AGL SEPARATE ACCOUNT VL R, S-6/A, 2000-02-04

AGL SEPARATE ACCOUNT VL R
S-6/A, 2000-02-04

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<PAGE>

Registration No. 333-90787

As filed with the Securities and Exchange Commission on February 4, 2000

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
FOR REGISTRATION UNDER
THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2

AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL-R
(Exact Name of Trust)

AMERICAN GENERAL LIFE INSURANCE COMPANY
(Exact Name of Depositor)
2727-A Allen Parkway
Houston, Texas 77019-2191
(Complete Address of Depositor's Principal Executive Offices)

Pauletta P. Cohn, Esq.
Deputy General Counsel
American General Life Companies
2727 Allen Parkway
Houston, Texas 77019-2191
(Name and Complete Address of Agent for Service)

Securities Being Offered: Flexible Premium Variable Life Insurance Policies.

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

The Registrant hereby amends this Registration Statement on such date or date as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL-R
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM
N-8B-2 AND THE PROSPECTUS
(PURSUANT TO INSTRUCTION 4 OF FORM S-6)

CROSS REFERENCE SHEET

ITEM NO. OF FORM N-8B-2* PROSPECTUS CAPTION
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
1 Additional Information : Separate Account VL-R.
2 Additional Information: AGL.
3 Inapplicable.
4 Additional Information: Distribution of Policies.
5, 6 Additional Information: Separate Account VL-R.
7 Inapplicable.**
8 Inapplicable.**
9 Additional Information: Legal Matters.
10(a) Additional Information: Your Beneficiary, Assigning
Your Policy.
10(b) Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
10(c)(d) Basic Questions You May Have: How can I change
my Policy's insurance coverage? How can I access
my investment in a Policy? Can I choose the form
in which AGL pays out any proceeds from my
Policy? Additional Information: Payment of Policy
Proceeds.
10(e) Basic Questions You May Have: Must I invest any
minimum amount in a policy?
10(f) Additional Information: Voting Privileges.
10(g)(1), 10(g)(4), 10(h)(3), 10(h)(2) Basic Questions You May Have: To what extent will
AGL vary the terms and conditions of the Policies
in particular cases? Additional Information: Voting
Privileges; Additional Rights That We Have.
10(g)(3), 10(g)(4), 10(h)(3), 10(h)(4) Inapplicable.**
10(i) Additional Information: Separate Account VL-R; Tax
Effects.
11 Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
Additional Information: Separate Account VL-R.
12(a) Additional Information: Separate Account VL-R;
Front Cover.
12(b) Inapplicable.**
12(c), 12(d) Inapplicable.**
12(e) Inapplicable, because the Separete Account did not
commence operations until 1998.
13(a) Basic Questions You May Have: What charges will
AGL deduct from my investment in a Policy? What
charges and expenses will the Mutual Funds
deduct from the amounts I invest through my Policy?
Additional Information: More About Policy
Charges.
13(b) Illustrations of Hypothetical Policy Benefits.
13(c) Inapplicable.**
13(d) Basic Questions You May Have: To what extent will
AGL vary the terms and conditions of the Policy in
particular cases?
13(e), 13(f), 13(g) None.
</TABLE>
<PAGE>

14 Basic Questions You May Have: How can I invest
money in a Policy?
15 Basic Questions You May Have: How can I invest
money in a Policy? How do I communicate with
AGL?
16 Basic Questions You May Have: How will the value
of my investment in a Policy change over time?

ITEM NO. ADDITIONAL INFORMATION
- -----------------------------------------------------------------------------------------------------------------
17(a), 17(b) Captions referenced under Items 10(c),10(d), and
10(e).
17(c) Inapplicable.**
18(a) Captions referred to under Item 16.
18(b), 18(d) Inapplicable.**
18(c) Additional Information: Separate Account VL-R.
19 Additional Information: Separate Account VL-R;
Our Reports to Policy Owners.
20(a), 20(b), 20(c), 20(d), 20(e), 20(f) Inapplicable.**
21(a), 21(b) Basic Questions You May Have: How can I access
my investment in a Policy? Additional Information:
Payment of Policy Proceeds.
21(c) Inapplicable.**
22 Additional Information: Payment of Police Porceeds-
Delay to Challenge Coverage.
23 Inapplicable.**
24 Basic Questions You May Have; Additional
Information.
25 Additional Information: AGL.
26 Inapplicable, because the Separate Account did
not commence operations until 1998.
27 Additional Information: AGL.
28 Additional Information: AGL's Management.
29 Additional Information: AGL.
30, 31, 32, 33, 34 Inapplicable, because the Separate Account did not
commence operations until 1998.
35 Inapplicable.**
36 Inapplicable.**
37 None.
38, 39 Additional Information: Distribution of the Policies.
40 Inapplicable, because the Separate Account did not
commence operations until 1998.
41(a) Additional Information: Distribution of the Policies.
41(b), 41(c) Inapplicable**
41,43 Inapplicable, because the Separate Account did not
commence operations or issue any securities until
1998.
44(a)(1), 44(a)(2), 44(a)(3) Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
44(a)(4) Additional Information: Tax Effects--Our taxes.
44(a)(5), 44(a)(6) Basic Questions You May Have: What charges will
AGL deduct from my investment in a Policy?
44(b) Inapplicable.**
44(c) Caption referenced in 13(d) above.
</TABLE>
<PAGE>

45 Inapplicable, because the Separate Account did not
commence operations until 1998.
46(a) Captions referenced in 44(a) above.
46(b) Inapplicable.**
47, 48, 49 None.
50 Inapplicable.**
51 Inapplicable.**
52(a), 52(c) Basic Questions You May Have: To what extent can
AGL vary the terms and conditions of the Policy in
particular cases? Additional Information:
Additional Rights That We Have.
52(b), 52(d) None.
53(a) Additional Information: Tax Effects--Our taxes.
53(b), 54 Inapplicable.**
55 Illustrations of Hypothetical Policy Benefits.
56-59 Inapplicable.**
</TABLE>

* Registrant includes this Reconciliation and Tie in its Registration
Statement in compliance with Instruction 4 as to the Prospectus as set
out in Form S-6. Separate Account VL-R (Account) has previously
filed a notice of registration as an investment company on Form N-8A
under the Investment Company Act of 1940 (Act), and a Form N-8B-2
Registration Statement. Pursuant to Sections 8 and 30(b)(1) of the
Act, Rule 30a-1 under the Act, and Forms N-8B-2 and N-SAR under that
Act, the Account will keep its Form N-8B-2 Registration Statement
current through the filing of periodic reports required by the Securities
and Exchange Commission (Commission).

** Not required pursuant to either Instruction 1(a) as to the Prospectus as
set out in Form S-6 or the administrative practice of the Commission and
its staff of adapting the disclosure requirements of the Commission's
registration statement forms in recognition of the differences between
variable life insurance policies and other periodic payment plan certificates
issued by investment companies and between separate accounts organized as
management companies and unit investment trusts.
<PAGE>

PLATINUM INVESTOR /(SM)/ SURVIVOR
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY (THE "POLICY")
ISSUED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL")

HOME OFFICE:
(Express Delivery) (US Mail)
2727-A Allen Parkway Variable Universal Life
Houston, Texas 77019-2191 Administration
PHONE: 1-888-325-9315 P.O. Box 4880
or 1-713-831-3443 Houston, Texas 77210-4880
FAX: 1-877-445-3098

This booklet is called a "prospectus."

Investment options. The AGL declared fixed interest account is the fixed
investment option for these Policies. You may also use AGL's Separate Account
VL-R ("Separate Account") to invest in the following variable investment options
and change your selections from time to time:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
AIM VARIABLE INSURANCE AMERICAN GENERAL SERIES DREYFUS VARIABLE MFS VARIABLE INSURANCE
FUNDS, INC. PORTFOLIO COMPANY INVESTMENT FUND TRUST
.AIM V.I. International .International Equities .Quality Bond .MFS Emerging Growth
Equity Fund Fund Portfolio Series
.AIM V.I. Value Fund .MidCap Index Fund .Small Cap Portfolio
.Money Market Fund
.Stock Index Fund

The Variable Annuity Life The Dreyfus Massachusetts Financial
A I M Advisors, Inc.* Insurance Company* Corporation* Services Company*

- --------------------------------------------------------------------------------------------------------------
MORGAN STANLEY DEAN PUTNAM VARIABLE TRUST SAFECO RESOURCE VAN KAMPEN LIFE
WITTER UNIVERSAL FUNDS, .Putnam VT Diversified SERIES TRUST INVESTMENT TRUST
INC. Income Fund .Equity Portfolio .Strategic Stock Portfolio
.Equity Growth Portfolio/1/ .Putnam VT Growth .Growth Portfolio
.High Yield Portfolio/2/ and Income Fund
.Putnam VT International
Growth and Income Fund

/1/Morgan Stanley Dean
Witter Investment
Management Inc.* SAFECO Asset
/2/Miller Anderson & Putnam Investment Management Van Kampen Asset
Sherrerd, LLP* Management, Inc.* Company* Management Inc.*

- --------------------------------------------------------------------------------------------------------------
</TABLE>

*The Investment Adviser of the investment option

SEPARATE PROSPECTUSES CONTAIN MORE INFORMATION ABOUT THE MUTUAL FUNDS ("FUNDS"
OR "MUTUAL FUNDS") IN WHICH WE INVEST THE ACCUMULATION VALUE THAT YOU ALLOCATE
TO ANY OF THE ABOVE-LISTED INVESTMENT OPTIONS. THE FORMAL NAME OF EACH SUCH FUND
IS SET FORTH IN THE CHART THAT APPEARS ABOVE. YOUR INVESTMENT RESULTS IN ANY
SUCH OPTION WILL DEPEND ON THOSE OF THE RELATED FUND. YOU SHOULD ALSO READ THE
PROSPECTUS OF THE MUTUAL FUND FOR ANY SUCH INVESTMENT OPTION IN WHICH YOU MAY BE
INTERESTED. YOU CAN REQUEST FREE COPIES OF ANY OR ALL OF THE MUTUAL FUND
PROSPECTUSES FROM YOUR AGL REPRESENTATIVE OR FROM US AT OUR HOME OFFICE LISTED
ABOVE.
<PAGE>

Other choices you have. During the insured persons' lifetimes, you may, within
limits, (1) request an increase or decrease in the amount of insurance, (2)
borrow or withdraw amounts you have invested, (3) choose when and how much you
invest, (4) choose whether your accumulation value under your Policy, upon the
last surviving insured person's death, will be added to the insurance proceeds
we otherwise will pay to the beneficiary, and (5) add or delete certain other
optional benefits that we make available by rider to your Policy. At the time
of purchase, you can decide whether your policy will be subject to certain tax
rules that maximize the cash value or rules that maximize the insurance
coverage.

Charges and expenses. We deduct charges and expenses from the amounts you
invest. These are described beginning on page 6.

Right to return. If for any reason you are not satisfied with your Policy, you
may return it to us and we will refund you the greater of (i) any premium
payments received by us or (ii) your accumulation value plus any charges that
have been deducted. To exercise your right to return your Policy, you must mail
it directly to the Home Office address shown on the first page of this
prospectus or return it to the AGL representative through whom you purchased the
Policy within 10 days after you receive it. In a few states, this period may be
longer. Because you have this right, we will invest your initial net premium
payment in the money market investment option from the date your investment
performance begins until the first business day that is at least 15 days later.
Then we will automatically allocate your investment among the above-listed
investment options as you have chosen. Any additional premium we receive during
the 15-day period will also be invested in the money market investment option
and allocated to the investment options at the same time as your initial net
premium.

We have designed this prospectus to provide you with information that you
should have before investing in the Policies. It also contains information that
will be helpful to you in exercising the various options you have once you own a
Policy. Please read this prospectus carefully and keep it for future reference.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE POLICIES ARE NOT AVAILABLE IN ALL STATES.

THE POLICIES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE
SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.

THIS PROSPECTUS IS DATED FEBRUARY __, 2000

2
<PAGE>

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you purchase
a Platinum Investor/(SM)/ Survivor variable life policy ("Policy") or exercise
any of your rights or privileges under a Policy. The Policy is based on the
lives of two persons. We call each person a contingent insured. We pay the
death benefit proceeds upon the death of the last surviving contingent insured.

Basic Information. Here are the page numbers in this prospectus where you may
find answers to most of your questions:
<TABLE>
<CAPTION>
PAGE TO SEE IN
THIS PROSPECTUS
---------------
<S> <C>
BASIC QUESTIONS YOU MAY HAVE
- ------------------------------------------------------------------------
. How can I invest money in a Policy?.................................. 4
. How will the value of my investment in a Policy change over time?.... 5
. What charges will AGL deduct from my investment in a Policy?......... 6
. What charges and expenses will the Mutual Funds deduct from
amounts I invest through my Policy?................................ 8
. What is the amount of insurance ("death benefit")
that AGL pays when the last surviving contingent insured dies?..... 11
. What is joint equal age?............................................. 13
. Must I invest any minimum amount in a Policy?........................ 13
. How can I change my Policy's investment options?..................... 15
. How can I change my Policy's insurance coverage?..................... 15
. What additional rider benefits might I select?....................... 16
. What is my Policy's exchange option?................................. 18
. How can I access my investment in a Policy?.......................... 18
. Can I choose the form in which AGL pays
out proceeds from my Policy?....................................... 20
. To what extent can AGL vary the terms and conditions of the Policy
in particular cases?............................................... 21
. How will my Policy be treated for income tax purposes?............... 22
. How do I communicate with AGL?....................................... 22
</TABLE>

Illustrations of a hypothetical Policy. Starting on page 24, we have included
some examples of how the values of a sample Policy would change over time, based
on certain assumptions we have made. Because your circumstances may vary
considerably from our assumptions, your AGL representative will also provide you
with a similar sample illustration that is more tailored to your own
circumstances and wishes.

Additional information. You may find the answers to any other questions you
have under "Additional Information" beginning on page 28 or in the form of our
Policy. A table of contents for the "Additional Information" portion of this
prospectus also appears on page 28. You can obtain copies of our form of Policy
from (and direct any other questions to) your AGL representative or our Home
Office (shown on the first page of this prospectus).

Financial statements. We have included certain financial statements of AGL.
These begin on page Q-1.

Special words and phrases. The Index of Words and Phrases that appears at the
back of this prospectus will tell you on what page you can read more information
about many of the words and phrases that we use.

3
<PAGE>

BASIC QUESTIONS YOU MAY HAVE

HOW CAN I INVEST MONEY IN A POLICY?

Premium payments. We call the payments you make in a Policy "premiums" or
"premium payments." The amount we require as your initial premium varies
depending on the specifics of your Policy and the contingent insureds. We can
refuse to accept a subsequent premium payment that is less than $25. Otherwise,
with a few exceptions mentioned below, you can make premium payments at any time
and in any amount. Upon receipt, we will allocate your premium payments (except
your initial premium) to the available investment options you have chosen.

Limits on premium payments. Federal tax law may limit the amount of premium
payments you can make (relative to the amount of your Policy's insurance
coverage) and may impose penalties on amounts you take out of your Policy if you
do not observe certain additional requirements. These tax law requirements and
a discussion of modified endowment contracts are summarized further under "How
will my Policy be treated for income tax purposes?" beginning on page 22 and
"Tax Effects" beginning on page 29. We will monitor your premium payments,
however, to be sure that you do not exceed permitted amounts or inadvertently
incur any tax penalties. The tax law limits can change as a result of changes
you make to your Policy. For example, a reduction in the specified amount of
your Policy can reduce the amount of premiums you can pay.

Also, in certain limited circumstances, additional premiums may cause the
death benefit to increase by more than they increase your accumulation value.
In such case, we may refuse to accept an additional premium if the contingent
insureds do not provide us with adequate evidence that they continue to meet our
requirements for issuing insurance.

Ways to pay premiums. You may pay premiums by check or money order drawn on a
U.S. bank in U.S. dollars and made payable to "American General Life Insurance
Company," or "AGL." Premiums after the initial premium must be sent directly to
our Home Office. We also accept premium payments by bank draft, wire or by
exchange from another insurance company. You may obtain further information
about how to make premium payments by any of these methods from your AGL
representative or from our Home Office shown on the first page of this
prospectus.

Dollar cost averaging. Dollar cost averaging is an investment strategy
designed to reduce the risks that result from market fluctuations. The strategy
spreads the allocation of your accumulation value among your chosen variable
investment options over a period of time. This allows you to reduce the risk of
investing most of your funds at a time when prices are high. The success of this
strategy depends on market trends and is not guaranteed.

Under dollar cost averaging, we automatically make transfers of your
accumulation value from the money market investment option to one or more of the
other variable investment options that you choose. You tell us whether you want
these transfers to be made monthly,

4
<PAGE>

quarterly, semi-annually or annually. We make the transfers as of the end of the
valuation period that contains the day of the month that you select other than
the 29th, 30th or 31st day of the month. (The term "valuation period" is
described on page 37.) You must have at least $5,000 of accumulation value to
start dollar cost averaging and each transfer under the program must be at least
$100. Dollar cost averaging ceases upon your request, or if your accumulation
value in the money market investment option becomes exhausted. You cannot use
dollar cost averaging at the same time you are using automatic rebalancing. We
do not charge you for using this service.

Automatic rebalancing. This feature automatically rebalances the proportion of
your accumulation value in each investment option under your Policy to
correspond to your then current premium allocation designation. You tell us
whether you want us to do the rebalancing quarterly, semi-annually or annually.
The date automatic rebalancing occurs will be based on the date of issue of your
Policy. For example, if your Policy is dated January 17, and you have requested
automatic rebalancing on a quarterly basis, automatic rebalancing will start on
April 17, and will occur quarterly thereafter. Automatic rebalancing will occur
as of the end of the valuation period that contains the date of the month your
Policy was issued. You must have a total accumulation value of at least $5,000
to begin automatic rebalancing. Rebalancing ends upon your request. You cannot
use automatic rebalancing at the same time you are using dollar cost averaging.
We do not charge you for using this service.

HOW WILL THE VALUE OF MY INVESTMENT IN A POLICY CHANGE OVER TIME?

Your accumulation value. From each premium payment you make, we deduct the
charges that we describe on page 6 under "Premium tax charge" and "Other
deductions from each premium payment." We invest the rest in one or more of the
investment options listed in the chart on the first page of this prospectus. We
call the amount that is at any time invested under your Policy (including any
loan collateral we are holding for your Policy loans) your "accumulation value."

Your investment options. We invest the accumulation value that you have
allocated to any variable investment option in shares of a corresponding Mutual
Fund. Over time, your accumulation value in any such investment option will
increase or decrease by the same amount as if you had invested in the related
Fund's shares directly (and reinvested all dividends and distributions from the
Fund in additional Fund shares); except that your accumulation value will also
be reduced by certain charges that we deduct. We describe these charges
beginning on page 6 under "What charges will AGL deduct from my investment in a
Policy?"

You can review other important information about the Mutual Funds that you can
choose in the separate prospectuses for those Funds. You can request additional
free copies of these prospectuses from your AGL representative or from our Home
Office shown on the first page of this prospectus.

We invest any accumulation value you have allocated to our declared fixed
interest account option as part of our general assets. We credit a fixed rate
of interest on that accumulation

5
<PAGE>

value, which we declare from time to time. We guarantee that this will be at an
effective annual rate of at least 4%. Although this interest increases the
amount of any accumulation value that you have in our declared fixed interest
account option, such accumulation value will also be reduced by any charges that
are allocated to this option under the procedures described under "Allocation of
charges" on page 8. The "daily charge" described on page 6 and the charges and
expenses of the Mutual Funds discussed on pages 8 - 10 do not apply to our
declared fixed interest account option.

Policies are "non-participating." You will not be entitled to any dividends
from AGL.

WHAT CHARGES WILL AGL DEDUCT FROM MY INVESTMENT IN A POLICY?

Premium tax charge. We deduct from each premium a charge for the tax that is
then applicable to us in your state or other jurisdiction. These taxes, if any,
currently range from .75% to 3.5%. Please let us know if you move to another
jurisdiction, so we can adjust this charge if required. You are not permitted
to deduct the amount of these taxes on your income tax return.

Other deductions from each premium payment. After we deduct premium tax from
your premium payment, we will deduct 6.5% of the remainder on all premiums
received during the first 10 years. Thereafter we will deduct 1% of each
premium, after deducting premium taxes. Your Policy refers to these deductions
as a Premium Expense Charge. We use these charges to cover sales expenses,
including commissions.

Daily charge. We will deduct a daily charge at an annual effective rate of
.40% of your accumulation value that is then being invested in any of the
variable investment options. After a Policy has been in effect for 10 years,
however, we will reduce this rate to an annual effective rate of .20%, and after
30 years, to an annual effective rate of .10%. Since the Policies were first
offered only in the year 2000, the reduction has not yet taken effect under any
outstanding Policies. We apply this charge to pay for our mortality and expense
risks.

Flat monthly charge. We will deduct $6 from your accumulation value each
month. The flat monthly charge is part of the Monthly Administration Fee shown
on page 4 of your Policy. We use this charge to pay for the cost of
administrative services we provide under the Policies.

Monthly charge per $1,000 of specified amount. We also deduct this charge
monthly from your accumulation value for the first 10 Policy years, or for 10
Policy years for any increase in specified amount. The dollar amount of this
charge changes whenever there is any change in your Policy's specified amount.
(We describe the specified amount under "Your specified amount of insurance" on
page 11.) This charge varies according to the amount of base coverage and the
ages and the premium classes of the contingent insureds. This charge is a
maximum of $1.00 for each $1000 of specified amount. The actual amount of this
charge for your Policy is the amount in excess of the first $6 of the Monthly
Administration Fee shown on page 4 of your Policy. We use this charge to pay
for underwriting costs and other costs of

6
<PAGE>

issuing the Policies, and also to help pay for the administrative services we
provide under the Policies.

Monthly insurance charge. Every month we will deduct from your accumulation
value a charge based on the cost of insurance rates applicable to your Policy on
the date of the deduction and our "amount at risk" on that date. Our amount at
risk is the difference between (a) the death benefit that would be payable
before reduction by policy loans if the last surviving contingent insured died
on that date and (b) the then total accumulation value under the Policy. For
otherwise identical Policies, a greater amount at risk results in a higher
monthly insurance charge.

For otherwise identical Policies, a higher cost of insurance rate also results
in a higher monthly insurance charge. Our cost of insurance rates are guaranteed
not to exceed those that will be specified in your Policy. Our current rates
are lower for insured persons in most age and premium classes, although we have
the right at any time to raise these rates to not more than the guaranteed
maximum. In general, the longer you own your Policy, the higher the cost of
insurance rate will be as the contingent insureds grow older.

Also our cost of insurance rates will generally be lower if one or both of the
insured persons is a female than if a male. Similarly, our current cost of
insurance rates are generally lower for non-tobacco users than tobacco users.
Contingent insureds who present particular health, occupational or non-work
related risks may require higher cost of insurance rates and other additional
charges based on the specified amount of insurance coverage under their Policy.

We use this charge to fund the death benefits we pay under the Policies.

Monthly charges for additional benefit riders. We will deduct charges monthly
from your accumulation value, if you select certain additional benefit riders.
These are described beginning on page 16, under "What additional rider benefits
might I select?" We use these charges to pay for the benefits under the riders
and to help offset the risks we assume.

Surrender Charge. The Policies have a surrender charge that applies for a
maximum of the first 10 Policy years (and for a maximum of the first 10 Policy
years after any requested increase in the Policy's base coverage). We will
apply the surrender charge only to the base coverage portion of the specified
amount.

The amount of the surrender charge depends on the ages and other insurance
characteristics of the contingent insureds. The maximum amount of your Policy's
surrender charge will be shown in the table beginning on page 26 of the Policy.
It may initially be as high as $50 per $1,000 of base amount or as low as $0 per
$1,000 of base amount (or any increase in the base amount).

We will deduct the entire amount of any then applicable surrender charge from
the accumulation value at the time of a full surrender. Upon a requested
decrease in a Policy's

7
<PAGE>

base coverage portion of the specified amount, we will deduct any remaining
amount of the surrender charge that was associated with the base amount that is
canceled. This includes any decrease that results from any requested partial
surrender. See "Partial surrender" beginning on page 18 and "Change of death
benefit option" beginning on page 16. For those Policies that lapse in the fist
10 Policy years, we use this charge to help recover sales expenses.

Transaction Fee. We will charge a transaction fee equal to the lesser of 2% of
the amount withdrawn or $25 for each partial surrender you make. We use this
charge to help pay for the expense of making a partial surrender.

Transfer fee. We may charge a $25 transfer fee for each transfer between
investment options that exceeds 12 each Policy Year. This charge will be
deducted from the investment options in the same ratio as the requested
transfer. We use this charge to help pay for the expense of making the
requested transfer.

Charge for taxes. Although we don't currently do so, we can make a charge in
the future for taxes we incur or reserves we set aside for taxes in connection
with the Policies. This would reduce the investment experience of your
accumulation value.

For a further discussion regarding the charges we will deduct from your
investment in a Policy, see "More About Policy Charges" on page 35.

Allocation of charges. You may choose the investment options from which we
deduct all monthly charges and any applicable surrender charges. If you do not
have enough accumulation value in those investment options, we will deduct these
charges in the same ratio the charges bear to the unloaned accumulation value
you then have in each investment option.

WHAT CHARGES AND EXPENSES WILL THE MUTUAL FUNDS DEDUCT FROM AMOUNTS I INVEST
THROUGH MY POLICY?

Each Mutual Fund pays its investment management fees and other operating
expenses. Because they reduce the investment return of a Fund, these fees and
expenses also will reduce indirectly the return you will earn on any
accumulation value that you have invested in that Fund. Current and future fees
and expenses may vary from fiscal year 1998 fees and expenses. The charges and
expenses for the fiscal year 1998 are as follows:

8
<PAGE>

THE MUTUAL FUNDS' ANNUAL EXPENSES/1/ (as a percentage of average net assets)

FUND TOTAL FUND
MANAGEMENT OTHER FUND OPERATING
FEES (AFTER OPERATING EXPENSES EXPENSES (AFTER
EXPENSE 12B-1 (AFTER EXPENSE EXPENSE
NAME OF FUND REIMBURSEMENT) FEES REIMBURSEMENT) REIMBURSEMENT)
- ----------------------------------------------- -------------- ------ ------------------- ----------------
<S> <C> <C> <C> <C>
The following funds of AIM VARIABLE
INSURANCE FUNDS, INC.:/1/
AIM V.I. International Equity Fund 0.75% 0.16% 0.91%
AIM V.I. Value Fund 0.61% 0.05% 0.66%

The following funds of AMERICAN
GENERAL SERIES PORTFOLIO COMPANY:/1/
International Equities Fund 0.35% 0.05% 0.40%
MidCap Index Fund 0.32% 0.04% 0.36%
Money Market Fund 0.50% 0.04% 0.54%
Stock Index Fund 0.27% 0.04% 0.31%

The following funds of DREYFUS VARIABLE
INVESTMENT FUND:/1/
Quality Bond Portfolio 0.65% 0.08% 0.73%
Small Cap Portfolio 0.75% 0.02% 0.77%

The following series of MFS VARIABLE
INSURANCE TRUST:/1/
MFS Emerging Growth Series 0.75% 0.10% 0.85%

The following portfolios of MORGAN
STANLEY DEAN WITTER UNIVERSAL FUNDS,
INC.:/1/
Equity Growth Portfolio /2/ 0.09% 0.76% 0.85%
High Yield Portfolio /2/ 0.15% 0.65% 0.80%

</TABLE>

9
<PAGE>

The following portfolios of PUTNAM
VARIABLE TRUST: Class "IB" Funds:
Putnam VT Diversified Income Fund /3/ 0.50% 0.11% 0.08% 0.69%
Putnam VT Growth and Income Fund /3/ 0.35% 0.11% 0.03% 0.49%
Putnam VT International Growth 0.59% 0.11% 0.14% 0.84%
and Income Fund /3/

The following portfolios of SAFECO
RESOURCE SERIES TRUST:/1/
Equity Portfolio 0.74% 0.04% 0.78%
Growth Portfolio 0.74% 0.06% 0.80%

The following portfolio of VAN KAMPEN
LIFE INVESTMENT TRUST /1/
Strategic Stock Portfolio /2/ 0.00% 0.65% 0.65%

/1/The Mutual Funds' advisers or administrators have entered into arrangements under which they pay certain amounts to AGL. The fees
do not have a direct relationship to the Mutual Funds' Annual Expenses, and do not increase the amount of charges you pay under your
Policy. (See "Certain arrangements.")

/2/For the Funds indicated, management fees and other expenses as shown for fiscal year 1998 would have been the percentages shown
below without certain voluntary expense reimbursements from the investment adviser. Current and future fees and expenses may vary
from the fiscal year 1998 fees and expenses.
</TABLE>

Management Other Total
Fees Expenses Annual Expenses
----------- --------- ----------------
<S> <C> <C> <C>
MORGAN STANLEY DEAN WITTER
UNIVERSAL FUNDS, INC.
Equity Growth Portfolio 0.55% 0.76% 1.31%
High Yield Portfolio 0.50% 0.65% 1.15%
VAN KAMPEN LIFE INVESTMENT
TRUST
Strategic Stock Portfolio 0.50% 0.75% 1.25%

No other Funds received any such reimbursements.

/3/The prospectus for Putnam Variable Trust under "Distribution plan" discusses this 12b-1 fee.

</TABLE>

10
<PAGE>

WHAT IS THE AMOUNT OF INSURANCE ("DEATH BENEFIT") THAT AGL PAYS WHEN THE LAST
SURVIVING CONTINGENT INSURED DIES?

Your specified amount of insurance. In your application to buy a Platinum
Investor Survivor Policy, you tell us how much life insurance coverage you want.
We call this the "specified amount" of insurance. The specified amount consists
of what we refer to as "base coverage" plus any "supplemental coverage" you
select. We also provide a guaranteed minimum death benefit equal to the initial
specified amount. We provide more information about the specified amount and
the guaranteed minimum death benefit beginning on page 38 under "More About the
Death Benefit" and under "Monthly guarantee premiums," beginning on page 13.
You should read these other discussions carefully because they contain important
information about how the choices you make can affect your benefits and the
amount of premiums and charges you may have to pay.

Your death benefit. The death benefit we will pay is reduced by any
outstanding Policy loans (plus any unearned loan interest). You also choose
whether the death benefit we will pay is

. Option 1--The specified amount on the date of the last surviving contingent
insured's death; or

. Option 2--The specified amount on the date of the last surviving contingent
insured's death plus the Policy's accumulation value as of the date of
death.

Under Option 2, your death benefit will tend to be higher than under Option 1.
However, the monthly insurance charge we deduct will also be higher to
compensate us for our additional risk. Because of this, your accumulation value
for the same amount of premium will tend to be higher under Option 1 than under
Option 2.

Any premiums we receive after the last surviving contingent insured's death
will be returned and not included in your accumulation value.

Federal tax law requires a minimum death benefit in relation to cash value for
a Policy to qualify as life insurance. We will automatically increase the death
benefit of a Policy if necessary to ensure that the Policy will continue to
qualify as life insurance. One of two tests under current federal tax law can
be used: the "guideline premium test" and the "cash value accumulation test."
You must elect one of these tests at issue, and, once elected, the choice may
not be changed. Factors you should consider in making this choice are discussed
below.

The "guideline premium test" limits the amount of premiums paid under a Policy
at any time to a certain amount which depends on the size of the Policy and the
age and gender of the contingent insureds. Therefore, the maximum premiums you
can pay are generally more limited under this test than under the cash value
accumulation test.

The other major difference between the two tax tests involves the Policy's
"alternative death benefit." The alternative death benefit is calculated as
shown in the tables that follow. During any

11
<PAGE>

time when the alternative death benefit works out to be more than the Option 1
or Option 2 death benefit you have chosen, we would automatically deem the death
benefit to be such higher amount.

As illustrated in the tables below, choosing the cash value accumulation test
for tax law compliance generally makes it more likely that an alternative
minimum death benefit will apply. Therefore, if you anticipate that your Policy
may have a substantial accumulation value in relation to its death benefit, you
should be aware that the alternative death benefit may cause your Policy's death
benefit to be higher if you choose that test than if you choose the guideline
premium test. To the extent that the alternative death benefit does result in a
higher death benefit, the cost of insurance charges deducted from your Policy
will also tend to be higher. (This compensates us for the additional risk that
we might have to pay the higher alternative death benefit.)

If you have selected the guideline premium test, we calculate the alternative
death benefit by multiplying your Policy's accumulation value by the following
percentages:

SPECIMEN ALTERNATIVE DEATH BENEFITS AS A PERCENTAGE MULTIPLE
OF POLICY ACCUMULATION VALUE (ASSUMING YOU
SELECT THE GUIDELINE PREMIUM TEST)

YOUNGER
CONTINGENT
INSURED'S
AGE* 40 45 50 55 60 65 70 75 100

% 250% 215% 185% 150% 130% 120% 115% 105% 100%

*Nearest birthday at the beginning of the Policy year in which the last
surviving contingent insured dies. We use the younger contingent insured's age
for this purpose even if the younger contingent insured is the first to die.

If you have selected the cash value accumulation test, we calculate the
alternative death benefit by multiplying your Policy's accumulation value by a
percentage that will be set forth on page 4A of your Policy. The percentage
varies based on the insurance characteristics of the contingent insureds.
Below is an example of applicable alternative death benefit percentages for the
cash value accumulation test. The example is for a male non-tobacco user and a
female non-tobacco user both preferred premium class and issue age 55.

SPECIMEN ALTERNATIVE DEATH BENEFITS AS A PERCENTAGE MULTIPLE
OF POLICY ACCUMULATION VALUE (ASSUMING YOU
SELECT THE CASH VALUE ACCUMULATION TEST)

POLICY YEAR 1 2 3 5 10 20 30 40 45

% 313% 301% 290% 268% 222% 159% 126% 111% 104%

Your Policy calls the multipliers used for each test the "Death Benefit Corridor
Rate."

12
<PAGE>

WHAT IS JOINT EQUAL AGE?

Your Policy has been issued on the basis of a joint equal age. Joint equal
age is a calculation that blends the ages and insurance risks of the contingent
insureds. We use the joint equal age in the Policy to help determine some of the
charges under the Policy. We determine the joint equal age by using the
contingent insureds' individual ages nearest their birthdays, with an adjustment
which is a function of:

. the age of each contingent insured;

. the gender of each contingent insured; and

. the premium class of each contingent insured.

We show the joint equal age as of the date of issue on the Policy's schedule
page. The attained joint equal age increases one year on each Policy
anniversary. The attained joint equal age continues to increase after the death
of either contingent insured.

MUST I INVEST ANY MINIMUM AMOUNT IN A POLICY?

Planned periodic premiums. Page 3 of your Policy will specify a "Planned
Periodic Premium." This is the amount that you (within limits) choose to pay.
Our current practice is to bill quarterly, semi-annually or annually. However,
payment of these or any other specific amounts of premiums is not mandatory.
After payment of your initial premium, you need only invest enough to ensure
your Policy's cash surrender value stays above zero or that the guaranteed
minimum death benefit (described under "Monthly guarantee premiums" on page 13)
remains in effect ("Cash surrender value" is explained under "Full surrender" on
page 18.) The less you invest, the more likely it is that your Policy's cash
surrender value could fall to zero, as a result of the deductions we
periodically make from your accumulation value.

Policy lapse and reinstatement. If your Policy's cash surrender value falls to
an amount insufficient to cover the monthly charges, we will notify you and
give you a grace period to pay at least the amount we estimate is necessary to
keep your Policy in force for a reasonable time. If we do not receive your
payment by the end of the grace period, your Policy will end without value and
all coverage under your Policy will cease. Although you can apply to have your
Policy "reinstated," you must do this within 5 years (or, if earlier, before the
Policy's maturity date), and you must present evidence that each contingent
insured who was living when the Policy lapsed is still living and meets our
requirements for issuing coverage. Also, you will have to pay at least the
amount of premium that we estimate will keep your Policy in force for two
months, as well as pay or reinstate any indebtedness. You will find additional
information in the Policy about the values and terms of a Policy after it is
reinstated.

Monthly guarantee premiums. Page 3 of your Policy will specify a "Guaranteed
Minimum Death Benefit Monthly Premium." If you pay these guarantee premiums, we
will provide an Option 1 death benefit, even if your policy's cash surrender
value has declined to zero, and even if you have selected Option 2 as the death
benefit for your Policy.

13
<PAGE>

We call this our "guaranteed minimum death benefit," and here are its terms
and conditions. On the first day of each Policy month that the cash surrender
value is not sufficient to pay the monthly deduction, we check to see if the
cumulative amount of premiums paid under the Policy, less any Policy loans, is
at least equal to the sum of the monthly guarantee premiums for all Policy
months to date, including the Policy month then starting. (Policy months are
measured from the "Date of Issue" that will also be shown on page 3 of the
Policy.) So long as at least this amount of premium payments has been paid by
the beginning of that Policy month, the Policy will not enter a grace period or
terminate (i.e., lapse) because of insufficient cash surrender value, unless the
guaranteed minimum death benefit has terminated as discussed in the paragraph
immediately below.

The guaranteed minimum death benefit terminates if

. The Policy terminates following a grace period.

. You change the death benefit Option.

. You request any decrease in specified amount.

. You make a partial surrender.

. You surrender the Policy.

We change the monthly guarantee premium whenever

. We approve any request you make to increase your Policy's specified amount.

. We approve any application you make after your Policy is issued for an
additional rider benefit or any increase in a rider benefit.

. You request removal or decrease of a rider benefit that provides term life
insurance coverage.

Once the guaranteed minimum death benefit terminates for any reason, it can
never be restored or reinstated, even if the Policy itself continues or is
reinstated. At any time before your guaranteed minimum death benefit
terminates, however, you may pay any monthly guarantee premiums that you have
not yet paid to date and thereby continue to have the protection that the
guarantee affords.

The amount of premiums that must be paid to maintain the guaranteed minimum
death benefit will be increased by the cumulative amount of any loans (including
any loan increases to pay interest) you have taken from your Policy.

14
<PAGE>

HOW CAN I CHANGE MY POLICY'S INVESTMENT OPTIONS?

Future premium payments. You may at any time change the investment options in
which future premiums you pay will be invested. Your allocation must, however,
be in whole percentages that total 100%.

Transfers of existing accumulation value. You may also transfer your existing
accumulation value from one investment option under the Policy to another. The
first 12 transfers in a year are free of charge. We may charge you $25 for each
additional transfer. You may make transfers from the variable investment
options at any time. You may make transfers from the declared fixed interest
account during the 60-day period beginning each Policy anniversary, and we will
not honor such a request that we receive at any other time. The amount that you
can transfer each year is limited to the greater of

. 25% of the unloaned accumulation value you have in the declared fixed
interest account as of the Policy anniversary, or

. the sum of any amounts you transferred or surrendered from the declared
fixed interest account during the previous Policy year.

Unless you are transferring the entire amount you have in an investment
option, each transfer must be at least $500. See "Additional Rights That We
Have" on page 42.

Market Timing. The Policy is not designed for professional market timing
organizations or other entities using programmed and frequent transfers. We
reserve the right at any time and without prior notice to any party to
terminate, suspend, or modify our policies or procedures regarding telephone
requests or to stop permitting telephone requests altogether.

HOW CAN I CHANGE MY POLICY'S INSURANCE COVERAGE?

Increase in coverage. At any time while both contingent insureds are living,
you may request an increase in the specified amount of coverage under your
Policy. You must, however, provide us with satisfactory evidence that both
contingent insureds continue to meet our requirements for issuing insurance
coverage.

We treat an increase in specified amount in many respects as if it were the
issuance of a new Policy. For example, the monthly insurance charge for the
increase will be based on the ages and premium classes of the contingent
insureds at the time of the increase. Also, a new amount of surrender charge
applies to any amount of the increase that you request as base (rather than
supplemental) coverage. This amount is the same as it would be if we were
instead issuing the same amount of base coverage as a new Platinum Investor
Survivor Policy. You can increase base coverage and supplemental coverage in
any ratio, so long as your base coverage is at least 10% of the specified
amount.

Decrease in coverage. After the first Policy year, you may request a
reduction in the specified amount of coverage, but not below certain minimums.
After any decrease, the specified

15
<PAGE>

amount cannot be less than the greater of (i) $100,000, and (ii) any minimum
amount which, in view of the amount of premiums you have paid, is necessary for
the Policy to continue to meet the Federal tax law definition of life insurance.
We will apply a reduction in specified amount proportionately against the
specified amount provided under the original application and any specified
amount increases. We will reduce base and supplemental coverages
proportionately. We will deduct from your accumulation value any remaining
surrender charge that is associated only with any amount of base coverage that
is canceled in this way. If there is not sufficient accumulation value to pay
the surrender charge at the time you request a reduction, the decrease will not
be allowed.

Change of death benefit option. You may at any time request us to change
your coverage from death benefit Option 1 to 2 or vice-versa.

. If you change from Option 1 to 2, we also automatically reduce your
Policy's specified amount of insurance by the amount of your Policy's
accumulation value (but not below zero) at the time of the change. The
change will go into effect on the monthly deduction day following the
date we receive your request for change. We will take the reduction
proportionately from each component of the Policy's specified amount. We
will not charge a surrender charge for this reduction in coverage.

. If you change from Option 2 to 1, we automatically increase your
Policy's specified amount by the amount of your Policy's accumulation
value.

Tax consequences of changes in insurance coverage. Please read "Tax
Effects" starting on page 29 of this prospectus to learn about possible tax
consequences of changing your insurance coverage under your Policy.

Effect of changes in insurance coverage on guaranteed minimum death benefit.
Most types of change in coverage will result in termination of our guarantee
that, if you pay certain prescribed amounts of premiums, we will pay a death
benefit even if your policy's cash surrender value declines to zero. The
details of this guarantee are discussed under "Monthly guarantee premiums,"
beginning on page 13.

WHAT ADDITIONAL RIDER BENEFITS MIGHT I SELECT?

You can request that your Policy include the additional rider benefits
described below. For most of the riders that you choose, a charge, which will
be shown on page 3 of your Policy, will be deducted from your accumulation value
on each monthly deduction date. Eligibility for and changes in these benefits
are subject to our rules and procedures as in effect from time to time. More
details are included in the form of each rider, which we suggest that you review
if you choose any of these benefits.

Four Year Term Rider
--------------------

. This rider provides an additional death benefit equal to 150% of the
Policy's initial specified amount. This additional benefit will be paid
if both contingent insureds die during the first four Policy years.

16
<PAGE>

. You can purchase this rider if the contingent insureds' joint equal age
is between 25 and 80.

Maturity Extension Rider
------------------------

. This rider permits you to extend the Policy's maturity date beyond what
it otherwise would be. The rider provides for a death benefit after the
original maturity date that is equal to the accumulation value on the
date of the last surviving contingent insured's death. With this rider,
all accumulation value that is in the separate account can remain there.
There is no charge for this rider.

. No additional premium payments, new loans, or Policy changes will be
allowed after the original maturity date.

. You cannot revoke this rider after you have elected it.

. Extension of the maturity date beyond the younger contingent insured's
age 100 may result in the current taxation of increases in your Policy's
accumulation value as a result of interest or investment experience
after that time. You should consult a qualified tax adviser before
making such an extension.

Return of Premium Rider
-----------------------

. You may purchase this rider only as of the date of issue and only if you
have selected death benefit Option 1.

. This rider provides an increase in the death benefit equal to all
premiums you have paid including premiums for any riders, minus the sum
of:

1. all partial surrenders; and

2. any outstanding policy loan (plus any unearned loan interest).

Single Life Annually Renewable Term Insurance Rider
- ---------------------------------------------------

. This rider allows you to provide term single life insurance on the life
of either or both of the contingent insureds. We will pay a death
benefit upon the death of the contingent insured on whose life you
purchased the rider. The death benefit is in addition to any death
benefit we pay under the Policy.

. You can purchase this rider on the life of a contingent insured who is
younger than age 75.

. You cannot purchase this rider on the life of a contingent insured if
the premium class for that contingent insured is uninsurable.

17
<PAGE>

WHAT IS MY POLICY'S EXCHANGE OPTION?

This option is not a rider. You as the owner of the Policy have the right at
any time while both contingent insureds are living to request that the Policy be
split into two separate policies, insuring each of the contingent insureds under
new, single life policies. In order for you to exercise this option, neither
contingent insured could have the "uninsurable" premium class when the original
Policy was issued. Here are the additional features about the exchange option:

. You can choose the amount of coverage on each policy, as long as the
total equals the death benefit amount of the Policy. We will transfer the
cash surrender value of the Policy, after paying off any outstanding
loan, to the new policies in the same proportion as the new face amounts
are to each other.

. The new policies are subject to underwriting based on our established
procedures. This option requires that both contingent insureds are found
to be insurable.

. The new policies can be any flexible or level premium whole life policy
or endowment plan we would ordinarily issue when the option is exercised.

. You can choose to exchange without underwriting only if the contingent
insureds were married to one another and have divorced, the Federal
unlimited marital deduction is repealed, or there is a reduction of at
least 50% of the tax rate in the maximum Federal estate tax bracket.
However, in the case of divorce, the divorce decree must have been final
at least 24 months before the exchange. In these situations, the original
Policy's specified amount and cash surrender value will be split equally
between the two new policies.

. The Policy terminates when we issue the new policies.

. Under each of the new policies, if the insured commits suicide within the
first two policy years, we will limit the death benefit proceeds to the
total of all premiums that have been paid on the Policy insuring the
deceased person to the time of death minus any outstanding policy loans
(plus any unearned loan interest) and partial surrenders.

. A few states do not permit the exchange option. Please ask your AGL
representative if you reside in one of these states.

. There is no additional charge for this option or its exercise.

HOW CAN I ACCESS MY INVESTMENT IN A POLICY?

Full surrender. You may at any time surrender your Policy in full. If you do,
we will pay you the accumulation value, less any Policy loans, plus any unearned
interest, and less any surrender charge that then applies. We call this amount
your "cash surrender value."

Partial surrender. You may, at any time after the first Policy year, make a
partial surrender of your Policy's cash surrender value. A partial surrender
must be at least $500. We will automatically

18
<PAGE>

reduce your Policy's accumulation value by the amount of your withdrawal and any
related charges. We do not allow partial surrenders that would reduce the death
benefit below $100,000.

If the Option 1 death benefit is then in effect, we also will reduce your
Policy's specified amount by the amount of such withdrawal and charges, but not
below $25,000. We will take any such reduction proportionately from each
component of the Policy's specified amount and deduct any remaining surrender
charge that is associated with any portion of your Policy's base amount of
coverage that is canceled. If the Option 2 death benefit is then in effect, we
will automatically reduce your accumulation value.

You may choose the investment option or options from which money that you
withdraw will be taken. Otherwise, we will allocate the partial surrender in the
same proportions as then apply for deducting monthly charges under your Policy
or, if that is not possible, in proportion to the amount of accumulation value
you then have in each investment option.

There is a transaction fee equal to the lesser of 2% of the amount withdrawn
or $25 for each partial surrender you make.

Exchange of Policy in Certain States. Certain states require that a policy
owner be given the right to exchange the Policy for a fixed benefit life
insurance policy, within either 18 or 24 months from the date of issue. This
right is subject to various conditions imposed by the states and us. In such
states, this right has been more fully described in your Policy or related
endorsements to comply with the applicable state requirements.

Policy loans. You may at any time borrow from us an amount equal to your
Policy's cash surrender value less the interest that will be payable on your
loan through your next Policy anniversary. This rule is not applicable in all
states.

We remove from your investment options an amount equal to your loan and hold
that part of your accumulation value in the declared fixed interest account as
collateral for the loan. We will credit your Policy with interest on this
collateral amount at an effective annual rate of 4% (rather than any amount you
could otherwise earn in one of our investment options), and we will charge you
interest on your loan at an effective annual rate of 4.50% during the first 10
Policy years and 4.25% thereafter. Loan interest is payable annually, on the
Policy anniversary, in advance, at a rate of 4.31% for loans you make during the
first 10 Policy years and 4.08% for loans you make thereafter. These are
equivalent to the effective annual rates of 4.50% and 4.25%, respectively. Any
amount not paid by its due date will automatically be added to the loan balance
as an additional loan. Interest you pay on Policy loans will not, in most cases,
be deductible on your tax returns.

You may choose which of your investment options the loan will be taken from.
If you do not so specify, we will allocate the loan in the same way that charges
under your Policy are being allocated. If this is not possible, we will make the
loan pro-rata from each investment option that you then are using.

You may repay all or part (but not less than $10 unless it is the final
payment) of your loan at any time before the death of the last surviving
contingent insured while the Policy is in force. You must designate any loan
repayment as such. Otherwise, we will treat it as a premium payment

19
<PAGE>

instead. Any loan repayments go first to repay all loans that were taken from
our declared fixed interest account option. We will invest any additional loan
repayments you make in the investment options you request. In the absence of
such a request we will invest the repayment in the same proportion as you then
have selected for premium payments that we receive from you. Any unpaid loan
(plus any unearned loan interest) will be deducted from the proceeds we pay
following the last surviving contingent insured's death.

Preferred loan interest rate. We will credit a higher interest rate on an
amount of the collateral securing Policy loans taken out after the first 10
Policy years. The maximum amount of new loans that will receive this preferred
loan interest rate for any year is:

. 10% of your Policy's accumulation value (which includes any loan collateral
we are holding for your Policy loans) at the beginning of the Policy year;
or

. if less, your Policy's maximum remaining loan value at that anniversary.

We intend to set the rate of interest we credit to your preferred collateral
amount equal to the loan interest rate you are paying, resulting in a zero net
cost of borrowing for that amount. We have full discretion to vary the
preferred rate, provided that it will always be greater than or equal to the
rate we are then crediting in connection with regular Policy loans, and will
never be less than an effective annual rate of 4.25%. Because we first began
offering the Policies in the year 2000, we have not yet declared a preferred
loan interest rate for any outstanding Policy.

Maturity of your Policy. If one or both contingent insureds are living on
the "Maturity Date" shown on page 3 of your Policy, we will pay you the cash
surrender value of the Policy, and the Policy will end. The maturity date can be
no later than the Policy anniversary nearest the younger contingent insured's
100/th/ birthday.

Tax considerations. Please refer to "How will my Policy be treated for
income tax purposes?" for information about the possible tax consequences to you
when you receive any loan, surrender or other funds from your Policy.

CAN I CHOOSE THE FORM IN WHICH AGL PAYS OUT THE PROCEEDS FROM MY POLICY?

Choosing a payment option. You may choose to receive the full proceeds from
the Policy as a single sum. This includes proceeds that become payable upon the
death of the last surviving contingent insured, full surrender or the maturity
date. Alternatively, you may elect that all or part of such proceeds be applied
to one or more of the following payment options:

. Option 1--Equal monthly payments for a specified period of time.

. Option 2--Equal monthly payments of a selected amount of at least $60 per
year for each $1,000 of proceeds until all amounts are paid out.

. Option 3--Equal monthly payments for the payee's life, but with payments
guaranteed for a specified number of years. These payments are based on
annuity rates that are set forth in the Policy or, at the payee's request,
the annuity rates that we then are using.

20
<PAGE>

. Option 4--Proceeds left to accumulate with interest.

Additional payment options may also be available with our consent. We have the
right to veto any payment option, if the payee is a corporation or other entity.
You can read more about each of these options in our Policy form and in the
separate form of payment contract that we issue when any such option takes
effect.

Within 60 days after the last surviving contingent insured's death, any payee
entitled to receive proceeds as a single sum may elect one or more payment
options.

Interest rates that we credit under each option will be at least 3%.

Change of payment option. You may change any payment option you have elected
at any time while the Policy is in force and before the start date of the
payment option.

Tax impact. If a payment option is chosen, you or your beneficiary may have
tax consequences. You should consult with a qualified tax adviser before
deciding whether to elect one or more payment options.

TO WHAT EXTENT CAN AGL VARY THE TERMS AND CONDITIONS OF THE POLICY IN PARTICULAR
CASES?

Here are some variations we may make in the terms and conditions of a Policy.
Any variations will be made only in accordance with uniform rules that we
establish.

Underwriting and premium classes. We have six premium classes, and also
combinations of the premium classes, we use to decide how much the monthly
insurance charges under any particular Policy will be: preferred, standard,
special, uninsurable, tobacco and non-tobacco. They are each described in your
Policy.

The term "uninsurable" is used in a special way when we issue a Policy.
"Uninsurable" describes a person proposed to become insured under a Policy who
would not pass our requirements to be insured under one of our policies that
insures only one life. Under some conditions a person who is uninsurable can
become a contingent insured under a Policy. The other contingent insured cannot
be uninsurable.

Policies purchased through "internal rollovers." We maintain published rules
that describe the procedures necessary to replace another life insurance policy
we issued with a Policy. Not all types of other insurance we issue are eligible
to be replaced with a Policy. Our published rules may be changed from time to
time, but are evenly applied to all our customers.

State law requirements. AGL is subject to the insurance laws and regulations
in every jurisdiction in which the Policies are sold. As a result, various time
periods and other terms and conditions described in this prospectus may vary
depending on where you reside. These variations will be reflected in your Policy
and related endorsements.

21
<PAGE>

Variations in expenses or risks. AGL may vary the charges and other terms of
the Policy where special circumstances result in sales, administrative or other
expenses, mortality risks or other risks that are different from those normally
associated with the Policy.

HOW WILL MY POLICY BE TREATED FOR INCOME TAX PURPOSES?

Generally, the death benefit paid under a Policy is not subject to income tax,
and earnings on your accumulation value are not subject to income tax as long as
we do not pay them out to you. If we do pay any amount of your Policy's
accumulation value upon surrender, partial surrender, or maturity of your
Policy, all or part of that distribution may be treated as a return of the
premiums you paid, which is not subject to income tax.

Amounts you receive as Policy loans are not taxable to you, unless you have
paid such a large amount of premiums that your Policy becomes what the tax law
calls a "modified endowment contract." In that case, the loan will be taxed as
if it were a partial surrender. Furthermore, loans, partial surrenders and other
distributions from a modified endowment contract may require you to pay
additional taxes and penalties that otherwise would not apply. If your Policy
lapses, you may have to pay income tax on a portion of any outstanding loan.

For further information about the tax consequences of owning a Policy, please
read "Tax Effects" starting on page 29.

HOW DO I COMMUNICATE WITH AGL?

When we refer to "you," we mean the person who is authorized to take any
action with respect to a Policy. Generally, this is the owner named in the
Policy. Where a Policy has more than one owner, each owner generally must join
in any requested action, except for transfers and changes in the allocation of
future premiums or changes among the investment options.

General. You should mail or express checks and money orders for premium
payments and loan repayments directly to our Home Office.

You must make the following requests in writing:

. transfer of accumulation value;

. loan;

. full surrender;

. partial surrender;

. change of beneficiary or contingent beneficiary;

. change of allocation percentages for premium payments;

. loan repayments or loan interest payments;

22
<PAGE>

. change of death benefit option or manner of death benefit payment;

. changes in specified amount;

. addition or cancellation of, or other action with respect to, election of a
payment option for Policy proceeds;

. tax withholding elections; and

. telephone transaction privileges.

You should mail or express these requests to our Home Office at the appropriate
address shown on the first page of this prospectus. You should also communicate
notice of each contingent insured's death, and related documentation, to our
Home Office.

We have special forms which should be used for loans, assignments, partial
and full surrenders, changes of owner or beneficiary, and all other contractual
changes. You will be asked to return your Policy when you request a full
surrender. You may obtain these forms from our Home Office or from your AGL
representative. Each communication must include your name, Policy number and the
names of both contingent insureds. We cannot process any requested action that
does not include all required information.

Telephone transactions. If you have a completed telephone authorization
form on file with us, you may make transfers, or change the allocation of future
premium payments or deduction of charges, by telephone, subject to the terms of
the form. We will honor telephone instructions from any person who provides the
correct information, so there is a risk of possible loss to you if unauthorized
persons use this service in your name. Our current procedure is that only the
owner or your AGL representative may make a transfer request by phone. We are
not liable for any acts or omissions based upon instructions that we reasonably
believe to be genuine. Our procedures include verification of the Policy number,
the identity of the caller, both the insured person's and owner's names, and a
form of personal identification from the caller. We will mail you a prompt
written confirmation of the transaction. If (a) many people seek to make
telephone requests at or about the same time, or (b) our recording equipment
malfunctions, it may be impossible for you to make a telephone request at the
time you wish. You should submit a written request if you cannot make a
telephone transfer. Also, if, due to malfunction or other circumstances, your
telephone request is incomplete or not fully comprehensible, we will not process
the transaction. The phone number for telephone requests is 1-888-325-9315.

23
<PAGE>

ILLUSTRATIONS OF HYPOTHETICAL POLICY BENEFITS

To help explain how our Policy works, we have prepared the following
tables:

Page to
See in this
Prospectus

Death Benefit Option 1-Current Charges ................. 26
Death Benefit Option 1-Guaranteed Maximum Charges........ 27

The tables show how death benefits, accumulation values, and cash surrender
values ("Policy benefits") under a sample Policy would change over time if the
investment options had constant hypothetical gross annual investment returns of
0%, 6% or 12% over the years covered by each table. The tables are for a male
non-tobacco user and female non-tobacco user both preferred premium class and
issue age 55. An annual premium payment of $1,500 for an initial $100,000 of
specified amount of coverage is assumed to be paid. The illustrations assume no
Policy loan has been taken. The differences between the accumulation values and
the cash surrender values for the first 10 years in the tables are because of
the Policy's surrender charges. As illustrated, this Policy would not be
classified as a modified endowment contract (See "Tax Effects" beginning on page
29 for further discussion).

The tables show a sample Policy with 100% base coverage only. A Policy with
supplemental coverage at current charges will over time have lower monthly
insurance charges and a higher accumulation value. Your AGL representative can
provide you with Policy illustrations specific to you, showing how your
selection of base and supplemental coverage, if any, can affect your Policy
values under different assumptions.

Although the tables that follow do not include an example of a Policy with
an Option 2 death benefit, such a Policy would have higher death benefits and
lower cash surrender values.

Separate tables are included to show both current and guaranteed maximum
charges. The charges assumed in the following tables include:

. a charge for state premium tax assumed to be 2.0% (for both current and
guaranteed maximum charges);

. after we deduct premium taxes, a deduction from the remainder of each
premium payment of 6.5% for each premium we receive during the first 10
Policy years; and 1% thereafter after deducting premium taxes;

. a daily charge for the first 10 Policy years at an annual effective rate
of .40% (for both current and guaranteed maximum charges);

. a daily charge after 10 Policy years at an annual effective rate of .20%
(for both current and guaranteed maximum charges);

. a daily charge after 30 Policy years at an annual effective rate of .10%
(for both current and guaranteed maximum charges);

24
<PAGE>

. a flat monthly charge of $6 (for both current and guaranteed maximum
charges);

. a monthly charge for each $1,000 of specified amount of $0.36 (for both
current and guaranteed maximum charges); and

. the current monthly insurance charge and guaranteed maximum monthly
insurance charges for current charges and guaranteed maximum charges,
respectively.

The charges assumed by both the current and guaranteed maximum charge
tables also include Mutual Fund expenses of 0.67% of aggregate Mutual Fund
assets, which is the arithmetic average of the advisory fees payable with
respect to each Mutual Fund, after all reimbursements, plus the arithmetic
average of all other operating expenses of each such Fund after all
reimbursements, as reflected on pages 9 and 10 of this prospectus. We expect the
reimbursement arrangements to continue in the future. If the reimbursement
arrangements were not currently in effect, the arithmetic average of Mutual Fund
expenses would equal 0.76% of aggregate Mutual Fund assets.

Individual illustrations. On request, we will furnish you with a comparable
illustration based on your Policy's characteristics. If you request
illustrations more than once in any Policy year, we may charge $25 for the
illustration.

25
<PAGE>

Platinum Investor Survivor

Annual Premium $ 1,500 Initial Specified Amount $ 100,000
Death Benefit Option

Male and Female, Age 55
Non-Tobacco Users, Preferred Premium Class
Assuming Current Charges
<TABLE>
<CAPTION>
Death Benefit Accumulation Value Cash Surrender Value
End of Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
Policy Annual Investment Return of Annual Investment Return of Annual Investment Return of
Year 0.0% 6.0% 12.0% 0.0% 6.0% 12.0% 0.0% 6.0% 12.0%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 100,000 100,000 100,000 856 922 988 0 0 0
2 100,000 100,000 100,000 1,698 1,885 2,080 647 834 1,029
3 100,000 100,000 100,000 2,531 2,894 3,290 1,630 1,993 2,389
4 100,000 100,000 100,000 3,350 3,949 4,628 2,599 3,198 3,877
5 100,000 100,000 100,000 4,156 5,052 6,108 3,555 4,451 5,507
6 100,000 100,000 100,000 4,951 6,206 7,747 4,471 5,726 7,267
7 100,000 100,000 100,000 5,734 7,414 9,562 5,374 7,054 9,202
8 100,000 100,000 100,000 6,505 8,678 11,572 6,265 8,438 11,332
9 100,000 100,000 100,000 7,265 10,001 13,798 7,145 9,881 13,678
10 100,000 100,000 100,000 8,014 11,387 16,266 8,014 11,387 16,266

15 100,000 100,000 100,000 14,127 22,390 36,890 14,127 22,390 36,890

20 100,000 100,000 100,000 19,511 36,096 71,608 19,511 36,096 71,608

</TABLE>

The values will change if premiums are paid in different amounts or
frequencies.

The investment results are an example only and are not a representation of
past or future investment results. Actual investment results may be more or less
than those shown.

26
<PAGE>

Platinum Investor Survivor

Annual Premium $ 1,500 Initial Specified Amount $100,000
Death Benefit Option 1

Male and Female, Age 55
Non-Tobacco Users, Preferred Premium Class
Assuming Guaranteed Charges
<TABLE>
<CAPTION>

Death Benefit Accumulation Value Cash Surrender Value
End of Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
Policy Annual Investment Return of Annual Investment Return of Annual Investment Return of
Year 0.0% 6.0% 12.0% 0.0% 6.0% 12.0% 0.0% 6.0% 12.0%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 100,000 100,000 100,000 854 920 986 0 0 0
2 100,000 100,000 100,000 1,688 1,874 2,069 637 823 1,018
3 100,000 100,000 100,000 2,500 2,862 3,256 1,599 1,961 2,355
4 100,000 100,000 100,000 3,287 3,882 4,556 2,536 3,131 3,805
5 100,000 100,000 100,000 4,048 4,934 5,980 3,447 4,333 5,379
6 100,000 100,000 100,000 4,778 6,015 7,536 4,298 5,535 7,056
7 100,000 100,000 100,000 5,473 7,122 9,235 5,113 6,762 8,875
8 100,000 100,000 100,000 6,128 8,251 11,089 5,888 8,011 10,849
9 100,000 100,000 100,000 6,734 9,395 13,105 6,614 9,275 12,985
10 100,000 100,000 100,000 7,283 10,545 15,295 7,283 10,545 15,295

15 100,000 100,000 100,000 11,411 19,155 33,052 11,411 19,155 33,052

20 100,000 100,000 100,000 11,790 26,863 61,053 11,790 26,863 61,053

</TABLE>

The values will change if premiums are paid in different amounts or
frequencies.

The investment results are an example only and are not a representation of
past or future investment results. Actual investment results may be more or less
than those shown.

27
<PAGE>

ADDITIONAL INFORMATION

A general overview of the Policy appears at pages 1 - 27. The additional
information that follows gives more details, but generally does not repeat what
is set forth above.

Page to
See in this
Contents of Additional Information Prospectus

AGL.............................................................. 28
Separate Account VL-R............................................ 29
Tax Effects...................................................... 29
Voting Privileges................................................ 34
Your Beneficiary................................................. 35
Assigning Your Policy............................................ 35
More About Policy Charges........................................ 35
Effective Date of Policy and Related Transactions................ 36
More About the Death Benefit..................................... 38
More About Our Declared Fixed Interest Account Option............ 38
Distribution of the Policies..................................... 39
Payment of Policy Proceeds....................................... 40
Adjustments to Death Benefit..................................... 41
Additional Rights That We Have................................... 42
Performance Information.......................................... 43
Our Reports to Policy Owners..................................... 43
AGL's Management................................................. 43
Principal Underwriter's Management............................... 47
Legal Matters.................................................... 48
Independent Auditors ............................................ 48
Actuarial Expert................................................. 48
Services Agreement............................................... 48
Certain Potential Conflicts...................................... 49
Year 2000 Considerations......................................... 49

Special words and phrases. If you want more information about any words or
phrases that you read in this prospectus, you may wish to refer to the Index of
Words and Phrases that appears at the end of this prospectus (pages 52 and 53,
which follow all of the financial pages). That index will tell you on what page
you can read more about many of the words and phrases that we use.

AGL

We are American General Life Insurance Company ("AGL"). AGL is a stock life
insurance company organized under the laws of Texas. AGL is a successor in
interest to a company originally organized under the laws of Delaware on January
10, 1917. AGL is an indirect, wholly-owned subsidiary of American General
Corporation (formerly American General Insurance Company), a diversified
financial services
28
<PAGE>

holding company engaged primarily in the insurance business. The commitments
under the Policies are AGL's, and American General Corporation has no legal
obligation to back those commitments.

AGL is a member of the Insurance Marketplace Standards Association
("IMSA"). IMSA is a voluntary membership organization created by the life
insurance industry to promote ethical market conduct for individual life
insurance and annuity products. AGL's membership in IMSA applies only to AGL and
not its products.

Separate Account VL-R

We hold the Mutual Fund shares in which any of your accumulation value is
invested in Separate Account VL-R. Separate Account VL-R is registered as a unit
investment trust with the SEC under the Investment Company Act of 1940. We
created the separate account on May 6, 1997 under Texas law.

For record keeping and financial reporting purposes, Separate Account VL-R
is divided into 41 separate "divisions," 17 of which correspond to the 17
variable "investment options" available since the inception of the Policy. The
remaining 24 divisions, and some of these 17 divisions, represent investment
options available under other variable life policies we offer. We hold the
Mutual Fund shares in which we invest your accumulation value for an investment
option in the division that corresponds to that investment option.

The assets in Separate Account VL-R are our property. The assets in
Separate Account VL-R would be available only to satisfy the claims of owners of
the Policies, to the extent they have allocated their accumulation value to
Separate Account VL-R. Our other creditors could reach only those Separate
Account VL-R assets (if any) that are in excess of the amount of our reserves
and other contract liabilities under the Policies with respect to Separate
Account VL-R.

Tax Effects

This discussion is based on current federal income tax law and
interpretations. It assumes that the policy owner is a natural person who is a
U.S. citizen and resident. The tax effects on corporate taxpayers, non-U.S.
residents or non-U.S. citizens, may be different. This discussion is general in
nature, and should not be considered tax advice, for which you should consult a
qualified tax adviser.

General. The Policy will be treated as "life insurance" for federal income
tax purposes (a) if it meets the definition of life insurance under Section 7702
of the Internal Revenue Code of 1986, as amended (the "Code") and (b) for as
long as the investments made by the underlying Mutual Funds satisfy certain
investment diversification requirements under Section 817(h) of the Code. We
believe that the Policy will meet these requirements and that:

. the death benefit received by the beneficiary under your Policy will not
be subject to federal income tax; and

. increases in your Policy's accumulation value as a result of interest or
investment experience will not be subject to federal income tax unless
and until there is a distribution from your Policy, such as a surrender
or a partial surrender.

29
<PAGE>

Although AGL believes that the Policies are in compliance with Section 7702
of the Code, the manner in which Section 7702 should be applied to certain
features of a last survivor life insurance policy is not directly addressed by
Section 7702. In the absence of final regulations or other guidance issued under
Section 7702, there is necessarily some uncertainty whether survivor life
insurance policies, like the Platinum Investor Survivor Policies, will meet the
Section 7702 definition of a life insurance contract.

The federal income tax consequences of a distribution from your Policy can
be affected by whether your Policy is determined to be a "modified endowment
contract," as you can see from the following discussion. In all cases, however,
the character of all income that is described as taxable to the payee will be
ordinary income (as opposed to capital gain).

Testing for modified endowment contract status. Your Policy will be a
"modified endowment contract" if, at any time during the first seven Policy
years, you have paid a cumulative amount of premiums that exceeds the premiums
that would have been paid by that time under a similar fixed-benefit insurance
policy that was designed (based on certain assumptions mandated under the Code)
to provide for paid-up future benefits after the payment of seven level annual
premiums. ("Paid up" means no future premium payments would be required.) This
is called the "seven-pay" test.

Whenever there is a "material change" under a policy, the policy will
generally be (a) treated as a new contract for purposes of determining whether
the policy is a modified endowment contract and (b) subjected to a new seven-pay
period and a new seven-pay limit. The new seven-pay limit would be determined
taking into account, under a prescribed formula, the accumulation value of the
policy at the time of such change. A materially changed policy would be
considered a modified endowment contract if it failed to satisfy the new seven-
pay limit at any time during the new seven-pay period. A "material change" for
these purposes could occur as a result of a change in death benefit option. A
material change will occur as a result of an increase in your Policy's specified
amount of coverage, and certain other changes.

If your Policy's benefits are reduced during the first seven Policy years
(or within seven years after a material change), the calculated seven-pay
premium limit will be redetermined based on the reduced level of benefits and
applied retroactively for purposes of the seven-pay test. (Such a reduction in
benefits could include, for example, a decrease in the specified amount that you
request or that results from a partial surrender). If the premiums previously
paid are greater than the recalculated seven-payment premium level limit, the
Policy will become a modified endowment contract.

A life insurance policy that is received in exchange for a modified
endowment contract will also be considered a modified endowment contract.

Other effects of Policy changes. Changes made to your Policy (for example,
a decrease in specified amount that you request or that results from a partial
surrender that you request) may also have other effects on your Policy. Such
effects may include impacting the maximum amount of premiums that can be paid
under your Policy, as well as the maximum amount of accumulation value that may
be maintained under your Policy.

Taxation of pre-death distributions if your Policy is not a modified
endowment contract. As long as your Policy remains in force as a non-modified
endowment contract, a Policy loan will be treated as

30
<PAGE>

indebtedness, and no part of the loan proceeds will be subject to current
federal income tax. Interest on the loan generally will not be tax deductible.

After the first 15 Policy years, the proceeds from a partial surrender will
not be subject to federal income tax except to the extent such proceeds exceed
your "basis" in your Policy. (Your basis generally will equal the premiums you
have paid, less the amount of any previous distributions from your Policy that
were not taxable.) During the first 15 Policy years, however, the proceeds from
a partial surrender could be subject to federal income tax, under a complex
formula, to the extent that your accumulation value exceeds your basis in your
Policy.

On the maturity date or upon full surrender, any excess in the amount of
proceeds we pay (including amounts we use to discharge any Policy loan) over
your basis in the Policy, will be subject to federal income tax. In addition, if
a Policy ends after a grace period while there is a policy loan, the
cancellation of such loan and any accrued loan interest will be treated as a
distribution and could be subject to tax under the above rules. Finally, if you
make an assignment of rights or benefits under your Policy you may be deemed to
have received a distribution from your Policy, all or part of which may be
taxable.

Taxation of pre-death distributions if your Policy is a modified endowment
contract. If your Policy is a modified endowment contract, any distribution from
your Policy while any contingent insured is still living will be taxed on an
"income-first" basis. Distributions for this purpose include a loan (including
any increase in the loan amount to pay interest on an existing loan or an
assignment or a pledge to secure a loan) or partial surrender. Any such
distributions will be considered taxable income to you to the extent your
accumulation value exceeds your basis in the Policy. For modified endowment
contracts, your basis is similar to the basis described above for other
policies, except that it also would be increased by the amount of any prior loan
under your Policy that was considered taxable income to you. For purposes of
determining the taxable portion of any distribution, all modified endowment
contracts issued by the same insurer (or its affiliates) to the same owner
(excluding certain qualified plans) during any calendar year are aggregated.

A 10% penalty tax also will apply to the taxable portion of most
distributions from a policy that is a modified endowment contract. The penalty
tax will not, however, apply:

. to taxpayers 59 1/2 years of age or older;

. in the case of a disability (as defined in the Code); or

. to distributions received as part of a series of substantially equal
periodic annuity payments for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer
and his or her beneficiary.

If your Policy ends after a grace period while there is a Policy loan, the
cancellation of the loan will be treated as a distribution to the extent not
previously treated as such and could be subject to tax, including the 10%
penalty tax, as described above. In addition, on the maturity date or upon a
full surrender, any excess of the proceeds we pay (including any amounts we use
to discharge any loan) over your basis in the Policy, will be subject to federal
income tax and, unless one of the above exceptions applies, the 10% penalty tax.

31
<PAGE>

Distributions that occur during a Policy year in which your Policy becomes
a modified endowment contract, and during any subsequent Policy years, will be
taxed as described in the two preceding paragraphs. In addition, distributions
from a policy within two years before it becomes a modified endowment contract
also will be subject to tax in this manner. This means that a distribution made
from a policy that is not a modified endowment contract could later become
taxable as a distribution from a modified endowment contract.

Policy lapses and reinstatements. A Policy which has lapsed may have the
tax consequences described above, even though you may b e able to reinstate that
Policy. For tax purposes, some reinstatements may be treated as the purchase of
a new insurance contract.

Taxation of Exchange Option. You can split the policy into two other single
life insurance policies under some circumstances. A policy split could have
adverse tax consequences if it is not treated as a nontaxable exchange under
Section 1035 of the Code. This could include, among other things, recognition as
taxable income an amount up to any gain in the Policy at the time of the
exchange.

Diversification. Under Section 817(h) of the Code, the Treasury Department
has issued regulations that implement investment diversification requirements.
Our failure to comply with these regulations would disqualify your Policy as a
life insurance policy under Section 7702 of the Code. If this were to occur, you
would be subject to federal income tax on the income under the Policy for the
period of the disqualification and for subsequent periods. Also, if the last
surviving contingent insured died during such period of disqualification or
subsequent periods, a portion of the death benefit proceeds would be taxable to
the beneficiary. Separate Account VL-R, through the Mutual Funds, intends to
comply with these requirements. Although we do not have direct control over the
investments or activities of the Mutual Funds, we will enter into agreements
with them requiring the Mutual Funds to comply with the diversification
requirements of the Section 817(h) Treasury Regulations.

The Treasury Department has stated that it anticipates the issuance of
guidelines prescribing the circumstances in which the ability of a policy owner
to direct his or her investment to particular Mutual Funds within Separate
Account VL-R may cause the policy owner, rather than the insurance company, to
be treated as the owner of the assets in the account. Due to the lack of
specific guidance on investor control, there is some uncertainty about when a
policy owner is considered the owner of the assets for tax purposes. If you were
considered the owner of the assets of Separate Account VL-R, income and gains
from the account would be included in your gross income for federal income tax
purposes. Under current law, however, we believe that AGL, and not the owner of
a Policy, would be considered the owner of the assets of Separate Account VL-R.

Estate and generation skipping taxes. If the last surviving contingent
insured is the Policy's owner, the death benefit under th e Policy will
generally be includable in the owner's estate for purposes of federal estate
tax. If the owner is not the last surviving contingent insured, under certain
conditions, only an amount approximately equal to the cash surrender value of
the Policy would be includable. The federal estate tax is integrated with the
federal gift tax under a unified rate schedule and unified credit. The Taxpayer
Relief Act of 1997 gradually raises the credit to $1,000,000. In addition, an
unlimited marital deduction may be available for federal estate tax purposes.

As a general rule, if a "transfer" is made to a person two or more
generations younger than the Policy's owner, a generation skipping tax may be
payable at rates similar to the maximum estate tax rate in effect
32
<PAGE>

at the time. The generation skipping tax provisions generally apply to
"transfers" that would be subject to the gift and estate tax rules. Individuals
are generally allowed an aggregate generation skipping tax exemption of $1
million. Because these rules are complex, you should consult with a qualified
tax adviser for specific information, especially where benefits are passing to
younger generations.

The particular situation of each policy owner, contingent insured or
beneficiary will determine how ownership or receipt of Policy proceeds will be
treated for purposes of federal estate and generation skipping taxes, as well as
state and local estate, inheritance and other taxes.

Life insurance in split dollar arrangements. The IRS has released a
technical advice memorandum ("TAM") on the taxability of insurance policies used
in certain split dollar arrangements. A TAM provides advice as to the internal
revenue laws, regulations, and related statutes with respect to a specified set
of facts and a specified taxpayer. In the TAM, among other things, the IRS
concluded that an employee was subject to current taxation on the excess of the
cash surrender value of the policy over the premiums to be returned to the
employer. Purchasers of life insurance policies to be used in split dollar
arrangements are strongly advised to consult with a qualified tax adviser to
determine the tax treatment resulting from such an arrangement.

Pension and profit-sharing plans. If a life insurance policy is purchased
by a trust or other entity that forms part of a pensio n or profit-sharing plan
qualified under Section 401(a) of the Code for the benefit of participants
covered under the plan, the federal income tax treatment of such policies will
be somewhat different from that described above.

The reasonable net premium cost for such amount of insurance that is
purchased as part of a pension or profit-sharing plan is required to be included
annually in the plan participant's gross income. This cost (generally referred
to as the "P.S. 58" cost) is reported to the participant annually. If the plan
participant dies while covered by the plan and the policy proceeds are paid to
the participant's beneficiary, then the excess of the death benefit over the
policy's accumulation value will not be subject to federal income tax. However,
the policy's accumulation value will generally be taxable to the extent it
exceeds the participant's cost basis in the policy. The participant's cost basis
will generally include the costs of insurance previously reported as income to
the participant. Special rules may apply if the participant had borrowed from
the policy or was an owner-employee under the plan.

There are limits on the amounts of life insurance that may be purchased on
behalf of a participant in a pension or profit-sharin g plan. Complex rules, in
addition to those discussed above, apply whenever life insurance is purchased by
a tax qualified plan. You should consult a qualified tax adviser.

Other employee benefit programs. Complex rules may also apply when a policy
is held by an employer or a trust, or acquired by an employee, in connection
with the provision of other employee benefits. These policy owners must consider
whether the policy was applied for by or issued to a person having an insurable
interest under applicable state law and with both contingent insureds' consent.
The lack of an insurable interest or consent may, among other things, affect the
qualification of the policy as life insurance for federal income tax purposes
and the right of the beneficiary to receive a death benefit.

ERISA. Employers and employer-created trusts may be subject to reporting,
disclosure and fiduciary obligations under the Employe e Retirement Income
Security Act of 1974, as amended. You should consult a qualified legal adviser.

33
<PAGE>

Our taxes. We report the operations of Separate Account VL-R in our federal
income tax return, but we currently pay no income ta x on Separate Account VL-
R's investment income and capital gains, because these items are, for tax
purposes, reflected in our variable life insurance policy reserves. We currently
make no charge to any Separate Account VL-R division for taxes. We reserve the
right to make a charge in the future for taxes incurred; for example, a charge
to Separate Account VL-R for income taxes we incur that are allocable to the
Policy.

We may have to pay state, local or other taxes in addition to applicable
taxes based on premiums. At present, these taxes are no t substantial. If they
increase, we may make charges for such taxes when they are attributable to
Separate Account VL-R or allocable to the Policy.

Certain Mutual Funds in which your accumulation value is invested may elect
to pass through to AGL taxes withheld by foreign taxing jurisdictions on foreign
source income. Such an election will result in additional taxable income and
income tax to AGL. The amount of additional income tax, however, may be more
than offset by credits for the foreign taxes withheld which are also passed
through. These credits may provide a benefit to AGL.

When we withhold income taxes. Generally, unless you provide us with an
election to the contrary before we make the distribution , we are required to
withhold income tax from any proceeds we distribute as part of a taxable
transaction under your Policy. In some cases, where generation skipping taxes
may apply, we may also be required to withhold for such taxes unless we are
provided satisfactory written notification that no such taxes are due.

In the case of non-resident aliens who own a Policy, the withholding rules
may be different. With respect to distributions from modified endowment
contracts, non-resident aliens are generally subject to federal income tax
withholding at a statutory rate of 30% of the distributed amount. In some cases,
the non-resident alien may be subject to lower or even no withholding if the
United States has entered into a tax treaty with his or her country of
residence.

Tax changes. The U.S. Congress frequently considers legislation that, if
enacted, could change the tax treatment of life insurance policies. In addition,
the Treasury Department may amend existing regulations, issue regulations on the
qualification of life insurance and modified endowment contracts, or adopt new
interpretations of existing law. State and local tax law or, if you are not a
U.S. citizen and resident, foreign tax law, may also affect the tax consequences
to you, the insured person or your beneficiary, and are subject to change. Any
changes in federal, state, local or foreign tax law or interpretation could have
a retroactive effect. We suggest you consult a qualified tax adviser.

Voting Privileges

We are the legal owner of the Funds' shares held in Separate Account VL-R.
However, you may be asked to instruct us how to vote the Fund shares held in the
various Mutual Funds and attributable to your Policy at meetings of shareholders
of the Funds. The number of votes for which you may give directions will be
determined as of the record date for the meeting. The number of votes that you
may direct related to a particular Fund is equal to (a) your accumulation value
invested in that Fund divided by (b) the net asset value of one share of that
Fund. Fractional votes will be recognized.

34
<PAGE>

We will vote all shares of each Fund that we hold of record, including any
shares we own on our own behalf, in the same proportions as those shares for
which we have received instructions from owners participating in that Fund
through Separate Account VL-R.

If you are asked to give us voting instructions, we will send you the proxy
material and a form for providing such instructions. Should we determine that we
are no longer required to send the owner such materials, we will vote the shares
as we determine in our sole discretion.

In certain cases, we may disregard instructions relating to changes in a
Fund's investment manager or its investment policies. We will advise you if we
do and explain the reasons in our next report to policy owners. AGL reserves the
right to modify these procedures in any manner that the laws in effect from time
to time allow.

Your Beneficiary

You name your beneficiary when you apply for a Policy. The beneficiary is
entitled to the insurance benefits of the Policy. You may change the beneficiary
during the lifetime of either contingent insured. We also require the consent of
any irrevocably named beneficiary. A new beneficiary designation is effective as
of the date you sign it, but will not affect any payments we may make before we
receive it. If no beneficiary is living when the last surviving contingent
insured dies, we will pay the insurance proceeds to the owner or the owner's
estate.

Assigning Your Policy

You may assign (transfer) your rights in a Policy to someone else as
collateral for a loan or for some other reason. We will not be bound by an
assignment unless it is received in writing. You must provide us with two copies
of the assignment. We are not responsible for any payment we make or any action
we take before we receive a complete notice of the assignment in good order. We
are also not responsible for the validity of the assignment. An absolute
assignment is a change of ownership. Because there may be unfavorable tax
consequences, including recognition of taxable income and the loss of income
tax-free treatment for any death benefit payable to the beneficiary, you should
consult a qualified tax adviser before making an assignment.

More About Policy Charges

Purpose of our charges. The charges under the Policy are designed to cover,
in total, our direct and indirect costs of selling, administering and providing
benefits under the Policy. They are also designed, in total, to compensate us
for the risks we assume and services that we provide under the Policy. These
include:

. mortality risks (such as the risk that contingent insureds will, on
average, die before we expect, thereby increasing the amount of claims we
must pay);

. sales risks (such as the risk that the number of Policies we sell and the
premiums we receive net of withdrawals, are less than we expect, thereby
depriving us of expected economies of scale);

35
<PAGE>

. regulatory risks (such as the risk that tax or other regulations may be
changed in ways adverse to issuers of variable life insurance policies);
and

. expense risks (such as the risk that the costs of administrative services
that the Policy requires us to provide will exceed what we currently
project).

The current monthly insurance charge has been designed primarily to provide
funds out of which we can make payments of death benefits under the Policy as
the last surviving contingent insured dies.

If the charges that we collect from the Policy exceed our total costs in
connection with the Policy, we will earn a profit. Otherwise we will incur a
loss.

Although the paragraphs above describe the primary purposes for which
charges under the Policies have been designed, these purposes are subject to
considerable change over the life of a Policy. We can retain or use the revenues
from any charge for any purpose.

Gender neutral policies. Congress and the legislatures of various states
have from time to time considered legislation that would require insurance rates
to be the same for males and females of the same age, premium class and tobacco
user status. In addition, employers and employee organizations should consider,
in consultation with counsel, the impact of Title VII of the Civil Rights Act of
1964 on the purchase of life insurance policies in connection with an
employment-related insurance or benefit plan. In a 1983 decision, the United
States Supreme Court held that, under Title VII, optional annuity benefits under
a deferred compensation plan could not vary on the basis of gender. In general,
we do not offer the Platinum Investor Survivor Policy for sale in situations
which, under current law, require gender-neutral premiums or benefits.

Cost of insurance rates. Because of specified amount increases, different
cost of insurance rates may apply to different increments of specified amount
under your Policy. If so, we attribute your accumulation value proportionately
to each increment of specified amount to compute our net amount at risk. See
"Monthly insurance charge" on page 7.

Certain arrangements. Each of the distributors or advisers of the Mutual
Funds listed on page 1 of this prospectus makes certain payments to us, on a
quarterly basis, for certain administrative, Policy, and policy owner support
expenses. These amounts will be reasonable for the services performed and are
not designed to result in a profit. These amounts are paid by the distributors
or the advisers, and will not be paid by the Mutual Funds, the divisions or
Policy owners. No payments have yet been made under these arrangements, because
the number of Policies issued does not require a payment.

Effective Date of Policy and Related Transactions

Valuation dates, times, and periods. We compute values under a Policy on
each day that the New York Stock Exchange is open for business. We call each
such day a "valuation date" or a "business day."

We compute policy values as of 3:00 p.m., Central time, on each valuation
date. We call this our "close of business." We call the time from the close of
business on one valuation date to the close of business of the next valuation
date a "valuation period."

36
<PAGE>

Date of receipt. Generally we consider that we have received a premium
payment or another communication from you on the day we actually receive it in
full and proper order at our Home Office. If we receive it after the close of
business on any valuation date, however, we consider that we have received it on
the day following that valuation date.

Commencement of insurance coverage. After you apply for a Policy, it can
sometimes take up to several weeks for us to gather and evaluate all the
information we need to decide whether to issue a Policy to you and, if so, what
the contingent insureds' premium classes should be. We will not pay a death
benefit under a Policy unless (a) it has been delivered to and accepted by the
owner and at least the initial premium has been paid, and (b) at the time of
such delivery and payment, there have been no adverse developments in the
contingent insureds' health or risk of death. However, if you pay at least the
minimum first premium payment with your application for a Policy, we will
provide temporary coverage of up to $300,000 provided the contingent insureds
meet certain medical and risk requirements. The terms and conditions of this
coverage are described in our "Limited Temporary Life Insurance Agreement." You
can obtain a copy from our Home Office by writing to the address shown on the
first page of this prospectus or from your AGL representative.

Date of issue; Policy months and years. We prepare the Policy only after we
approve an application for a Policy and assign an appropriate premium class. The
day we begin to deduct charges will appear on page 3 of your Policy and is
called the "Date of Issue." Policy months and years are measured from the date
of issue. To preserve a younger age at issue for the contingent insureds, we may
assign a date of issue to a Policy that is up to 6 months earlier than otherwise
would apply.

Monthly deduction days. Each charge that we deduct monthly is assessed
against your accumulation value at the close of business on the date of issue
and at the end of each subsequent valuation period that includes the first day
of a Policy month. We call these "monthly deduction days."

Commencement of investment performance. We begin to credit an investment
return to the accumulation value resulting from your initial premium payment on
the later of (a) the date of issue, or (b) the date all requirements needed to
place the Policy in force have been satisfied, including underwriting approval
and receipt in the Home Office of the necessary premium. In the case of a back-
dated Policy, we do not credit an investment return to the accumulation value
resulting from your initial premium payment until the date stated in (b) above.

Effective date of other premium payments and requests that you make.
Premium payments (after the first) and transactions made in response to your
requests and elections are generally effected at the end of the valuation period
in which we receive the payment, request or election and based on prices and
values computed as of that same time. Exceptions to this general rule are as
follows:

. Increases you request in the specified amount of insurance,
reinstatements of a Policy that has lapsed, and changes in death benefit
option take effect on the Policy's monthly deduction day on or next
following our approval of the transaction;

. We may return premium payments, make a partial surrender or reduce the
death benefit if we determine that such premiums would cause your Policy
to become a modified endowment contract or to cease to qualify as life
insurance under federal income tax law or exceed the maximum net amount
at risk;

37
<PAGE>

. If you exercise the right to return your Policy described on the second
page of this prospectus, your coverage will end when you mail us your
Policy or deliver it to your AGL representative; and

. If you pay a premium in connection with a request which requires our
approval, your payment will be applied when received rather than
following the effective date of the change requested so long as your
coverage is in force and the amount paid will not cause you to exceed
premium limitations under the Code. If we do not approve your request, no
premium will be refunded to you except to the extent necessary to cure
any violation of the maximum premium limitations under the Code. We will
not apply this procedure to premiums you pay in connection with
reinstatement requests.

More About the Death Benefit

Base coverage and supplemental coverage. The amount of insurance coverage
you select at the time you apply to purchase a Policy is called the specified
amount. The specified amount is the total of two types of coverage: your "base
coverage" and "supplemental coverage," if any, that you select. You decide how
much base coverage and how much supplemental coverage you want, as long as the
total is not less than the minimum of $100,000 and at least 10% of the total is
base coverage when you purchase the Policy or when you request a Policy
increase. You can choose to have only base coverage. You can use the mix of base
and supplemental coverage to emphasize your own objectives. Here are the
features about supplemental coverage that differ from base coverage:

. There are no surrender charges;

. The monthly insurance charge for supplemental coverage is always equal to
or less than the monthly insurance charge for an equivalent amount of
base coverage; and

. We do not collect the monthly charge for each $1,000 of specified amount
that is attributable to supplemental coverage.

Generally, if you choose supplemental coverage instead of base coverage, you
will reduce your total charges and increase your accumulation value on a current
charge basis. The more supplemental coverage you elect, the greater will be the
amount of the reduction in charges and increase in accumulation value, on a
current charge basis. Policy owner objectives differ. Therefore, before deciding
how much, if any, supplemental coverage you should have, you should discuss with
your AGL representative what you believe to be your own objectives. Your
representative can provide you with further information and Policy illustrations
showing how your selection of base and supplemental coverage can affect your
Policy values under different assumptions. You can then decide what is to be
your mix of base and supplemental coverage.

More About Our Declared Fixed Interest Account Option

Our general account. Our general account assets are all of our assets that
we do not hold in legally segregated separate accounts. Our general account
supports our obligations to you under your Policy's declared fixed interest
account option. Because of applicable exemptions, no interest in this option has
been registered under the Securities Act of 1933, as amended. Neither our
general account or our declared
38
<PAGE>

fixed interest account is an investment company under the Investment Company Act
of 1940. We have been advised that the staff of the SEC has not reviewed the
disclosures that are included in this prospectus for your information about our
general account or our declared fixed interest account option. Those
disclosures, however, may be subject to certain generally applicable provisions
of the federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.

How we declare interest. We can at any time change the rate of interest we
are paying on any accumulation value allocated to our declared fixed interest
account option, but it will always be at an effective annual rate of at least
4%.

Under these procedures, it is likely that at any time different interest
rates will apply to different portions of your accumulation value, depending on
when each portion was allocated to our declared fixed interest account option.
Any charges, partial surrenders, or loans that we take from any accumulation
value that you have in our declared fixed interest account option will be taken
from each portion in reverse chronological order based on the date that
accumulation value was allocated to this option.

Distribution of the Policies

American General Securities Incorporated ("AGSI") is the principal
underwriter of the Policies. AGSI is a wholly-owned subsidiary of AGL. AGL, in
turn, is a wholly-owned subsidiary of American General Corporation ("American
General"). AGSI's principal office is at 2727 Allen Parkway, Houston, Texas
77019. AGSI was organized as a Texas corporation on March 8, 1983 and is a
registered broker-dealer under the Securities Exchange Act of 1934, as amended
("1934 Act") and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). AGSI is also the principal underwriter for AGL's Separate
Accounts A and D, Separate Accounts USL VA-R and USL VL-R of The United States
Life Insurance Company in the City of New York ("USL"), and Separate Account E
of American General Life Insurance Company of New York ("AGNY"). USL is an
affiliate of AGL and AGNY is a wholly-owned subsidiary of AGL. These separate
accounts are registered investment companies. AGSI, as the principal
underwriter, is not paid any fees on the Policies.

We and AGSI have sales agreements with various broker-dealers and banks
under which the Policies will be sold by registered representatives of the
broker-dealers or employees of the banks. These registered representatives and
employees are also required to be authorized under applicable state regulations
as life insurance agents to sell variable life insurance. The broker-dealers are
ordinarily required to be registered with the SEC and must be members of the
NASD.

We pay compensation directly to broker-dealers and banks for promotion and
sales of the Policies. AGSI also has its own registered representatives who will
sell the Policies, and we will pay compensation to AGSI for these sales.

The compensation payable to broker-dealers or banks for sales of the
Policies may vary with the sales agreement, but is generally not expected to
exceed:

. 90% of the premiums paid in the first Policy year up to a "target"
amount;

. 3% of the premiums not in excess of the target amount paid in each of
Policy years two through 10;

39
<PAGE>

. 3% of all premiums in excess of the target amount received in any of
Policy years one through 10;

. 1.5% of all premiums paid in each Policy year after Policy year 10; and

. 0.20% of the Policy's accumulation value (reduced by any outstanding
loans) in the investment options after Policy year one.

The target amount is an amount of level annual premium that would be
necessary to support the benefits under your Policy, based on certain
assumptions that we believe are reasonable. For this purpose, we exclude any
supplemental coverage and, therefore, the target premium is reduced
proportionately by the amount of supplemental coverage.

The maximum value of any alternative amounts we may pay for sales of the
Policies is expected to be equivalent over time to the amounts described above.
For example, we may pay a broker-dealer compensation in a lump sum which will
not exceed the aggregate compensation described above.

We pay a comparable amount of compensation to the broker-dealers or banks
with respect to any increase in the specified amount o f coverage that you
request. In addition, we may pay broker-dealers or banks expense allowances,
bonuses, wholesaler fees and training allowances.

We pay the compensation directly to AGSI or any other selling broker-dealer
firm or bank. We pay the compensation from our own resources which does not
result in any additional charge to you that is not described beginning on page
6. Each broker-dealer firm or bank, in turn, may compensate its registered
representative or employee who acts as agent in selling you a Policy.

We sponsor a non-qualified deferred compensation plan ("Plan") for our
insurance agents. Some of our agents are registered representatives of AGSI and
sell the Policies. These agents may, subject to regulatory approval, receive
benefits under the Plan when they sell the Policies. The benefits are deferred
and the Plan terms may result in the agent never receiving the benefits. The
Plan provides for a varying amount of benefits annually. We have the right to
change the Plan in ways that affect the amount of benefits earned each year.

Payment of Policy Proceeds

General. We will pay any death benefit, maturity benefit, cash surrender
value or loan proceeds within seven days after we receive the last required form
or request (and any other documents that may be required for payment of a death
benefit). If we do not have information about the desired manner of payment
within 60 days after the date we receive notification of the insured person's
death, we will pay the proceeds as a single sum, normally within seven days
thereafter.

Delay of declared fixed interest account option proceeds. We have the
right, however, to defer payment or transfers of amounts out of our declared
fixed interest account option for up to six months. If we delay more than 30
days in paying you such amounts, we will pay interest of at least 3% a year from
the date we receive all items we require to make the payment.

40
<PAGE>

Delay for check clearance. We reserve the right to defer payment of that
portion of your accumulation value that is attributable to a payment made by
check for a reasonable period of time (not to exceed 15 days) to allow the check
to clear the banking system.

Delay of Separate Account VL-R proceeds. We reserve the right to defer
payment of any death benefit, loan or other distribution that comes from that
portion of your accumulation value that is allocated to Separate Account VL-R,
if:

. the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is
restricted;

. an emergency exists, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to fairly
determine the accumulation value; or

. the SEC by order permits the delay for the protection of owners.

Transfers and allocations of accumulation value among the investment
options may also be postponed under these circumstances. If we need to defer
calculation of Separate Account VL-R values for any of the foregoing reasons,
all delayed transactions will be processed at the next values that we do
compute.

Delay to challenge coverage. We may challenge the validity of your
insurance Policy based on any material misstatements in your application or any
application for a change in coverage. However,

. We cannot challenge the Policy after it has been in effect, during either
contingent insured's lifetime, for two years from the dat e the Policy
was issued or restored after termination. (Some states may require that
we measure this time in some other way.)

. We cannot challenge any Policy change that requires evidence of
insurability (such as an increase in specified amount) after the change
has been in effect for two years during either contingent insured's
lifetime.

Adjustments to Death Benefit

Suicide. If either contingent insured commits suicide during the first two
Policy years, we will limit the death benefit proceeds to the total of all
premiums that have been paid to the time of death minus any outstanding Policy
loans (plus credit for any unearned interest) and any partial surrenders.

A new two year period begins if you increase the specified amount. You can
increase the specified amount only if both contingent insureds are living at the
time of the increase. In this case, if either contingent insured commits suicide
during the first two years following the increase, we will refund the monthly
insurance deductions attributable to the increase. The death benefit will then
be based on the specified amount in effect before the increase.

Some states require that we compute these periods for noncontestability
differently following a suicide.

41
<PAGE>

Wrong age or gender. If the age or gender of either contingent insured was
misstated on your application for a Policy (or for any increase in benefits), we
will adjust any death benefit to be what the monthly insurance charge deducted
for the current month would have purchased based on the correct information.

Death during grace period. We will deduct from the insurance proceeds any
monthly charges that remain unpaid because the last surviving contingent insured
died during a grace period.

Additional Rights That We Have

We have the right at any time to:

. transfer the entire balance in an investment option in accordance with
any transfer request you make that would reduce your accumulation value
for that option to below $500;

. transfer the entire balance in proportion to any other investment options
you then are using, if the accumulation value in an investment option is
below $500 for any other reason;

. end the automatic rebalancing feature if your accumulation value falls
below $5,000;

. change the underlying Mutual Fund that any investment option uses;

. add, delete or limit investment options, combine two or more investment
options, or withdraw assets relating to the Policies from one investment
option and put them into another;

. operate Separate Account VL-R under the direction of a committee or
discharge such a committee at any time;

. change our underwriting and premium class guidelines;

. operate Separate Account VL-R, or one or more investment options, in any
other form the law allows, including a form that allows us to make direct
investments. Separate Account VL-R may be charged an advisory fee if its
investments are made directly rather than through another investment
company. In that case, we may make any legal investments we wish; or

. make other changes in the Policy that in our judgment are necessary or
appropriate to ensure that the Policy continues to qualify for tax
treatment as life insurance, or that do not reduce any cash surrender
value, death benefit, accumulation value, or other accrued rights or
benefits.

You will be notified as required by law if there are any material changes
in the underlying investments of an investment option that you are using. We
intend to comply with all applicable laws in making any changes and, if
necessary, we will seek policy owner approval.

42
<PAGE>

Performance Information

From time to time, we may quote performance information for the divisions
of Separate Account VL-R in advertisements, sales literature, or reports to
owners or prospective investors.

We may quote performance information in any manner permitted under
applicable law. We may, for example, present such information as a change in a
hypothetical owner's cash value or death benefit. We also may present the yield
or total return of the division based on a hypothetical investment in a Policy.
The performance information shown may cover various periods of time, including
periods beginning with the commencement of the operations of the division or the
Mutual Funds in which it invests. The performance information shown may reflect
the deduction of one or more charges, such as the premium charge, and we
generally expect to exclude costs of insurance charges because of the individual
nature of these charges.

We may compare a division's performance to that of other variable life
separate accounts or investment products, as well as to generally accepted
indices or analyses, such as those provided by research firms and rating
services. In addition, we may use performance ratings that may be reported
periodically in financial publications, such as Money Magazine, Forbes, Business
Week, Fortune, Financial Planning and The Wall Street Journal. We also may
advertise ratings of AGL's financial strength or claims-paying ability as
determined by firms that analyze and rate insurance companies and by nationally
recognized statistical rating organizations.

Performance information for any division reflects the performance of a
hypothetical Policy and is not illustrative of how actual investment performance
would affect the benefits under your Policy. You should not consider such
performance information to be an estimate or guarantee of future performance.

Our Reports to Policy Owners

Shortly after the end of each Policy year, we will mail you a report that
includes information about your Policy's current death benefit, accumulation
value, cash surrender value and policy loans. We will send you notices to
confirm premium payments, transfers and certain other Policy transactions. We
will mail to you at your last known address of record, these and any other
reports and communications required by law. You should give us prompt written
notice of any address change.

AGL's Management

The directors, executive officers, and (to the extent responsible for
variable life operations) the other principal officers of AGL are listed below.
<TABLE>
<CAPTION>
<S> <C>
Name Business Experience Within Past Five Years
- --------------------- ------------------------------------------------------------------------------------------------
Rodney O. Martin, Jr. Senior Chairman of the Board of American General Life Insurance Company since April 1999 and a
Director since August 1996. President and CEO (August 1996-July 1998). President of American
General Life Insurance Company of New York (November 1995-August 1996). Vice President Agencies,
with Connecticut Mutual Life Insurance Company, Hartford, Connecticut (1990-1995).

</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Donald W. Britton Director and Vice Chairman of the Board of American General Life Insurance Company since April
1999. President of First Colony Life, Lynchburg, Virginia (1996 - April 1997) and Executive Vice
President of First Colony Life (1992 - 1996).

Ronald H. Ridlehuber Director, President and Chief Executive Officer of American General Life Insurance Company since
July 1998. Senior Vice President and Chief Marketing Officer of Jefferson-Pilot Life Insurance
Company in Greensboro, North Carolina (1993-1998).

David A. Fravel Director of American General Life Insurance Company since November 1996. Elected Executive Vice
President in April 1998. Previously held position of Senior Vice President of American General
Life Insurance Company since November 1996. Senior Vice President of Massachusetts Mutual,
Springfield, Missouri (March 1996-June 1996); Vice President, New Business, Connecticut Mutual
Life Insurance Company, Hartford, Connecticut (December 1978-March 1996).

Robert F. Herbert, Jr. Director, Senior Vice President and Treasurer of American General Life Insurance Company since May
1996, and Controller since February 1991.

Royce G. Imhoff, II Director, Senior Vice President and Chief Marketing Officer for American General Life Insurance
Company since November 1997. Previously held various positions with American General Life
Insurance Company including Vice President since August 1996 and Regional Director since 1992.

John V. LaGrasse Director and Chief Systems Officer of American General Life Insurance Company since August 1996.
Elected Executive Vice President in July 1998. Previously held position of Senior Vice President
of American General Life Insurance Company since August 1996. Director of Citicorp Insurance
Services, Inc., Dover, Delaware (1986-1996).

Gary D. Reddick Director of American General Life Insurance Company since October 1998. Elected Executive Vice
President in April 1998. Vice Chairman since July 1997 and Executive Vice President-Administration
of The Franklin Life Insurance Company since February 1995. Senior Vice President-Administration
of American General Corporation (October 1994-February 1995). Senior Vice President for American
General Life Insurance Company (September 1986-October 1994).

Thomas M. Zurek Director and Executive Vice President of American General Life Insurance Company since April 1999.
Elected Secretary in July 1999 and General Counsel in December 1998. Previously held various
positions with American General Life Insurance Company including Senior Vice President since
December 1998 and Vice President since October 1998. In February 1998 named as Senior Vice
President and Deputy General Counsel of American General Corporation. Attorney Shareholder with
Nyemaster, Goode, Voigts, West, Hansell & O'Brien, Des Moines, Iowa (June 1992 - February 1998).

</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Paul L. Mistretta Executive Vice President of American General Life Insurance Company since July 1999. Senior Vice
President of First Colony Life Insurance, Lynchburg, Virginia (1992 - July 1999).

Brian D. Murphy Executive Vice President of American General Life Insurance Company since July 1999. Previously
held position of Senior Vice President-Insurance Operations of American General Life Insurance
Company since April 1998. Vice President-Sales, Phoenix Home Life, Hartford, CT (January
1997-April 1998). Vice President of Underwriting and Issue, Phoenix Home Life (July 1994-January
1997). Various positions with Mutual of New York, Syracuse, NY, including Agent, Agency Manager,
Marketing Life and Disability Income Underwriting Management, (1978-July 1994).

Wayne A. Barnard Senior Vice President of American General Life Insurance Company since November 1997. Previously
held various positions with American General Life Insurance Company including Vice President since
February 1991.

Robert M. Beuerlein Senior Vice President and Chief Actuary of American General Life Insurance Company since September
1999. Previously held position of Vice President of American General Life Insurance Company since
December 1998. Director, Senior Vice President and Chief Actuary of The Franklin Life Insurance
Company, Springfield, Illinois (January 1991 - June 1999).

David J. Dietz Senior Vice President - Corporate Markets Group of American General Life Insurance Company since
January 1999. President and Chief Executive Officer - Individual Insurance Operations of The
United States Life Insurance Company in the City of New York since September, 1997. President of
Prudential Select Life, Newark, New Jersey (August 1990 - September 1997).

Barbara J. Fossum Senior Vice President of American General Life Insurance Company since July 1999. Previously held
position of Vice President of American General Life Insurance Company since 1988.

Ross D. Friend Senior Vice President and Chief Compliance Officer of American General Life Insurance Company
since July 1998. Senior Vice President and General Counsel of The Franklin Life Insurance Company,
Springfield, Illinois (August 1996 - July 1998). Attorney-in-Charge for The Prudential Insurance
Company, Jacksonville, Florida (July 1995 - August 1996). Chief Legal Officer for Confederation
Life Insurance, Atlanta, Georgia (1982 - June 1995).

</TABLE>
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<PAGE>

William Guterding Senior Vice President of American General Life
Insurance Company since April 1999. Senior Vice
President and Chief Underwriting Officer of The United
States Life Insurance Company in the City of New York
since October, 1980.

F. Paul Kovach, Jr. Senior Vice President-Broker Dealers for American
General Life Insurance Company since August 1997.
President and Director of American General Securities
Incorporated since October 1994. Vice President of
Chubb Securities Corporation, Concord, New Hampshire,
(February 1990-October 1994).

Simon J. Leech Senior Vice President-Houston Service Center for
American General Life Insurance Company since July
1997. Previously held various positions with American
General Life Insurance Company since 1981, including
Director of Policy Owners' Service Department in 1993,
and Vice President-Policy Administration in 1995.

JoAnn Waddell Senior Vice President - Human Resources for American
General Life Insurance Company since October 1998.
Vice President - Human Resources for American General
Corporation (1995 - October 1998) and Director,
Corporate Personnel of American General Corporation
(1993 - 1995).

Don M. Ward Senior Vice President-Variable Products-Marketing of
American General Life Insurance Company since February
1998. Vice President of Pacific Life Insurance
Company, Newport Beach, CA (1991-February 1998).

The principal business address of each person listed above is our Home
Office; except that the street number for Messrs. Ridlehuber, Fravel, LaGrasse,
Martin, Reddick, Britton, Mistretta and Zurek is 2929 Allen Parkway, the street
number for Messrs. Kovach, Ward and Friend is 2727 Allen Parkway, the street
number for Messrs. Dietz and Guterding is 125 Maiden Lane, New York, New York
and the street number for Ms. Fossum is #1 Franklin Square, Springfield,
Illinois.

46
<PAGE>

Principal Underwriter's Management

The directors and principal officers of the principal underwriter are:

Position and Offices
with Underwriter,
Name and Principal American General
Business Address Securities Incorporated
- ------------------ -----------------------
<S> <C>
F. Paul Kovach, Jr. Director and Chairman,
American General Securities Incorporated President and Chief Executive Officer
2727 Allen Parkway
Houston, TX 77019

Royce G. Imhoff, II Director
American General Life Companies
2727-A Allen Parkway
Houston, Texas 77019

Rodney O. Martin, Jr. Director and Vice Chairman
American General Life Companies
2929 Allen Parkway
Houston, TX 77019

Donald W. Britton Director
American General Life Companies
2929 Allen Parkway
Houston, TX 77019

John A. Kalbaugh Vice President--
American General Life Companies Chief Marketing Officer
2727 Allen Parkway
Houston, TX 77019

Robert M. Roth Vice President -
American General Securities Incorporated Administration and Compliance,
2727 Allen Parkway Treasurer and Secretary
Houston, TX 77019

Don M. Ward Vice President
American General Life Companies
2727 Allen Parkway
Houston, TX 77019

</TABLE>

47
<PAGE>

Julie A. Cotton Assistant Secretary
American General Life Companies
2727 Allen Parkway
Houston, TX 77019

Robert F. Herbert, Jr. Assistant Treasurer
American General Life Companies
2727-A Allen Parkway
Houston, Texas 77019

K. David Nunley Assistant Associate Tax Officer
2727-A Allen Parkway
Houston, TX 77019

Legal Matters

We are not involved in any legal proceedings that would be considered
material with respect to a policy owner's interest in Separate Account VL-R.
Pauletta P. Cohn, Esquire, Deputy General Counsel of the American General Life
Companies, an affiliate of AGL, has opined as to the validity of the Policies.

Independent Auditors

The financial statements of AGL included in this prospectus have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
appearing elsewhere in this prospectus. Such financial statements have been
included in this prospectus in reliance upon the report of Ernst & Young LLP
given upon the authority of such firm as experts in accounting and auditing.
Ernst & Young LLP is located at One Houston Center, 1221 McKinney, Suite 2400,
Houston, Texas 77010-2007.

Actuarial Expert

Actuarial matters have been examined by Robert M. Beuerlein who is Senior
Vice President and Chief Actuary of AGL. His opinion o n actuarial matters is
filed as an exhibit to the registration statement we have filed with the SEC in
connection with the Policies.

Services Agreement

American General Life Companies ("AGLC") is party to an existing general
services agreement with AGL. AGLC, an affiliate of AGL, is a corporation
incorporated in Delaware on November 24, 1997. Pursuant to this agreement, AGLC
provides services to AGL, including most of the administrative, data processing,
systems, customer services, product development, actuarial, auditing, accounting
and legal services for AGL and the Policies.

48
<PAGE>

Certain Potential Conflicts

The Mutual Funds sell shares to separate accounts of insurance companies
(and may sell in the future, certain qualified plans), both affiliated and not
affiliated with AGL. We currently do not foresee any disadvantages to you
arising out of such sales. Differences in treatment under tax and other laws, as
well as other considerations, could cause the interests of various owners to
conflict. For example, violation of the federal tax laws by one separate account
investing in the Funds could cause the contracts funded through another separate
account to lose their tax-deferred status, unless remedial action were taken.
However, each Mutual Fund has advised us that its board of trustees (or
directors) intends to monitor events to identify any material irreconcilable
conflicts that possibly may arise and to determine what action, if any, should
be taken in response. If we believe that a Fund's response to any such event
insufficiently protects our policy owners, we will see to it that appropriate
action is taken to do so as well as report any material irreconcilable conflicts
that we know exist to each Mutual Fund as soon as a conflict arises. If it
becomes necessary for any separate account to replace shares of any Mutual Fund
in which it invests, that Fund may have to liquidate securities in its portfolio
on a disadvantageous basis.

Year 2000 Considerations

Internal Systems. Our ultimate parent, American General Corporation ("AGC"), has
numerous technology and non-technology systems that are managed on a
decentralized basis. AGC's Year 2000 readiness efforts have been performed by
its key business units with centralized oversight. Each business unit, including
AGL, executed a plan to minimize the risk of a significant negative impact on
its operations.

While the specifics of the plans varied, the plans included the following
activities: (1) perform an inventory of the company's information technology and
non-information technology systems; (2) assess which items in the inventory may
expose us to business interruptions due to Year 2000 issues; (3) reprogram or
replace systems that are not Year 2000 ready; (4) test systems to prove that
they will function into the next century; and (5) return the systems to
operations. As of December 31, 1999, these activities have been completed,
making our critical systems Year 2000 ready.

We continued to test our systems throughout 1999 to maintain Year 2000
readiness. In addition, we implemented plans for the century transition. These
plans included a freeze on system modifications from November 1999 through
January 2000, the creation of rapid response teams to address problems and
limiting vacations for certain business and technical personnel and establishing
Y2K command centers. In addition, AGC established Y2K command centers in Houston
and each of its locations across the country. Each command center monitored all
major business processing activities during the century transition and reported
progress to the Houston command center which coordinated the company's
nationwide Year 2000 effort. The command centers continued to operate 24 hours a
day until January 7, 2000.

On January 1, 2000, AGC announced that its Year 2000 command centers reported
that all major technology systems, programs, and applications were operating
smoothly following the transition into the 21st century. As of January 20, 2000,
we have experienced no interruptions to normal business operations, including
the processing of customer account data and transactions. We will continue to
monitor our technology systems and maintain quality customer service throughout
the transition period.

49
<PAGE>

Third Party Relationships. We have relationships with various third parties who
must also be Year 2000 ready. These third parties provide (or receive) resources
and services to (or from) us and include organizations with which we exchange
information. Third parties include vendors of hardware, software, and
information services; providers of infrastructure services such as voice and
data communications and utilities for office facilities; investors; customers;
distribution channels; and joint venture partners. Third parties differ from
internal systems in that we exercise less, or no, control over such parties'
Year 2000 readiness.

We developed plans to assess and mitigate the risks associated with the
potential failure of third parties to achieve Year 2000 readiness. These plans
included the following activities: (1) identify and classify third party
dependencies; (2) research, analyze, and document Year 2000 readiness for
critical third parties; and (3) test critical hardware and software products and
electronic interfaces, and, where feasible, we have taken reasonable precautions
to protect against the receipt of non-Year 2000 ready data. Where necessary,
critical third party dependencies have been included in our contingency plans.

Contingency Plans. Our contingency planning process was designed to reduce the
risk of Year 2000-related business failures related to both internal systems and
third party relationships. The contingency plans included the following
activities: (1) evaluate the consequences of failure of critical business
processes with significant exposure to Year 2000 risk; (2) determine the
probability of a Year 2000-related failure for those critical processes that
have a high consequence of failure; (3) develop an action plan to complete
contingency plans for critical processes that rank high in consequence and
probability of failure; and (4) complete the applicable contingency plans. The
contingency plans were tested and updated throughout 1999.

Risks and Uncertainties. Based on the Year 2000 readiness of internal systems,
century transition plans, plans to deal with third party relationships,
contingency plans and the reports from the AGC command centers described above,
we believe that we will experience at most isolated and minor disruptions of
business processes due to the Year 2000 transition. Such disruptions are not
expected to have a material effect on our future results of operations,
liquidity, or financial condition. However, due to the magnitude and complexity
of this project, risks and uncertainties exist and we are not able to predict a
most reasonably likely worst case scenario. If Year 2000 readiness is not
achieved due to our failure to maintain critical systems as Year 2000 ready,
failure of critical third parties to achieve Year 2000 readiness on a timely
basis, failure of contingency plans to reduce Year 2000-related business
failures, or other unforeseen circumstances in completing its plans, the Year
2000 issues could have a material adverse impact on our operations following the
turn of the century.

Costs. Through December 31, 1999, we have incurred, and anticipate that we will
continue to incur, costs relative to achieving and maintaining Year 2000
readiness. The cost of activities related to Year 2000 readiness has not had a
material adverse effect on our results of operations or financial condition. In
addition, we have elected to accelerate the planned replacement of certain
systems as part of the Year 2000 plans. Costs of the replacement systems are
being capitalized and amortized over their useful lives, in accordance with our
normal accounting policies. None of the costs associated with Year 2000
readiness are passed to divisions of the Separate Account.

50
<PAGE>

FINANCIAL STATEMENTS

The financial statements of AGL contained in this prospectus should be
considered to bear only upon the ability of AGL to meet its obligations under
the Policies. They should not be considered as bearing upon the investment
experience of Separate Account VL-R. No financial statements of Separate Account
VL-R are included because, at the date of this prospectus, none of the Divisions
of Separate Account VL-R were available under the Policies.

Page to
Consolidated Financial Statements of See in this
American General Life Insurance Company Prospectus
- --------------------------------------- ----------
<S> <C>
Unaudited consolidated Balance Sheets as of September 30, 1999.......................... Q-1
Unaudited consolidated Income Statements for the nine months
ended September 30, 1999............................................................. Q-3

Report of Ernst & Young, LLP Independent Auditors....................................... F-1
Consolidated Balance Sheets as of December 31, 1998 and 1997............................ F-2
Consolidated Income Statements for the years ended
December 31, 1998, 1997 and 1996..................................................... F-3
Consolidated Statements of Comprehensive Income
for the years ended December 31, 1998, 1997, and 1996................................ F-4
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1998, 1997 and 1996............................................... F-5
Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997 and 1996............................................... F-6
Notes to Consolidated Financial Statements.............................................. F-7
</TABLE>

51
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheet

(Unaudited)

September 30
1999
--------------
(In Thousands)
ASSETS
Investments:
Fixed maturity securities, at fair value (amortized
cost - $27,720,226) $27,539,065
Equity securities, at fair value (cost - $215,480) 245,837
Mortgage loans on real estate 1,703,850
Policy loans 1,224,130
Investment real estate 117,005
Other long-term investments 154,183
Short-term investments 484,721
-----------
Total investments 31,468,791

Cash 89,211
Investment in Parent Company (cost - $7,958) 44,254
Indebtedness from affiliates 53,756
Accrued investment income 477,429
Accounts receivable 505,368
Deferred policy acquisition costs 1,733,978
Property and equipment 74,683
Other assets 225,353
Assets held in separate accounts 18,734,868
-----------
Total assets $53,407,691
===========

Q-1
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheet

(Unaudited)

September 30
1999
--------------
(In Thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Future policy benefits $29,704,115
Other policy claims and benefits payable 45,955
Other policyholders' funds 379,623
Federal income taxes 414,324
Indebtedness to affiliates 3,053
Other liabilities 1,035,653
Liabilities related to separate accounts 18,734,868
-----------
Total liabilities 50,317,591

Shareholders' equity:
Common stock, $10 par value, 600,000 shares
authorized, issued, and outstanding 6,000

Preferred stock, $100 par value, 8,500 shares
authorized, issued, and outstanding 850

Additional paid-in capital 1,369,315
Accumulated other comprehensive income (15,046)
Retained earnings 1,728,981
-----------
Total shareholders' equity 3,090,100

-----------
Total liabilities and shareholders' equity $53,407,691
===========

Q-2
<PAGE>

American General Life Insurance Company

Consolidated Income Statement

(Unaudited)

Nine months
ended
September 30
1999
--------------
(In Thousands)

Revenues:
Premiums and other considerations $ 402,583
Net investment income 1,753,914
Net realized investment gains 3,899
Other 58,530
----------
Total revenues 2,218,926

Benefits and expenses:
Benefits 1,289,534
Operating costs and expenses 367,123
Total benefits and expenses 1,656,657
----------
Income before income tax expense 562,269

Income tax expense 190,143
----------
Net income $ 372,126
==========

Q-3

<PAGE>

[ERNST & YOUNG LLP LETTERHEAD] . One Houston Center . Phone: 713 750 1500
Suite 2400 Fax: 713 750 1501
1221 McKinney
Houston, Texas 77010-2007

Report of Independent Auditors

Board of Directors and Stockholder
American General Life Insurance Company

We have audited the accompanying consolidated balance sheets of American General
Life Insurance Company (an indirectly wholly owned subsidiary of American
General Corporation) and subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of income, comprehensive income, shareholder's
equity, and cash flows for each of the three years in the period ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American General
Life Insurance Company and subsidiaries at December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.

/S/ ERNST & YOUNG LLP
---------------------

February 16, 1999

Ernst & Young LLP is a member of Ernst & Young International, Ltd.

F-1
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheets

<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
---------------------------------
<S> <C> <C>
(In Thousands)
ASSETS
Investments:
Fixed maturity securities, at fair value (amortized cost-
$27,425,605 in 1998 and $26,131,207 in 1997) $28,906,261 $27,386,715
Equity securities, at fair value (cost - $193,368 in 1998
and $19,208 in 1997) 211,684 21,114
Mortgage loans on real estate 1,557,268 1,659,921
Policy loans 1,170,686 1,093,694
Investment real estate 119,520 129,364
Other long-term investments 86,194 55,118
Short-term investments 222,949 100,061
---------------------------------
Total investments 32,274,562 30,445,987

Cash 117,675 99,284
Investment in Parent Company (cost - $8,597 in 1998
and 1997) 54,570 37,823
Indebtedness from affiliates 161,096 96,519
Accrued investment income 459,961 433,111
Accounts receivable 196,596 208,209
Deferred policy acquisition costs 1,087,718 835,031
Property and equipment 66,197 33,827
Other assets 206,318 132,659
Assets held in separate accounts 15,616,020 11,242,270
---------------------------------
Total assets $50,240,713 $43,564,720
=================================

LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Future policy benefits $29,353,022 $27,849,893
Other policy claims and benefits payable 54,278 42,677
Other policyholders' funds 398,587 398,314
Federal income taxes 677,315 543,379
Indebtedness to affiliates 18,173 4,712
Other liabilities 554,783 421,861
Liabilities related to separate accounts 15,616,020 11,242,270
---------------------------------
Total liabilities 46,672,178 40,503,106

Shareholder's equity:
Common stock, $10 par value, 600,000 shares
authorized, issued, and outstanding 6,000 6,000
Preferred stock, $100 par value, 8,500 shares authorized,
issued, and outstanding 850 850
Additional paid-in capital 1,368,089 1,184,743
Accumulated other comprehensive income 679,107 427,526
Retained earnings 1,514,489 1,442,495
---------------------------------
Total shareholder's equity 3,568,535 3,061,614
---------------------------------
Total liabilities and shareholder's equity $50,240,713 $43,564,720
=================================
</TABLE>

See accompanying notes.

F-2
<PAGE>

American General Life Insurance Company

Consolidated Statements of Income

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996
----------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)

Revenues:
Premiums and other considerations $ 470,238 $ 428,721 $ 382,923
Net investment income 2,316,933 2,198,623 2,095,072
Net realized investment gains (losses) (33,785) 29,865 28,502
Other 69,602 53,370 41,968
----------------------------------------------------------
Total revenues 2,822,988 2,710,579 2,548,465

Benefits and expenses:
Benefits 1,788,417 1,757,504 1,689,011
Operating costs and expenses 467,067 379,012 347,369
Interest expense 15 782 830
Litigation settlement 97,096 - -
----------------------------------------------------------
Total benefits and expenses 2,352,595 2,137,298 2,037,210
----------------------------------------------------------
Income before income tax expense 470,393 573,281 511,255

Income tax expense 153,719 198,724 176,660
----------------------------------------------------------
Net income $ 316,674 $ 374,557 $ 334,595
==========================================================
</TABLE>

See accompanying notes.

F-3
<PAGE>

American General Life Insurance Company

Consolidated Statements of Comprehensive Income

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996
--------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)

Net income $316,674 $374,557 $ 334,595
Other comprehensive income:
Gross change in unrealized gains (losses)
on securities (pretax: $341,000;
$318,700; ($404,900)) 222,245 207,124 (263,181)
Less: gains (losses) realized in net income (29,336) (1,251) 11,262
--------------------------------------------------------
Change in net unrealized gains (losses) on
securities (pretax: $387,000; $320,600;
($422,200) 251,581 208,375 (274,443)
-------------------------------------------------------
Comprehensive income $568,255 $582,932 $ 60,152
========================================================
</TABLE>

See accompanying notes.

F-4
<PAGE>

American General Life Insurance Company

Consolidated Statements of Shareholder's Equity

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996
----------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)
Common stock:
Balance at beginning of year $ 6,000 $ 6,000 $ 6,000
Change during year - - -
----------------------------------------------------------
Balance at end of year 6,000 6,000 6,000

Preferred stock:
Balance at beginning of year 850 850 850
Change during year - - -
----------------------------------------------------------
Balance at end of year 850 850 850

Additional paid-in capital:
Balance at beginning of year 1,184,743 933,342 858,075
Capital contribution from Parent
Company 182,284 250,000 75,000
Other changes during year 1,062 1,401 267
----------------------------------------------------------
Balance at end of year 1,368,089 1,184,743 933,342

Accumulated other comprehensive income:
Balance at beginning of year 427,526 219,151 493,594
Change in unrealized gains (losses) on
securities 251,581 208,375 (274,443)
----------------------------------------------------------
Balance at end of year 679,107 427,526 219,151

Retained earnings:
Balance at beginning of year 1,442,495 1,469,618 1,324,703
Net income 316,674 374,557 334,595
Dividends paid (244,680) (401,680) (189,680)
----------------------------------------------------------
Balance at end of year 1,514,489 1,442,495 1,469,618
----------------------------------------------------------
Total shareholder's equity $3,568,535 $3,061,614 $2,628,961
==========================================================
</TABLE>

See accompanying notes.

F-5
<PAGE>

American General Life Insurance Company

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996
--------------------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)

OPERATING ACTIVITIES
Net income $ 316,674 $ 374,557 $ 334,595
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Change in accounts receivable 11,613 (37,752) 3,846
Change in future policy benefits and other policy
claims (866,428) (1,143,736) (543,193)
Amortization of policy acquisition costs 125,062 115,467 102,189
Policy acquisition costs deferred (244,196) (219,339) (188,001)
Change in other policyholders' funds 273 21,639 (69,126)
Provision for deferred income tax expense 15,872 13,264 12,388
Depreciation 19,418 16,893 16,993
Amortization (26,775) (28,276) (30,758)
Change in indebtedness to/from affiliates (51,116) (8,695) 4,432
Change in amounts payable to brokers (894) 31,769 (25,260)
Net (gain) loss on sale of investments 37,016 (29,865) (28,502)
Other, net 57,307 30,409 32,111
--------------------------------------------------------------------
Net cash used in operating activities (606,174) (863,665) (378,286)

INVESTING ACTIVITIES
Purchases of investments and loans made (28,231,615) (29,638,861) (27,245,453)
Sales or maturities of investments and receipts from
repayment of loans 26,656,897 28,300,238 25,889,422
Sales and purchases of property, equipment, and
software, net (105,907) (9,230) (8,057)
--------------------------------------------------------------------
Net cash used in investing activities (1,680,625) (1,347,853) (1,364,088)

FINANCING ACTIVITIES
Policyholder account deposits 4,688,831 4,187,191 3,593,380
Policyholder account withdrawals (2,322,307) (1,759,660) (1,746,987)
Dividends paid (244,680) (401,680) (189,680)
Capital contribution from Parent 182,284 250,000 75,000
Other 1,062 1,401 267
--------------------------------------------------------------------
Net cash provided by financing activities 2,305,190 2,277,252 1,731,980
--------------------------------------------------------------------
Increase (decrease) in cash 18,391 65,734 (10,394)
Cash at beginning of year 99,284 33,550 43,944
--------------------------------------------------------------------
Cash at end of year $ 117,675 $ 99,284 $ 33,550
====================================================================
</TABLE>

Interest paid amounted to approximately $420,000, $1,004,000, and $1,080,000 in
1998, 1997, and 1996, respectively.

See accompanying notes.

F-6
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 1998

NATURE OF OPERATIONS

American General Life Insurance Company (the "Company") is a wholly owned
subsidiary of AGC Life Insurance Company, which is a wholly owned subsidiary of
American General Corporation (the "Parent Company"). The Company's wholly owned
life insurance subsidiaries are American General Life Insurance Company of New
York ("AGNY") and The Variable Annuity Life Insurance Company ("VALIC"). During
1998, the Company formed a new wholly owned subsidiary, American General Life
Companies (AGLC), to provide management services to certain life insurance
subsidiaries of the Parent Company.

The Company offers a complete portfolio of the standard forms of universal life,
variable universal life, interest-sensitive whole life, term life, structured
settlements, and fixed and variable annuities throughout the United States. In
addition, a variety of equity products is sold through its wholly owned
broker/dealer, American General Securities, Inc. The Company serves the estate
planning needs of middle- and upper-income households and the insurance needs of
small- to medium-sized businesses. AGNY offers a broad array of traditional and
interest-sensitive insurance, in addition to individual annuity products. VALIC
provides tax-deferred retirement annuities and employer-sponsored retirement
plans to employees of health care, educational, public sector, and other not-
for-profit organizations throughout the United States.

1. ACCOUNTING POLICIES

1.1 PREPARATION OF FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") and include the accounts of
the Company and its wholly owned subsidiaries. Transactions with the Parent
Company and other subsidiaries of the Parent Company are not eliminated from the
financial statements of the Company. All other material intercompany
transactions have been eliminated in consolidation.

The preparation of financial statements requires management to make estimates
and assumptions that affect amounts reported in the financial statements and
disclosures of contingent assets and liabilities. Ultimate results could differ
from those estimates.

F-7
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.2 STATUTORY ACCOUNTING

The Company and its wholly owned life insurance subsidiaries are required to
file financial statements with state regulatory authorities. State insurance
laws and regulations prescribe accounting practices for calculating statutory
net income and equity. In addition, state regulators may permit statutory
accounting practices that differ from prescribed practices. The use of such
permitted practices by the Company and its wholly owned life insurance
subsidiaries did not have a material effect on statutory equity at December 31,
1998.

Statutory financial statements differ from GAAP. Significant differences were as
follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------------------------------------------------------
<S> <C> <C> <C>
Net income:
Statutory net income (1998 balance is
unaudited) $ 259,903 $ 327,813 $ 284,070
Deferred policy acquisition costs and cost
of insurance purchased 116,597 103,872 85,812
Deferred income taxes (53,358) (13,264) (12,388)
Adjustments to policy reserves 52,445 (30,162) (19,954)
Goodwill amortization (2,033) (2,067) (2,169)
Net realized gain on investments 41,488 20,139 14,140
Litigation settlement (63,112) -- --
Other, net (35,256) (31,774) (14,916)
-------------------------------------------------------
GAAP net income $ 316,674 $ 374,557 $ 334,595
=======================================================

Shareholders' equity:
Statutory capital and surplus (1998 balance
is unaudited) $1,670,412 $1,636,327 $1,441,768
Deferred policy acquisition costs 1,109,831 835,031 1,042,783
Deferred income taxes (698,350) (535,703) (410,007)
Adjustments to policy reserves (274,532) (319,680) (297,434)
Acquisition-related goodwill 54,754 51,424 55,626
Asset valuation reserve ("AVR") 310,564 255,975 291,205
Interest maintenance reserve ("IMR") 27,323 9,596 63
Investment valuation differences 1,487,658 1,272,339 643,289
Surplus from separate accounts (174,447) (150,928) (106,026)
Other, net 55,322 7,233 (32,306)
-------------------------------------------------------
Total GAAP shareholders' equity $3,568,535 $3,061,614 $2,628,961
=======================================================
</TABLE>

F-8
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.2 STATUTORY ACCOUNTING (CONTINUED)

The more significant differences between GAAP and statutory accounting
principles are that under GAAP: (a) acquisition costs related to acquiring new
business are deferred and amortized (generally in proportion to the present
value of expected gross profits from surrender charges and investment,
mortality, and expense margins), rather than being charged to operations as
incurred; (b) future policy benefits are based on estimates of mortality,
interest, and withdrawals generally representing the Company's experience, which
may differ from those based on statutory mortality and interest requirements
without consideration of withdrawals; (c) deferred tax assets and liabilities
are established for temporary differences between the financial reporting basis
and the tax basis of assets and liabilities, at the enacted tax rates expected
to be in effect when the temporary differences reverse; (d) certain assets
(principally furniture and equipment, agents' debit balances, computer software,
and certain other receivables) are reported as assets rather than being charged
to retained earnings; (e) acquisitions are accounted for using the purchase
method of accounting rather than being accounted for as equity investments; and
(f) fixed maturity investments are carried at fair value rather than amortized
cost. In addition, statutory accounting principles require life insurance
companies to establish an AVR and an IMR. The AVR is designed to address the
credit-related risk for bonds, preferred stocks, derivative instruments, and
mortgages and market risk for common stocks, real estate, and other invested
assets. The IMR is composed of investment- and liability-related realized gains
and losses that result from interest rate fluctuations. These realized gains and
losses, net of tax, are amortized into income over the expected remaining life
of the asset sold or the liability released.

1.3 INSURANCE CONTRACTS

The insurance contracts accounted for in these financial statements include
primarily long-duration contracts. Long-duration contracts include traditional
whole life, endowment, guaranteed renewable term life, universal life, limited
payment, and investment contracts. Long-duration contracts generally require the
performance of various functions and services over a period of more than one
year. The contract provisions generally cannot be changed or canceled by the
insurer during the contract period; however, most new contracts written by the
Company allow the insurer to revise certain elements used in determining premium
rates or policy benefits, subject to guarantees stated in the contracts.

F-9
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.4 INVESTMENTS

FIXED MATURITY AND EQUITY SECURITIES

All fixed maturity and equity securities were classified as available-for-sale
and recorded at fair value at December 31, 1998, 1997, and 1996. After adjusting
related balance sheet accounts as if the unrealized gains (losses) had been
realized, the net adjustment is recorded in accumulated other comprehensive
income within shareholders' equity. If the fair value of a security classified
as available-for-sale declines below its cost and this decline is considered to
be other than temporary, the security is reduced to its fair value, and the
reduction is recorded as a realized loss.

During 1998, the Company maintained a trading portfolio of certain fixed
maturity securities. Trading securities are recorded at fair value. Unrealized
gains (losses), as well as realized gains (losses), are included in net
investment income. The Company held no trading securities at December 31, 1998,
and trading securities did not have a material effect on net investment income
in 1998.

MORTGAGE LOANS

Mortgage loans are reported at amortized cost, net of an allowance for losses.
The allowance for losses covers all non-performing loans and loans for which
management has a concern based on its assessment of risk factors, such as
potential non-payment or non-monetary default. The allowance is based on a loan-
specific review and a formula that reflects past results and current trends.

Loans for which the Company determines that collection of all amounts due under
the contractual terms is not probable are considered to be impaired. The Company
generally looks to the underlying collateral for repayment of impaired loans.
Therefore, impaired loans are considered to be collateral dependent and are
reported at the lower of amortized cost or fair value of the underlying
collateral, less estimated cost to sell.

POLICY LOANS

Policy loans are reported at unpaid principal balance.

F-10
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.4 INVESTMENTS (CONTINUED)

INVESTMENT REAL ESTATE

Investment real estate is classified as held for investment or available for
sale, based on management's intent. Real estate held for investment is carried
at cost, less accumulated depreciation and impairment write-downs. Real estate
available for sale is carried at the lower of cost (less accumulated
depreciation, if applicable) or fair value less cost to sell.

INVESTMENT INCOME

Interest on fixed maturity securities and performing and restructured mortgage
loans is recorded as income when earned and is adjusted for any amortization of
premium or discount. Interest on delinquent mortgage loans is recorded as income
when received. Dividends are recorded as income on ex-dividend dates.

REALIZED INVESTMENT GAINS

Realized investment gains (losses) are recognized using the specific-
identification method.

1.5 SEPARATE ACCOUNTS

Separate Accounts are assets and liabilities associated with certain contracts,
principally annuities; for which the investment risk lies solely with the
contract holder. Therefore, the Company's liability for these accounts equals
the value of the account assets. Investment income, realized investment gains
(losses), and policyholder account deposits and withdrawals related to separate
accounts are excluded from the consolidated statements of income, comprehensive
income, and cash flows. Assets held in Separate Accounts are primarily shares in
mutual funds, which are carried at fair value based on the quoted net asset
value per share.

F-11
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.6 DEFERRED POLICY ACQUISITION COSTS ("DPAC") AND COST OF INSURANCE PURCHASED
("CIP")

Certain costs of writing an insurance policy, including commissions,
underwriting, and marketing expenses, are deferred and reported as DPAC.

CIP represents the cost assigned to insurance contracts in force that are
acquired through the purchase of a block of business. At December 31, 1998, CIP
of $22.1 million was reported within other assets.

DPAC and CIP associated with interest-sensitive life contracts, insurance
investment contracts, and participating life insurance contracts is charged to
expense in relation to the estimated gross profits of those contracts. DPAC and
CIP associated with all other insurance contracts is charged to expense over the
premium-paying period or as the premiums are earned over the life of the
contract.

DPAC and CIP are adjusted for the impact on estimated future gross profits as if
net unrealized gains (losses) on securities had been realized at the balance
sheet date. The impact of this adjustment is included in accumulated other
comprehensive income within shareholder's equity.

The Company reviews the carrying amount of DPAC and CIP on at least an annual
basis. Management considers estimated future gross profits or future premiums,
expected mortality, interest earned and credited rates, persistency, and
expenses in determining whether the carrying amount is recoverable.

1.7 PREMIUM RECOGNITION

Most receipts for annuities and interest-sensitive life insurance policies are
classified as deposits instead of revenue. Revenues for these contracts consist
of mortality, expense, and surrender charges. Policy charges that compensate the
Company for future services are deferred and recognized in income over the
period earned, using the same assumptions used to amortize DPAC (see Note 1.6).

For limited-payment contracts, net premiums are recorded as revenue, and the
difference between the gross premium received and the net premium is deferred
and recognized in a constant relationship to insurance in force. For all other
contracts, premiums are recognized when due.

F-12
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.8 OTHER ASSETS

Acquisition-related goodwill, which is included in other assets, is charged to
expense in equal amounts over 40 years. The carrying value of goodwill is
regularly reviewed by management for indicators of impairment in value. If facts
and circumstances suggest that goodwill is impaired, other than temporarily, the
Company assesses the fair value of the underlying assets and reduces goodwill
accordingly.

1.9 POLICY AND CONTRACT CLAIMS RESERVES

Substantially all of the Company's insurance and annuity liabilities relate to
long-duration contracts. The contracts normally cannot be changed or canceled by
the Company during the contract period.

For interest-sensitive life and insurance investment contracts, reserves equal
the sum of the policy account balance and deferred revenue charges. Reserves for
other contracts are based on estimates of the cost of future policy benefits.
Reserves are determined using the net level premium method. Interest assumptions
used to compute reserves ranged from 2.5% to 13.5% at December 31, 1998.

1.10 REINSURANCE

The Company limits its exposure to loss on any single insured to $2.5 million by
ceding additional risks through reinsurance contracts with other insurers. The
Company diversifies its risk of reinsurance loss by using a number of reinsurers
that have strong claims-paying ability ratings. If the reinsurer could not meet
its obligations, the Company would reassume the liability. The likelihood of a
material reinsurance liability being reassumed by the Company is considered to
be remote.

A receivable is recorded for the portion of benefits paid and insurance
liabilities that have been reinsured. Reinsurance recoveries on ceded
reinsurance contracts were $63 million, $25 million, and $24 million during
1998, 1997, and 1996, respectively. The cost of reinsurance is recognized over
the life of the reinsured policies using assumptions consistent with those used
to account for the underlying policies.

F-13
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.10 REINSURANCE

Benefits paid and future policy benefits related to ceded insurance contracts
are recorded as reinsurance receivables. The cost of reinsurance is recognized
over the life of the underlying reinsured policies using assumptions consistent
with those used to account for the underlying policies.

1.11 PARTICIPATING POLICY CONTRACTS

Participating life insurance accounted for approximately 2% of life insurance in
force at December 31, 1998 and 1997.

The portion of earnings allocated to participating policyholders that cannot be
expected to inure to shareholders is excluded from net income and shareholder's
equity. Dividends to be paid on participating life insurance contracts are
determined annually based on estimates of the contracts' earnings. Policyholder
dividends were $4.9 million in 1998.

1.12 INCOME TAXES

The Company and its life insurance subsidiaries, together with certain other
life insurance subsidiaries of the Parent Company, are included in a life/non-
life consolidated tax return with the Parent Company and its noninsurance
subsidiaries. The Company participates in a tax sharing agreement with other
companies included in the consolidated tax return. Under this agreement, tax
payments are made to the Parent Company as if the companies filed separate tax
returns; and companies incurring operating and/or capital losses are reimbursed
for the use of these losses by the consolidated return group.

Deferred tax assets and liabilities are established for temporary differences
between the financial reporting basis and the tax basis of assets and
liabilities, at the enacted tax rates expected to be in effect when the
temporary differences reverse. The effect of a tax rate change is recognized in
income in the period of enactment. State income taxes are included in income tax
expense.

F-14
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.12 INCOME TAXES (CONTINUED)

A valuation allowance for deferred tax assets is provided if it is more likely
than not that some portion of the deferred tax asset will not be realized. An
increase or decrease in a valuation allowance that results from a change in
circumstances that causes a change in judgment about the realizability of the
related deferred tax asset is included in income. Changes related to
fluctuations in fair value of available-for-sale securities are included in the
consolidated statements of comprehensive income and accumulated other
comprehensive income in shareholder's equity.

1.13 ACCOUNTING CHANGES

During 1998, the Company adopted Statement of Financial Accounting Standards
(SFAS) 130, Reporting Comprehensive Income, which establishes standards for
reporting and displaying comprehensive income and its components in the
financial statements. The Company elected to report comprehensive income and its
components in a separate statement of comprehensive income. Adoption of this
statement did not change recognition or measurement of net income and,
therefore, did not impact the Company's consolidated results of operations or
financial position.

Effective December 31, 1998, the Company adopted SFAS 131, Disclosures about
Segments of an Enterprise and Related Information, which changes the way
companies report segment information. With the adoption of SFAS 131, the Company
reports division earnings exclusive of goodwill amortization, net realized
investment gains, and nonrecurring items. This methodology is consistent with
the manner in which management reviews division results. Adoption of this
statement did not impact the Company's consolidated results of operations or
financial position.

In June 1998, the Financial Accounting Standards Board issued SFAS 133,
Accounting for Derivative Instruments and Hedging Activities, which requires all
derivative instruments to be recognized at fair value as either assets or
liabilities in the balance sheet. Changes in the fair value of a derivative
instrument are to be reported as earnings or other comprehensive income,
depending upon the intended use of the derivative instrument. This statement is
effective for years beginning after June 15, 1999. Adoption of SFAS 133 is not
expected to have a material impact on the Company's consolidated results of
operations or financial position.

F-15
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS

2.1 INVESTMENT INCOME

Investment income by type of investment was as follows:

<TABLE>
<CAPTION>
1998 1997 1996
----------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Investment income:
Fixed maturities $2,101,730 $1,966,528 $1,846,549
Equity securities 1,813 1,067 1,842
Mortgage loans on real estate 148,447 157,035 175,833
Investment real estate 23,139 22,157 22,752
Policy loans 66,573 62,939 58,211
Other long-term investments 3,837 3,135 2,328
Short-term investments 15,492 8,626 9,280
Investment income from affiliates 10,536 11,094 11,502
----------------------------------------------------------
Gross investment income 2,371,567 2,232,581 2,128,297
Investment expenses 54,634 33,958 33,225
----------------------------------------------------------
Net investment income $2,316,933 $2,198,623 $2,095,072
==========================================================
</TABLE>

The carrying value of investments that produced no investment income during 1998
was less than 0.2% of total invested assets. The ultimate disposition of these
investments is not expected to have a material effect on the Company's results
of operations and financial position.

F-16
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.2 NET REALIZED INVESTMENT GAINS (LOSSES)

Realized gains (losses) by type of investment were as follows:

<TABLE>
<CAPTION>
1998 1997 1996
--------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Fixed maturities:
Gross gains $ 20,109 $ 42,966 $ 46,498
Gross losses (62,657) (34,456) (47,293)
--------------------------------------------------------
Total fixed maturities (42,548) 8,510 (795)
Equity securities 645 1,971 18,304
Other investments 8,118 19,384 10,993
--------------------------------------------------------
Net realized investment gains (losses)
before tax (33,785) 29,865 28,502
Income tax expense (benefit) (11,826) 10,452 9,976
--------------------------------------------------------
Net realized investment gains (losses)
after tax $(21,959) $ 19,413 $ 18,526
========================================================
</TABLE>

F-17
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES

All fixed maturity and equity securities are classified as available-for-sale
and reported at fair value (see Note 1.4). Amortized cost and fair value at
December 31, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
Fixed maturity securities:
Corporate securities:
Investment-grade $18,800,553 $1,129,504 $(26,353) $19,903,703
Below investment-grade 1,409,198 33,910 (45,789) 1,397,320
Mortgage-backed securities* 6,359,242 294,331 (870) 6,652,703
U.S. government obligations 417,822 69,321 (178) 486,965
Foreign governments 331,699 24,625 (2,437) 353,887
State and political subdivisions 86,778 4,796 (187) 91,387
Redeemable preferred stocks 20,313 - (17) 20,296
------------------------------------------------------------------------------
Total fixed maturity securities $27,425,605 $1,556,487 $(75,831) $28,906,261
==============================================================================

Equity securities $ 193,368 $ 19,426 $ (1,110) $ 211,684
==============================================================================

Investment in Parent Company $ 8,597 $ 45,973 $ - $ 54,570
==============================================================================
</TABLE>

* Primarily include pass-through securities guaranteed by and mortgage
obligations ("CMOs") collateralized by the U.S. government and government
agencies.

F-18
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES (CONTINUED)

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
Fixed maturity securities:
Corporate securities:
Investment-grade $17,913,942 $ 906,235 $(17,551) $18,802,626
Below investment-grade 950,438 34,290 (4,032) 980,696
Mortgage-backed securities* 6,614,704 278,143 (4,260) 6,888,587
U.S. government obligations 289,406 46,529 (74) 335,861
Foreign governments 318,212 18,076 (3,534) 332,754
State and political subdivisions 44,505 1,686 -- 46,191
------------------------------------------------------------------------------
Total fixed maturity securities $26,131,207 $1,284,959 $(29,451) $27,386,715
==============================================================================
Equity securities $ 19,208 $ 2,145 $ (239) $ 21,114
==============================================================================
Investment in Parent Company $ 8,597 $ 29,226 $ -- $ 37,823
==============================================================================
</TABLE>

* Primarily include pass-through securities guaranteed by and mortgage
obligations ("CMOs") collateralized by the U.S. government and government
agencies.

F-19
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES (CONTINUED)

Net unrealized gains (losses) on securities included in accumulated
comprehensive income in shareholders' equity at December 31 were as follows:

<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
(In Thousands)

<S> <C> <C>
Gross unrealized gains $1,621,886 $1,316,330
Gross unrealized losses (76,941) (29,690)
DPAC and other fair value adjustments (488,120) (621,867)
Deferred federal income taxes (377,718) (237,247)
--------------------------------------------
Net unrealized gains on securities $ 679,107 $ 427,526
============================================
</TABLE>

The contractual maturities of fixed maturity securities at December 31, 1998
were as follows:

<TABLE>
<CAPTION>
1998 1997
-----------------------------------------------------------------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
-----------------------------------------------------------------------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Fixed maturity securities,
excluding mortgage-
backed securities:
Due in one year or less $ 531,496 $ 536,264 $ 205,719 $ 207,364
Due after one year
through five years 5,550,665 5,812,581 5,008,933 5,216,174
Due after five years
through ten years 9,229,980 9,747,761 9,163,681 9,604,447
Due after ten years 5,754,220 6,156,950 5,138,169 5,470,143
Mortgage-backed securities 6,359,244 6,652,705 6,614,705 6,888,587
-----------------------------------------------------------------------------
Total fixed maturity securities $27,425,605 $28,906,261 $26,131,207 $27,386,715
=============================================================================
</TABLE>

Actual maturities may differ from contractual maturities, since borrowers may
have the right to call or prepay obligations. In addition, corporate
requirements and investment strategies may result in the sale of investments
before maturity. Proceeds from sales of fixed maturities were $5.4 billion,
$14.8 billion, and $16.2 billion during 1998, 1997, and 1996, respectively.

F-20
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.4 MORTGAGE LOANS ON REAL ESTATE

Diversification of the geographic location and type of property collateralizing
mortgage loans reduces the concentration of credit risk. For new loans, the
Company requires loan-to-value ratios of 75% or less, based on management's
credit assessment of the borrower. The mortgage loan portfolio was distributed
as follows at December 31, 1998 and 1997:

<TABLE>
<CAPTION>
OUTSTANDING PERCENT OF PERCENT
AMOUNT TOTAL NONPERFORMING
------------------------------------------------------------------
(In Millions)
<S> <C> <C> <C>
DECEMBER 31, 1998
Geographic distribution:
South Atlantic $ 429 27.6% 0.2%
Pacific 320 20.6 10.4
Mid-Atlantic 326 20.9 4.1
East North Central 178 11.4 -
Mountain 95 6.1 -
West South Central 118 7.5 -
East South Central 46 3.0 -
West North Central 33 2.1 -
New England 25 1.6 -
Allowance for losses (13) (0.8) -
-------------------------------------
Total $ 1,557 100.00% 3.1%
=====================================

Property type:
Office $ 593 38.1% 7.0%
Retail 423 27.1 0.2
Industrial 292 18.8 -
Apartments 178 11.4 2.9
Hotel/motel 38 2.4 -
Other 46 3.0 -
Allowance for losses (13) (0.8) -
-------------------------------------
Total $ 1,557 100% 3.1%
=====================================
</TABLE>

F-21
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.4 MORTGAGE LOANS ON REAL ESTATE (CONTINUED)

<TABLE>
<CAPTION>
OUTSTANDING PERCENT OF PERCENT
AMOUNT TOTAL NONPERFORMING
------------------------------------------------------------------
(In Millions)
<S> <C> <C> <C>
DECEMBER 31, 1997
Geographic distribution:
South Atlantic $ 456 27.5% 1.8%
Pacific 340 20.5 14.4
Mid-Atlantic 288 17.3 -
East North Central 186 11.2 -
Mountain 151 9.1 2.7
West South Central 132 7.9 .1
East South Central 94 5.7 -
West North Central 19 1.1 -
New England 17 1.1 -
Allowance for losses (23) (1.4) -
-------------------------------------
Total $1,660 100.0% 3.6%
=====================================

Property type:
Office $ 622 37.5% 4.6%
Retail 463 27.9 3.0
Industrial 324 19.5 1.8
Apartments 223 13.4 6.1
Hotel/motel 40 2.4 -
Other 11 .7 -
Allowance for losses (23) (1.4) -
-------------------------------------
Total $1,660 100.0% 3.6%
=====================================
</TABLE>

F-22
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.4 MORTGAGE LOANS ON REAL ESTATE (CONTINUED)

Impaired mortgage loans on real estate and related interest income were as
follows:

<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
-----------------------------------------
(In Millions)
<S> <C> <C>
Impaired loans:
With allowance* $ 13 $ 35
Without allowance - -
-----------------------------------------
Total impaired loans $ 13 $ 35
=========================================
</TABLE>

* Represents gross amounts before allowance for mortgage loan losses of $1.8
million and $10 million, respectively.

<TABLE>
<CAPTION>
1998 1997 1996
---------------------------------------------------------------
(In Millions)

<S> <C> <C> <C>
Average investment $ 24 $ 48 $ 72
Interest income earned $ - $ 3 $ 6
Interest income - cash basis $ - $ - $ 6
</TABLE>

F-23
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.5 INVESTMENT SUMMARY

Investments of the Company were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
--------------------------------------------------------------------------------------------------------
CARRYING CARRYING
COST FAIR VALUE AMOUNT COST FAIR VALUE AMOUNT
--------------------------------------------------------------------------------------------------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Fixed maturities:
Bonds:
United States government
and government agencies
and authorities $ 417,822 $ 486,965 $ 486,965 $ 289,406 $ 335,861 $ 335,861
States, municipalities,
and political subdivisions 86,778 91,387 91,387 44,505 46,191 46,191
Foreign governments 331,699 353,887 353,887 318,212 332,754 332,754
Public utilities 1,777,172 1,895,326 1,895,326 1,848,546 1,952,724 1,952,724
Mortgage-backed securities 6,359,242 6,652,703 6,652,703 6,614,704 6,888,587 6,888,587
All other corporate bonds 18,432,579 19,405,697 19,405,697 17,015,834 17,830,598 17,830,598
Redeemable preferred stocks 20,313 20,296 20,296 - - -
--------------------------------------------------------------------------------------------------------
Total fixed maturities 27,425,605 28,906,261 28,906,261 26,131,207 27,386,715 27,386,715
Equity securities:
Common stocks:
Banks, trust, and insurance
companies - - - - - -
Industrial, miscellaneous,
and other 176,321 211,684 211,684 5,604 5,785 5,785
Nonredeemable preferred
stocks 17,047 - - 13,604 15,329 15,329
--------------------------------------------------------------------------------------------------------
Total equity securities 193,368 211,684 211,684 19,208 21,114 21,114
Mortgage loans on real
estate* 1,557,268 - 1,557,268 1,659,921 - 1,659,921
Investment real estate 119,520 - 119,520 129,364 - 129,364
Policy loans 1,170,686 - 1,170,686 1,093,694 - 1,093,694
Other long-term investments 86,194 - 86,194 55,118 - 55,118
Short-term investments 222,949 - 222,949 100,061 - 100,061
--------------------------------------------------------------------------------------------------------
Total investments $30,775,590 $ - $32,274,562 $29,188,573 $ - $30,445,987
========================================================================================================

</TABLE>

* Amount is net of allowance for losses of $13 million and $23 million at
December 31, 1996 and 1997, respectively.

F-24
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

3. DEFERRED POLICY ACQUISITION COSTS

The balance of DPAC at December 31 and the components of the change reported in
operating costs and expenses for the years then ended were as follows:

<TABLE>
<CAPTION>
1998 1997 1996
----------------------------------------------------------
(In Thousands)

<S> <C> <C> <C>
Balance at January 1 $ 835,031 $1,042,783 $ 605,501
Capitalization 244,196 219,339 188,001
Amortization (125,062) (115,467) (102,189)
Effect of unrealized gains (losses) on
securities 133,553 (311,624) 351,470
----------------------------------------------------------
Balance at December 31 $1,087,718 $ 835,031 $1,042,783
==========================================================
</TABLE>

4. OTHER ASSETS

Other assets consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
------------------------------------
(In Thousands)
<S> <C> <C>
Goodwill $ 54,754 $ 51,424
American General Corporation CBO (Collateralized Bond
Obligation) 98-1 Ltd. 9,740 -
Cost of insurance purchased ("CIP") 22,113 -
Other 119,711 81,235
------------------------------------
Total other assets $206,318 $132,659
====================================
</TABLE>

F-25
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

4. OTHER ASSETS (CONTINUED)

A rollforward of CIP for the year ended December 31, 1998, was as follows:

<TABLE>
<CAPTION>
1998
--------------------
(In Thousands)
<S> <C>
Balance at January 1 $ --
Acquisition of business 23,915
Accretion of interest at 5.88% 733
Amortization (2,535)
--------------------
Balance at December 31 $ 22,113
====================
</TABLE>

5. FEDERAL INCOME TAXES

5.1 TAX LIABILITIES

Income tax liabilities were as follows:

<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
--------------------------------------
(In Thousands)

<S> <C> <C>
Current tax (receivable) payable $ (21,035) $ 7,676
Deferred tax liabilities, applicable to:
Net income 320,632 298,456
Net unrealized investment gains 377,718 237,247
-----------------------------------------
Total deferred tax liabilities 698,350 535,703
-----------------------------------------
Total current and deferred tax liabilities $ 677,315 $ 543,379
=========================================
</TABLE>

F-26
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.1 TAX LIABILITIES (CONTINUED)

Components of deferred tax liabilities and assets at December 31 were as
follows:

<TABLE>
<CAPTION>
1998 1997
------------------------------------------
(In Thousands)
<S> <C> <C>
Deferred tax liabilities applicable to:
Deferred policy acquisition costs $ 307,025 $ 226,653
Basis differential of investments 590,661 486,194
Other 150,189 139,298
------------------------------------------
Total deferred tax liabilities 1,047,875 852,145

Deferred tax assets applicable to:
Policy reserves (212,459) (232,539)
Other (137,066) (83,903)
------------------------------------------
Total deferred tax assets before valuation
allowance (349,525) (316,442)
Valuation allowance - -
------------------------------------------
Total deferred tax assets, net of valuation
allowance (349,525) (316,442)
------------------------------------------
Net deferred tax liabilities $ 698,350 $ 535,703
==========================================
</TABLE>

A portion of life insurance income earned prior to 1984 is not taxable unless it
exceeds certain statutory limitations, is distributed as dividends, or unless
the income tax deferred status of such amount is modified by future tax
legislation. Such income, accumulated in policyholders' surplus accounts,
totaled $87.1 million at December 31, 1998. At current corporate rates, the
maximum amount of tax on such income is approximately $30.5 million. Deferred
income taxes on these accumulations are not required because no distributions
are expected.

F-27
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.2 TAX EXPENSE

Components of income tax expense for the years were as follows:

<TABLE>
<CAPTION>
1998 1997 1996
--------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Current expense $134,344 $185,460 $164,272
Deferred expense (benefit):
Deferred policy acquisition cost 33,230 27,644 21,628
Policy reserves 2,189 (27,496) (27,460)
Basis differential of investments 11,969 3,769 4,129
Litigation settlement (33,983) -- --
Year 2000 (9,653) -- --
Other, net 15,623 9,347 14,091
--------------------------------------------------------
Total deferred expense 19,375 13,264 12,388
--------------------------------------------------------
Income tax expense $153,719 $198,724 $176,660
========================================================
</TABLE>

A reconciliation between the income tax expense computed by applying the federal
income tax rate (35%) to income before taxes and the income tax expense reported
in the financial statement is presented below.

<TABLE>
<CAPTION>
1998 1997 1996
--------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Income tax at statutory percentage of GAAP
pretax income $164,638 $200,649 $178,939
Tax-exempt investment income (11,278) (9,493) (9,347)
Goodwill 712 723 759
Other (353) 6,845 6,309
--------------------------------------------------------
Income tax expense $153,719 $198,724 $176,660
========================================================
</TABLE>

F-28
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.3 TAXES PAID

Income taxes paid amounted to approximately $159 million, $168 million, and $182
million in 1998, 1997, and 1996, respectively.

5.4 TAX RETURN EXAMINATIONS

The Parent Company and the majority of its subsidiaries file a consolidated
federal income tax return. The Internal Revenue Service ("IRS") has completed
examinations of the Parent Company's tax returns through 1988. The IRS is
currently examining tax returns for 1989 through 1996. In addition, the tax
returns of companies recently acquired are also being examined. Although the
final outcome of any issues raised in examination is uncertain, the Parent
Company believes that the ultimate liability, including interest, will not
materially exceed amounts recorded in the consolidated financial statements.

6. TRANSACTIONS WITH AFFILIATES

Affiliated notes and accounts receivable were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------------------------------------------------
PAR VALUE BOOK VALUE PAR VALUE BOOK VALUE
------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>

American General Corporation,
9-3/8%, due 2008 $ 4,725 $ 3,345 $ 4,725 $ 3,288
American General Corporation,
Promissory notes, due 2004 14,679 14,679 17,125 17,125
American General Corporation,
Restricted Subordinated
Note, 13-1/2%, due 2002 29,435 29,435 31,494 31,494
------------------------------------------------------------------------
Total notes receivable from
affiliates 48,839 47,459 53,344 51,907
Accounts receivable from
affiliates - 113,637 - 44,612
------------------------------------------------------------------------
Indebtedness from affiliates $48,839 $161,096 $53,344 $96,519
========================================================================
</TABLE>

F-29
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

6. TRANSACTIONS WITH AFFILIATES (CONTINUED)

Various American General companies provide services to the Company, principally
mortgage servicing and investment management services, provided by American
General Investment Management Corporation on a fee basis. The Company paid
approximately $46,921,000, $33,916,000, and $22,083,000 for such services in
1998, 1997, and 1996, respectively. Accounts payable for such services at
December 31, 1998 and 1997 were not material. The Company rents facilities and
provides services on an allocated cost basis to various American General
companies. Beginning in 1998, amounts received by the Company from affiliates
include amounts received by its wholly-owned, non-life insurance subsidiary,
American General Life Companies (AGLC). AGLC provides shared services, including
technology and Year 2000-readiness, to a number of American General
Corporation's life insurance subsidiaries. The Company received approximately
$66,550,000, $6,455,000, and $1,255,000 for such services and rent in 1998,
1997, and 1996, respectively. Accounts receivable for rent and services at
December 31, 1998 and 1997 were not material.

The Company has 8,500 shares of $100 par value cumulative preferred stock
authorized and outstanding with an $80 dividend rate, redeemable at $1,000 per
share after December 31, 2000. The holder of this stock, The Franklin Life
Insurance Company ("Franklin"), an affiliated company, is entitled to one vote
per share, voting together with the holders of common stock.

During 1996, the Company's residential mortgage loan portfolio of $42 million
was sold to American General Finance, Inc., at carrying value plus accrued
interest.

7. STOCK-BASED COMPENSATION

Certain officers of the Company participate in American General Corporation's
stock and incentive plans which provide for the award of stock options,
restricted stock awards, performance awards, and incentive awards to key
employees. Stock options constitute the majority of such awards. Expense related
to stock options is measured as the excess of the market price of the stock at
the measurement date over the exercise price. The measurement date is the first
date on which both the number of shares that the employee is entitled to receive
and the exercise price are known. Under the stock option plans, no expense is
recognized, since the market price equals the exercise price at the measurement
date.

F-30
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

7. STOCK-BASED COMPENSATION (CONTINUED)

Under an alternative accounting method, compensation expense arising from stock
options would be measured at the estimated fair value of the options at the date
of grant. Had compensation expense for the stock options been determined using
this method, net income would have been as follows:

<TABLE>
<CAPTION>
1998 1997 1996
-------------------------------------------------------
(In Thousands)

<S> <C> <C> <C>
Net income as reported $316,674 $374,557 $334,595
Net income pro forma $315,078 $373,328 $334,029
</TABLE>

The average fair values of the options granted during 1998, 1997, and 1996 were
$15.38, $10.33, and $7.07, respectively. The fair value of each option was
estimated at the date of grant using a Black-Scholes option pricing model. The
weighted average assumptions used to estimate the fair value of the stock
options were as follows:

<TABLE>
<CAPTION>
1998 1997 1996
-------------------------------------------------------

<S> <C> <C> <C>
Dividend yield 2.5% 3.0% 4.0%
Expected volatility 23.0% 22.0% 22.3%
Risk-free interest rate 5.76% 6.4% 6.2%
Expected life 6 YEARS 6 years 6 years
</TABLE>

8. BENEFIT PLANS

8.1 PENSION PLANS

The Company has non-contributory defined benefit pension plans covering most
employees. Pension benefits are based on the participant's compensation and
length of credited service.

Equity and fixed maturity securities were 56% and 30%, respectively, of the
plans' assets at the plans' most recent balance sheet dates. Additionally, 1% of
plan assets were invested in general investment accounts of the Parent Company's
subsidiaries through deposit administration insurance contracts.

F-31
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.1 PENSION PLANS (CONTINUED)

The benefit plans have purchased annuity contracts from American General
Corporation's subsidiaries to provide benefits for certain retirees. These
contracts are expected to provide future annual benefits to certain retirees of
American General Corporation and its subsidiaries of approximately $52 million.

The components of pension expense and underlying assumptions were as follows:

<TABLE>
<CAPTION>
1998 1997 1996
--------------------------------------------------------
(In Thousands)

<S> <C> <C> <C>
Service cost (benefits earned) $ 3,693 $ 1,891 $ 1,826
Interest cost 6,289 2,929 2,660
Expected return on plan assets (9,322) (5,469) (5,027)
Amortization (557) 195 4
--------------------------------------------------------
Pension (income) expense $ 103 $ (454) $ (537)
========================================================

Discount rate on benefit obligation 7.00% 7.25% 7.50%
Rate of increase in compensation levels 4.25% 4.00% 4.00%
Expected long-term rate of return on plan
assets 10.25% 10.00% 10.00%
</TABLE>

The Company's funding policy is to contribute annually no more than the maximum
deductible for federal income tax purposes. The funded status of the plans and
the prepaid pension expense included in other assets at December 31 were as
follows:

<TABLE>
<CAPTION>
1998 1997
-----------------------------------
(In Thousands)

<S> <C> <C>
Projected benefit obligation (PBO) $ 96,554 $ 43,393
Plan assets at fair value 120,898 80,102
Plan assets at fair value in excess of PBO 24,344 36,709
Other unrecognized items, net (10,176) (23,470)
-----------------------------------
Prepaid pension expense $ 14,168 $ 13,239
===================================
</TABLE>

F-32
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.1 PENSION PLANS (CONTINUED)

The change in PBO was as follows:

<TABLE>
<CAPTION>
1998 1997
---------------------------------
(In Thousands)

<S> <C> <C>
PBO at January 1 $43,393 $37,389
Service and interest costs 9,982 4,820
Benefits paid (1,954) (673)
Actuarial loss 17,089 1,810
Amendments, transfers, and acquisitions 28,044 47
---------------------------------
PBO at December 31 $96,554 $43,393
=================================
</TABLE>

The change in the fair value of plan assets was as follows:

<TABLE>
<CAPTION>
1998 1997
----------------------------------
(In Thousands)

<S> <C> <C>
Fair value of plan assets at January 1 $ 80,102 $65,158
Actual return on plan assets 12,269 14,990
Benefits paid (1,954) (673)
Acquisitions and other 30,481 627
----------------------------------
Fair value of plan assets at December 31 $120,898 $80,102
==================================
</TABLE>

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company has life, medical, supplemental major medical, and dental plans for
certain retired employees and agents. Most plans are contributory, which retiree
contributions adjusted annually to limit employer contributions to predetermined
amounts. The Company has reserved the right to change or eliminate these
benefits at any time.

F-33
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.2 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)

The life plans are insured through December 31, 1999. A portion of the retiree
medical and dental plans is funded through a voluntary employees' beneficiary
association (VEBA); the remainder is unfunded and self-insured. All of the
retiree medical and dental plans' assets held in the VEBA were invested in
readily marketable securities at its most recent balance sheet date.

Postretirement benefit expense in 1998, 1997, and 1996 was $60,000, $601,000,
and $844,000, respectively. The accrued liability for postretirement benefits
was $19.2 million and $3.8 million at December 31, 1998 and 1997, respectively.
These liabilities were discounted at the same rates used for the pension plans.

9. DERIVATIVE FINANCIAL INSTRUMENTS

9.1 USE OF DERIVATIVE FINANCIAL INSTRUMENTS

The Company's use of derivative financial instruments is generally limited to
reducing its exposure to interest rate and currency exchange risk by utilizing
interest rate and currency swap agreements, and options to enter into interest
rate swap agreements (called swaptions). The Company accounts for these
derivative and financial instruments as hedges. Hedge accounting requires a high
correlation between changes in fair values or cash flows of the derivative
financial instrument and the specific item being hedged, both at inception and
throughout the life of the hedge.

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS

Interest rate swap agreements are used to convert specific investment securities
from a floating to a fixed rate basis, or vice versa, and to hedge against the
risk of declining interest rates on anticipated security purchases. Interest
rate swap agreements are also used to convert a portion of floating-rate
borrowings to a fixed rate and to hedge against the risk of rising interest
rates on anticipated debt issuances.

Currency swap agreements are used to convert cash flows from specific investment
securities denominated in foreign currencies into U.S. dollars at specific
exchange rates, and to hedge against currency rate fluctuation on anticipated
security purchases.

F-34
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS (CONTINUED)

The difference between amounts paid and received on swap agreements is recorded
on an accrual basis as an adjustment to net investment income or interest
expense, as appropriate, over the periods covered by the agreements. The related
amount payable to or receivable from counterparties is included in other
liabilities or assets.

The fair values of swap agreements are recognized in the consolidated balance
sheet if the hedge investments are carried at fair value or if they hedge
anticipated purchases of such investments. In this event, changes in the fair
value of a swap agreement are reported in net unrealized gains on securities
included in other accumulated comprehensive income in shareholders' equity,
consistent with the treatment of the related investment security. The fair
values of swap agreements hedging debt are not recognized in the consolidated
balance sheet.

For swap agreements hedging anticipated investment purchases or debt issuances,
the net swap settlement amount or unrealized gain or loss is deferred and
included in the measurement of the anticipated transaction when it occurs.

Swap agreements generally have terms of two to ten years. Any gain or loss from
early termination of a swap agreement is deferred and amortized into income over
the remaining term of the related investment or debt. If the underlying
investment or debt is extinguished or sold, any related gain or loss on swap
agreements is recognized in income.

F-35
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS (CONTINUED)

Interest rate and currency swap agreements related to investment securities at
December 31 were as follows:

<TABLE>
<CAPTION>
1998 1997
-----------------------------------
(Dollars in Millions)
<S> <C> <C>
Interest rate swap agreements to pay fixed rate:
Notional amount $ - $ 15
Average receive rate - 6.74%
Average pay rate - 6.48%
Interest rate swap agreements to receive fixed rate:
Notional amount $ 369 $ 144
Average receive rate 6.06% 6.89%
Average pay rate 5.48% 6.37%
Currency swap agreements (receive U.S. dollars/pay
Canadian dollars):
Notional amount (in U.S. dollars) $ 124 $ 139
Average exchange rate 1.50 1.50
</TABLE>

9.3 CALL SWAPTIONS

Options to enter into interest rate swap agreements are used to limit the
Company's exposure to reduced spreads between investment yields and interest
crediting rates should interest rates decline significantly over prolonged
periods. During such periods, the spread between investment yields and interest
crediting rates may be reduced as a result of certain limitations on the
Company's ability to manage interest crediting rates. Call swaptions allow the
Company to enter into interest rate swap agreements to receive fixed rates and
pay lower floating rates, effectively increasing the spread between investment
yields and interest crediting rates.

Premiums paid to purchase call swaptions are included in investments and are
amortized to net investment income over the exercise period of the swaptions. If
a call swaption is terminated, any gain is deferred and amortized to insurance
and annuity benefits over the expected life of the insurance and annuity
contracts and any unamortized premium is charged to income. If a call swaption
ceases to be an effective hedge, any related gain or loss is recognized in
income.

F-36
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.3 CALL SWAPTIONS (CONTINUED)

Swaptions at December 31 were as follows:

<TABLE>
<CAPTION>
1998 1997
----------------------------------
(Dollars in Billions)
<S> <C> <C>
Call swaptions:
Notional amount $1.76 $1.35
Average strike rate 3.97% 4.81%

Put swaptions:
Notional amount $1.05 $ -
Average strike rate 8.33% -
</TABLE>

9.4 CREDIT AND MARKET RISK

Derivative financial instruments expose the Company to credit risk in the event
of non-performance by counterparties. The Company limits this exposure by
entering into agreements with counterparties having high credit ratings and by
regularly monitoring the ratings. The Company does not expect any counterparty
to fail to meet its obligation; however, non-performance would not have a
material impact on the Company's consolidated results of operations or financial
position.

The Company's exposure to market risk is mitigated by the offsetting effects of
changes in the value of the agreements and the related items being hedged.

F-37
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying amounts and fair values for certain of the Company's financial
instruments at December 31 are presented below. Care should be exercised in
drawing conclusions based on fair value, since (1) the fair values presented do
not include the value associated with all the Company's assets and liabilities,
and (2) the reporting of investments at fair value without a corresponding
evaluation of related policyholders liabilities can be misinterpreted.

<TABLE>
<CAPTION>
1998 1997
--------------------------------------------------------------------------------
FAIR CARRYING FAIR CARRYING
VALUE AMOUNT VALUE AMOUNT
--------------------------------------------------------------------------------
(In Millions) (In Millions)
<S> <C> <C> <C> <C>
Assets:
Fixed maturity and equity
securities * $29,118 $29,118 $27,408 $27,408
Mortgage loans on real
estate $ 1,608 $ 1,557 $ 1,702 $ 1,660
Policy loans $ 1,252 $ 1,171 $ 1,127 $ 1,094
Investment in parent
company $ 55 $ 55 $ 38 $ 38
Indebtedness from
affiliates $ 161 $ 161 $ 97 $ 97
Liabilities:
Insurance investment
contracts $25,852 $25,675 $24,011 $24,497
</TABLE>

* Includes derivative financial instruments with negative fair values of $1.0
million and $4.2 million and positive fair values of $24.3 million and $7.2
million at December 31, 1998 and 1997, respectively.

F-38
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The following methods and assumptions were used to estimate the fair value of
financial instruments:

FIXED MATURITY AND EQUITY SECURITIES

Fair values of fixed maturity and equity securities were based on quoted
market prices, where available. For investments not actively traded, fair
values were estimated using values obtained from independent pricing
services or, in the case of some private placements, by discounting
expected future cash flows using a current market rate applicable to yield,
credit quality, and average life of investments.

MORTGAGE LOANS ON REAL ESTATE

Fair value of mortgage loans was estimated primarily using discounted cash
flows, based on contractual maturities and risk-adjusted discount rates.

POLICY LOANS

Fair value of policy loans was estimated using discounted cash flows and
actuarially determined assumptions, incorporating market rates.

INVESTMENT IN PARENT COMPANY

The fair value of the investment in Parent Company is based on quoted
market prices of American General Corporation common stock.

INSURANCE INVESTMENT CONTRACTS

Fair value of insurance investment contracts was estimated using cash flows
discounted at market interest rates.

F-39
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

INDEBTEDNESS FROM AFFILIATES

Indebtedness from affiliates is composed of accounts receivable and notes
receivable from affiliates. Due to the short-term nature of accounts
receivable, fair value is assumed to equal carrying value. Fair value of
notes receivable was estimated using discounted cash flows based on
contractual maturities and discount rates that were based on U.S. Treasury
rates for similar maturity ranges.

11. DIVIDENDS PAID

American General Life Insurance Company paid $244 million, $401 million, and
$189 million in dividends on common stock to AGC Life Insurance Company in 1998,
1997, and 1996, respectively. The Company also paid $680 thousand per year in
dividends on preferred stock to an affiliate, The Franklin Life Insurance
Company, in 1998, 1997, and 1996.

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES

The Company and its insurance subsidiaries are restricted by state insurance
laws as to the amounts they may pay as dividends without prior approval from
their respective state insurance departments. At December 31, 1998,
approximately $3.3 billion of consolidated shareholder's equity represents net
assets of the Company which cannot be transferred, in the form of dividends,
loans, or advances to the Parent Company. Approximately $2.5 billion of
consolidated shareholders' equity is similarly restricted as to transfer from
its subsidiaries to the Company.

Generally, the net assets of the Company's subsidiaries available for transfer
to the Parent are limited to the amounts that the subsidiaries' net assets, as
determined in accordance with statutory accounting practices, exceed minimum
statutory capital requirements. However, payments of such amounts as dividends
may be subject to approval by regulatory authorities and are generally limited
to the greater of 10% of policyholders' surplus or the previous year's statutory
net gain from operations.

The Company has various leases, substantially all of which are for office space
and facilities. Rentals under financing leases, contingent rentals, and future
minimum rental commitments and rental expense under operating leases are not
material.

F-40
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES (CONTINUED)

In recent years, various life insurance companies have been named as defendants
in class action lawsuits relating to life insurance pricing and sales practices,
and a number of these lawsuits have resulted in substantial settlements. On
December 16, 1998, American General Corporation announced that certain of its
life insurance subsidiaries had entered into agreements to resolve all pending
market conduct class action lawsuits. The settlements are not final until
approved by the courts and any appeals are resolved. If court approvals are
obtained and appeals are not taken, it is expected the settlements will be final
in third quarter 1999.

In conjunction with the proposed settlements, the Company recorded a charge of
$97.1 million ($63.1 million after-tax) in the fourth quarter of 1998. The
charge covers the cost of policyholder benefits and other anticipated expenses
resulting from the proposed settlements, as well as other administrative and
legal costs.

On December 31, 1998, the Company entered into an agreement with the Parent
Company whereby the Company assigned, and the Parent Company assumed, $80.1
million of the liabilities of the Company related to the proposed resolution.
The liabilities of American General Life Insurance Company of New York, which
totaled $17.0 million, were not assumed by the Parent Company. As consideration
for the assumption of the liabilities, the Company paid the Parent Company an
amount equal to the liabilities recorded with respect to the proposed resolution
of the litigation. The assignment of the liabilities was not a novation, and
accordingly, the Company retains a contingent liability related to the
litigation. The litigation liabilities were reduced by payments of $2.7 million,
and the remaining balance of $94.4 million was included in other liabilities on
the Company's balance sheet at December 31, 1998.

The Company is party to various other lawsuits and proceedings arising in the
ordinary course of business. Many of these lawsuits and proceedings arise in
jurisdictions, such as Alabama and Mississippi, that permit damage awards
disproportionate to the actual economic damages incurred. Based upon information
presently available, the Company believes that the total amounts that will
ultimately be paid, if any, arising from these lawsuits and proceedings will not
have a material adverse effect on the Company's consolidated results of
operations and financial position. However, it should be noted that the
frequency of large damage awards, including large punitive damage awards, that
bear little or no relation to actual economic damages incurred by plaintiffs in
jurisdictions like Alabama and Mississippi continues to create the potential for
an unpredictable judgment in any given suit.

F-41
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES (CONTINUED)

The increase in the number of insurance companies that are under regulatory
supervision has resulted, and is expected to continue to result, in increased
assessments by state guaranty funds to cover losses to policyholders of
insolvent or rehabilitated insurance companies. Those mandatory assessments may
be partially recovered through a reduction in future premium taxes in certain
states. At December 31, 1998 and 1997, the Company has accrued $6.0 million and
$7.6 million, respectively, for guaranty fund assessments, net of $3.7 million
and $4.3 million, respectively, of premium tax deductions. The Company has
recorded receivables of $6.2 million and $9.7 million at December 31, 1998 and
1997, respectively, for expected recoveries against the payment of future
premium taxes. Expenses incurred for guaranty fund assessments were $3.6
million, $2.1 million, and $6.0 million in 1998, 1997, and 1996, respectively.

F-42
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

13. REINSURANCE

Reinsurance transactions for the years ended December 31, 1998, 1997, and 1996
were as follows:

CEDED TO ASSUMED PERCENTAGE OF
GROSS OTHER FROM OTHER AMOUNT
AMOUNT COMPANIES COMPANIES NET AMOUNT ASSUMED TO NET
----------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1998
Life insurance in force $46,057,031 $13,288,183 $629,791 $33,398,639 1.89%
====================================================================
Premiums:
Life insurance and annuities $ 90,298 $ 42,235 $ 117 $ 48,180 0.24%
Accident and health insurance 1,134 87 - 1,047 0.00%
--------------------------------------------------------------------
Total premiums $ 91,432 $ 42,322 $ 117 $ 49,227 0.24%
====================================================================
DECEMBER 31, 1997
Life insurance in force $45,963,710 $10,926,255 $ 4,997 $35,042,452 0.01%
====================================================================
Premiums:
Life insurance and annuities $ 100,357 $ 37,294 $ 75 $ 63,138 0.12%
Accident and health insurance 1,208 172 - 1,036 0.00%
--------------------------------------------------------------------
Total premiums $ 101,565 $ 37,466 $ 75 $ 64,174 0.12%
====================================================================
DECEMBER 31, 1996
Life insurance in force $44,535,841 $ 8,625,465 $ 5,081 $35,915,457 0.01%
====================================================================
Premiums:
Life insurance and annuities $ 104,225 $ 34,451 $ 36 $ 69,810 0.05%
Accident and health insurance 1,426 64 - 1,362 0.00%
--------------------------------------------------------------------
Total premiums $ 105,651 $ 34,515 $ 36 $ 71,172 0.05%
====================================================================
</TABLE>

Reinsurance recoverable on paid losses was approximately $7.7 million, $2.3
million, and $6.9 million at December 31, 1998, 1997, and 1996, respectively.
Reinsurance recoverable on unpaid losses was approximately $2.5 million, $3.2
million, and $4.3 million at December 31, 1998, 1997, and 1996, respectively.

F-43
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

14. YEAR 2000 CONTINGENCY (UNAUDITED)

INTERNAL SYSTEMS

The Company's ultimate parent, American General Corporation, ("AGC") has
numerous technology systems that are managed on a decentralized basis. AGC's
Year 2000 readiness efforts are therefore being undertaken by its key business
units with centralized oversight. Each business unit, including the Company, has
developed and is implementing a plan to minimize the risk of a significant
negative impact on its operations.

While the specifics of the plans vary, the plans include the following
activities: (1) perform an inventory of the Company's information technology and
non-information technology systems; (2) assess which items in the inventory may
expose the Company to business interruptions due to Year 2000 issues; (3)
reprogram or replace systems that are not Year 2000 ready; (4) test systems to
prove that they will function into the next century as they do currently; and
(5) return the systems to operations. As of December 31, 1998, substantially all
of the Company's critical systems are Year 2000 ready and have been returned to
operations. However, activities (3) through (5) for certain systems are ongoing,
with vendor upgrades expected to be received during the first half of 1999.

THIRD PARTY RELATIONSHIPS

The Company has relationships with various third parties who must also be Year
2000 ready. These third parties provide, or receive resources and services to
(or from) the Company and include organizations with which the Company exchanges
information. Third parties include vendors of hardware, software, and
information services; providers of infrastructure services such as voice and
data communications and utilities for office facilities; investors, customers;
distribution channels; and joint venture partners. Third parties differ from
internal systems in that the Company exercises less, or no, control over Year
2000 readiness. The Company has developed a plan to assess and attempt to
mitigate the risks associated with the potential failure of third parties to
achieve Year 2000 readiness. The plan includes the following activities (1)
identify and classify third party dependencies; (2) research, analyze, and
document Year 2000 readiness for critical third parties; and (3) test critical
hardware and software products and electronic interfaces. As of December 31,
1998, AGC has identified and assessed more approximately 700 critical third
party dependencies, including those related to the Company. A more detailed
evaluation will be completed during the first quarter 1999 as part of the
Company's contingency planning efforts. Due to the various stages of third
parties' Year 2000 readiness, the Company's testing activities will extend
through 1999.

F-44
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

14. YEAR 2000 CONTINGENCY (UNAUDITED) (CONTINUED)

CONTINGENCY PLANS

The Company has commenced contingency planning to reduce the risk of Year 2000-
related business failures. The contingency plans, which address both internal
systems and third party relationships, include the following activities: (1)
evaluate the consequences of failure of business processes with significant
exposure to Year 2000 risk; (2) determine the probability of a Year 2000 related
failure for those processes that have a high consequence of failure; (3) develop
an action plan to complete contingency plans for those processes that rank high
in consequence and probability of failure; and (4) complete the applicable
actions plans. The Company is currently developing action plans and expects to
substantially complete all contingency planning activities by April 30, 1999.

RISKS AND UNCERTAINTIES

Based on its plans to make internal systems ready for Year 2000, to deal with
third party relationships, and to develop contingency action, the Company
believes that it will experience at most isolated and minor disruptions of
business processes following the turn of the century. Such disruptions are not
expected to have a material effect on the Company's future results of
operations, liquidity, or financial condition. However, due to the magnitude and
complexity of this project, risks and uncertainties exist and the Company is not
able to predict a most reasonably likely worst case scenario. If conversion of
the Company's internal systems is not completed on a timely basis (due to non-
performance by significant third party vendors, lack of qualified personnel to
perform the Year 2000 work, or other unforeseen circumstances in completing the
Company's plans), or if critical third parties fail to achieve Year 2000
readiness on a timely basis, the Year 2000 issue could have a material adverse
impact on the Company's operation following the turn of the century.

COSTS

Through December 31, 1998, the Company has incurred, and anticipates that it
will continue to incur, costs for internal staff, third-party vendors, and other
expenses to achieve Year 2000 readiness. The cost of activities related to Year
2000 readiness has not had a material adverse effect on the Company's results of
operations or financial condition. In addition, the Company has elected to
accelerate the planned replacement of certain systems as part of the Year 2000
plans. Costs of the replacement systems are being capitalized and amortized over
their useful lives, in accordance with the Company's normal accounting policies.

F-45
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

15. DIVISION OPERATIONS

15.1 NATURE OF OPERATIONS

The Company manages its business operation through two divisions, which are
based on products and services offered.

RETIREMENT SERVICES

The Retirement Services Division provides tax-deferred retirement annuities and
employer-sponsored retirement plans to employees of educational, health care,
public sector, and other not-for-profit organizations marketed nationwide
through exclusive sales representatives.

LIFE INSURANCE

The Life Insurance division provides traditional, interest-sensitive, and
variable life insurance and annuities to a broad spectrum of customers through
multiple distribution channels focused on specific market segments.

15.2 DIVISION RESULTS

Results of each division exclude goodwill amortization, net realized investment
gains, and non-recurring items.

Division earnings information was as follows:

<TABLE>
<CAPTION>
REVENUES INCOME BEFORE TAXES EARNINGS
------------------------------------------------------------------------------------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
------------------------------------------------------------------------------------------------------------
(In Millions)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retirement Services $1,987 $1,859 $1,745 $ 469 $398 $343 $315 $261 $226
Life Insurance 870 822 774 162 147 141 107 97 92
------------------------------------------------------------------------------------------------------------
Total divisions 2,857 2,681 2,519 631 545 484 422 358 318
Goodwill
amortization - - - (2) (2) (2) (2) (2) (2)
RG (L) (34) 30 29 (34) 30 29 (22) 19 19
Nonrecurring items - - - (125)(a) - - (81)(a) - -
------------------------------------------------------------------------------------------------------------
Total consolidated $2,823 $2,711 $2,548 $ 470 $573 $511 $317 $375 $335
============================================================================================================
</TABLE>

(a) Includes $97 million pretax ($63 million after-tax) in litigation
settlements and $28 million pretax ($18 million after-tax) in Year 2000
costs.

F-46
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

15. DIVISION OPERATIONS (CONTINUED)

15.2 DIVISION RESULTS (CONTINUED)

Division balance sheet information was as follows:

<TABLE>
<CAPTION>
ASSETS LIABILITIES
-------------------------------------------------------------------
DECEMBER 31
-------------------------------------------------------------------
IN MILLIONS 1998 1997 1998 1997
-------------------------------------------------------------------

<S> <C> <C> <C> <C>
Retirement Services $41,347 $35,195 $38,841 $33,136
Life Insurance 8,894 8,370 7,831 7,367
-------------------------------------------------------------------
Total consolidated $50,241 $43,565 $46,672 $40,503
===================================================================
</TABLE>

F-47

<PAGE>

INDEX OF WORDS AND PHRASES

This index should help you to locate more information about some of the
terms and phrases used in this prospectus.

Page to
See in this
Defined Term Prospectus

accumulation value............................................... 5
AGLC............................................................. 48
AGL.............................................................. 28
amount at risk................................................... 7
automatic rebalancing............................................ 5
base coverage.................................................... 11,38
basis............................................................ 31
beneficiary...................................................... 35
cash surrender value............................................. 18
cash value accumulation test..................................... 11
close of business................................................ 37
Code............................................................. 29
contingent insured............................................... 3
cost of insurance rates.......................................... 7
daily charge..................................................... 6
date of issue.................................................... 37
death benefit.................................................... 11
declared fixed interest account option........................... 1
dollar cost averaging............................................ 4
full surrender................................................... 18
Fund, Funds...................................................... 1
guideline premium test........................................... 11
guaranteed minimum death benefit................................. 14
investment option................................................ 29
joint equal age.................................................. 13
lapse............................................................ 13
last surviving contingent insured................................ 3
loan, loan interest.............................................. 19
maturity, maturity date.......................................... 20
modified endowment contract...................................... 30
monthly deduction day............................................ 37
monthly guarantee premium........................................ 13
monthly insurance charge......................................... 7
Mutual Fund...................................................... 1
option 1, 2...................................................... 20
partial surrender................................................ 18
payment option................................................... 20
planned periodic premium......................................... 13
Policy........................................................... 1

52
<PAGE>

Page to
See in this
Defined Term Prospectus

Policy loan...................................................... 19
Policy month, year............................................... 37
premium payments................................................. 4
reinstate, reinstatement......................................... 13
SEC.............................................................. 2
separate account................................................. 29
Separate Account VL-R............................................ 29
seven-pay test................................................... 30
specified amount................................................. 11
surrender........................................................ 18
telephone transactions........................................... 23
transfers........................................................ 15
uninsurable...................................................... 21
valuation date, period........................................... 37
variable investment option....................................... 1

We have filed a registration statement relating to Separate Account VL-R
and the Policy with the SEC. The registration statement , which is required by
the Securities Act of 1933, includes additional information that is not required
in this prospectus. If you would like the additional information, you may obtain
it from the SEC's Website at http://www.sec.gov or main office in Washington,
D.C. You will have to pay a fee for the material.

You should rely only on the information contained in this prospectus or
sales materials we have approved. We have not authorized anyone to provide you
with information that is different. The policies are not available in all
states. This prospectus is not an offer in any state to any person if the offer
would be unlawful.

53
<PAGE>

PART II

(OTHER INFORMATION)

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

American General Life Insurance Company's Bylaws provide in Article VII,
Section 1 for indemnification of directors, officers and employees of the
Company.

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.

REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A) OF THE INVESTMENT COMPANY ACT OF
1940

American General 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 risks
assumed by American General Life Insurance Company.

II-1
<PAGE>

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following papers and documents:

The facing sheet.
Cross-Reference Table.
Prospectus, consisting of 53 pages of text, plus 50 financial pages of American
General Life Insurance Company.
The undertaking to file reports.
The Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written Consents of the following persons:
(a) Pauletta P. Cohn, Deputy General Counsel of
American General Life Companies
(b) American General Life Insurance Company's actuary
(c) Independent Auditors

Independent Auditors

The following exhibits:

1. Exhibits required by Article IX, paragraph A of Form N-8B-2:

(1)(a) Resolutions of Board of Directors of American General Life
Insurance Company authorizing the establishment of Separate
Account VL-R. (1)

(1)(b) Resolutions of Board of Directors of American General Life
Insurance Company authorizing the establishment of variable
life insurance standards of suitability and conduct. (1)

(2) Not applicable.

(3)(a) Amended and Restated Distribution Agreement between
American General Securities Incorporated and American
General Life Insurance Company effective October 15, 1998.
(4)

(3)(b)(i) Form of Selling Group Agreement. (6)

(3)(b)(ii) Form of Selling Group Agreement, Schedule A (identifying
the policy offered) and Schedule B (describing the
commissions paid). (Filed herewith)

(3)(c) Schedule of Commissions (incorporated by reference from the
text included under the heading "Distribution of the
Policies" in the prospectus that is filed as part of this
Registration Statement).

(4) Not applicable.

II-2
<PAGE>

(5)(a) Form of the "Platinum Investor/sm/ Survivor" Variable
Universal Life Insurance Policy (Policy Form No. 99206).
(12)

(5)(b) Specimen form of the "Platinum Investor/s/ Survivor"
Variable Universal Life Insurance Policy (Policy Form No.
99206). (Filed herewith)

(6)(a) Amended and Restated Articles of Incorporation of American
General Life Insurance Company, effective December 31,
1991. (2)

(6)(b) Bylaws of American General Life Insurance Company, adopted
January 22, 1992. (3)

(6)(c) Amendment to the Amended and Restated Articles of
Incorporation of American General Life Insurance Company,
effective July 13, 1995. (5)

(7) Not applicable.

(8)(a)(i) Form of Participation Agreement by and Among AIM Variable
Insurance Funds, Inc., AIM Distributors, Inc., American
General Life Insurance Company, on Behalf of Itself and its
Separate Accounts, and American General Securities
Incorporated. (6)

(8)(a)(ii) Form of Amendment Three to Participation Agreement by and
among AIM Variable Insurance Funds, Inc., A I M
Distributors, Inc., American General Life Insurance
Company, on Behalf of Itself and its Separate Accounts, and
American General Securities Incorporated dated as of
February 1, 2000. (13)

(8)(b)(i) Form of Participation Agreement by and between The Variable
Annuity Life Insurance Company and American General Life
Insurance Company. (10)

(8)(b)(ii) Amendment One to Participation Agreement by and between The
Variable Annuity Life Insurance Company and American
General Life Insurance Company dated as of July 21, 1998.
(8)

(8)(c)(i) Form of Participation Agreement Between American General
Life Insurance Company and Dreyfus Variable Investment
Fund, The Dreyfus Socially Responsible Growth Fund, Inc.
and Dreyfus Life and Annuity Index Fund, Inc. (6)

(8)(c)(ii) Amendment One to Participation Agreement by and among
American General Life Insurance Company, Dreyfus Variable
Investment Fund, The Dreyfus Socially Responsible Growth
Fund, Inc. and Dreyfus Life and Annuity Index Fund, Inc.
dated December 1, 1998. (8)

II-3
<PAGE>

(8)(d)(i) Form of Participation Agreement Among MFS Variable
Insurance Trust, American General Life Insurance Company
and Massachusetts Financial Services Company. (6)

(8)(d)(ii) Form of Amendment Three to Participation Agreement by and
among MFS Variable Insurance Trust, American General Life
Insurance Company and Massachusetts Financial Services
Company dated as of February 1, 2000. (13)

(8)(e)(i) Participation Agreement by and among American General Life
Insurance Company, American General Securities
Incorporated, Morgan Stanley Universal Funds, Inc., Morgan
Stanley Asset Management Inc., and Miller Anderson &
Sherrerd LLP. (9)

(8)(e)(ii) Amendment One to Participation Agreement by and among
American General Life Insurance Company, American General
Securities Incorporated, Morgan Stanley Universal Funds,
Inc., Morgan Stanley Asset Management Inc., and Miller
Anderson & Sherrerd LLP. (11)

(8)(e)(iii) Form of Amendment Six to Participation Agreement Among
Morgan Stanley Dean Witter Universal Funds, Inc., Van
Kampen Distributors, Inc., Morgan Stanley Dean Witter
Investment Management Inc., Miller Anderson & Sherrerd,
LLP, American General Life Insurance Company, and American
General Securities Incorporated. (Filed herewith)

(8)(f) Form of Participation Agreement Among Putnam Variable
Trust, Putnam Mutual Funds Corp., and American General Life
Insurance Company. (6)

(8)(g)(i) Form of Participation Agreement Among American General Life
Insurance Company, American General Securities
Incorporated, SAFECO Resources Series Trust, and Safeco
Securities, Inc. (6)

(8)(g)(ii) Form of Amendment Three to Participation Agreement by and
among American General Life Insurance Company, American
General Securities Incorporated and SAFECO Resources Series
Trust dated as of January 1, 2000. (Filed herewith)

(8)(h)(i) Amended and Restated Participation Agreement by and among
American General Life Insurance Company, American General
Securities Incorporated, Van Kampen American Capital Life
Investment Trust, Van Kampen American Capital Asset
Management, Inc., and Van Kampen American Capital
Distributors, Inc. (9)

(8)(h)(ii) Amendment One to Amended and Restated Participation
Agreement by and among American General Life Insurance
Company, American General Securities Incorporated, Van
Kampen American Capital Life Investment Trust, Van Kampen
American Capital Asset Management, Inc., and Van Kampen
American Capital Distributors, Inc. (8)

II-4
<PAGE>

(8)(h)(iii) Form of Amendment Five to Amended and Restated
Participation Agreement by and among Van Kampen Life
Investment Trust, Van Kampen Funds, Inc., Van Kampen Asset
Management Inc., American General Life Insurance Company,
and American General Securities Incorporated. (13)

(8)(i) Form of Administrative Services Agreement between American
General Life Insurance Company and fund distributor. (5)

(8)(j) Form of Administrative Services Agreement between American
General Life Insurance Company, Miller Anderson & Sherrard
LLP and Morgan Stanley Dean Witter Investment Management
Inc. (Filed herewith)

(8)(k) Form of Administrative Services Agreement between American
General Life Insurance Company and SAFECO Asset Management
Company. (Filed herewith)

(8)(l) Form of Administrative Services Agreement between Van
Kampen Asset Management Inc. and American General Life
Insurance Company dated January 1, 2000. (13)

(8)(m) Form of services agreement dated July 31, 1975, (limited to
introduction and first two recitals, and sections 1-3)
among various affiliates of American General Corporation,
including American General Life Insurance Company and
American General Life Companies. (7)

(8)(n) Administrative Services Agreement dated as of June 1, 1998,
between American General Life Insurance Company and AIM
Advisors, Inc. (4)

(8)(o)(i) Administrative Services Agreement dated as of August 11,
1998, between American General Life Insurance Company and
The Dreyfus Corporation. (4)

(8)(o)(ii) Amendment to Administrative Services Agreement dated as of
August 11, 1998, between American General Life Insurance
Company to the Dreyfus Corporation effective as of
December 1, 1998. (4)

(9) Not applicable.

(10)(a)(i) Form of Multiple Insured Life Insurance Application -
Part A. (12)

(10)(a)(ii) Specimen form of Multiple Insured Life Insurance
Application - Part A. (Filed herewith)

(10)(b)(i) Form of Multiple Insured Life Insurance Application -
Part B. (12)

(10)(b)(ii) Specimen form of Multiple Insured Life Insurance
Application - Part B. (Filed herewith)

II-5
<PAGE>

(10)(c)(i) Form of Medical Exam Form Life Insurance Application. (12)

(10)(c)(ii) Specimen form of Medical Exam Form Life Insurance
Application. (Filed herewith)

(10)(d)(i) Form of Variable Universal Life Insurance Supplemental
Application. (12)

(10)(d)(ii) Specimen form of Variable Universal Life Insurance
Supplemental Application. (Filed herewith)

(10)(e)(i) Form of product specific Service Request Form. (12)

(10)(e)(ii) Specimen form of product specific Service Request Form.
(Filed herewith)

2. Other Exhibits

2(a) Opinion and Consent of Pauletta P. Cohn, Deputy General Counsel
of American General Life Companies. (Filed herewith)

2(b) Opinion and Consent of American General Life Insurance Company's
actuary. (Filed herewith)

3 Not applicable.

4 Not applicable.

5 Financial Data Schedule. (Not applicable)

6 Consent of Independent Auditors. (Filed herewith)

7 Powers of Attorney. (12)

27 Financial Data Schedule. (Inapplicable, because no financial
statements of the Separate Account are being filed herewith)

/1/ Incorporated herein by reference to the initial filing of the Form S-6
Registration Statement (File No. 333-42567) of American General Life Insurance
Company Separate Account VL-R filed on December 18, 1997.

/2/ Incorporated herein by reference to the initial filing of the Form N-4
Registration Statement (File No. 33-43390) of Separate Account D of American
General Life Insurance Company filed on October 16, 1991.

/3/ Incorporated herein by reference to the filing of Post-Effective Amendment
No. 1 of the Form N-4 Registration Statement (File No. 33-43390) of Separate
Account D of American General Life Insurance Company filed on April 30, 1992.

II-6
<PAGE>

/4/ Incorporated herein by reference to the initial filing of the Form N-4
Registration Statement (File No. 333-70667) of American General Life Insurance
Company Separate Account D filed on January 15, 1999.

/5/ Incorporated by reference to the filing of Pre-Effective Amendment No. 3 of
the Form S-6 Registration Statement (File No. 333-53909) of American General
Life Insurance Company Separate Account VL-R filed on August 19, 1998.

/6/ Incorporated by reference to the filing of Pre-Effective Amendment No. 1 of
the Form S-6 Registration Statement (File No. 333-42567) of American General
Life Insurance Company Separate Account VL-R filed on March 23, 1998.

/7/ Incorporated by reference to the filing of Pre-Effective Amendment No. 23
to the Form N-4 Registration Statement of American General Life Insurance
Company's Separate Account A (File No. 33-44745) filed on April 24, 1998.

/8/ Incorporated by reference to the filing of the Pre-Effective Amendment No. 1
to Form N-4 Registration Statement (File No. 333-70667) of American General Life
Insurance Company Separate Account D filed on March 18, 1999.

/9 /Incorporated by reference to Post-Effective Amendment No. 12 to Registrant's
Form N-4 Registration Statement (File No. 33-43390) filed on April 30, 1997.

/10 /Incorporated by reference to Pre-Effective Amendment No. 1 of the Form N-4
Registration Statement (File No. 333-40637) of Separate Account D of American
General Life Insurance Company filed on February 12, 1998.

/11 /Incorporated by reference to the filing of Pre-Effective Amendment No. 1 of
the Form S-6 Registration Statement (File No. 333-80191) of American General
Life Insurance Company filed on August 25, 1999.

/12/ Incorporated herein by reference to the initial filing of this Form S-6
Registration Statement (File No. 333-90787) of American General Life Insurance
Company Separate Account VL-R filed on November 12, 1999.

/13/ Incorporated herein by reference to the filing of Pre-Effective Amendment
No. 1 of the Form S-6 Registration Statement (File No. 333-87307) of American
General Life Insurance Company filed on January 20, 2000.

II-7
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant,
American General Life Insurance Company Separate Account VL-R, has duly caused
this amended 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 Houston, and State of Texas, on the 3rd day of
February, 2000.

AMERICAN GENERAL LIFE INSURANCE
COMPANY SEPARATE ACCOUNT VL-R
(Registrant)

BY: AMERICAN GENERAL LIFE
INSURANCE COMPANY
(On behalf of the Registrant and itself)

BY: /s/ ROBERT F. HERBERT, JR.
-------------------------------
Robert F. Herbert, Jr.
Senior Vice President
[SEAL]
ATTEST: /s/ JULIE A. COTTON
-----------------------
Julie A. Cotton
Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

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

/s/ RONALD H. RIDLEHUBER* Principal Executive Officer February 3, 2000
- ---------------------------- and Director
(Ronald H. Ridlehuber)

/s/ ROBERT F. HERBERT, JR* Principal Financial and February 3, 2000
- ---------------------------- Accounting Officer
(Robert F. Herbert, Jr.) and Director

II-8
<PAGE>

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

/s/ DONALD W. BRITTON* Director February 3, 2000
- ---------------------------
(Donald W. Britton)

/s/ DAVID A. FRAVEL* Director February 3, 2000
- ---------------------------
(David A. Fravel)

/s/ ROYCE G. IMHOFF, II* Director February 3, 2000
- ---------------------------
(Royce G. Imhoff, II)

/s/ JOHN V. LAGRASSE* Director February 3, 2000
- ---------------------------
(John V. LaGrasse)

/s/ RODNEY O. MARTIN, JR.* Director February 3, 2000
- ---------------------------
(Rodney O. Martin, Jr.)

/s/ GARY D. REDDICK* Director February 3, 2000
- ---------------------------
(Gary D. Reddick)

/s/ THOMAS M. ZUREK* Director February 3, 2000
- ---------------------------
(Thomas M. Zurek)

*
/s/ ROBERT F. HERBERT, JR.
- ---------------------------
By: Robert F. Herbert, Jr.
Attorney-in-Fact

II-9
<PAGE>

EXHIBIT INDEX

The following exhibits:

1. Exhibits required by Article IX, paragraph A of Form N-8B-2:

(3)(b)(ii) Form of Selling Group Agreement, Schedule A (identifying the
policy offered) and Schedule B (describing the commissions
paid).

(5)(b) Specimen form of the "Platinum Investor (SM) Survivor"
Variable Universal Life Insurance Policy (Policy Form No.
99206).

(8)(e)(iii) Form of Amendment Six to Participation Agreement Among
Morgan Stanley Dean Witter Universal Funds, Inc., Van Kampen
Distributors, Inc., Morgan Stanley Dean Witter Investment
Management Inc., Miller Anderson & Sherrerd, LLP, American
General Life Insurance Company, and American General
Securities Incorporated.

(8)(j) Form of Administrative Services Agreement between American
General Life Insurance Company, Miller Anderson & Sherrard
LLP and Morgan Stanley Dean Witter Investment Management
Inc.

(8)(k) Form of Administrative Services Agreement between American
General Life Insurance Company and SAFECO Asset Management
Company.

(10)(a)(ii) Specimen form of Multiple Insured Life Insurance
Application - Part A.

(10)(b)(ii) Specimen form of Multiple Insured Life Insurance Application
- Part B.

(10)(c)(ii) Specimen form of Medical Exam Form Life Insurance
Application.

(10)(d)(ii) Specimen form of Variable Universal Life Insurance
Supplemental Application.

(10)(e)(ii) Specimen form of Product specific Service Request Form.

E-1
<PAGE>

2. Other Exhibits

2(a) Opinion and Consent of Pauletta P. Cohn, Deputy General Counsel
of American General Life Companies.

2(b) Opinion and Consent of American General Life Insurance Company's
actuary.

6 Consent of Independent Auditors.

E-2

<PAGE>

EXHIBIT (3)(b)(ii)

<PAGE>

SCHEDULE A - PLATINUM INVESTOR SURVIVOR VARIABLE LIFE
CONTROL DATE - FEBRUARY 1, 2000

AMERICAN GENERAL LIFE INSURANCE COMPANY
CONTRACTS COVERED BY THIS AGREEMENT

POLICY REGISTRATION FORMS SEPARATE
CONTRACT NAME FORM NOS. AND NUMBERS ACCOUNT
- ----------------------------- --------- ------------------ ---------
FLEXIBLE PAYMENT VARIABLE
LIFE INSURANCE POLICIES:

Platinum Investor Survivor 99206 Form S-6 VL-R
Nos. 811-08561
333-90787
<PAGE>

SCHEDULE B - PLATINUM INVESTOR SURVIVOR VARIABLE LIFE
CONTROL DATE - FEBRUARY 1, 2000

AMERICAN GENERAL SECURITIES INCORPORATED
AND AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL")

This Schedule B is made a part of the Selling Group Agreement ("Agreement") to
which it is attached. It is subject to the terms and conditions of the
Agreement. In no event shall AGL be liable for the payment of any commission
with respect to any solicitation made, in whole or in part, by any person not
appropriately licensed and appointed prior to the commencement of such
solicitation.

1. COMMISSIONS TO BE PAID TO ASSOCIATED AGENCY

. 90% of premiums paid in the first Policy year up to the Target
Premium;

. 3% of premiums which are not in excess of the Target Premium, paid
in any of Policy years 2 through 10;

. 3% of premiums which are in excess of the Target Premium, paid in
any of Policy years 1 through 10; and

. 1.5% of all premiums paid in Policy years 11+

. a trail commission of .20% annual beginning with the 2nd Policy
year, of each Policy's accumulation value (reduced by any
outstanding loans), in the variable investment options.

2. TARGET PREMIUM

The Target Premium is the maximum amount of premium to which the first year
commission rate applies. Commissions paid on premiums received in excess
of the Target Premium are paid at the excess rate. The Target Premium is
an amount calculated in accordance with the method of calculation and rates
from the American General Life Target Premium schedules. American General
Life may change the Target Premium schedules from time to time. The Target
Premium applicable to a particular coverage shall be determined from the
schedule in force when the first premium for such coverage is entered as
paid in accounting records of AGL.

3. TRAIL COMMISSIONS; WHEN PAID

The 0.20% annual trail is calculated on a quarterly basis as 0.05%, and is
applied to the entire unloaned accumulation value on each quarterly Policy
anniversary. Payment will be made at the end of the calendar quarter
immediately following the corresponding quarterly Policy anniversary. For
example, for Policies issued February 1, the trail is based on the unloaned
accumulation value as of February 1, but is not payable until the calendar
quarter ended March 31.
<PAGE>

4. COMMISSIONS ON INCREASES IN SPECIFIED AMOUNT

First year commissions will be paid on a portion of the premiums received
during the first year following the increase.

(a) A portion of the premium received is allocated to the increase segment
by multiplying the premium received by the ratio of:

1) the Target Premium for the increase segment, to

2) the total Target Premium.

(b) First year commissions are paid on the premium allocated to the
increase segment up to the Target Premium for the increase.

(c) Renewal commissions are paid on the portion of the premium allocated
to the increase segment in excess of the Target Premium for the
increased segment.

(d) Renewal commissions are paid on the premium received that is not
allocated to the increase segment (unless the Policy is still in its
first Policy year and the Target Premium for the original Specified
Amount has not yet been received).

5. COMMISSIONS ON DEATH BENEFIT OPTION SWITCHES

No commissions are paid on changes in Death Benefit Options, either from
increasing to level, or from level to increasing.

6. COMMISSIONS ON RIDERS

Commissions paid on Riders are:

. 90% of premiums paid in the first Policy year up to the Target
Premium;

. 3% of premiums which are not in excess of the Target Premium, paid
in any of Policy years 2 through 10;

. 3% of premiums which are in excess of the Target Premium, paid in
any of Policy years 1 through 10; and

. 1.5% of all premiums paid in Policy years 11+
<PAGE>

7. COMMISSIONS ON SUBSTANDARD RATINGS

The Substandard Target Premium is equal to the Minimum Annual Premium (MAP)
for substandard ratings up to Table 6 plus permanent and temporary flat
extra premiums of more than seven years. Aviation extra premiums are
excluded from the Substandard Target Premium. Commissions paid on
substandard rating are:

. 90% of premiums paid in the first Policy year up to the Target
Premium;

. 3% of premiums which are not in excess of the Target Premium, paid
in any of Policy years 2 through 10;

. 3% of premiums which are in excess of the Target Premium, paid in
any of Policy years 1 through 10; and

. 1.5% of all premiums paid in Policy years 11+

8. GUIDELINES AND COMMISSIONS ON INTERNAL EXCHANGES

(a) AGL INTEREST-SENSITIVE PRODUCTS TO AGL VARIABLE UNIVERSAL LIFE
PRODUCTS

AGL Interest-Sensitive products may be exchanged for AGL Variable
Universal Life products under the following guidelines:

(1) No exchanges are allowed during the first 5 Policy years of the
AGL Interest-Sensitive product proposed for exchange;

(2) Surrender charges will be waived for exchanges to a new Platinum
Investor Survivor policy as long as the new policy's surrender
charges are equal to or greater than the existing policy's
surrender charges;

(3) No commission will be earned on the initial exchange of any AGL
Interest-Sensitive policy for an AGL VUL policy; however, the
cash value may be applied against first year premiums up to the
Target Premium on a no commission basis; and

(4) All subsequent premiums will receive commissions calculated as
described in Sections 1, 4, 5, and 6 of this Schedule B.

(b) AGL TRADITIONAL PRODUCTS TO AGL VARIABLE UNIVERSAL LIFE PRODUCTS

No exchanges are allowed between Traditional products and Variable
Universal Life products unless specifically stated in the traditional
product policy form.
<PAGE>

AGL Term Insurance products may be exchanged for AGL Variable
Universal Life products under the following guidelines:

(1) If the current AGL Term Insurance policy contains a conversion
option, the policy may be exchanged for a Platinum Investor
Survivor policy without evidence of insurability;

(2) If the current Term Insurance policy is exchanged for a Platinum
Investor Survivor policy, the policy owner will receive a
conversion credit on the base policy only by multiplying the
premium paid in year 1, up to the Target Premium, by .333. No
commission is earned on the conversion;

All subsequent premiums will receive commissions calculated as described in
Sections 1, 4, 5, and 6 of this Schedule B.

<PAGE>

EXHIBIT (5)(b)
<PAGE>

01/27/00

AMERICAN GENERAL LIFE
INSURANCE COMPANY
Home Office:
Houston, Texas

2727-A Allen Parkway POLICY NUMBER: AMERICAN
P.O. Box 4880 GENERAL
Houston, Texas 77210
A STOCK COMPANY
------------------------------------------
(888) 325-9315 Subsidiary of American General Corporation
------------------------------------------

WE WILL PAY THE DEATH BENEFIT PROCEEDS to the designated Beneficiary if the last
surviving Contingent Insured named on the Policy Schedule dies prior to the
Maturity Date and while this policy is in force. Payment will be made after We
receive due proof of the deaths of both Contingent Insureds, and will be subject
to the terms of this policy. The method for determining the amount payable is
stated in the Death Benefit Proceeds provision.

WE WILL PAY THE CASH SURRENDER VALUE of this policy to the Owner on the Maturity
Date if one or both Contingent Insureds are living on that date. No benefits
will be paid upon the death of the first Contingent Insured.

THE AMOUNT OR DURATION OF THE DEATH BENEFIT PROCEEDS AND THE ACCUMULATION VALUES
PROVIDED BY THIS POLICY WHEN BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE
ACCOUNT, ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
ACCUMULATION VALUES MAY INCREASE OR DECREASE.

The consideration for this policy is the application and payment of the first
premium. The first premium must be paid on or before delivery of this policy.

This is a JOINT AND LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY. An adjustable Death Benefit is payable upon the LAST SURVIVING
Contingent Insured's death prior to the Maturity Date. Investment results are
reflected in policy benefits. ACCUMULATION VALUES are flexible and will be based
on the amount and frequency of premiums paid and the investment results of the
Separate Account. NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS.

NOTICE OF TEN DAY RIGHT TO EXAMINE POLICY

YOU MAY RETURN THIS POLICY WITHIN 10 DAYS AFTER DELIVERY IF YOU ARE NOT
SATISFIED WITH IT FOR ANY REASON. THE POLICY MAY BE RETURNED TO US OR TO THE
REGISTERED REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED. UPON SURRENDER OF THIS
POLICY WITHIN THE 10 DAY PERIOD, IT WILL BE DEEMED VOID FROM THE DATE OF ISSUE,
AND WE WILL REFUND THE GREATER OF: (1) ANY PREMIUMS RECEIVED BY US; OR (2) YOUR
ACCUMULATION VALUE AT THE END OF THE VALUATION PERIOD IN WHICH YOUR REQUEST IS
RECEIVED PLUS ANY CHARGES THAT HAVE BEEN DEDUCTED.

SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
SECRETARY PRESIDENT

SIGNATURE APPEARS HERE SIGNATURE APPEARS HERE

JOINT AND LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
READ YOUR POLICY CAREFULLY
<PAGE>

INDEX

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Annual Report 22 Last Surviving Contingent Insured 5
Automatic Rebalancing 16 Maturity Date 3
Beneficiary and Proceeds 18 Monthly Administration Fee 13
Cash Surrender Value 12 Owner 5
Changing Your Insurance Policy 8 Payment Options 19-21
Change of Ownership or Beneficiary 19 Policy Loans 17-18
Changing the Death Benefit Option 8 Policy Values 11-15
Changing the Specified Amount 8 Premium Class 2
Contract 5 Premium Expense Charge 5
Cost of Insurance Rate Table 4B Premium Payments 5
Date of Issue 3, 5 Reinstatement 23
Death Benefit and Death Benefit Options 7 Separate Account 9
Death Benefit Corridor Rates 4A Specified Amount 7
Dollar Cost Averaging 16 Suicide 22
Exchange Option 23 Surrender Charges 26
First Death, Notification of 5 Surrender, Full and Partial 14-15
General Account 10 Suspension and Deferral of
General Provisions 21-22 Payments Provision 17
Grace Period 13 Transfer Provision 15-16
Guaranteed Minimum Death Benefit 14 Valuation of Assets 9
Incontestability 21 Valuation Dates 9
Investment Advisor or Valuation Units 9
Investment Objective, Change of 10 When This Policy Terminates 23
Investments of the Separate Account 9
</TABLE>

COMPANY REFERENCE. We, Our, Us, or Company means American General Life Insurance
Company.

YOU, YOUR. The words You or Your mean the Owner of this policy.

HOME OFFICE. Our office at 2727-A Allen Parkway, Houston, Texas 77019; Mailing
Address P. O. Box 4880, Houston, Texas 77210-4880.

WRITTEN, IN WRITING. A written request or notice in acceptable form and
content, which is signed and dated, and received at Our Home Office.

PREMIUM CLASS. One or a combination of the following terms will be used to
describe the Premium Class of this policy:

PREFERRED. The term "Preferred" means the cost of insurance is based on the
Contingent Insured being a better than average mortality risk.

STANDARD. The term "Standard" means the cost of insurance is based on the
Contingent Insured being an average mortality risk.

SPECIAL. The term "Special" means an extra amount is being charged due to the
health, occupation or avocation of a Contingent Insured.

UNINSURABLE. The term "Uninsurable" means the Contingent Insured would not
pass the Underwriting requirements for a single life policy.

TOBACCO. The term "Tobacco" means the cost of insurance is based on the
Contingent Insured being a user of tobacco.

NON-TOBACCO. The term "Non-Tobacco" means the cost of insurance is based on the
Contingent Insured being a non-user of tobacco.

NOTICE
This Policy Is A Legal Contract Between
The Policy Owner And the Company.

Page 2
<PAGE>

POLICY SCHEDULE

BASIC POLICY YEARS PAYABLE MONTHLY COST

LAST SURVIVOR VARIABLE LIFE 65 SEE PAGE 4B

ADDITIONAL BENEFITS PROVIDED BY RIDERS

NONE

SCHEDULE OF PREMIUMS

INITIAL PREMIUM: $700
PLANNED PERIODIC PREMIUM: $ PAYABLE ANNUALLY
MONTHLY DEDUCTION DAY: 1ST DAY OF EACH MONTH

GUARANTED MINIMUM DEATH BENEFIT
MONTHLY PREMIUM: $84

MINIMUM PARITAL SURRENDER: $500
MINIMUM VALUE THAT MAY BE RETAINED IN A
DIVISION AFTER A PARTIAL SURRENDER
OR TRANSFER: $500
MINIMUM DEATH BENEFIT AMOUNT (AFTER A
DECREASE IN SPECIFIED AMOUNT): $100,000

DEATH BENEFIT COMPLIANCE TEST: GUIDELINE PREMIUM

COVERAGE MAY EXPIRE PRIOR TO THE MATURITY DATE SHOWN WHERE EITHER NO PREMIUMS
ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM, OR SUBSEQUENT PREMIUMS ARE
INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE.

POLICY DATA

CONTINGENT INSURANCE PREMIUM JOINT EQUAL
INSUREDS AGES CLASSES AGE

JOHN DOE 35 PREFERRED 35
JIM DOE 35 PREFERRED

BASE COVERAGE: $100,000 DEATH BENEFIT OPTION: 1
SUPPLEMENTAL COVERAGE: $0
INITIAL SPECIFIED AMOUNT: $100,000 DATE OF ISSUE: NOVEMBER 1, 1999

POLICY NUMBER: 0000000000 MATURITY DATE: NOVEMBER 1, 2064

THIS IS A (STATE NAME) POLICY

Page 3
<PAGE>

POLICY SCHEDULE CONTINUED - POLICY NUMBER 0000000000

CHARGES DEDUCTED FROM THE SEPARATE ACCOUNT

MORTALITY AND EXPENSE CHARGES:

DEDUCTIONS FROM THE SEPARATE ACCOUNT WILL BE MADE AT AN ANNUAL RATE NOT TO
EXCEED THE RATES STATED BELOW. THE ACTUAL DEDUCTION WILL BE MADE ON A
DAILY BASIS.

POLICY YEARS CURRENT ANNUAL RATE GUARANTEED ANNUAL RATE
1-10 [0.40%] [0.40%]
11-30 [0.20%] [0.20%]
THEREAFTER [0.10%] [0.10%]

EXPENSE CHARGES:

PREMIUM TAX (IF APPLICABLE). DEPENDING ON THE LAWS OF THE JURISDICTION IN
WHICH THIS POLICY WAS ISSUED, AND SUBJECT TO FUTURE CHANGES IN RESIDENCE, A
PERCENTAGE OF EACH PREMIUM MAY BE DEDUCTED FOR PREMIUM TAX. PREMIUM TAX
RATES ARE SUBJECT TO CHANGE. THE PREMIUM TAX RATE FOR THIS POLICY ON THE
DATE OF ISSUE IS [0%].

PREMIUM EXPENSE CHARGE:

POLICY YEARS PERCENT OF PREMIUM (AFTER DEDUCTION
OF ANY STATE PREMIUM TAX)
1-10 6.5%
THEREAFTER 1.0%

MONTHLY ADMINISTRATION FEE:

POLICY YEARS CURRENT GUARANTEED
1-10 $31 $31
THEREAFTER $6 $6

BASIC POLICY CHARGES AND FEES

COST OF INSURANCE CHARGES. GUARANTEED MAXIMUM COST OF INSURANCE RATE PER
$1,000 OF NET AMOUNT AT RISK ARE SHOWN ON PAGE 4B.

SURRENDER CHARGES. SURRENDER CHARGES WILL APPLY IF THIS POLICY IS
SURRENDERED OR THE BASE COVERAGE IS REDUCED DURING THE SURRENDER CHARGE
PERIOD FOLLOWING THE DATE OF ISSUE. SURRENDER CHARGES WILL ALSO APPLY
DURING THE SURRENDER CHARGE PERIOD FOLLOWING AN INCREASE IN BASE COVERAGE.
SURRENDER CHARGES APPLICABLE TO THIS POLICY APPEAR ON PAGES 26.

Page 4
<PAGE>

DEATH BENEFIT CORRIDOR RATES

BASED ON CASH VALUE ACCUMULATION TEST

POLICY POLICY
YEAR RATE YEAR RATE

1 6.0982 36 1.6787
2 5.8637 37 1.6303
3 5.6385 38 1.5851
4 5.4220 39 1.5425
5 5.2140 40 1.5028
6 5.0142 41 1.4659
7 4.8222 42 1.4317
8 4.6378 43 1.4000
9 4.4607 44 1.3706
10 4.2906 45 1.3434
11 4.1272 46 1.3180
12 3.9703 47 1.2944
13 3.8197 48 1.2726
14 3.6751 49 1.2525
15 3.5363 50 1.2341
16 3.4031 51 1.2174
17 3.2753 52 1.2023
18 3.1527 53 1.1885
19 3.0351 54 1.1759
20 2.9225 55 1.1642
21 2.8146 56 1.1530
22 2.7113 57 1.1423
23 2.6125 58 1.1315
24 2.5179 59 1.1206
25 2.4276 60 1.1089
26 2.3412 61 1.0963
27 2.2588 62 1.0828
28 2.1803 63 1.0684
29 2.1054 64 1.0539
30 2.0342 65 1.0400
31 1.9666
32 1.9026
33 1.8418
34 1.7844
35 1.7301

The Death Benefit Corridor Rates between policy anniversaries will be calculated
monthly by interpolating (straight line) between the Policy Year values shown
above.

Page 4A
<PAGE>

DEATH BENEFIT CORRIDOR RATES

BASED ON GUIDELINE PREMIUM TEST

ATTAINED ATTAINED
AGE OF AGE OF
YOUNGER YOUNGER
CONTINGENT CONTINGENT
INSURED RATE INSURED RATE

0-40 2.50 60 1.30
41 2.43 61 1.28
42 2.36 62 1.26
43 2.29 63 1.24
44 2.22 64 1.22
45 2.15 65 1.20
46 2.09 66 1.19
47 2.03 67 1.18
48 1.97 68 1.17
49 1.91 69 1.16
50 1.85 70 1.15
51 1.78 71 1.13
52 1.71 72 1.11
53 1.64 73 1.09
54 1.57 74 1.07
55 1.50 75-90 1.05
56 1.46 91 1.04
57 1.42 92 1.03
58 1.38 93 1.02
59 1.34 94 1.01
95+ 1.00

Page 4A
<PAGE>

TABLE OF GUARANTEED MONTHLY COST OF INSURANCE RATES

PER $1,000 OF NET AMOUNT AT RISK

POLICY POLICY
YEAR RATE YEAR RATE

1 0.0002 36 1.3248
2 0.0008 37 1.5889
3 0.0014 38 1.8500
4 0.0021 39 2.1893
5 0.0030 40 2.5869
6 0.0040 41 3.0365
7 0.0053 42 3.5386
8 0.0067 43 4.0905
9 0.0085 44 4.6870
10 0.0106 45 5.3370
11 0.0131 46 6.0583
12 0.0161 47 6.8656
13 0.0196 48 7.7784
14 0.0237 49 8.8077
15 0.0287 50 9.9390
16 0.0345 51 11.1494
17 0.0416 52 12.4146
18 0.0503 53 13.7194
19 0.0608 54 15.0353
20 0.0737 55 16.3716
21 0.0892 56 17.7404
22 0.1080 57 19.1597
23 0.1300 58 20.6702
24 0.1560 59 22.3307
25 0.1874 60 24.4047
26 0.2249 61 27.3233
27 0.2698 62 31.9219
28 0.3241 63 39.9364
29 0.3900 64 54.7941
30 0.4695 65 83.3333
31 0.5641
32 0.6744
33 0.8030
34 0.9511
35 1.1227

IF THIS POLICY HAS BEEN ISSUED IN A SPECIAL (RATED) PREMIUM CLASS, THE
GUARANTEED MONTHLY COST WILL BE CALCULATED USING THE RATES SHOWN ABOVE UNLESS A
FORMULA FOR ADJUSTING THE RATES APPEARS ON PAGE 3.

Page 4B
<PAGE>

CONTRACT. Your policy is a legal contract that You have entered into with Us.
You have paid the first premium and have submitted an application, a copy of
which is attached. In return, We promise to provide the insurance coverage
described in this policy.

The entire contract consists of:

1. The basic policy;

2. The riders that add benefits to the basic policy, if any;

3. Endorsements, if any; and

4. The attached copies of the applications, and any amendments or supplemental
applications.

DATE OF ISSUE. The Date of Issue of this policy is the date from which the
first policy charges are due. The Date of Issue is also the date from which all
policy years, anniversaries, and monthly deduction dates are determined.

OWNER. The Owner is as stated in the application unless later changed. During
the last surviving Contingent Insured's lifetime, the Owner may exercise every
right the policy confers or We allow (subject to the rights of any assignee of
record, and to any endorsement on this policy limiting such rights). You may
have multiple Owners of the policy. In that case, the authorizations of all
Owners are required for all policy changes except for transfers, premium
allocations and deduction allocations. We will accept the authorization of one
Owner for transfers and changes in premium and deduction allocations. The Owner
or Owners may be the same as one or both Contingent Insureds, but this is not
required. If an Owner dies while the policy is in force and a Contingent
Insured is living, ownership rights pass on to a successor owner, if any, or to
the estate of the Owner.

JOINT EQUAL AGE. This policy has been issued on the basis of a Joint Equal Age
which is determined from the individual age nearest birthday of each of the two
Contingent Insureds with an adjustment which is the function of:

1. The age of each Contingent Insured; and

2. The gender of each Contingent Insured; and

3. The premium class of each Contingent Insured.

The Joint Equal Age as of the Date of Issue is shown on the Policy Schedule.
The attained Joint Equal Age will increase by one year on each policy
anniversary. The attained Joint Equal Age will continue to increase after the
first death of a Contingent Insured.

LAST SURVIVING CONTINGENT INSURED. Payment of a death benefit under this policy
will be made upon the death of the last survivor of the Contingent Insureds
named on the Policy Schedule. As used in this policy, the terms "last survivor"
or "second to die" mean "last surviving Contingent Insured."

NOTIFICATION OF FIRST DEATH. While Death Benefit Proceeds will be payable upon
the death of the second to die, We must receive proof of the death of both
Contingent Insureds before payment will be made. Therefore, it is important
that Written proof of the first death be furnished to the Company at the time of
such death.

PREMIUM PAYMENTS

All premiums after the first are payable in advance. Premium payments are
flexible. This means You may choose the amount and frequency of payments.

The actual amount and frequency of premium payments will affect the Accumulation
Value and the amount and duration of insurance. Please refer to the Policy
Values Provision for a detailed explanation.

Page 5
<PAGE>

PLANNED PERIODIC PREMIUMS. The amount and frequency of the Planned Periodic
Premiums You selected are shown on the Policy Schedule. You may request a change
in the amount and frequency. We may limit the amount of any increase. (See
"Maximum Premium").

UNSCHEDULED ADDITIONAL PREMIUMS. You may pay additional premiums at any time
before the Maturity Date shown on the Policy Schedule. We may limit the number
and amount of additional premiums. (See "Maximum Premium" and "Maximum Net
Amount at Risk").

MAXIMUM PREMIUM. We reserve the right to refund any premium that would cause
this policy to fail to qualify as life insurance under the Death Benefit
Compliance Test selected, and under applicable tax laws. The test selected is
shown on the Policy Schedule.

MAXIMUM NET AMOUNT AT RISK. The Company may automatically effect a partial
surrender or reduce the Death Benefit, both of which may have federal tax
consequences, if the Net Amount at Risk exceeds Company limitations. Net Amount
at Risk is the excess of the Death Benefit over the Accumulation Value of the
policy.

PREMIUM EXPENSE CHARGE. The Premium Expense Charge is calculated by multiplying
the premium paid (after deduction of any state premium tax) by the Premium
Expense Charge Percentage shown on the Policy Schedule. Premium Expense Charge
Percentages differ according to policy year.

NET PREMIUM. The term Net Premium as used in this policy means "The premium
paid, less any applicable state premium tax and the Premium Expense Charge"
except as follows: No Premium Expense Charge or state premium tax will be
deducted if the source of the premium is Cash Surrender Values applied from
another policy issued by the Company (We refer to this as an internal rollover).

ALLOCATION OF NET PREMIUMS. The initial allocation of Net Premiums is shown
in the application for this policy and will remain in effect until changed by
Written notice from the Owner. The percentage allocation for future Net Premiums
may be changed at any time by Written Notice.

The initial Net Premium will be allocated to the Money Market Division on the
later of the following dates:

1. The Date of Issue; or

2. The date all requirements needed to place the policy in force have been
satisfied, including underwriting approval and receipt in the Home Office of
the necessary premium.

The initial Net Premium will remain in the Money Market Division until the first
Valuation Date following the 15th day after it was applied. Any additional
Net Premiums received prior to the first Valuation Date which follows the 15th
day after the initial Net Premium was applied will be allocated to the Money
Market Division until such Valuation Date. At that time, We will transfer the
Accumulation Value to the selected Investment Option(s). Each Net Premium
received after such Valuation Date will be applied directly to the elected
Investment Option(s) as of the Business Day received.

Changes in the allocation of Net Premiums will be effective on the date we
receive the Owner's notice. The allocation may be 100% to any available
Division or may be divided among these options in whole percentage points
totaling 100%. We reserve the right to limit the number of Divisions which You
may select.

WHERE TO PAY. You may make Your payments to Us at Our Home Office or to an
authorized agent. A receipt signed by an officer of the Company will be
furnished upon request.

Page 6
<PAGE>

DEATH BENEFIT AND DEATH BENEFIT OPTIONS

DEATH BENEFIT PROCEEDS. If both Contingent Insureds die prior to the Maturity
Date and while this policy is in force, We will pay the Death Benefit Proceeds
to the Beneficiary. The Death Benefit Proceeds will be subject to:

1. The Death Benefit Option in effect on the date of the second death; and

2. Any increases or decreases made to the Specified Amount. The Initial
Specified Amount is shown on the Policy Schedule.

You can find guidelines for changing the Death Benefit Option or the Specified
Amount in the section entitled "Changing Your Insurance Policy."

Any premium received after the date of the second death will be refunded and
will not be included in the Accumulation Value for purposes of calculating the
Death Benefit Amount.

The Death Benefit Proceeds will be the Death Benefit Amount, after reversing any
premium received after the date of the second death, less any outstanding policy
loan and will be subject to the other provisions of the Beneficiary and Proceeds
section.

DEATH BENEFIT COMPLIANCE TEST. Death benefit compliance tests are used to
determine if a policy will qualify as life insurance under applicable tax laws.
There are two compliance tests which may be used: The Guideline Premium Test and
the Cash Value Accumulation Test. The test which You selected when this policy
was issued is shown on the Policy Schedule. You cannot change Your election of
the death benefit compliance test after the Date of Issue.

DEATH BENEFIT OPTION. The Death Benefit Option which You have chosen is shown
on the Policy Schedule as either Option 1 or Option 2.

OPTION 1. If You have chosen Option 1, the Death Benefit Amount will be the
greater of:

1. The Specified Amount on the date of the second death; or

2. The following amount calculated on the date of the second death:

a) The Accumulation Value; multiplied by

b) The applicable Death Benefit Corridor Rate.

OPTION 2. If You have chosen Option 2, the Death Benefit Amount will be the
greater of:

1. The Specified Amount plus the Accumulation Value on the date of the second
death; or

2. The following amount calculated on the date of the second death:

a) The Accumulation Value; multiplied by

b) The applicable Death Benefit Corridor Rate.

Death Benefit Corridor Rates are shown in the table for the Death Benefit
Compliance Test which You selected.

SPECIFIED AMOUNT. The Specified Amount is the total of two types of coverage:
Base Coverage and Supplemental Coverage. Base Coverage is subject to surrender
charges. Supplemental Coverage is not subject to surrender charges. The
amounts of Base Coverage, Supplemental Coverage (if any) and Specified Amount
are shown on the Policy Schedule.

Page 7
<PAGE>

CHANGING YOUR INSURANCE POLICY

You may request a change in the Specified Amount or Death Benefit Option at any
time except that:

1. A decrease in the Specified Amount may not become effective prior to the end
of the first policy year; and

2. Increases in the Specified Amount will be considered only while both
Contingent Insureds are living.

Your request must be submitted to Our Home Office In Writing.

INCREASING THE SPECIFIED AMOUNT. You may apply for an increase in Specified
Amount by submitting for each Contingent Insured:

1. A supplemental application; and

2. Evidence of insurability satisfactory to Us.

An increase will be effective on the Monthly Deduction Day on or next following
the date the applications for increase are approved by Us. The effective date
will appear in an endorsement to this policy.

DECREASING THE SPECIFIED AMOUNT. Any decrease will go into effect on the
Monthly Deduction Day following the Business Day We receive the request. The
Death Benefit Amount remaining in effect after any decrease cannot be less than
the greater of:

1. The Minimum Death Benefit Amount shown on the Policy Schedule; and

2. Any Death Benefit Amount required to qualify this policy as life insurance
under applicable tax laws.

Any such decrease will be applied proportionately against the Specified Amount
provided under the original application and any Specified Amount increases. We
will decrease the Base Coverage and Supplemental Coverage proportionately.

Any reduction in Specified Amount will be subject to any applicable surrender
charges on a pro-rata basis with the Surrender Charge prior to the reduction in
Specified Amount being reduced proportionately. However, if such charge is
greater than the Accumulation Value, the Specified Amount decrease will not be
allowed.

CHANGING THE DEATH BENEFIT OPTION. You may request a change in the Death
Benefit Option You have chosen.

1. If You request a change from Option 1 to Option 2: The new Specified Amount
will be the Specified Amount, prior to change, less the Accumulation Value
as of the effective date of the change, but not less than zero. The change
will go into effect on the Monthly Deduction Day following the date We
receive Your request for change.

2. If You request a change from Option 2 to Option 1: The new Specified Amount
will be the Death Benefit Amount as of the effective date of the change. The
change will go into effect on the Monthly Deduction Day following the date
We receive Your request for change.

CHANGING THE TERMS OF YOUR POLICY. Any change in Your policy must be approved
by one of Our senior officers. No agent has the authority to make any changes
or waive any of the terms of Your policy.

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SEPARATE ACCOUNT PROVISIONS

SEPARATE ACCOUNT. Separate Account VL-R is a segregated investment account
established by the Company under Texas law to separate the assets funding the
variable benefits for the class of policies to which this policy belongs from
the other assets of the Company. That portion of the assets of the Separate
Account equal to the reserves and other policy liabilities with respect to the
Separate Account shall not be chargeable with liabilities arising out of any
other business We may conduct. Income, gains and losses, whether or not
realized from assets allocable to the Separate Account, are credited to or
charged against such Account without regard to Our other income, gains or
losses.

INVESTMENTS OF THE SEPARATE ACCOUNT. The Separate Account is segmented into
Divisions. Each Division invests in a single Investment Option. Net Premiums
will be applied to the Separate Account and allocated to one or more Divisions.
The assets of the Separate Account are invested in the Investment Option(s)
listed on the application for this policy. From time to time, We may add
additional Divisions. We may also discontinue offering one or more Divisions as
provided in the Rights Reserved by Us provision. You may make a change in
investment selections by filing a Written change form with Our Home Office. You
may make transfers to the additional Divisions subject to the rules stated in
the Transfer Provision section and any new rules or limitations which may apply
to such additional Divisions.

If shares of any of the Investment Options become unavailable for investment by
the Separate Account, or the Company's Board of Directors deems further
investment in these shares is inappropriate, the Company may limit further
investment in the shares or may substitute shares of another Investment Option
for shares already purchased under this policy as provided in the Rights
Reserved by Us provision.

VALUATION OF ASSETS. The assets of the Separate Account are valued as of each
Valuation Date at their fair market value in accordance with Our established
procedures. The Separate Account Value as of any Valuation Date prior to the
Maturity Date is the sum of Your account values in each Division of the Separate
Account as of that date.

VALUATION UNITS. In order to determine policy values in the Divisions, We use
Valuation Units which are calculated separately for each Division. The
Valuation Unit value for each Division will vary to reflect the investment
experience of the applicable Investment Option. The Valuation Unit for a
Division will be determined on each Valuation Date for the Division by
multiplying the Valuation Unit value for the Division on the preceding Valuation
Date by the Net Investment Factor for that Division for the current Valuation
Date.

NET INVESTMENT FACTOR. The Net Investment Factor for each Division is
determined by dividing (1) by (2) and subtracting (3), where:

1. Is the net asset value per share of the applicable Investment Option as of
the current Valuation Date (plus any per share amount of any dividend or
capital gains distribution paid by the Investment Option since the last
Valuation Date); and

2. Is the net asset value per share of the shares held in the Division as
determined as of the previous Valuation Date; and

3. Is a factor representing the Mortality and Expense Charge.

The net asset value of an Investment Option's shares held in each Division shall
be the value reported to Us by that Investment Option.

VALUATION DATES. Valuation of the various Divisions will occur on each Business
Day during each month. If the underlying Investment Option is unable to value
or determine the Division's investment in an Investment Option due to any of the
reasons stated in the Suspension and Deferral of Payments Provision, the
Valuation Date for the Division with respect to the unvalued portion shall be
the first Business Day that the assets can be valued or determined.

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BUSINESS DAY. A Business Day is each day during which the New York Stock
Exchange is open for business. We will treat any information or Written
communications We receive after the close of a Business Day to have been
received as of the next Business Day. For the purpose of collecting daily
charges, a Business Day immediately preceded by one or more non-business
calendar days will include those non-business days as a part of that Business
Day. For example, a Business Day which falls on a Monday will consist of a
Monday and the immediately preceding Saturday and Sunday.

MINIMUM BALANCE. The minimum value that may be retained in a Division after a
partial surrender or transfer is shown on the Policy Schedule. If a partial
surrender causes the balance in any Division to drop below such minimum amount,
the Company reserves the right to transfer the remaining balance to the Money
Market Division. If a transfer causes the balance in any Division to drop below
the minimum amount, the Company reserves the right to transfer the remaining
balance in proportion to the transfer request.

CHANGE OF INVESTMENT ADVISOR OR INVESTMENT OBJECTIVE. Unless otherwise
required by law or regulation, the investment advisor or any investment
objective may not be changed without Our consent. If required, approval of or
change of any investment objective will be filed with the Insurance Department
of the state where the policy is being delivered.

RIGHTS RESERVED BY US. Upon notice to You, this policy may be modified by Us,
but only if such modification is necessary to:

1. Operate the Separate Account in any form permitted under the Investment
Company Act of 1940 or in any other form permitted by law;

2. Transfer any assets in any Division to another Division, or to one or more
other separate accounts;

3. Add, combine or remove Divisions in the Separate Account, or combine the
Separate Account with another separate account;

4. Make any new Division available to You on a basis to be determined by Us;

5. Substitute for the shares held by any Division the shares of another
Division or the shares of another investment company or any other investment
permitted by law;

6. Make any changes as required by the Internal Revenue Code, or by any other
applicable law, regulation or interpretation in order to continue treatment
of this policy as life insurance;

7. Make any changes required to comply with the requirements of any underlying
Investment Option; or

8. Make other changes in this policy that in Our judgement are necessary or
appropriate to ensure that this policy continues to qualify for tax
treatment as life insurance, or that do not reduce any Cash Surrender Value,
Death Benefit Amount, Accumulation Value or other accrued right or benefit.

When required by law, We will obtain Your approval of changes and We will gain
approval from any appropriate regulatory authority.

GENERAL ACCOUNT

The General Account is a fixed account within Our general assets which We have
established for:

1. Any amounts transferred from the Divisions as a result of a loan; or

2. Any amounts the Owner allocated to such Account.

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The guaranteed interest rate used in calculating Accumulation Values of amounts
allocated to the General Account is .3274% per month compounded monthly. This
is equivalent to 4.0% per year, compounded annually, and is not based on the
investment experience of any Division of the Separate Account. We can use
interest rates greater than the guaranteed rates to calculate Accumulation
Values of amounts allocated to the General Account.

POLICY VALUES PROVISION

ACCUMULATION VALUE. The Accumulation Value of Your policy is the total of all
values in the Divisions of the Separate Account and in the General Account.
The Accumulation Value reflects:

1. Net Premiums paid;

2. Monthly deductions;

3. The investment experience of the Divisions selected less the Mortality and
Expense Charge;

4. Amounts allocated to the General Account, including interest earned on
amounts in the General Account;

5. Deductions due to partial surrenders and any charges for partial surrenders;
and

6. Deductions, if any, resulting from decreases in Specified Amount.

Net premiums are allocated, in accordance with Your instructions, to the General
Account or allocated to the selected Divisions of the Separate Account and
converted to Valuation Units.

On each Monthly Deduction Day, a Monthly Deduction will be made by reducing the
unloaned portion of the General Account or redeeming Valuation Units from each
applicable Division in the same ratio as the allocation of policy deductions in
effect on the Monthly Deduction Day. You must state In Writing in advance how
Monthly Deductions should be made if other than this method is to be used.

If the unloaned portion of the General Account or the balance in any Division of
the Separate Account is insufficient to make a Monthly Deduction in this
manner, We will cancel Valuation Units from each applicable Division and reduce
the unloaned portion of the General Account in the same ratio the Monthly
Deduction bears to the unloaned Accumulation Value of Your policy.

The Accumulation Value in any Division is determined by multiplying the value of
a Valuation Unit by the number of Valuation Units held under the policy in that
Division.

The value of the Valuation Units equal to the amount being borrowed from the
Separate Account will be transferred to the General Account as of the Business
Day that the loan request is received In Writing.

Valuation Units are surrendered to reflect a partial surrender as of the
Business Day that the request for partial surrender is received In Writing.

ON THE DATE OF ISSUE. The Accumulation Value on the Date of Issue is:

1. The Net Premium received; less

2. The Monthly Deduction for the first policy month. (See "How We Calculate a
Monthly Deduction.")

The first deduction day is the Date of Issue. The Monthly Deduction Day is shown
on the Policy Schedule.

ON EACH MONTHLY DEDUCTION DAY. On each Monthly Deduction Day after the Date of
Issue, We will determine the Accumulation Value as follows:

1. We will take the Accumulation Value as of the last Monthly Deduction Day;

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2. Add the interest earned for the month on the excess of the General Account
value on the last Monthly Deduction Day over any partial surrenders and
transfers made from the General Account since the last Monthly Deduction
Day;

3. Add all Net Premiums received since the last Monthly Deduction Day;

4. Add any investment gain (or subtract any investment loss) on the Divisions
of the Separate Account since the last Monthly Deduction Day as measured by
the change in the value of the Valuation Units;

5. Subtract any partial surrender made and any charges for partial surrenders
since the last Monthly Deduction Day; and

6. Subtract the Monthly Deduction for the policy month following the Monthly
Deduction Day. (See "How We Calculate a Monthly Deduction.")

ON ANY VALUATION DATE OTHER THAN A MONTHLY DEDUCTION DAY. The Accumulation
Value on any Valuation Date other than a Monthly Deduction Day will be the sum
of:

1. The value of the General Account as of the last Monthly Deduction Day;

2. Less any partial surrenders and any charges for partial surrenders since the
last Monthly Deduction Day;

3. Plus all Net Premiums received since the last Monthly Deduction Day; and

4. Plus the sum of the values of the Divisions of the Separate Account as of
the last Monthly Deduction Day, plus the amount of any investment gain (or
minus any investment loss) on the Divisions since the last Monthly Deduction
Day as measured by the change in the value of the Valuation Units.

CASH VALUE. The Cash Value of this policy will be equal to the Accumulation
Value less the Surrender Charge, if any.

CASH SURRENDER VALUE. The Cash Surrender Value of this policy will be equal to
the Cash Value less any indebtedness.

MONTHLY DEDUCTIONS MAY BE MADE ONLY IF THERE IS SUFFICIENT CASH SURRENDER VALUE
(UNLESS THE POLICY IS BEING CONTINUED UNDER THE GUARANTEED MINIMUM DEATH BENEFIT
PROVISION). Unless this policy is being continued in force under the
"Guaranteed Minimum Death Benefit" provision, a Monthly Deduction from the
Accumulation Value may be made only if the Cash Surrender Value is equal to or
greater than the Monthly Deduction. The Accumulation Value will be reduced by
the amount of each Monthly Deduction which will cause an equal reduction in the
Cash Surrender Value. If the Cash Surrender Value on a Monthly Deduction Day is
not sufficient to meet the Monthly Deduction for the current month, this policy
will be subject to the "Grace Period" and "Guaranteed Minimum Death Benefit"
provisions.

SURRENDER CHARGES. The Surrender Charge applies only to the Base Coverage
portion of the Specified Amount. The Surrender Charge for the amount of Base
Coverage on the Date of Issue will apply if such Base Coverage is surrendered or
reduced during the Surrender Charge Period. Surrender Charges for any increases
in Base Coverage will apply if such increases are surrendered or reduced during
the Surrender Charge Period of each increase. Surrender Charges will vary
according to the Joint Equal Age at issue as shown in the Table of Surrender
Charges per $1,000 of Base Coverage.

You may make a request for surrender at any time during the last surviving
Contingent Insured's lifetime before the Maturity Date.

The amount being surrendered or reduced will terminate on or next following the
date We receive a Written request for surrender or reduction.

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HOW WE CALCULATE A MONTHLY DEDUCTION. Each Monthly Deduction includes:

1. The cost of insurance provided by the basic policy;

2. The cost of insurance for benefits provided by riders, if any; and

3. The Monthly Administration Fee.

HOW WE CALCULATE THE COST OF INSURANCE FOR THE BASIC POLICY. We calculate the
cost of insurance at the beginning of each policy month on the Monthly Deduction
Day. The cost of insurance is determined as follows:

1. Reduce the Death Benefit Amount by the amount of Accumulation Value on the
Monthly Deduction Day before the cost of insurance deduction is taken, and
after the Monthly Administration Fee is deducted;

2. Multiply the difference by the cost of insurance rate per $1,000 of net risk
amount as provided in the "Cost of Insurance Rate" provision; and

3. Divide the result by 1,000.

COST OF INSURANCE FOR BENEFITS PROVIDED BY RIDERS. The cost of insurance for
benefits provided by riders, if any, will be as stated on the Policy Schedule or
in an endorsement to this policy.

MONTHLY ADMINISTRATION FEE. An administration fee will be deducted monthly. The
amount of the monthly fee may be adjusted, but will never be greater than the
amount shown on the Policy Schedule.

COST OF INSURANCE RATE. The cost of insurance rate for the Initial Specified
Amount, and for each Specified Amount increase, is based on each Contingent
Insured's:

1. Gender;

2. Age nearest birthday on each policy anniversary; and

3. Premium class associated with the Initial Specified Amount and each increase
in the Specified Amount. The premium class is shown on the Policy Schedule.

A table of guaranteed monthly cost of insurance rates is included in this
policy. We can use cost of insurance rates that are lower than the guaranteed
rates. Any change in rates will apply to all policies in the same rate class as
this policy. The rate class of this policy is determined on its Date of Issue
according to:

1. The calendar year of issue and policy year;

2. The plan of insurance;

3. The amount of insurance; and

4. The age, gender and premium class of each Contingent Insured.

CHANGES IN RATES, CHARGES AND FEES. This policy does not participate in Our
profits or surplus. Any redetermination of the cost of insurance rates, interest
rates, mortality and expense charges, Monthly Administration Fee or percentage
of premium charges will be based on Our expectations as to investment earnings,
mortality, persistency and expenses. We will not change these charges in order
to recoup any prior losses.

GRACE PERIOD. If the Cash Surrender Value on a Monthly Deduction Day is not
enough to meet the Monthly Deduction for the current month, this policy will
remain in force during the 61-day period that follows. If the Cash Surrender
Value on a policy anniversary is not enough to pay any loan interest due, this
policy will remain

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in force during the 61-day period that follows. Such 61-day period is referred
to in this policy as the "Grace Period." There is no Grace Period for the
initial Monthly Deduction.

If the amount We require to keep Your policy in force is not paid by the end of
the Grace Period, this policy will terminate without value. However, We will
give You at least 31 days notice prior to termination that Your policy is in the
Grace Period and advise You of the amount required to keep Your policy in force.
Such 31 days prior notice will be sent to You at Your last known address, and to
the assignee of record, if any. If the last surviving Contingent Insured dies
during the Grace Period, Monthly Deductions through the policy month in which
the death occurred will be deducted from the proceeds.

If a surrender request is received within 31 days after the Grace Period
commences, the Cash Surrender Value payable will not be less than the Cash
Surrender Value on the Monthly Deduction Day the Grace Period commenced. The
Monthly Deduction for the policy month following such Monthly Deduction Day will
not be subtracted in the calculation of such Cash Surrender Value.

GUARANTEED MINIMUM DEATH BENEFIT. A Guaranteed Minimum Death Benefit (GMDB)
monthly premium is shown on the Policy Schedule. The Option 1 death benefit
will remain payable while the GMDB is in force if, on each Monthly Deduction
Day:

1. The sum of premiums paid less any policy loans, is greater than:

2. The sum of monthly GMDB premiums accumulated from the Date of Issue
(including the monthly GMDB premium for the current month).

It is important to note that the benefit provided is the Option 1 death benefit,
even if Your policy's cash surrender value has declined to zero, and even if You
have selected Option 2 as the death benefit for Your policy. The GMDB is a
minimum death benefit payable in lieu of (and not in addition to) benefits
otherwise payable under this policy.

The GMDB premium shown on the Policy Schedule is for the Initial Specified
Amount and any benefit riders in force on the Date of Issue. If the Specified
Amount is increased, or if a benefit rider is added or increased, a new GMDB
premium will be calculated. If a benefit rider providing term life insurance
coverage is removed or decreased, a new GMDB premium will be calculated. If any
other benefit rider is removed or decreased, no change will be made in the GMDB
premium. If a decrease in the Specified Amount is requested by the Owner the
GMDB will terminate.

If the policy lapses and is later reinstated, the GMDB will not be reinstated.

SUSPENSION OR TERMINATION OF THE GMDB. You will not permanently lose the GMDB
when premium payments fall below the required premium amount, as long as the
policy remains in force. Your payment of sufficient premiums to pass the GMDB
test will restore the GMDB.

The GMDB will terminate if:

1. The policy terminates;

2. The Specified Amount is decreased at the request of the Owner;

3. A change is made in the Death Benefit Option; or

4. A partial surrender is made.

FULL SURRENDER. Subject to the Beneficiary and Proceeds section, You may return
Your policy to Us and request its Cash Surrender Value at any time during the
last surviving Contingent Insured's lifetime before the Maturity Date. The Cash
Surrender Value will be determined as of the Business Day the policy and the
Written request for surrender are received. The Company may delay payment if
the Suspension and Deferral of Payments Provision is in effect.

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<PAGE>

PARTIAL SURRENDER. At any time after the first policy year, You may request a
portion of the Cash Surrender Value of the policy. Your request must be made In
Writing during the last surviving Contingent Insured's lifetime before the
Maturity Date. The minimum partial surrender is shown on the Policy Schedule.

Valuation Units are surrendered to reflect a partial surrender as of the
Business Day We receive the Written request for partial surrender.

A partial surrender will result in a reduction of the Cash Value, Accumulation
Value and the Death Benefit Amount. The Cash and Accumulation Values will be
reduced by the amount of the partial surrender. The reduced Death Benefit Amount
will be determined in accordance with the Death Benefit Option provision. If
Your Death Benefit Option is Option 1, the Specified Amount will be reduced by
the amount of the partial surrender. (The reduced amount will not be less than
$25,000.) The Death Benefit Amount remaining after this reduction must be no
less than the Minimum Death Benefit Amount after a Decrease in Specified Amount
shown on the Policy Schedule.

A partial surrender will result in the cancellation of Valuation Units from each
applicable Division and a reduction of the unloaned portion of the General
Account in the same ratio as the allocation of policy deductions in effect on
the date of partial surrender. If the number of Valuation Units in any Division
or in the unloaned portion of the General Account is insufficient to make a
partial surrender in this manner, We will cancel Valuation Units from each
applicable Division and reduce the unloaned portion of the General Account in
the ratio the partial surrender request bears to the Cash Surrender Value of
Your policy. You must state In Writing in advance how partial surrenders should
be made if other than this method is to be used.

There will be a charge for each partial surrender not to exceed the lesser of 2%
of the amount withdrawn or $25 in addition to the amounts shown in the Table of
Surrender Charges.

The Company may delay payment if the Suspension and Deferral of Payments
Provision is in effect.

PERIOD OF INSURANCE COVERAGE IF AMOUNT OR FREQUENCY OF PREMIUM PAYMENTS IS
REDUCED OR IF PREMIUM PAYMENTS ARE DISCONTINUED. If You reduce the amount or
frequency of premium payments, or if You discontinue payment of premiums, We
will continue making Monthly Deductions (as long as there is sufficient Cash
Surrender Value to make such deductions) until the Maturity Date. This policy
will remain in force until the earliest of the following dates:

1. The Maturity Date (if there is sufficient Cash Surrender Value to make
Monthly Deductions to that date);

2. Surrender of the policy;

3. The end of the Grace Period; or

4. Death of the last surviving Contingent Insured.

TRANSFER PROVISION

TRANSFER OF ACCUMULATION VALUE. Transfers will be made as of the Business Day
We receive the Written transfer request, subject to the restrictions that
follow. If You elect to use the transfer privilege, We will not be liable for a
transfer made in accordance with Your instructions. We reserve the right to
terminate, suspend or modify the transfer privilege, and to charge a $25 fee for
each transfer in excess of 12 in a policy year. Transfers under the Dollar Cost
Averaging or Automatic Rebalancing programs will not count toward the 12 free
transfers.

TRANSFER OF ACCUMULATION VALUE (SEPARATE ACCOUNT). You may transfer all or part
of Your interest in a Division of the Separate Account subject to the following:

1. The minimum amount which may be transferred is $500.

2. If the entire amount in a Division of the Separate Account is not being
transferred, the minimum which must remain is $500.

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<PAGE>

Transfers between Separate Account Divisions result in the redemption of
Valuation Units in one Division and the purchase of Valuation Units in the
Division to which the transfer is made. We will not honor Your request for a
transfer if the Separate Account is unable to purchase shares of an Investment
Option for any reason.

TRANSFER OF ACCUMULATION VALUE (GENERAL ACCOUNT). A transfer from the General
Account to a Division of the Separate Account may be made during the 60 day
period following each policy anniversary. The amount that may be transferred
will be the greatest of the following amounts:

1. Twenty-five percent (25%) of the unloaned portion of the General Account as
of the policy anniversary;

2. The total dollar amount withdrawn from the General Account during the prior
policy year (whether the amount withdrawn was a partial surrender for cash
or was being transferred to the Separate Account);

3. $500.

TELEPHONE TRANSFER AND ALLOCATION PRIVILEGE. If We have on file a completed
telephone authorization form (Telephone Transaction), We will allow transfers
and the percentage allocation for future Net Premiums and Policy Deductions to
be changed at any time by telephone. We will honor instructions for Telephone
Transactions from any person who provides the correct information. There is a
risk of possible loss to You if unauthorized persons use this service in Your
name. Under Telephone Transactions, We are not liable for any acts or omissions
based upon instructions that We reasonably believe to be genuine, including
losses arising from errors in the communication of telephone instructions.

DOLLAR COST AVERAGING. Dollar Cost Averaging (DCA) is an automatic transfer of
funds made periodically prior to the Maturity Date in accordance with
instructions from the Owner. Transfers will be made in accordance with the
Transfer provisions, except as provided below:

1. DCA transfers may be made:

(a) On any day of the month except the 29th, 30th or 31st;

(b) On a monthly, quarterly, semi-annual or annual basis; and

2. DCA may be elected only if the Accumulation Value at the time of election is
$5,000 or more.

3. The minimum amount of each DCA transfer is $100, or the remaining amount in
the Money Market Division, if less.

4. DCA may not begin prior to the first Valuation Date following the 15th day
after the initial Net Premium is applied.

5. DCA will end when there is no longer any value in the Money Market Division,
or when You request that DCA end.

6. Amounts applied to the Money Market Division while DCA is active will be
available for future dollar cost averaging in accordance with the current
DCA request.

7. There is no charge for DCA.

8. DCA is not available if Automatic Rebalancing is active.

AUTOMATIC REBALANCING. Automatic Rebalancing occurs when funds are transferred
by the Company between the Separate Account Divisions so that the values in each
Division match the premium allocation percentages then in effect. You may choose
Automatic Rebalancing on a quarterly, semi-annual or annual basis if your
Accumulation Value is $5,000 or more. The date Automatic Rebalancing occurs will
be based on the Date of Issue of Your policy. For example, if Your policy is
dated January 17, and You have requested Automatic Rebalancing on a quarterly
basis, Automatic Rebalancing will start on April 17, and will occur quarterly
thereafter. After Automatic Rebalancing is elected, it will continue until We
are notified In Writing that it is to

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<PAGE>

be discontinued. There is no charge for Automatic Rebalancing. Automatic
Rebalancing is not available if DCA is active.

SUSPENSION AND DEFERRAL OF PAYMENTS PROVISION

We reserve the right to defer payment of any Death Benefit Amount, loan or other
distribution that comes from that portion of Your Accumulation Value that is
allocated to Separate Account VL-R, if:

1. The New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted;

2. An emergency exists, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to fairly
determine the Accumulation Value; or

3. The U.S. Securities and Exchange Commission by order permits the delay for
the protection of Owners.

As to amounts allocated to the General Account, We may defer payment of any Cash
Surrender Value withdrawal or loan amount for up to six months, or the period
allowed by law, whichever is less, after We receive the request In Writing.

Written notice of both the imposition and termination of any such suspension
will be given to the Owners, assignees of record and any irrevocable
Beneficiaries.

Payments which were due to have been made and which were deferred following the
suspension of the calculation of the Cash Surrender Value will be made within
thirty (30) days following the lifting of the suspension, and will be calculated
based on the Valuation Date which immediately follows termination of the
suspension.

POLICY LOANS

You may borrow from Us at any time while this policy is in force, an amount
which is equal to or less than the policy loan value. The policy loan value
will be the Cash Surrender Value, less interest on the amount to be borrowed
(including interest on any prior outstanding policy loan) to the next policy
anniversary.

The value of Valuation Units equal to the amount You borrow from the Separate
Account will be transferred to the General Account as of the Business Day that
We receive Your Written loan request.

OBTAINING A LOAN. You may obtain a policy loan by Written request and
assignment of the policy as sole security for the loan. The Company may delay
processing the loan requested if the Suspension and Deferral of Payments
Provision is in effect.

EFFECT OF A LOAN. When a loan is made, an amount equal to the amount being
borrowed from the Separate Account will be transferred to the General Account.
A loan will result in cancellation of units from each applicable Division and
reduction of the unloaned portion of the General Account according to the
allocation of policy deductions then in effect. The resulting amount will be
added to the loaned portion of the General Account. If the number of Valuation
Units in any Division or unloaned portion of the General Account is insufficient
for a loan to be made in this manner, We will cancel Valuation Units from each
applicable Division and reduce the unloaned portion of the General Account in
the same ratio the loan bears to the unloaned Accumulation Value of Your policy.
You must state In Writing in advance which Division units are to be canceled if
a different method is to be used.

Repayment of a loan will first be allocated to the General Account until You
have repaid any loaned amounts that were allocated to the General Account. You
may tell Us how to allocate repayments above that amount. If You do not tell
Us, an amount equal to the loan repayment will be transferred from the General
Account to the Divisions in the same ratio currently in effect for the
allocation of Net Premiums.

A loan, whether or not repaid, will have a permanent effect on the Cash
Surrender Values and on the death benefits. If not repaid, any indebtedness
will reduce the amount of Death Benefit Proceeds and the amount available upon
surrender of the policy.

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<PAGE>

LOAN INTEREST. Loan interest will accrue daily at an annual effective rate of
4.31% during the first 10 policy years, and 4.08% thereafter payable in advance.
(This is equivalent to an annual effective rate of 4.50% during the first 10
policy years and 4.25% thereafter paid in arrears.) On each policy anniversary,
loan interest for the next year is due. Unpaid loan interest will be deducted
from the various accounts according to the Allocation of Policy Deductions then
in effect, and added to the loaned portion of the General Account. You must
state In Writing in advance how unpaid loan interest should be deducted if other
than this method is to be used.

If the number of Valuation Units in any Division or unloaned portion of the
General Account is insufficient to deduct unpaid loan interest in this manner,
We will cancel Valuation Units from each applicable Division and reduce the
unloaned portion of the General Account in the same ratio the unpaid loan
interest bears to the unloaned Accumulation Value of Your policy. We will
credit interest monthly on the loaned portion of the General Account at an
annual effective rate of 4.0%.

PREFERRED LOANS. A "Preferred Loan" is a policy loan that is made at a net cost
to the Owner that is less than the net cost of other policy loans. Starting on
the tenth policy anniversary, this policy will be eligible for "Preferred Loans"
subject to the following guidelines:

1. The maximum amount eligible for Preferred Loans during a policy year is
restricted to the lesser of the following values on the first day of such
policy year:

a) The policy loan value; or

b) 10% of the Accumulation Value.

2. When a Preferred Loan is made, interest to the next policy anniversary will
be charged at the rate shown in the Loan Interest provision.

3. Interest credited to the amount of the Accumulation Value offset by a
Preferred Loan:

a) Will be an annual effective rate that is equal to or less than the
Policy Loan annual effective interest rate; and

b) Will be at a higher rate than the rate used to credit interest to values
offset by any other policy loan and will never be less than an annual
effective rate of 4.25%.

HOW YOU MAY REPAY A POLICY LOAN. You may repay all or part of a policy loan at
any time, except that;

1. Repayment may be made only while this policy is in force and prior to the
death of the last surviving Contingent Insured;

2. A partial repayment must be at least $10; and

3. At the time You repay all or part of a policy loan, You must specify the
payment is to repay all or part of the policy loan.

At any time Your policy loan exceeds the Cash Value, this policy will lapse.
However, at least 31 days prior notice must be mailed by Us to Your last known
address and to the assignee of record, if any.

WE CAN DELAY PAYMENT. We can delay lending You money for up to 6 months, or the
period allowed by law, whichever is less. However, We cannot delay lending You
money if the amount is to be used to pay a premium to Us.

BENEFICIARY AND PROCEEDS

BENEFICIARY. The Beneficiary, with respect to each Contingent Insured, will be
as named in the application, or later changed by the Owner. Unless the Owner
provides otherwise, upon the death of the last surviving Contingent Insured We
will pay proceeds in equal shares to the named Beneficiaries that survive such
Contingent Insured. Unless otherwise provided by the beneficiary designation,
proceeds will be paid as follows:

Page 18
<PAGE>

1. If any Beneficiary of the last surviving Contingent Insured dies while the
last surviving Contingent Insured is living, that Beneficiary's interest
will pass to any other Beneficiaries of the last surviving Contingent
Insured according to their respective interests.

2. If there is no Beneficiary upon the death of the last surviving Contingent
Insured (and there is no provision to the contrary), proceeds will be paid
in one sum to the Owner, if living; otherwise, proceeds will be paid to the
Owner's estate.

COMMON DISASTER. If We cannot determine whether a Beneficiary or the last
surviving Contingent Insured died first in a common disaster, We will assume
that the Beneficiary died first. We will pay proceeds on this basis unless an
endorsement to this policy provides otherwise.

SIMULTANEOUS DEATH OF CONTINGENT INSUREDS. If We are unable to determine to Our
satisfaction that one of the Contingent Insureds predeceased the other, it will
be assumed that the Contingent Insureds died simultaneously. Thereupon, one-
half of the Death Benefit Proceeds will be payable with respect to each of the
Contingent Insureds.

PROCEEDS. Proceeds means the amount payable on:

1. The Maturity Date;

2. Exercise of the full surrender benefit; or

3. The death of the last surviving Contingent Insured.

The Proceeds on the Maturity Date will be the Cash Surrender Value. The
Proceeds on the last surviving Contingent Insured's death will be the Death
Benefit Amount less any outstanding policy loan.

All Proceeds and partial surrender benefits are subject to the provisions of the
Payment Options section and the other provisions of this policy.

CHANGE OF OWNERSHIP OR BENEFICIARY

You may change the Owner or the Beneficiary at any time prior to the death of
the last surviving Contingent Insured unless the previous designation provides
otherwise. To do so, send a Written request to Our Home Office. The change
will go into effect when We have recorded the change.

However, after the change is recorded, it will be deemed effective as of the
date of Your Written request for change. The change will be subject to any
payment made or action We take before the request is recorded.

PAYMENT OPTIONS

Instead of being paid in one sum, all or part of the proceeds may be applied
under any of the Payment Options described in this provision. In addition to
these options other methods of payment may be chosen with Our consent.

PAYMENT CONTRACT. When proceeds become payable under a Payment Option, a
Payment Contract will be issued to each payee. The Payment Contract will state
the rights and benefits of the payee. It will also name those who are to
receive any balance unpaid at the death of the payee.

ELECTION OF OPTIONS. The Owner may elect or change any Payment Option prior to
the death of the last surviving Contingent Insured, subject to the provisions of
this policy. This election or change must be In Writing.

Within 60 days after We receive Written notification of the last surviving
Contingent Insured's death, a payee entitled to proceeds in one sum may elect to
receive proceeds under any option.

Page 19
<PAGE>

OPTION 1. PAYMENTS FOR A SPECIFIED PERIOD: Equal monthly payments will be made
for a specified period. The Option 1 Table in this policy shows the monthly
income for each $1,000 of proceeds applied.

OPTION 2. PAYMENTS OF A SELECTED AMOUNT: Equal monthly payments of a selected
amount will be made. Each payment must be at least $60 a year for each $1,000
of proceeds applied. Payments will continue until the amount applied, with
interest, has been paid in full.

OPTION 3. MONTHLY PAYMENTS FOR LIFE: Equal monthly payments will be made for a
specified period, and will continue after that period for as long as the payee
lives. The specified period may be 10, 15 or 20 years.

The Option 3 Table in this policy shows the monthly income for each $1,000 of
proceeds applied. The tables are based on the 1983a Male or Female Tables
adjusted by projection scale G for 9 years, with interest at the rate of 3% per
year and a 2% load.

At the time payments are to begin under this option, the payee may choose one of
the following:

1. Monthly payments based on the Option 3 Table; or

2. Monthly payments equal to a monthly annuity based on Our single premium
immediate annuity rates then in use.

OPTION 4. PROCEEDS LEFT AT INTEREST: Proceeds may be left on deposit with Us for
any period up to 30 years. Interest earned on the proceeds may be:

1. Left on deposit to accumulate at the rate of 3% compounded annually; or

2. Paid in installments at the rate for each $1,000 of proceeds of $30
annually, $14.89 semiannually, $7.42 quarterly or $2.47 monthly.

Upon the death of the payee, or at the end of the specified period, any balance
left on deposit will be paid in a lump sum or under Payment Options 1, 2 or 3.

INTEREST RATES. The guaranteed rate of interest for proceeds held under Payment
Options 1, 2, 3 and 4 is 3% compounded annually. We may credit interest at a
higher rate. Any higher rate will be determined by Us.

PAYMENTS. The first payment under Options 1, 2 and 3 will be made when the
claim for payment of proceeds has been approved. Payments after the first will
be made according to the manner of payment chosen. Interest under Option 4 will
be credited from the date We receive Written notification of death and paid or
added to the proceeds as provided in the Payment Contract.

AVAILABILITY OF OPTIONS. If the proposed payee is not a natural person, payment
options may be chosen only with Our consent.

If this policy is assigned, We will have the right to pay the assignee in one
sum the amount to which the assignee is entitled. Any balance will be applied
according to the option chosen.

The amount to be applied under any one option must be at least $2,000. The
payment elected under any one option must be at least $25. If the total policy
proceeds are less than $2,000, payment will be made in one lump sum.

EVIDENCE THAT PAYEE IS ALIVE. Before making any payment under a Payment Option,
We may ask for proof that the payee is alive. If We request proof, no payment
will be made or considered due until We receive proof.

DEATH OF A PAYEE. If a payee dies, any unpaid balance will be paid as stated in
the Payment Contract. If there is no surviving payee named in the Payment
Contract, We will pay the estate of the payee:

Page 20
<PAGE>

1. Under Options 1 and 3, the value, as of the date We receive Written
notification of death, of the remaining payments for the specified period
discounted at the rate of interest, compounded annually, that was used in
determining the amount of the monthly payment;

2. Under Options 2 and 4, the balance of any proceeds remaining unpaid with
accrued interest, if any.

WITHDRAWAL OF PROCEEDS UNDER OPTIONS 1 OR 2. If provided in the Payment
Contract, a payee will have the right to withdraw the entire unpaid balance
under Options 1 or 2. Under Option 1, the amount will be the value of the
remaining payments for the specified period discounted at the rate of interest
used in determining monthly income. Under Option 2, the amount will be the
entire unpaid balance.

WITHDRAWAL OF PROCEEDS UNDER OPTION 4. A payee will have the right to withdraw
proceeds left under Option 4 subject to the following rules:

1. The amount to be withdrawn must be $500 or more; and

2. A partial withdrawal must leave a balance on deposit of $1,000 or more.

WITHDRAWALS MAY BE DEFERRED. We may defer payment of any withdrawal for up to 6
months from the date We receive a Written withdrawal request.

ASSIGNMENT. Payment Contracts may not be assigned.

CHANGE IN PAYMENT. The right to make any change in payment is available only if
the Payment Contract provides for a change in payment.

CLAIMS OF CREDITORS. To the extent permitted by law, proceeds will not be
subject to any claims of a Beneficiary's creditors.

GENERAL PROVISIONS

ASSIGNING YOUR POLICY. Prior to the death of the last surviving Contingent
Insured, You may assign this policy as security for an obligation. We will not
be bound by an assignment unless it is received In Writing at the Home Office.
Two copies of the assignment must be submitted. We will retain one copy and
return the other. We will not be responsible for the validity of any
assignment.

INCONTESTABILITY. We rely on the statements made in the application for the
policy and applications for any reinstatements or increases in Specified Amount.
These statements, in the absence of fraud, are considered representations and
not warranties. No statement may be used in defense of a claim under the policy
unless it is in such applications.

We cannot contest this policy after it has been in force during the last
surviving Contingent Insured's lifetime for 2 years from the Date of Issue.
However, We can contest an increase in Specified Amount before such increase has
been in effect during the last surviving Contingent Insured's lifetime for 2
years.

Additionally, if this policy is reinstated, We cannot contest the reinstated
policy after it has been in force during the last surviving Contingent Insured's
lifetime for 2 years from the date of reinstatement. However, We can contest a
reinstatement or an increase in Specified Amount based solely on the information
provided in the application for such reinstatement or increase.

These 2 year limitations do not apply to any Disability or Accidental Death
Benefit, or to the nonpayment of premium.

Page 21
<PAGE>

SUICIDE EXCLUSION. If either Contingent Insured takes his or her own life,
while sane or insane, within 2 years from the Date of Issue, We will refund all
premiums paid, less any policy loans, and less any partial cash surrenders paid,
and this policy will be terminated as of the Date of Issue.

If there are any increases in the Specified Amount (See the section entitled
"Changing Your Insurance Policy") a new 2 year period shall apply to each
increase beginning on the date of each increase.

If death due to suicide occurs during the 2 year period following an increase,
but after the policy has been in force for 2 years or more, We will refund the
costs of insurance that were deducted for the increase, and that increase will
be terminated. The Initial Specified Amount, and any increases in Specified
Amount that have been in force for 2 years or more, will remain in force on the
life of the last surviving Contingent Insured.

When the laws of the state in which this policy is delivered require less than
these 2 year periods, the periods will be as stated in such laws.

AGE OR GENDER INCORRECTLY STATED. If the age or gender of a Contingent Insured
has been misstated to Us, We will adjust the excess of the Death Benefit Amount
over the Accumulation Value on the date of death to that which would have been
purchased by the Monthly Deduction for the policy month of death at the correct
cost of insurance rate. By age, We mean age nearest birthday as of the Date of
Issue.

STATUTORY BASIS OF POLICY VALUES. The Cash Values of the policy are not less
than the minimum values required by the law of the state where this policy is
delivered. The calculation of the Cash Values includes a charge for the cost of
insurance, as shown in the Table of Guaranteed Monthly Cost of Insurance Rates
and for the General Account interest at the annual effective rate of 4.0%.

Calculation of minimum Cash Values, nonforfeiture benefits and Guaranteed Cost
of Insurance Rates are based on the 1980 Smoker or Nonsmoker Commissioners
Standard Ordinary Ultimate Mortality Table for the appropriate gender and age
nearest birthday.

A detailed statement of the method of computing values has been filed with the
state insurance department where required.

NO DIVIDENDS. This policy will not pay dividends. It will not participate in
any of Our surplus or earnings.

ANNUAL REPORT. We will send to You at least once a year, without charge, an
annual report which will show a summary of all transactions since the last
report, including:

1. Premiums paid;

2. Transfers;

3. Expense charges deducted;

4. The cost of insurance deducted;

5. Partial surrender benefits deducted including partial surrender fees;

6. The amount of any outstanding policy loan;

7. Separate Account Unit Values;

8. The current Cash Surrender Value and Accumulation Values; and

Page 22
<PAGE>

9. The Death Benefit Amount.

WHEN THIS POLICY TERMINATES. This policy will terminate if:

1. You request that this policy be terminated;

2. The last surviving Contingent Insured dies;

3. Premiums are refunded due to suicide of either Contingent Insured;

4. The policy matures; or

5. The Grace Period ends and there is not sufficient Cash Surrender Value to
cover a Monthly Deduction.

REINSTATEMENT. "Reinstating" means placing Your policy in force after it has
terminated at the end of the Grace Period. We will reinstate this policy if We
receive:

1. Your Written request within 5 years after the end of the Grace Period and
before the Maturity Date;

2. Current evidence of insurability satisfactory to Us for each Contingent
Insured who was living on the date the policy terminated;

3. Payment of enough premiums to keep the policy in force for 2 months; and

4. Payment or reinstatement of any indebtedness.

The reinstated policy will be in force from the Monthly Deduction Day on or
following the date We approve the reinstatement application.

The original surrender charge schedule will apply to a reinstated policy. The
Accumulation Value at the time of reinstatement will be:

1. The Surrender Charge deducted at the time of lapse (such charge not being
greater than the Accumulation Value at the time of lapse before the
Surrender Charge was applied); plus

2. The Net Premium allocated in accordance with the premium allocation
percentages at time of lapse unless the reinstatement application provides
otherwise, using Unit Values as of the date of reinstatement; plus

3. Any loan, repaid or reinstated; less

4. The Monthly Deduction for one month.

The dollar amount of any Surrender Charge reinstated will be the same as the
dollar amount of Surrender Charge at the time of lapse, and will be applied to
the funds from which the Surrender Charge was deducted at the time of lapse
using Unit Values as of the date of reinstatement.

EXCHANGE OPTION

At any time while both Contingent Insureds are living this policy may be
exchanged for two individual policies covering the Contingent Insureds
separately subject to the following:

1. The total amount of coverage under the new policies will be an amount equal
to:

Page 23
<PAGE>

a) The Death Benefit Amount in effect on the effective date of exchange;
less

b) The amount of any policy loan.

Except as stated in number 10, the Death Benefit Amount of this policy may
be split into two individual policies in any proportion, the total of which
does not exceed the Death Benefit Amount of this policy.

2. After repayment of any loan against the Cash Surrender Value of this policy,
the remaining Cash Surrender Value will be transferred to the new policies
in the same ratio as the division of the Death Benefit Amount;

3. The new policies will be issued on any flexible premium adjustable whole
life or level premium whole life or endowment plan regularly issued by the
Company on the date of exchange;

4. Except as stated in number 10, evidence of insurability satisfactory to the
Company must be furnished (This option is not available unless both
Contingent Insureds are found to be insurable.);

5. The new policies will be issued as of the date of exchange at the then
attained age of each Contingent Insured;

6. The plan of insurance selected will be subject to Our standard minimum
amount requirement for such plan;

7. If, on or after the Date of Issue of this policy:

a) A rider providing waiver of monthly deduction or waiver of premium
coverage is made available, and is added to this policy; and

b) Monthly deductions or premiums for this policy are being waived as
provided in such a rider,

then, neither monthly deductions nor premiums for the new policies will be
waived and We will not include a waiver benefit in the new policies;

8. The Suicide Exclusion and Incontestability provisions of the new policies
will run from the Date of Issue of the new policies;

9. This policy will terminate on the Date of Issue of the new policies;

10. We will not require evidence of insurability at the time this option is
elected if:

a) The Contingent Insureds divorce and a period of at least 24 months has
elapsed since the date the divorce decree was finalized; or

b) The Federal unlimited marital deduction is repealed, or there is a
reduction of at least 50% of the tax rate in the maximum Federal
estate bracket.

In these cases the amount of coverage under each new policy will be 50% of
an amount equal to:

a) The Death Benefit Amount in effect on the effective date of exchange;
less

b) The amount of any policy loan.

Page 24
<PAGE>

After repayment of any loan against the Cash Surrender Value of this policy,
50% of any remaining Cash Surrender Value will be transferred to each of the
new policies.

This option is not available if the premium class of either Contingent
Insured was "Uninsurable" on the Date of Issue.

To apply for an exchange, the Owner must submit:

1. Applications for the new policies (including evidence of insurability
satisfactory to Us);

2. Payment of the first premium for each new policy; and

3. This policy for cancellation.

Page 25
<PAGE>

TABLE OF SURRENDER CHARGES PER $1,000 OF BASE COVERAGE

The following charges apply to each $1,000 of Base Coverage surrendered during
the Surrender Charge Period following the Date of Issue. The charges also apply
to each $1,000 of increase in Base Coverage surrendered during the Surrender
Charge Period of each increase. The word "surrender" as used in this provision
means full surrender, or a reduction in Base Coverage at the request of the
Owner, or due to a partial surrender. The charge for the surrender of all or
any portion of the Base Coverage during the Surrender Charge Period following
the Date of Issue will be equal to the rate shown below for the joint equal age
at issue and the year of surrender, multiplied by the number of thousands of
Base Coverage being surrendered. The charges for surrender of all or any
portion of an increase in Base Coverage will be equal to the rates shown below
for the joint equal age at issue of such increase and year of surrender,
multiplied by the number of thousands of such increase being surrendered.

<TABLE>
<CAPTION>
Duration
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JEA 1 2 3 4 5 6 7 8 9 10
------------------------------------------------------------------------------------
16 1.30 1.14 0.98 0.81 0.65 0.52 0.39 0.26 0.13 0.00
17 1.30 1.14 0.98 0.81 0.65 0.52 0.39 0.26 0.13 0.00
18 1.40 1.23 1.05 0.88 0.70 0.56 0.42 0.28 0.14 0.00
19 1.50 1.31 1.13 0.94 0.75 0.60 0.45 0.30 0.15 0.00
20 1.60 1.40 1.20 1.00 0.80 0.64 0.48 0.32 0.16 0.00
21 1.70 1.49 1.28 1.06 0.85 0.68 0.51 0.34 0.17 0.00
22 1.80 1.58 1.35 1.13 0.90 0.72 0.54 0.36 0.18 0.00
23 1.90 1.66 1.43 1.19 0.95 0.76 0.57 0.38 0.19 0.00
24 2.00 1.75 1.50 1.25 1.00 0.80 0.60 0.40 0.20 0.00
25 2.08 1.82 1.56 1.30 1.04 0.83 0.62 0.42 0.21 0.00
26 2.18 1.91 1.64 1.36 1.09 0.87 0.65 0.44 0.22 0.00
27 2.28 2.00 1.71 1.43 1.14 0.91 0.68 0.46 0.23 0.00
28 2.38 2.08 1.79 1.49 1.19 0.95 0.71 0.48 0.24 0.00
29 2.51 2.20 1.88 1.57 1.26 1.00 0.75 0.50 0.25 0.00
30 2.66 2.33 2.00 1.66 1.33 1.06 0.80 0.53 0.27 0.00
31 2.86 2.50 2.15 1.79 1.43 1.14 0.86 0.57 0.29 0.00
32 3.05 2.67 2.29 1.91 1.53 1.22 0.92 0.61 0.31 0.00
33 3.25 2.84 2.44 2.03 1.63 1.30 0.98 0.65 0.33 0.00
34 3.50 3.06 2.63 2.19 1.75 1.40 1.05 0.70 0.35 0.00
35 3.71 3.25 2.78 2.32 1.86 1.48 1.11 0.74 0.37 0.00
36 4.00 3.50 3.00 2.50 2.00 1.60 1.20 0.80 0.40 0.00
37 4.28 3.75 3.21 2.68 2.14 1.71 1.28 0.86 0.43 0.00
38 4.57 4.00 3.43 2.86 2.29 1.83 1.37 0.91 0.46 0.00
39 4.92 4.31 3.69 3.08 2.46 1.97 1.48 0.98 0.49 0.00
40 5.21 4.56 3.91 3.26 2.61 2.08 1.56 1.04 0.52 0.00
41 5.59 4.89 4.19 3.49 2.80 2.24 1.68 1.12 0.56 0.00
42 5.97 5.22 4.48 3.73 2.99 2.39 1.79 1.19 0.60 0.00
43 6.35 5.56 4.76 3.97 3.18 2.54 1.91 1.27 0.64 0.00
44 6.83 5.98 5.12 4.27 3.42 2.73 2.05 1.37 0.68 0.00
45 7.15 6.26 5.36 4.47 3.58 2.86 2.15 1.43 0.72 0.00
46 7.59 6.64 5.69 4.74 3.80 3.04 2.28 1.52 0.76 0.00
47 8.02 7.02 6.02 5.01 4.01 3.21 2.41 1.60 0.80 0.00
48 8.46 7.40 6.35 5.29 4.23 3.38 2.54 1.69 0.85 0.00
49 9.00 7.88 6.75 5.63 4.50 3.60 2.70 1.80 0.90 0.00
50 9.45 8.27 7.09 5.91 4.73 3.78 2.84 1.89 0.95 0.00
51 10.05 8.79 7.54 6.28 5.03 4.02 3.02 2.01 1.01 0.00
52 10.65 9.32 7.99 6.66 5.33 4.26 3.20 2.13 1.07 0.00
53 11.25 9.84 8.44 7.03 5.63 4.50 3.38 2.25 1.13 0.00
54 12.01 10.51 9.01 7.51 6.01 4.80 3.60 2.40 1.20 0.00
55 12.72 11.13 9.54 7.95 6.36 5.09 3.82 2.54 1.27 0.00
56 13.67 11.96 10.25 8.54 6.84 5.47 4.10 2.73 1.37 0.00
</TABLE>
Page 26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
57 14.63 12.80 10.97 9.14 7.32 5.85 4.39 2.93 1.46 0.00
58 15.58 13.63 11.69 9.74 7.79 6.23 4.67 3.12 1.56 0.00
59 16.77 14.67 12.58 10.48 8.39 6.71 5.03 3.35 1.68 0.00
60 17.79 15.57 13.34 11.12 8.90 7.12 5.34 3.56 1.78 0.00
61 19.16 16.77 14.37 11.98 9.58 7.66 5.75 3.83 1.92 0.00
62 20.52 17.96 15.39 12.83 10.26 8.21 6.16 4.10 2.05 0.00
63 21.89 19.15 16.42 13.68 10.95 8.76 6.57 4.38 2.19 0.00
64 23.59 20.64 17.69 14.74 11.80 9.44 7.08 4.72 2.36 0.00
65 25.20 22.05 18.90 15.75 12.60 10.08 7.56 5.04 2.52 0.00
66 27.35 23.93 20.51 17.09 13.68 10.94 8.21 5.47 2.74 0.00
67 29.49 25.80 22.12 18.43 14.75 11.80 8.85 5.90 2.95 0.00
68 31.64 27.69 23.73 19.78 15.82 12.66 9.49 6.33 3.16 0.00

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

69 34.32 30.03 25.74 21.45 17.16 13.73 10.30 6.86 3.43 0.00
70 36.46 31.90 27.35 22.79 18.23 14.58 10.94 7.29 3.65 0.00
71 39.31 34.40 29.48 24.57 19.66 15.72 11.79 7.86 3.93 0.00
72 40.90 35.79 30.68 25.56 20.45 16.36 12.27 8.18 4.09 0.00
73 42.55 37.23 31.91 26.59 21.28 17.02 12.77 8.51 4.26 0.00
74 43.70 38.24 32.78 27.31 21.85 17.48 13.11 8.74 4.37 0.00
75 47.45 41.52 35.59 29.66 23.73 18.98 14.24 9.49 4.75 0.00
76 49.08 42.95 36.81 30.68 24.54 19.63 14.72 9.82 4.91 0.00
77 49.36 43.19 37.02 30.85 24.68 19.74 14.81 9.87 4.94 0.00
78 49.65 43.44 37.24 31.03 24.83 19.86 14.90 9.93 4.97 0.00
79 50.00 43.75 37.50 31.25 25.00 20.00 15.00 10.00 5.00 0.00
80 50.00 43.75 37.50 31.25 25.00 20.00 15.00 10.00 5.00 0.00
81 50.00 43.75 37.50 31.25 25.00 20.00 15.00 10.00 5.00 0.00
82 50.00 43.75 37.50 31.25 25.00 20.00 15.00 10.00 5.00 0.00
83 49.68 43.47 37.26 31.05 24.84 19.87 14.90 9.94 4.97 0.00
84 49.30 43.14 36.98 30.81 24.65 19.72 14.79 9.86 4.93 0.00
85 49.02 42.89 36.77 30.64 24.51 19.61 14.71 9.80 4.90 0.00
86 48.70 42.37 36.53 30.68 24.35 18.51 12.18 6.33 0.00 0.00
87 48.42 41.16 34.38 27.60 20.82 14.04 6.78 0.00 0.00 0.00
88 48.00 39.84 32.16 24.00 15.84 8.16 0.00 0.00 0.00 0.00
89 47.60 38.08 28.56 19.04 9.52 0.00 0.00 0.00 0.00 0.00
90 47.12 35.34 23.56 11.78 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>

Page 26
<PAGE>

TABLES OF MONTHLY INSTALLMENTS FOR EACH $1,000 OF PROCEEDS
<TABLE>
<CAPTION>
OPTION 1 TABLE
INSTALLMENTS FOR A SPECIFIED PERIOD
- -------------------------------------------------------------------------------------------------------------------------

Number Amount of Number Amount of Number Amount of Number Amount of
of Years Monthly of Years Monthly Of Years Monthly Of Years Monthly
Payable Installments Payable Installments Payable Installments Payable Installments
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

5 $17.91 15 $6.87 25 $4.71 35 $3.82
6 15.14 16 6.53 26 4.59 36 3.76
7 13.16 17 6.23 27 4.47 37 3.70
8 11.68 18 5.96 28 4.37 38 3.65
9 10.53 19 5.73 29 4.27 39 3.60

10 9.61 20 5.51 30 4.18 40 3.55
11 8.86 21 5.32 31 4.10
12 8.24 22 5.15 32 4.02
13 7.71 23 4.99 33 3.95
14 7.26 24 4.84 34 3.88
- -------------------------------------------------------------------------------------------------------------------------

OPTION 3 TABLE
INSTALLMENTS FOR LIFE WITH SPECIFIED MINIMUM PERIOD
- -------------------------------------------------------------------------------------------------------------------------

AGE OF AGE OF
PAYEE GUARANTEED PERIOD PAYEE GUARANTEED PERIOD
- -------------------------------------------------------------------------------------------------------------------------

Female 10 Years 15 Years 20 Years Female 10 Years 15 Years 20 Years
- -------------------------------------------------------------------------------------------------------------------------

20* $2.85 $2.85 $2.85 50 $3.75 $3.73 $3.69
21 2.87 2.87 2.87 51 3.80 3.78 3.74
22 2.89 2.88 2.88 52 3.86 3.84 3.79
23 2.90 2.90 2.90 53 3.92 3.89 3.85
24 2.92 2.92 2.91 54 3.99 3.96 3.90

25 2.94 2.93 2.93 55 4.06 4.02 3.96
26 2.95 2.95 2.95 56 4.13 4.09 4.02
27 2.97 2.97 2.97 57 4.21 4.16 4.08
28 2.99 2.99 2.99 58 4.29 4.23 4.15
29 3.01 3.01 3.01 59 4.37 4.31 4.21

30 3.03 3.03 3.03 60 4.46 4.39 4.28
31 3.06 3.05 3.05 61 4.56 4.47 4.35
32 3.08 3.08 3.07 62 4.66 4.56 4.42
33 3.10 3.10 3.10 63 4.76 4.65 4.49
34 3.13 3.13 3.12 64 4.88 4.75 4.56

35 3.16 3.15 3.15 65 4.99 4.85 4.63
36 3.19 3.18 3.17 66 5.12 4.95 4.70
37 3.21 3.21 3.20 67 5.25 5.05 4.77
38 3.24 3.24 3.23 68 5.39 5.16 4.83
39 3.28 3.27 3.26 69 5.53 5.27 4.90

40 3.31 3.30 3.29 70 5.69 5.38 4.96
41 3.35 3.34 3.33 71 5.85 5.49 5.02
42 3.38 3.37 3.36 72 6.02 5.60 5.08
43 3.42 3.41 3.40 73 6.19 5.71 5.13
44 3.46 3.45 3.43 74 6.37 5.82 5.17

45 3.50 3.49 3.47 75 6.56 5.92 5.21
46 3.55 3.53 3.51 76 6.75 6.02 5.25
47 3.59 3.58 3.56 77 6.95 6.11 5.28
48 3.64 3.63 3.60 78 7.14 6.20 5.30
49 3.69 3.67 3.65 79 7.34 6.28 5.32
80** 7.54 6.35 5.34
- -------------------------------------------------------------------------------------------------------------------------
Payments are based upon the age, nearest birthday, of the Payee on the date the first payment is due. If monthly installments for
two or more specified periods for a given age are the same, the specified period of longer duration will apply.
*Also applies to younger ages. **Also applies to older ages.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Page 27
<PAGE>

TABLES OF MONTHLY INSTALLMENTS FOR EACH $1,000 OF PROCEEDS
<TABLE>
<CAPTION>

OPTION 1 TABLE
INSTALLMENTS FOR A SPECIFIED PERIOD
- ----------------------------------------------------------------------------------------------------------------------------

Number Amount of Number Amount of Number Amount of Number Amount of
Of Years Monthly of Years Monthly of Years Monthly of Years Monthly
Payable Installments Payable Installments Payable Installments Payable Installments
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

5 $17.91 15 $6.87 25 $4.71 35 $3.82
6 15.14 16 6.53 26 4.59 36 3.76
7 13.16 17 6.23 27 4.47 37 3.70
8 11.68 18 5.96 28 4.37 38 3.65
9 10.53 19 5.73 29 4.27 39 3.60

OPTION 3 TABLE
INSTALLMENTS FOR LIFE WITH SPECIFIED MINIMUM PERIOD
- ----------------------------------------------------------------------------------------------------------------------------

AGE OF AGE OF
PAYEE GUARANTEED PERIOD PAYEE GUARANTEED PERIOD
- ----------------------------------------------------------------------------------------------------------------------------

Male 10 Years 15 Years 20 Years Male 10 Years 15 Years 20 Years
- ----------------------------------------------------------------------------------------------------------------------------

20* $2.95 $2.94 $2.94 50 $4.05 $4.00 $3.93
21 2.97 2.96 2.96 51 4.11 4.06 3.99
22 2.98 2.98 2.98 52 4.18 4.13 4.04
23 3.00 3.00 3.00 53 4.26 4.19 4.10
24 3.02 3.02 3.02 54 4.34 4.27 4.16

25 3.05 3.04 3.04 55 4.42 4.34 4.22
26 3.07 3.06 3.06 56 4.51 4.42 4.28
27 3.09 3.09 3.08 57 4.60 4.50 4.35
28 3.12 3.11 3.11 58 4.69 4.58 4.41
29 3.14 3.14 3.13 59 4.79 4.66 4.47

30 3.17 3.16 3.16 60 4.90 4.75 4.54
31 3.20 3.19 3.18 61 5.01 4.84 4.60
32 3.22 3.22 3.21 62 5.13 4.94 4.67
33 3.25 3.25 3.24 63 5.26 5.03 4.73
34 3.29 3.28 3.27 64 5.39 5.13 4.79

35 3.32 3.31 3.00 65 5.52 5.23 4.85
36 3.35 3.35 3.33 66 5.66 5.33 4.91
37 3.39 3.38 3.36 67 5.81 5.43 4.97
38 3.43 3.42 3.40 68 5.96 5.53 5.02
39 3.47 3.46 3.44 69 6.12 5.63 5.07

40 3.51 3.50 3.47 70 6.28 5.73 5.11
41 3.55 3.54 3.51 71 6.44 5.82 5.15
42 3.60 3.58 3.55 72 6.61 5.91 5.19
43 3.65 3.63 3.59 73 6.78 6.00 5.23
44 3.70 3.67 3.64 74 6.96 6.08 5.26

45 3.75 3.72 3.68 75 7.13 6.16 5.28
46 3.80 3.77 3.73 76 7.30 6.24 5.31
47 3.86 3.83 3.78 77 7.47 6.31 5.33
48 3.92 3.88 3.83 78 7.64 6.37 5.34
49 3.98 3.94 3.88 79 7.81 6.42 5.36
80** 7.97 6.48 5.37
- ----------------------------------------------------------------------------------------------------------------------------
Payments are based upon the age, nearest birthday, of the Payee on the date the first payment is due. If monthly
installments for two or more specified periods for a given age are the same, the specified period of longer duration will
apply.

*Also applies to younger ages. **Also applies to older ages.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Page 28
<PAGE>

AMERICAN GENERAL LIFE
INSURANCE COMPANY

For Information, Service or to make a Complaint

Contact Your Registered Representative, or Our VUL Administration.

2727-A ALLEN PARKWAY
P.O. BOX 4880
HOUSTON, TEXAS 77210-4880
1-888-325-9315

[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation

<PAGE>

Exhibit (8)(e)(iii)
<PAGE>

AMENDMENT NUMBER 6 TO
PARTICIPATION AGREEMENT
AMONG MORGAN STANLEY UNIVERSAL FUNDS, INC.,
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.,
MORGAN STANLEY ASSET MANAGEMENT INC.,
MILLER ANDERSON & SHERRERD, LLP,
AMERICAN GENERAL LIFE INSURANCE COMPANY, AND
AMERICAN GENERAL SECURITIES INCORPORATED

This Amendment No. 6 ("Amendment") executed as of ________________, 2000 to
the Participation Agreement (the "AGLI Agreement") dated as of January 24, 1997,
as amended, among Morgan Stanley Universal Funds, Inc. (the "Fund"), Van Kampen
Funds Inc. ("VK Funds") (formerly Van Kampen American Capital Distributors,
Inc.), Morgan Stanley Dean Witter Investment Management Inc. ("MSDW Investment
Management") (formerly Morgan Stanley Asset Management Inc.), Miller Anderson &
Sherrerd, LLP ("MAS"), American General Life Insurance Company (the "Company"),
and American General Securities Incorporated ("AGSI").

WHEREAS, the parties desire to amend the Agreement to (i) add to Schedule A
of the Agreement the Contracts of the Company relating to the Platinum Investor
Survivor Variable Life Insurance Policies ("Platinum Investor Survivor"), and
(ii) to the extent the Agreement relates to Platinum Investor Survivor, amend
the provisions of Article III of the Agreement as described below.

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1. Schedule A to the Agreement, a revised copy of which is attached hereto, is
hereby amended and restated to add Platinum Investor Survivor; and

2. To the extent the Agreement relates to Platinum Investor Survivor, Article
III of the Agreement is hereby deleted and replaced with the following:

"ARTICLE III. Prospectuses, Reports to Shareholders and Proxy
Statements; Voting

3.1. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus and statement of
additional information as the Company may reasonably request. If
requested by the Company, in lieu of providing printed copies the
Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and statement of additional
information, and such other assistance as is reasonably necessary
<PAGE>

in order for the Company once each year (or more frequently if
the prospectus and/or statement of additional information for the
Fund is amended during the year) to have the prospectus for the
Contracts and the Fund's prospectus printed together in one
document or separately. The Company may elect to print the
Fund's prospectus and/or its statement of additional information
in combination with other fund companies' prospectuses and
statements of additional information.

3.2(a). Except as otherwise provided in this Section 3.2., all expenses
of preparing, setting in type and printing and distributing Fund
prospectuses and statements of additional information shall be
the expense of the Company. For prospectuses and statements of
additional information provided by the Company to its existing
owners of Contracts who own shares of the Fund in order to update
disclosure as required by the 1933 Act and/or the 1940 Act, the
cost of setting in type, printing and distributing shall be borne
by the Fund. If the Company chooses to receive camera-ready film
or computer diskettes in lieu of receiving printed copies of the
Fund's prospectus and/or statement of additional information, the
Fund shall bear the cost of typesetting to provide the Fund's
prospectus and/or statement of additional information to the
Company in the format in which the Fund is accustomed to
formatting prospectuses and statements of additional information,
respectively, and the Company shall bear the expense of adjusting
or changing the format to conform with any of its prospectuses
and/or statements of additional information. In such event, the
Fund will reimburse the Company in an amount equal to the product
of x and y where x is the number of such prospectuses distributed
to Participants who own shares of the Fund, and y is the Fund's
per unit cost of printing the Fund's prospectuses. The same
procedures shall be followed with respect to the Fund's statement
of additional information. The Fund shall not pay any costs of
typesetting, printing and distributing the Fund's prospectus
and/or statement of additional information to prospective
Participants.

3.2(b). The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and statements of
additional information, which are covered in Section 3.2(a)
above) to shareholders in such quantity as the Company shall
reasonably require for distributing to Participants. The Fund
shall not pay any costs of distributing such proxy-related
material, reports to
<PAGE>

shareholders, and other communications to prospective
Participants.

3.2(c). The Company agrees to provide the Fund or its designee with
such information as may be reasonably requested by the Fund to
assure that the Fund's expenses do not include the cost of
typesetting, printing or distributing any of the foregoing
documents other than those actually distributed to existing
Participants.

3.2(d). The Fund shall pay no fee or other compensation to the Company
under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to
the Company or to the underwriter for the Contracts if and in
amounts agreed to by the Underwriter in writing.

3.2(e). All expenses, including expenses to be borne by the Fund pursuant
to Section 3.2 hereof, incident to performance by the Fund under
this Agreement shall be paid by the Fund. The Fund shall see to
it that all its shares are registered and authorized for issuance
in accordance with applicable federal law and, if and to the
extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of
the Fund's shares.

3.3 The Fund's statement of additional information shall be
obtainable from the Fund, the Underwriter, the Company or such
other person as the Fund may designate.

3.4 If and to the extent required by law the Company shall distribute
all proxy material furnished by the Fund to Contract Owners to
whom voting privileges are required to be extended and shall:

(i) solicit voting instructions from Contract owners:

(ii) vote the Fund shares in accordance with instructions
received from Contract owners: and

(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such Portfolio
for which instructions have been received, so long as and to the
extent that the Securities and Exchange Commission continues to
interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to
vote Fund shares held in any segregated asset account in its own
right, to the extent permitted by law. The Fund and the Company
shall
<PAGE>

follow the procedures, and shall have the corresponding
responsibilities, for the handling of proxy and voting
instruction solicitations, as set forth in Schedule C attached
hereto and incorporated herein by reference. Participating
Insurance Companies shall be responsible for ensuring that each
of their separate accounts participating in the Fund calculates
voting privileges in a manner consistent with the standards set
forth on Schedule C, which standards will also be provided to the
other Participating Insurance Companies.

3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will
either provide for annual meetings (except insofar as the
Securities and Exchange Commission may interpret Section 16 not
to require such meetings) or comply with Section 16(c) of the
1940 Act (although the Fund is not one of the trusts described in
Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect
to periodic elections of directors and with whatever rules the
Commission may promulgate with respect thereto."

4. Except as amended hereby the Agreement is hereby ratified and
confirmed in all respects.

5. Any and all references in the Agreement to "Van Kampen American
Capital Distributors, Inc." are hereby changed to Van Kampen Funds
Inc.
<PAGE>

IN WITNESS WHEREOF, the parties hereto execute this Amendment No. 6 as of the
date first written above.

AMERICAN GENERAL LIFE INSURANCE COMPANY AMERICAN GENERAL SECURITIES
INCORPORATED
on behalf of itself and each of its
Accounts named in Schedule B to the
Agreement, as amended from time to time

By:________________________________ By:______________________________

VAN KAMPEN FUNDS INC.
MORGAN STANLEY UNIVERSAL (FORMERLY VAN KAMPEN AMERICAN
FUNDS, INC. CAPITAL DISTRIBUTORS, INC.)

By:________________________________ By:______________________________

MORGAN STANLEY DEAN WITTER INVESTMENT MILLER ANDERSON & SHERRERD, LLP
MANAGEMENT INC. (FORMERLY MORGAN STANLEY
ASSET MANAGEMENT INC.)

By:________________________________ By:______________________________

<PAGE>

SCHEDULE B
----------

SEPARATE ACCOUNTS AND CONTRACTS
-------------------------------

<TABLE>
<CAPTION>
Name of Separate Account and Form Numbers and Names of
Date Established by Board of Directors Contracts Funded by Separate Account
- -------------------------------------- ------------------------------------
<S> <C>
American General Life Insurance Company Contract Form Numbers:
Separate Account D ----------------------
Established: November 19, 1973 95020 Rev 896
95021 Rev 896

Name of Contract:
-----------------
Generations Combination Fixed and Variable
Annuity Contract

Contract Form Numbers:
----------------------
91010
91011
93020
93021
Name of Contract:
-----------------
Variety Plus Combination Fixed and Variable
Annuity Contract

Contract Form Numbers:
----------------------
74010
74011
76010
76011
80010
80011
81010
81011
83010
83011
Name of Contract: None
-------------------------

Contract Form Number: 98020
---------------------
Name of Contract:
-----------------
Platinum Investor Variable Annuity
</TABLE>
<PAGE>

<TABLE>
<S> <C>
Contract Form Number:
---------------------
99020

Name of Contract:
--------------------------------------------
Generations Asset Builder Combination Fixed
and Variable Annuity Contract

American General Life Insurance Company
Separate Account VL-R Contract Form
Established: May 6, 1997 -------------
Numbers:
--------
97600
97610
Name of Contract:
-----------------
Platinum I and Platinum II Flexible Premium
Variable Life Insurance Policies

Contract Form Numbers:
----------------------
98615
Name of Contract:
-----------------
Legacy Plus Flexible Premium
Variable Life Insurance Policies

Contract Form Number:
---------------------
99301
Name of Contract:
-----------------
Corporate America - Variable Life Insurance
Policy

Contract Form Number:
---------------------
99206
Name of Contract:
-----------------
Platinum Investor Survivor
Variable Life Insurance Policies
</TABLE>

<PAGE>

EXHIBIT (8)(g)(ii)
<PAGE>

THIRD AMENDMENT
TO
PARTICIPATION AGREEMENT
AMONG AMERICAN GENERAL LIFE INSURANCE COMPANY,
AMERICAN GENERAL SECURITIES INCORPORATED,
SAFECO RESOURCE SERIES TRUST, AND
SAFECO SECURITIES, INC.

THIS THIRD AMENDMENT TO PARTICIPATION AGREEMENT ("Amendment") dated as of
February 1, 2000, amends the Participation Agreement dated as of April 1, 1998
(the "Agreement") among AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL") ON ITS
OWN BEHALF AND ON BEHALF OF EACH SEPARATE ACCOUNT OF AGL (EACH A "SEPARATE
ACCOUNT") SET FORTH ON SCHEDULE A of the Agreement attached hereto and
incorporated herein (as same may be amended from time to time ("Schedule A")
AMERICAN GENERAL SECURITIES INCORPORATED ("AGSI"), SAFECO RESOURCE SERIES TRUST
(the "Fund") and SAFECO SECURITIES, INC. (the "Distributor") collectively, the
"Parties." All capitalized terms not otherwise defined in this Amendment, shall
have the same meaning as ascribed in the Agreement.

WITNESSETH THAT:

WHEREAS, pursuant to the Agreement shares of the Fund's Equity Portfolio and
Growth Portfolio (the "Series"; reference herein to the "Fund" includes
reference to each of the foregoing Series to the extent the context requires)
are made available by the Distributor to serve as underlying investment media
for those variable life insurance policies and variable annuity contracts of
AGL that are described on Schedule A (the "Policies") and are offered through
AGSI.

WHEREAS, the Distributor and the Fund desire that shares of the series also be
made available by the Distributor to serve as underlying investment media for
AGL's Platinum Investor Survivor Variable Life Insurance Policies ("Platinum
Survivor") to be offered through AGSI; and

NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein, the parties agree as follows:

1. The Agreement shall be amended to include Schedule A in the form attached
hereto and incorporated herein.

2. Except as amended hereby, the Agreement and the First Amendment to the
Agreement dated as of April 1, 1998 are hereby ratified in all respects.

Page 1 of 4
<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
in its name and on its behalf by its duly authorized representative hereto as of
the date specified above.

AMERICAN GENERAL LIFE INSURANCE COMPANY, on behalf of itself and each of its
Separate Accounts named in Schedule A hereto, as amended from time to time.

By:____________________________

AMERICAN GENERAL SECURITIES INCORPORATED

By:____________________________

SAFECO RESOURCE SERIES TRUST

By:____________________________

SAFECO SECURITIES, INC.

By:_____________________________

Page 2 of 4
<PAGE>

SCHEDULE A
----------

POLICIES AND SEPARATE ACCOUNTS
------------------------------
(AS OF FEBRUARY 1, 2000)
<TABLE>
<CAPTION>

NAME OF SEPARATE ACCOUNTS AND REGISTRATION NUMBERS AND NAMES OF POLICIES FUNDED BY
DATE ESTABLISHED BY BOARD OF DIRECTORS SEPARATE ACCOUNTS
- -------------------------------------- -----------------------------------------------------
<S> <C> <C>
Registration Nos. Name of Contract
(if available) ----------------
--------------

1. American General Life Insurance Company 333-42567 Platinum Investor I and
Separate Account VL-R 811-08561 Platinum Investor II Variable Life
Insurance Policies (Contract Form
Nos. 97600 and 97610)

333-80191 Corporate America-Variable
811-08561 Life Insurance Policies
(Contract Form No. 99301)

333-90787 Platinum Investor Survivor
811-08561 Variable Life Insurance Policies
(Contract Form No. 99206)

2. American General Life Insurance Company 333-70667 Platinum Investor Variable
Separate Account D 811-02441 Annuity Contract (Contract Form
No. 98202)

</TABLE>

<PAGE>

EXHIBIT (8)(j)
<PAGE>

AGREEMENT

THIS AGREEMENT ("Agreement") made as of January 24, 1997, is by and among MORGAN
STANLEY ASSET MANAGEMENT INC., a Delaware corporation ("MSAM"), MILLER ANDERSON
& SHERRERD, LLP, a Pennsylvania limited partnership ("MAS") (each of MSAM and
MAS are referred to herein as an "Adviser" and collectively as, the "Advisers")
and AMERICAN GENERAL LIFE INSURANCE COMPANY, a Texas corporation ("AGL").

W I T N E S S E T H:

WHEREAS, the investment company identified on Schedule One hereto ("Schedule
One," as the same may be amended from time to time), is registered as an open-
end management investment company under the Investment Company Act of 1940, as
amended (the "Act") (the "Investment Company" - the portfolios of the Investment
Company identified in Schedule One are referred to herein individually as a
"Fund" and collectively as the "Funds"); and

WHEREAS, each of the Funds is available as the investment vehicle for certain
separate accounts of AGL, established for variable life insurance policies
and/or variable annuity contracts offered by AGL (individually or collectively,
the "Separate Account"); and

WHEREAS, AGL has entered into a participation agreement dated January 24, 1997
among AGL, the Investment Company and the Advisers (the "Participation
Agreement," as the same may be amended from time to time); and

WHEREAS, the Advisers provide, among other things, investment advisory and/or
administrative services to the Investment Company; and

WHEREAS, the Advisers desire AGL to provide the administrative services
specified in the attached Exhibit A ("Administrative Services"), in connection
with the ownership of interests of the Separate Account, which holds shares of
the Funds, and AGL is willing and able to provide such Administrative Services
on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, each party hereto severally agrees as follows:

1. AGL agrees to perform the Administrative Services specified in Exhibit A
hereto for the benefit of variable annuity and variable life insurance
contracts that participate in the Separate Account.

2. AGL may, with the consent of an Adviser, contract with or establish
relationships with other parties for the provision of the Administrative
Services or other activities of AGL required by this Agreement, provided that
AGL shall be fully responsible for the acts and omissions of such other
parties.

3. AGL hereby agrees to notify the Advisers promptly if for any reason it is
unable to perform fully

1
<PAGE>

and promptly any of its obligations under this Agreement.

4. AGL hereby represents and covenants that it does not, and will not, own or
hold or control with power to vote any shares of the Funds which are
registered in the name of AGL or the name of its nominee and which are
maintained under AGL variable annuity or variable life insurance accounts.

5. The provisions of the Agreement shall in no way limit the authority of the
Advisers or the Investment Company to take such action as any of such parties
may deem appropriate or advisable in connection with all matters relating to
the operations of any of the Funds and/or sale of shares of the Funds.

6. In consideration of the Administrative Services provided by AGL with respect
to the variable life insurance and variable annuity contracts identified on
Schedule Two attached hereto, each Adviser agrees to pay AGL with respect to
the Funds for which it serves as adviser (as indicated on Schedule One), a
monthly fee at an annual rate which shall equal .15% of the net asset value
of the shares of each such Fund held in the Separate Account. The foregoing
fee will be paid by the applicable Adviser to AGL on a calendar quarter
basis; payment of such fee will be made by the appropriate Adviser to AGL
within thirty (30) days following the end of each calendar quarter. The
determination of applicable assets shall be made by averaging the assets of
the applicable portfolios of the Fund maintained in the Master Account for
the Shareholders as of the last Business Day (as defined in the Participation
Agreement) of each month falling within the applicable calendar quarter.

Notwithstanding anything in this Agreement or the Participation Agreement
appearing to the contrary, the payments by an Adviser to AGL relate solely to
the performance by AGL of the Administrative Services described herein only,
and do not constitute payment in any manner for services provided by AGL to
AGL policy or contract owners, or to any separate account organized by AGL,
or for any investment advisory services, or for costs associated with the
distribution of any variable annuity or variable life insurance contracts.

7. AGL shall indemnify and hold harmless the Investment Company, the Funds, and
the Advisers and each of their respective officers, Directors, employees and
agents from and against any and all losses, claims, damages, expenses, or
liabilities that any one or more of them may incur including, without
limitation, reasonable attorneys' fees, expenses and costs arising out of or
related to the performance or non-performance by AGL of the Administrative
Services under this Agreement.

8. This Agreement may be terminated without penalty at any time by AGL or by an
Adviser as to one or more of the Funds, upon one hundred and eighty days
(180) written notice to the other party. Notwithstanding the foregoing, the
provisions of paragraphs 7 and 9 of this Agreement, shall continue in full
force and effect after termination of this Agreement.

9. After the date of any termination of this Agreement in accordance with
paragraph 8 of this Agreement, no fee will be due with respect to any shares
of the Funds first placed in the Separate Account after the date of such
termination. However, notwithstanding any such termination, the

2
<PAGE>

Advisers will remain obligated to pay AGL the fee specified in paragraph 6
of this Agreement, with respect to the net asset value of shares of the
Funds maintained in the Separate Account as of the date of such termination,
for so long as such amounts are held in the Separate Account and AGL
continues to provide the Administrative Services with respect to such
amounts in conformity with this Agreement. This Agreement, or any provision
hereof, shall survive termination to the extent necessary for each party to
perform its obligations with respect to amounts for which a fee continues to
be due subsequent to such termination.

10. AGL understands and agrees that the obligations of the Advisers under this
Agreement are not binding upon the Investment Company, upon any of its Board
members or upon any shareholder of any of the Funds.

11. It is understood and agreed that in performing the services under this
Agreement AGL, acting in its capacity described herein, shall at no time be
acting as an agent for an Adviser or the Investment Company. AGL agrees, and
agrees to cause its agents, not to make any representations concerning the
Investment Company or the Funds except those contained in the Investment
Company's then-current prospectus; in current sales literature furnished by
the Investment Company or an Adviser to AGL; in the then current prospectus
for a variable annuity contract or variable life insurance policy issued by
AGL or then current sales literature with respect to such variable annuity
contract or variable life insurance policy, approved by an Adviser.

12. This Agreement, including the provisions set forth herein in paragraph 6,
may only be amended pursuant to a written instrument signed by the party to
be charged. This Agreement may not be assigned by a party hereto, by
operation of law or otherwise, without the prior written consent of the
other party.

13. This Agreement shall be governed by the laws of the State of Texas, without
giving effect to the principles of conflicts of law of such jurisdiction.

14. This Agreement, including Exhibit A and Schedules One and Two, constitutes
the entire agreement between the parties with respect to the matters dealt
with herein and supersedes any previous agreements and documents with
respect to such matters. The parties agree that Schedule One may be
replaced from time to time with a new Schedule One to accurately reflect any
changes in the Investment Company or Funds available as investment vehicles
under the Participation Agreement.

3
<PAGE>

IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.

AMERICAN GENERAL LIFE INSURANCE COMPANY

By: _____________________________
Authorized Signatory

______________________________
Print or Type Name

MORGAN STANLEY ASSET MANAGEMENT INC.

By: _______________________________
Authorized Signatory

_______________________________
Print or Type Name

MILLER ANDERSON & SHERRERD, LLP

By: _______________________________
Authorized Signatory

_______________________________
Print or Type Name

4
<PAGE>

SCHEDULE ONE

INVESTMENT COMPANY NAME: FUND NAME(S) AND ADVISER TO FUND:
- ------------------------------------- --------------------------------------

Morgan Stanley Universal Funds, Inc. Adviser:
Morgan Stanley Asset Management Inc.

Funds:
Equity Growth
International Magnum
Emerging Markets Equity
Global Equity

Adviser:
Miller Anderson & Sherrerd, LLP

Funds:
Fixed Income
High Yield
Mid Cap Value
Value

5
<PAGE>

SCHEDULE TWO

VARIABLE LIFE INSURANCE AND
ANNUITY CONTRACTS COVERED UNDER
AGREEMENT (as of February 1, 2000)

1. PLATINUM I AND PLATINUM II FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
(Form Nos. 97600 and 97610)

2. LEGACY PLUS FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
(Form No. 98615)

3. PLATINUM INVESTOR VARIABLE ANNUITY
(Form No. 98020)

4. CORPORATE AMERICA VARIABLE LIFE INSURANCE POLICY
(FORM NO. 93301)

5. PLATINUM INVESTOR SURVIVOR VARIABLE LIFE INSURANCE POLICIES
(FORM NO. 99206)

6
<PAGE>

EXHIBIT A
(As of January 1, 1999)

Pursuant to the Agreement by and among the parties hereto, AGL shall perform the
following Administrative Services:

1. Assist the Investment Company in communicating with variable life insurance
policy owners and variable annuity contract owners and provide them with
information regarding the Funds, including (a) information on investment
objectives, policies and procedures, (b) information on Fund performance and
(c) answers to questions regarding Fund investments.

2. Create and utilize computer programs and other information systems that
assist the Investment Company in communicating Fund information to variable
life insurance policy owners and variable annuity contract owners.

3. Assist the Investment Company in educating AGL's home office and field
personnel on the management and operation of the Funds.

4. Transmit to variable life insurance policy owners and variable annuity
contract owners proxy materials and reports and other information received
by AGL from the Investment Company and required to be sent to policy and
contract owners under the federal securities laws and, upon request of the
Investment Company and transmit communications deemed by the Investment
Company, through its Board of Directors, to be necessary and proper for
receipt by all policy and contract owners participating in the Separate
Account.

5. Provide to the Investment Company such periodic reports as shall reasonably
be necessary to enable Investment Company and its Advisers to comply with
applicable securities and insurance laws.

<PAGE>

EXHIBIT (8)(k)
<PAGE>

SAFECO

February 1, 2000

American General Life Insurance Company
2929 Allen Parkway
Houston, Texas 77019

Ladies and Gentlemen:

This letter amends and supersedes the letter agreement dated August 23, 1999
between SAFECO Asset Management Company ("SAM") and American General Life
Insurance Company ("AGL") concerning certain administrative services to be
provided by AGL on a sub-administration basis with respect to certain series of
the SAFECO Resource Series Trust (the "Fund") in connection with the
Participation Agreement between AGL, American General Securities Incorporated,
the Fund, and SAFECO Securities, Inc. (the "Participation Agreement").
Capitalized terms not defined herein shall have the meanings ascribed to them in
the Participation Agreement.

1. Administrative Services and Expenses. AGL shall be responsible for
administrative services for purchasers of Policies and for the Separate
Accounts named in Schedule B attached hereto and made a part hereof and
which invest in the Series pursuant to the Participation Agreement.
Administrative services for the Series in which the Separate Accounts
invest, and for purchasers of shares of the Series, are the responsibility
of the Fund.

AGL has agreed to assist SAM, as SAM may request from time to time, with
the provision of administrative services ("Administrative Services") to the
Series, on a sub-administration basis, as they may relate to the investment
in the Series by the Separate Accounts. It is anticipated that
Administrative Services may include (but shall not be limited to) the
printing and mailing of informational materials to owners of the Policies
supported by the Separate Accounts with allocations to the Series; the
provision of various reports for the Fund and for submission to the Fund's
Board of Trustees; the provision of shareholder support services with
respect to the Series; and the services listed on Schedule A attached
hereto and made a part hereof.

2. Administrative Expense Payments. In consideration of the anticipated
administrative expense savings resulting from the arrangements set forth in
this Agreement, SAM agrees to pay AGL on a quarterly basis an amount set
forth in Schedule B.

For purposes of computing the payment to AGL contemplated under this
Paragraph 2 for each quarterly period, the total of the average daily net
assets invested by the Separate Accounts shall be multiplied by the rate
shown in Schedule B multiplied by the actual number of days in the period
divided by 365.

The expense payment contemplated by this Paragraph 2 shall be calculated by
SAM at the end of each quarter and will be paid to AGL within 30 days
thereafter on a pro-rata basis. Payment will be accompanied by a statement
showing the calculation of the quarterly amount payable by SAM and such
other supporting data as may be reasonably requested by AGL.

-1-
<PAGE>

3. Nature of Payments. The parties to this letter agreement recognize and
agree that payments to AGL relate to Administrative Services only. The
amount of administrative expense payments made by SAM to AGL pursuant to
Paragraph 2 of this letter agreement shall not be deemed to be conclusive
with respect to SAM's actual administrative expenses or savings.

4. Term. This letter agreement shall remain in full force and effect for so
long as the assets of the Series are attributable to amounts invested by
the Separate Accounts under the Participation Agreement, unless terminated
in accordance with Paragraph 5 of this letter agreement.

5. Termination. This letter agreement may be terminated by either party upon
90 days' advance written notice or immediately upon termination of the
Participation Agreement or upon the mutual agreement of the parties hereto
in writing.

6. Representation. AGL represents and agrees that it will maintain and
preserve all records as required by law to be maintained and preserved in
connection with providing the Administrative Services, and will otherwise
comply with all laws, rules and regulations applicable to the
Administrative Services.

7. Subcontractors. AGL may, with the prior written consent of SAM, contract
with or establish relationships with other parties for the provision of the
Administrative Services or other activities of AGL required by this letter
agreement, provided that AGL shall be fully responsible for the acts and
omissions of such other parties. SAM agrees that American General Life
Companies, an affiliate of AGL, may provide services on behalf of AGL under
this letter agreement as provided in this paragraph.

8. Authority. This letter agreement shall in no way limit the authority of
the Fund or SAM to take such action as either party may deem appropriate or
advisable in connection with all matters relating to the operations of the
Fund and/or sale of its shares. AGL understands and agrees that the
obligations of SAM under this letter agreement are not binding upon the
Fund.

9. Indemnification. This letter agreement will be subject to the
indemnification provisions in Section 12 of the Participation Agreement.

10. Miscellaneous. This letter agreement may be amended only upon mutual
agreement of the parties hereto in writing. This letter agreement may not
be assigned by either party hereto, by operation of law or otherwise,
without the prior written consent of the other party. This letter
agreement, including Schedule A and Schedule B, constitutes the entire
agreement between the parties with respect to the matters dealt with
herein, and supersedes any previous agreements and documents with respect
to such matters. This letter agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall together
constitute one and the same instrument. Each party agrees to notify the
other party promptly if for any reason it is unable to perform fully and
promptly any of its obligations under this letter agreement.

11. Notice. Any notices required to be sent hereunder shall be sent in
accordance with the Participation Agreement, except that any notice to SAM
hereunder shall be sent to:

SAFECO Asset Management Company
4333 Brooklyn Avenue N.E.
Seattle, Washington 98185
Attention: Institutional Division

-2-
<PAGE>

Please indicate AGL's understanding of, and agreement to, the matters set forth
above by signing below and returning a signed copy to us.

Very truly yours,

By: ___________________________

Name: Leslie Eggerling - Vice President

Acknowledged and Agreed:

AMERICAN GENERAL LIFE INSURANCE COMPANY

By: _______________________________

Name: ____________________________

Title: _____________________________

Attachment: Schedule A
Schedule B

-3-
<PAGE>

SCHEDULE A

I. Fund-related Policyowner services

. Fund proxies services, including facilitating distribution of proxy
material to Policyowners, tabulation and reporting.

. Telephonic support for Policyowners with respect to inquiries about the
Fund (not including information related to sales).

. Communications to Policyowners regarding performance of the Series.

II. Sub-accounting services

. Aggregating purchase and redemption orders of the Separate Accounts for
sales of the Series.

. Assistance in resolution of pricing errors.

III. Other administrative support

. Providing other administrative support to the Fund as mutually agreed
between AGL and SAM.

-4-
<PAGE>

SCHEDULE B

Separate Account Registration Nos. of Variable Life Administrative Expense Amounts
- ---------------- Insurance Policy(ies)/Annuity ----------------------------------
Contracts and Policy or Contract Name(s)
---------------------------------------

American General Life Insurance File Nos. 333-42567 SAM agrees to pay AGL a quarterly
Company Separate Account VL-R 811-08561 amount that is equal on a annual
Policies: Platinum Investor I basis to twenty-five basis points
and Platinum Investor II Variable (.25%) of the average combined
Life Insurance Policies (Contract daily net assets of all of shares
Form Nos. 97600 and 97610) of the Fund held in the Separate
Account of AGL pursuant to the
File Nos. 333-80191 Participation Agreement.
811-08561
Corporate America-Variable Life
Insurance Policies (Contract Form
No. 99301)

File Nos. 333-90787
811-08561
Platinum Investor Survivor
Variable Life Insurance Policies
(Contract Form No. 99206)
American General Life Insurance File Nos. 333-70667 SAM agrees to pay AGL a quarterly
Company Separate Account D 811-2441 amount that is equal on a annual
Policy: Platinum Investor basis to twenty-five basis points
Variable Annuity Contract (.25%) of the average combined
(Contract Form No. 98202) daily net assets of all of shares
of the Fund held in the Separate
Account of AGL pursuant to the
Participation Agreement

</TABLE>

-5-

<PAGE>

EXHIBIT (10)(a)(ii)
<PAGE>
AMERICAN
Part A Multiple Insured |GENERAL
Life Insurance Application FINANCIAL GROUP

[_] American General Life Insurance Company, Houston, TX
[_] The Old Line Life Insurance Company of America, Milwaukee, WI
[_] All American Life Insurance Company, Springfield, IL
[_] The Franklin Life Insurance Company, Springfield, IL
[_] The American Franklin Life Insurance Company, Springfield, IL

Members of American General Financial Group. American General Financial
Group is a marketing name for American General Corporation and its
subsidiaries.

In this application, the "Company" refers to the insurance company whose
name is checked above.

The insurance company checked above is SOLELY responsible for the
obligation and payment of benefits under any policy that it may issue. No
other company shown is responsible for such obligations or payments.

Personal Information

Primary proposed Name Social Security #
insured ----------------------------- ---------------------------
Address Zip
---------------------------------------- ----------------
Home phone # Work phone #
------------------------------ --------------------------
E-mail address
---------------------------------------------------------
Sex: [_] male [_] female
Birthplace (city, state, country)
---------------------------------------------------------
Date of birth Drivers license # State
--------------------- ------------------------- ---------
U.S. citizen: [_] yes [_] no
If no, date of entry Type of visa
----------------------------------- ---------------------
Employer
---------------------------------------------------------
Occupation and duties Income:
------------------------------------- -------------------
Tobacco use
Have you ever used any form of tobacco or
nicotine products? [_] yes [_] no
Date of last use
---------------------------------------------------------
Type of tobacco or nicotine products
---------------------------------------------------------

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

Other proposed Name Social Security #
insured ---------------------------- -----------------------------
Address Zip
------------------------------------------ ---------------
Home phone # Work phone #
---------------------------- -----------------------------
Relationship to primary proposed insured
---------------------------------------------------------
E-mail address
---------------------------------------------------------
Sex: [_] male [_] female
Birthplace (city, state, country)
----------------------------------------------------------
Date of birth Drivers license # State
--------------------- ------------------------- ----------
U.S. citizen: [_] yes [_] no
If no, date of entry Type of visa
------------------------------- --------------------------
Employer
----------------------------------------------------------
Occupation and duties Income:
------------------------------------------ ---------------
Tobacco use
Have you ever used any form of tobacco or nicotine
products? [_] yes [_] no
Date of last use
---------------------------------------------------------
Type of tobacco or nicotine products
---------------------------------------------------------

AGLC 8001-99 Page 1
<PAGE>

Child rider Complete if a proposed insured requests child riders. If more
than three children, list information in the "Remarks"
section.

Child name
------------------------------------------------------------
Sex: [_] male [_] female
Birthplace (city, state, country)
------------------------------------------------------------
Date of birth Height: ft. in. Weight: lbs.
--------------------- ------------- ------- ----------------
Child name
------------------------------------------------------------
Sex: [_] male [_] female
Birthplace (city, state, country)
-------------------------------------------------------------
Date of birth Height: ft. in. Weight: lbs.
---------------------- ------------- ------ ----------------
Child name
------------------------------------------------------------
Sex: [_] male [_] female
Birthplace (city, state, country)
-------------------------------------------------------------
Date of birth Height: ft. in. Weight: lbs.
---------------------- ------------- ------ -----------------

Product Information

Product name
------------------------------------------------------------
(If a variable product, complete appropriate supplement.)

Amount applied for $
------------------------------------------------------------
Reason for insurance (If more space is needed, use "Remarks"
section.)
____________________________________________________________

____________________________________________________________

- ------------------------------------------------------------------------------
Business Does any proposed insured have an ownership interest
coverage in the business? [_] yes [_] no
If yes, what is primary proposed insured's percentage
(Complete only of ownership? %
if applying -----------------------
for business If yes, what is other proposed insured's percentage
coverage) of ownership? %
------------------------
If buy-sell, stock redemption, or key person insurance,
will all partners or key people be covered? [_] yes [_] no
Describe any special circumstances.
- ------------------------------------------------------------------------------

Riders [_] Waiver of premium
[_] Waiver of monthly deduction
[_] Waiver of monthly guarantee premium
[_] Accidental death benefit $
------------------------------------------------------------
[_] Other insured $
------------------------------------------------------------
[_] Spouse $ Plan [_] Other rider(s)
----------------------------------- -----------------------
[_] Child $
----------------------------------- -----------------------

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

Dividend options For participating policy only
[_] Cash [_] Premium reduction [_] Paid-up additions
[_] Deposit earning interest [_] Other (explain)
- ------------------------------------------------------------------------------

Death benefit For universal life only
options [_] Level [_] Increasing

AGLC 8001-99

Page 2
<PAGE>

Beneficiary Primary
Name Relationship % share
------------------------ -------------------- -------------
Name Relationship % share
------------------------ -------------------- -------------
Contingent
Name Relationship % share
------------------------ -------------------- -------------
Name Relationship % share
------------------------ -------------------- -------------
Complete if beneficiary is a trust.
Exact name of trust
-----------------------------------------------------------
Trust ID # Date of trust
--------------------------- -------------------------------
Current trustee(s)
-----------------------------------------------------------
Rider Beneficiaries
Spouse rider Child rider
--------------------------- -------------------------------

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

Other life Indicate life insurance policies or annuities in force or
insurance or pending for the proposed insured(s).
annuities Type: i = individual, b = business, g = group,
p = pending life insurance or annuity

<S> <C> <C> <C> <C> <C> <C> <C>
Name of Policy Insurance Type Year of Amount Replacement*
proposed insured number company issue

[_] Check if none ----------------- ------------- -------------- ----------- ------------ $---------- [_] yes [_] no

----------------- ------------- -------------- ----------- ------------ $---------- [_] yes [_] no

</TABLE>
* Replacement means that the insurance being applied for
may replace, change, or use any monetary value of any
existing or pending life insurance policy or annuity. If
replacement may be involved, complete and submit
replacement-related forms.

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

Owner [_] Primary proposed insured [_] Other proposed insured
[_] Trust [_] Someone other than
a proposed insured or
trust
Complete if owner is a trust.
Exact name of trust
-----------------------------------------------------------
Trust ID # Date of trust
------------------------------ ----------------------------
Current trustee(s)
-----------------------------------------------------------
Complete if someone other than a proposed insured or
trust is the owner.
Name Home phone #
----------------------------- -----------------------------
Address City, State Zip
-------------------------- ------------------ -------------
Social Security or Tax ID # Date of birth
----------------------------------------- -----------------
Relationship to primary proposed insured
-----------------------------------------------------------

- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C> <C> <C>
Premium payment [_] Single premium: $ [_] Modal premium: $ [_] Additional initial premium: $
------------------------------- ----------------------------- -----------------------------------------
Frequency of modal premium
[_] Annual [_] Semi-annual [_] Quarterly [_] Monthly Amount submitted with application $-----

Method
[_] Direct billing [_] Automatic bank draft
[_] List bill: number
----------------------------------------------------------------------------------------------------------
[_] Other
---------------------------------------------------------------------------------------------------------

Premium payor
Complete if other than owner.
Name Social Security #
-------------------------------------------------------------------- -------------------------------------
Address
----------------------------------------------------------------------------------------------------------
Zip Home phone #
------------------------------------ ---------------------------------------------------------------------

</TABLE>
AGLC 8001-99

Page 3
<PAGE>

Remarks ___________________________________________________________

___________________________________________________________

Your Signature

Authorization to obtain and disclose information and declaration

I hereby give my consent to any of the entities listed below to give to the
Company or its legal representative, all information they have pertaining to:
my medical consultations, treatments, or surgeries; hospital confinements,
which concern the physical and mental condition of me, my spouse, or my minor
children; my use of drugs or alcohol; or any other non-medical information.
Non-medical information could include items such as: personal finances;
habits; hazardous avocations; motor vehicle or court records; or foreign
travel, etc. The list of entities for which I give my consent to provide the
information above is as follows: any physician or medical practitioner; any
hospital, clinic or other health care facility; any insurance or reinsurance
company; any consumer reporting agency or insurance support organization; my
employer; or the Medical Information Bureau (MIB).

I understand the information obtained will be used by the Company to
determine eligibility for insurance and eligibility for benefits under an
existing policy. The Company may disclose such information and any
information developed during its evaluation of my application to: its
reinsurers; MIB; other insurance companies; other persons or organizations
performing business or legal services in connection with my application or
claim; me; any physician designated by me; or any person or entity required
to receive such information by law or as I may further consent.

I, as well as any person authorized to act on my behalf, may upon written
request, obtain a copy of this consent from the Company.

This consent will be valid for 30 months from the date of this application. I
agree that a photocopy of this consent will be as valid as the original. I
authorize the Company to obtain an investigative consumer report on me. I
understand that I may: request to be interviewed in connection with the
preparation of the report; and receive, upon written request, a copy of such
report.

[_] Check if you wish to be interviewed.

I have read the above statements or they have been read to me. The above
statements are true and complete to the best of my knowledge and belief. I
understand that this application: (1) will consist of Part A, Part B, and, if
applicable, Part C and related forms; and (2) shall be the basis for any
policy issued on this application. I understand that any misrepresentation
contained in this application and relied on by the Company may be used to:
reduce or deny a claim or void the policy, if it is within its contestable
period and if such misrepresentation materially affects the acceptance of the
risk. Except as may be provided in a Limited Temporary Life Insurance
Agreement (LTLIA) for which all eligibility requirements are met, I
understand and agree that no insurance will be in effect pursuant to this
application, or under any policy issued by the Company, unless or until: the
policy has been delivered and accepted; the full first modal premium for the
issued policy has been paid; and there has been no change in the health of
any proposed insured that would change the answers to any questions in the
application.

I understand and agree that no agent is authorized to: accept risks or pass
upon insurability; make or modify contracts; or waive any of the Company's
rights or requirements.

I have received a copy of the Notice to Proposed Insured regarding Fair
Credit Reporting Act; the MIB; Insurance information practices; and telephone
interview information.

Limited Temporary Life Insurance - If eligible, I have received and accepted
the LTLIA. Temporary insurance is available only if: the full first modal
premium is submitted with this application and only "no" answers have been
given by any proposed insured to the "Health and Age" questions in the LTLIA.

Under penalties of perjury, I certify: that the number shown on this
application is my correct Social Security or Tax ID number; and that I am
not subject to backup withholding under Section 3406(a)(1)(C) of the
Internal Revenue Code. The Internal Revenue Service does not require my
consent to any provision of this document other than the certifications
required to avoid backup withholding.

Signatures X Owner Date
--------------------------------------- ------------------
Signed at (city, state)
-----------------------------------------------------------
X Witness Date
---------------------------------------- ------------------
X Primary proposed insured Date
---------------------------------------- ------------------
(If under age 15, signature of parent or guardian)

X Other proposed insured Date
---------------------------------------- ------------------
If the Company contacts the proposed insured(s), when would
be the best time to call?
Time Day of the week
---------------------------------------- ------------------
Date Phone #
---------------------------------------- ------------------
I certify that I have truthfully and accurately recorded on
the Part A application the information supplied by the
proposed insured(s).
Agent name (please print)
-----------------------------------------------------------
Agent # State license #
--------------------------------- -------------------------
X Agent Date
----------------------------------------- -----------------

AGLC 8001-99

Page 4
<PAGE>

Agent's Report

Number of years you have known: primary proposed insured
----------------------------------------------------------------
other proposed insured
----------------------------------------------------------------
Have you scheduled a medical exam, inspection report,
blood profile, urinalysis, or APS? [_] yes [_] no
If yes, please provide name of examiner, clinic, date, and
the type of report ordered.
----------------------------------------------------------------

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

- ------------------------------------------------------------------------------
Statements
Did you personally see the proposed insured(s) on the date of
this application, ask each question, and accurately record
the answers yourself? [_] yes [_] no
If no, please provide details in the "Remarks" section below.

Do you have any information that indicates that any proposed
insured may replace, change, or use any monetary value of any
existing or pending life insurance policy or annuity with any
company in connection with the purchase of insurance?
[_] yes [_] no If yes, please provide details in the
"Remarks" section below and attach all replacement-related forms.

Are you aware of any information that would adversely affect any
proposed insured's eligibility, acceptability, or insurability?
[_] yes [_] no If yes, please provide details in the
"Remarks" section below, and do not provide limited temporary
life insurance.

Did you provide client with LTLIA? [_] yes [_] no

Have any of the proposed insureds or the owner submitted
an application for coverage with any of the American General life
insurance companies within the last 30 days? [_] yes [_] no

If primary proposed insured is a child, what amount of insurance
is in force on the father $___________ and/or mother $________?

Are you related by blood or marriage to any proposed insured?
[_] yes [_] no (If yes, relationship)

Remarks (Please include information on any split dollar,
collateral assignment, etc.)
________________________________________________________________

________________________________________________________________

- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C>
Commission
Please list servicing agent first.
Agent(s) to receive commission Agency number Agent number Percent of commission
--------------------------------------- ------------------- ------------------ ------------------------
--------------------------------------- ------------------- ------------------ ------------------------
--------------------------------------- ------------------- ------------------ ------------------------
--------------------------------------- ------------------- ------------------ ------------------------

</TABLE>

X Writing agent Date
-------------------------------------- -------------------------
Social Security or Tax ID # Phone #
-------------------------------------- -------------------------
Primary appointing company
----------------------------------------------------------------
Client #
----------------------------------------------------------------
If applicable:
Broker-Dealer(s)
----------------------------------------------------------------
Contact person Processing center
--------------------------------- ------------------------------
Phone # Fax #
--------------------------------- ------------------------------
If other than writing agent, send policy/delivery
requirements to:------------------------------------------------

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

AGLC 8001-99 AR

<PAGE>

Limited Temporary Life Insurance Agreement

In this application, the "Company" refers to the insurance
company whose name is checked above.

The insurance company checked above is SOLELY responsible for the
obligation and payment of benefits under any policy that it may
issue. No other company shown is responsible for such obligations
or payments.

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

Health and Age questions

If any proposed insured answers "yes" to either question, temporary insurance
is not available, this agreement will be void, and any payment submitted will
be refunded.

During the last two years, have you had a heart attack, stroke, cancer,
diabetes, or disorder of the immune system; or have you been confined in a
hospital or other health care facility or been advised to have any diagnostic
test or surgery not yet performed?

Primary proposed insured Other proposed insured
[_] yes [_] no [_] yes [_]no

Are you age 71 or above?

Primary proposed insured Other proposed insured
[_] yes [_] no [_] yes [_]no

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

Premium payment

Received $ Date
---------------------------------------- -----------------------
All premium checks must be made payable to the Company.
Do not make check payable to the agent or leave payee blank.

Note: Agent does not have the authority to accept a premium
(including automatic bank draft check, salary savings,
or government allotment) with this application if the conditions
in "Authorization to obtain and disclose information and
declaration" cannot be met or if any part of the
"Health and Age questions" have been answered "yes" by any
proposed insured, answered falsely, or left blank.

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

Conditions of temporary life insurance

1. The first modal premium must be paid with Part A of the application.

2. The answer to both of the above "Health and Age
questions" must be "no" for both proposed insureds.

3. Upon receiving proof of the death of the primary
proposed insured-or of both proposed insureds if this is a joint life
or survivorship policy-during the period covered by this agreement, the
total amount that will be paid by the Company pursuant to this and any
other limited temporary life insurance agreements covering the proposed
insured(s) will be the lesser of:
. the plan amount the proposed insured(s) applied for;
or
. $500,000 plus the amount of any premium paid for
coverage in excess of $500,000.
The Company will pay this sum to the beneficiary named in the
application. If death is due to suicide, payment will be limited to the
amount of premium paid.

4. Coverage under this agreement will begin on the date
the later of the following events have been completed:
. this Limited Temporary Life Insurance Agreement
(LTLIA) has been signed by the proposed insured(s); or
. all required medical examinations have been taken.

5. Coverage under this agreement will end on the earliest of the following
dates:
. the date the policy as applied for is delivered
and accepted;
. the date the Company declines the application;
. the date the Company states the application
will not be considered on a prepaid basis;
. 60 days from the date coverage begins under
this agreement; or
. the date the Company issues a policy other than
as applied for.

6. The prepayment for this temporary insurance will be:
. applied to the first premium due if the policy is issued as
applied for; or
. refunded if the Company declines the application or if the
owner does not accept the policy; or
. applied to the first premium if a policy is issued other than as applied
for and is accepted.

7. Any misrepresentation contained in this agreement and relied on
by the Company may be used to deny a claim on or void this agreement.

No changes may be made in the terms and conditions of this agreement. No
statement that tries to make such a change will bind the Company.

X Owner Date
-------------------------------------- ------------------------
Signed at (city, state)
----------------------------------------------------------------
X Witness Date
--------------------------------------- ------------------------
X Primary proposed insured Date
--------------------------------------- ------------------------
(If under age 15, signature of parent or guardian)
X Other proposed insured Date
--------------------------------------- ------------------------
I certify that I have truthfully and accurately recorded
on the LTLIA the information supplied by the proposed insured(s).
Agent name (please print)
----------------------------------------------------------------
Agent # State license #
----------------------------------------------------------------
X Agent Date
------------------------------------- ------------------------

AGLC 8001-99 TIA
<PAGE>
Bank Draft Information

The company checked above will withdraw the premiums from
the specified account. This company will be referred to hereafter
as the "Company." "You," "your," "I," and "me" refer to the
accountholder whose name appears below.

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

How automatic bank draft works

Automatic bank draft is a debit service that offers a convenient way to pay
life insurance premiums. The Company will collect the life insurance premiums
from your bank account electronically-you do not need to write checks or mail
in any payments. Premium withdrawals will appear on your bank statement,
and your statements will be your receipt for payment of your premium.

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

Automatic bank draft agreement

I authorize the Company to electronically withdraw money from my account at
(name of bank) ___________________________________________________________
(bank address)____________________________________________________________
(Type of account [_] Checking [_] Savings)
for the payment of premiums and other charges on the insurance policy. I
authorize the Company to continue to make these withdrawals if there is a
conversion, renewal, or other change in the policy. I will compensate the
Company for any loss, claim, or liability caused by these withdrawals and
will not hold the Company responsible for any such loss, claim, or liability.

This authorization will not affect the terms of the policy. If the premiums
are not paid within the grace period allowed, the policy may lapse, and it
will be subject to any applicable nonforfeiture provision. Authorizing this
automatic payment plan does not put the insurance policy into effect.

This authorization may be retracted by me or the Company at any time for any
reason by giving written notice. The Company may retract the authorization
immediately, without giving me written notice, if any debt is not paid by the
bank stated above for any reason.

Name of primary proposed insured
- ------------------------------------------------------------------------------
Premium amount $
- ------------------------------------------------------------------------------
Frequency: [_] annual [_] semi-annual [_] quarterly [_] monthly
- ------------------------------------------------------------------------------
Preferred withdrawal date
- ------------------------------------------------------------------------------
[_] Please debit my account for all outstanding premiums due.
X Signature of accountholder
- ------------------------------------------------------------------------------
Print name
- ------------------------------------------------------------------------------

Please attach voided check.

AGLC 8001-99 BDI

<PAGE>

Detach this page and leave it with the proposed insured.

Notice To The Proposed Insured

You have applied for life insurance with one of the following companies:
American General Life Insurance Company, The Old Line Life Insurance Company
of America, All American Life Insurance Company, The Franklin Life
Insurance Company, or The American Franklin Life Insurance Company. "Company"
refers to the company with which you have applied for insurance. This
notice is provided on behalf of that company.

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

Fair Credit Reporting Act

Pursuant to the Federal Fair Credit Reporting Act, as amended (15 U.S.C.
1681d), notice is hereby given that, as a component of our underwriting
process relating to your application for life insurance, the Company may
request an investigative consumer report that may include information about
your character, general reputation, personal characteristics, and mode of
living.

This information may be obtained through personal interviews with your
neighbors, friends, associates, and others with whom you are acquainted or who
may have knowledge concerning any such items of information. You have a right to
request in writing, within a reasonable period of time after receiving this
notice, a complete and accurate disclosure of the nature and scope of the
investigation the Company requests. You should direct this written request to
the Company at:

P. O. Box 1931
Houston, TX 77251-1931

Upon receipt of such a request, the Company will respond by mail within five
business days.

To make it easier to use its products and services, the Company may share
information about you with its affiliates beyond the 30 month period
described in "Authorization to Obtain and Disclose Information and
Declaration." You should notify the Company in writing at the address above
if you do not want the Company to share this information with its affiliates.

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

Medical Information Bureau

The designated insurer or its reinsurers may make a brief report regarding
your insurability to the Medical Information Bureau (MIB), a non-profit
membership organization of life insurance companies, that operates an
information exchange on behalf of its members. If you apply to another
MIB-member company for life or health insurance or a claim for benefits is
submitted to such a company, the MIB will supply such company with the
information they have about you.

At your request, the MIB will disclose any information it has in your file.
If you question the accuracy of information in the MIB's file, you may seek a
correction in accordance with the procedures set forth in the Federal Fair
Credit Reporting Act. The address and phone number of the MIB's information
office are:

P. O. Box 105
Essex Station
Boston, Massachusetts 01112
(617) 426-3660

The designated insurer, or its reinsurer, may also release information in its
file to other life insurance companies to whom you may apply for life or
health insurance, or to whom a claim for benefits may be submitted.

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

Insurance information practices

To issue an insurance policy, we need to obtain information about you. Some of
that information will come from you, and some will come from other sources. This
information may in certain circumstances be disclosed to third parties without
your specific authorization as permitted by law.

You have the right to access and correct this information, except information
that relates to a claim or a civil or criminal proceeding.

Upon your written request, the Company will provide you with a more detailed
written notice explaining the types of information that may be collected, the
types of sources and investigative techniques that may be used, the types of
disclosures that may be made and the circumstances under which they may be
made without your authorization, a description of your rights to access and
correct information, and the role of insurance support organizations with
regard to your information.

If you desire additional information on Insurance Information Practices you
should direct your requests to the Company at:

P. O. Box 1931
Houston, TX 77251-1931

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

Telephone interview information

To help process your application as soon as possible, the Company may have
one of its representatives call you by telephone, at your convenience,
and obtain additional underwriting information.

AGLC 8001-99 NPI

<PAGE>

EXHIBIT (10)(b)(ii)
<PAGE>

Part B AMERICAN
|GENERAL
Multiple Insured FINANCIAL GROUP
Life Insurance Application

Members of American General Financial Group. American General
Financial Group is a marketing name for American General Corporation
and its subsidiaries.

In this application, the "Company" refers to the insurance company
whose name is checked above.

The insurance company checked above is SOLELY responsible for the
obligation and payment of benefits under any policy that it may
issue. No other company shown is responsible for such obligations or
payments.

Personal and Employer Information

Primary proposed Name
insured --------------------------------------------------------
Social Security # Date of birth
-------------------------------- -----------------------
Employer
---------------------------------------------------------
Employer address
---------------------------------------------------------
Zip Phone # Length of employment
------------ ------------------- ------------------------
Net worth $ Household income $
-------------------------- ------------------------------

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

Other proposed Name
insured ---------------------------------------------------------
Social Security # Date of birth
---------------------------------- ----------------------
Employer
---------------------------------------------------------
Employer address
---------------------------------------------------------
Zip Phone # Length of employment
---------- ------------------ ---------------------------
Net worth $ Household income $
------------------------- -------------------------------

Background Information

Provide any additional details to "yes" answers for questions 1-6 in the
"Remarks" section on page 4.

---------------------------------- -----------------------------------
Primary proposed insured Other proposed insured

1. Do you intend to travel or reside outside of the United States or Canada
within the next two years?

[_] yes [_] no [_] yes [_] no

Country, purpose, and date Country, purpose, and date
----------------------------------- ----------------------------------
----------------------------------- ----------------------------------
----------------------------------- ----------------------------------

2. In the past five years, have you participated in, or do you intend to
participate in: any flights as a trainee, pilot or crew member; scuba
diving; skydiving or parachuting; ultralight aviation; auto racing; cave
exploration; hang gliding; boat racing; mountaineering; or other hazardous
activities?

[_] yes [_] no [_] yes [_] no
If yes, complete the Aviation and/or If yes, complete the Aviation and/or
Avocation Questionnaire. Avocation Questionnaire.

AGLC 8002-99
Page 1
<PAGE>

Background Information continued

------------------------------------ ---------------------------------
Primary proposed insured Other proposed insured

3. Has any proposed insured:
a) during the past 90 days submitted an application for life insurance to any
other company or has any proposed insured begun the process of filling out
an application?

[_] yes [_] no If yes, explain. [_] yes [_] no If yes, explain.

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

b) ever had a life or disability insurance application modified, rated,
declined, postponed, withdrawn, canceled, or refused for renewal?

[_] yes [_] no If yes, explain. [_] yes [_] no If yes, explain.

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

4. Have you ever filed for bankruptcy?

[_] yes [_] no [_]yes [_] no

Type of bankruptcy Type of bankruptcy
---------------------------------- ----------------------------------
Date Date of discharge Date Date of discharge
---------------------------------- ----------------------------------

5. In the past five years, have you been charged with or convicted of driving
under the influence of alcohol or drugs, or had two or more driving
violations?

[_] yes [_] no If yes, explain. [_] yes [_] no If yes, explain.

State License # State License #
---------------------------------- ----------------------------------

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

6. Have you ever been convicted of or pled guilty or "no contest" to a felony or
do you have any such charge pending against you?

[_] yes [_] no If yes, explain. [_] yes [_] no If yes, explain.

State Date State Date
---------------------------------- ----------------------------------

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

Medical History

Provide any additional details for answers to questions 7-9 in the "Remarks"
section on page 4.

Primary proposed insured Other proposed insured

7. Name and address of your personal physician(s). Write "none" if you don't
have one.

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

Date, reason, findings of last Date, reason, findings of last
visit visit
---------------------------------- ----------------------------------

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

AGLC 8002-99

Page 2
<PAGE>

Medical History continued

------------------------------------- ----------------------------------
Primary proposed insured Other proposed insured

8. Height and weight.
ft. in. lbs. ft. in. lbs.
---------- ---------- ---------------- --------- ----------- -------------

Have you had any weight change in excess of 10 lbs. in the past year?

[_] yes [_] no If yes, explain. [_] yes [_] no If yes, explain.
--------------------------------------- -----------------------------------

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

9. What is your family history?

Age if living Age at death Current condition
or cause of death
Primary proposed insured
Father ------------- ----------- -----------------

Mother ------------- ----------- -----------------

Other proposed insured
Father ------------- ----------- -----------------

Mother ------------- ----------- -----------------

For questions 10-16, provide additional information as requested in the
"Remarks" section on page 4.

<S> <C> <C> <C>
---------------- -------------- ------
Primary proposed Other proposed Child
insured insured
10. Have you ever been diagnosed as having, been treated for,
or consulted a licensed health care provider for:

a) any heart disease, heart attack, chest pain,
irregular heartbeat, high cholesterol, high blood pressure,
or any other disorder of the heart or blood vessels? [_] yes [_] no [_] yes [_] no [_] yes [_] no

b) any blood clot, aneurysm, stroke, or other disease, disorder,
or blockage of the arteries or veins? [_] yes [_] no [_] yes [_] no [_] yes [_] no

c) any cancer, cysts, tumors, masses, or other such abnormalities? [_] yes [_] no [_] yes [_] no [_] yes [_] no

d) diabetes, disorder of the thyroid or other glands,
immune system disorder, or blood or lymphatic system disorder? [_] yes [_] no [_] yes [_] no [_] yes [_] no

e) any disorder of the stomach or liver, colitis, hepatitis, or
any disorder of the digestive system or other such organs? [_] yes [_] no [_] yes [_] no [_] yes [_] no

f) any disorder of the kidneys, prostate, urinary system, or
reproductive organs? [_] yes [_] no [_] yes [_] no [_] yes [_] no

g) any asthma, bronchitis, emphysema, sleep apnea, or other
breathing or lung disorders? [_] yes [_] no [_] yes [_] no [_] yes [_] no

h) any brain or spinal cord disorders, seizures, or other
nervous system abnormalities including mental and
nervous disorders? [_] yes [_] no [_] yes [_] no [_] yes [_] no

i) arthritis, muscle disorders, or other bone or joint disorders? [_] yes [_] no [_] yes [_] no [_] yes [_] no

11. Are you currently taking any medication, treatment, or therapy,
or are you under medical observation? [_] yes [_] no [_] yes [_] no [_] yes [_] no

12. Have you in the past three years had:
a) fainting spells, nervous disorder, headaches, convulsions, or
paralysis? [_] yes [_] no [_] yes [_] no [_] yes [_] no

b) any pain or discomfort in the chest or shortness of breath? [_] yes [_] no [_] yes [_] no [_] yes [_] no

c) disorders of the stomach, intestines, or rectum, or blood in
the urine? [_] yes [_] no [_] yes [_] no [_] yes [_] no

</TABLE>

AGLC 8002-99

Page 3
<PAGE>

Medical History continued

<S> <C> <C> <C>
---------------- -------------- -----
Primary proposed Other proposed Child
insured insured

13. Have you ever:
a) sought or received advice, counseling, or treatment by
a medical professional for the use of alcohol or drugs
including prescription drugs? [_] yes [_] no [_] yes [_] no [_] yes [_] no

b) used cocaine, marijuana, heroin, controlled substances, or any
other drug except as legally prescribed by a physician? [_] yes [_] no [_] yes [_] no [_] yes [_] no
If "yes" answered to a or b, complete Drug/Alcohol
Questionnaire.

14. Have you ever been diagnosed or treated by any member of the
medical profession for AIDS Related Complex (ARC) or Acquired
Immune Deficiency Syndrome (AIDS)? [_] yes [_] no [_] yes [_] no [_] yes [_] no

15. In the past 10 years, have you:
a) been hospitalized, consulted a health care provider, or had any
illness, injury, or surgery? [_] yes [_] no [_] yes [_] no [_] yes [_] no

b) had any laboratory tests, treatments, or diagnostic procedures,
including x-rays, scans, or EKGs? [_] yes [_] no [_] yes [_] no [_] yes [_] no

c) been advised to have any diagnostic test, hospitalization, or
treatment that was not completed? [_] yes [_] no [_] yes [_] no [_] yes [_] no

d) received or claimed disability or hospital indemnity
benefits or a pension for any injury, sickness, disability,
or impaired condition? [_] yes [_] no [_] yes [_] no [_] yes [_] no

16. Do you have any symptoms or knowledge of any other condition
that is not disclosed above? [_] yes [_] no [_] yes [_] no [_] yes [_] no

</TABLE>

Remarks

Identify question number and name of proposed insured, and provide details to
any questions answered "yes" in the "Background Information" and
"Medical History" sections. Include such details as: date of first diagnosis;
name and address of doctor; tests performed; test results; medication(s) or
recommended treatment. If necessary, attach additional pages to record
responses.

_______________________________________________________________________________

AGLC 8002-99

Page 4
<PAGE>

Your Signature

Statements by the proposed insured(s)

I have read the above statements or they have been read to me. The above
statements are true and complete to the best of my knowledge and belief. I
understand that this application: (1) will consist of Part A, Part B, and,
if applicable, Part C and related forms; and (2) shall be the basis for any
policy issued on this application. I understand that any misrepresentation
contained in this application and relied on by the Company may be used to:
reduce or deny a claim or void the policy, if it is within its contestable
period and if such misrepresentation materially affects the acceptance of
the risk. Except as may be provided in a Limited Temporary Life Insurance
Agreement (LTLIA) for which all eligibility requirements are met, I
understand and agree that no insurance will be in effect pursuant to this
application, or under any policy issued by the Company, unless or until: the
policy has been delivered and accepted; the full first modal premium for the
issued policy has been paid; and there has been no change in the health of
any proposed insured that would change the answers to any questions in the
application.

I understand and agree that no agent is authorized to: accept risks or pass
upon insurability; make or modify contracts; or waive any of the Company's
rights or requirements.

Insurance fraud

Any person who, with intent to defraud or facilitate a fraud against an
insurer, submits an application or files a claim containing a false or
deceptive statement, may be guilty of insurance fraud.

Signatures X Owner Date
------------------------------------------- -------------------
Signed at (city, state)
---------------------------------------------------------------
X Witness Date
------------------------------------------- -------------------
X Primary proposed insured Date
------------------------------------------- -------------------
(If under age 15, signature of parent or guardian)

X Other proposed insured Date
------------------------------------------- -------------------

I certify that I have truthfully and accurately recorded on the
Part B application the information supplied by the proposed
insured(s).

Agent name (please print)
---------------------------------------------------------------
Agent # State license #
--------------------------------- -----------------------------
X Agent Date
------------------------------------------- -------------------

AGLC 8002-99

Page 5

<PAGE>

EXHIBIT (10)(c)(ii)

<PAGE>

Part C Medical Exam Form
Life Insurance Application

Members of American General Financial Group. American General
Financial Group is a marketing name for American General Corporation
and its subsidiaries.

In this application, the "Company" refers to the insurance company
whose name is checked above.

The insurance company checked above is solely responsible for the
obligation and payment of benefits under any policy that it may
issue. No other company shown is responsible for such obligations or
payments.

SECTION 1-STATEMENT TO MEDICAL EXAMINER

Proposed insured Date of birth
- ------------------------------------------- ----------------------------------

1. Name of your personal physician
----------------------------------------------------------------------------

Address
--------------------------------------------------------------------------

City, state, zip
--------------------------------------------------------------------------

Date and findings of last visit
--------------------------------------------------------------------------

Treatment given or medication prescribed
--------------------------------------------------------------------------

2. Have you ever been diagnosed as having, been treated for, or consulted a
licensed health care provider for:

a. any heart disease, heart attack, chest pain, irregular
heartbeat, high cholesterol, high blood pressure, or any
other disorder of the heart or blood vessels?.............. [_] Yes [_] No

b. any blood clot, aneurysm, stroke, or other disease,
disorder, or blockage of the arteries or veins?............ [_] Yes [_] No

c. any cancer, cysts, tumors, masses, or other such
abnormalities?............................................. [_] Yes [_] No

d. diabetes, disorder of the thyroid or other glands,
immune system disorder, or blood or lymphatic
system disorder?........................................... [_] Yes [_] No

e. any disorder of the stomach or liver, colitis, hepatitis,
or any disorder of the digestive system or other such
organs?.................................................... [_] Yes [_] No

f. any disorder of the kidneys, prostate, urinary system,
or reproductive organs?.................................... [_] Yes [_] No

g. any asthma, bronchitis, emphysema, sleep apnea, or other
breathing or lung disorders?............................... [_] Yes [_] No

h. any brain or spinal cord disorders, seizures, or other
nervous system abnormalities including mental or nervous
disorders?................................................. [_] Yes [_] No

i. arthritis, muscle disorders, or other bone or joint
disorders?................................................. [_] Yes [_] No

3. Are you currently taking any medication, treatment, or
therapy, or are you under medical observation?................ [_] Yes [_] No

4. Have you in the past three years had:

a. fainting spells, nervous disorders, headaches,
convulsions, or paralysis?................................. [_] Yes [_] No

b. any pain or discomfort in the chest or shortness
of breath?................................................. [_] Yes [_] No

c. disorders of the stomach, intestines, or rectum, or
blood in the urine?........................................ [_] Yes [_] No

5. Have you ever:
a. sought or received advice, counseling, or treatment by
a medical professional for the use of alcohol or drugs,
including prescription drugs?.............................. [_] Yes [_] No

b. used cocaine, marijuana, heroin, controlled substances,
or any other drug except as legally prescribed by a
physician?................................................. [_] Yes [_] No

6. Have you ever been diagnosed or treated by any member of
the medical profession for AIDS Related Complex (ARC) or
Acquired Immune Deficiency Syndrome (AIDS)?................... [_] Yes [_] No

AGLC 8003-99 Page 1
<PAGE>

________________________________________________________________________________
STATEMENT TO MEDICAL EXAMINER continued

7. In the past 10 years, have you:

a. been hospitalized, consulted a health care provider, or
had any illness, injury, or surgery?....................... [_] Yes [_] No

b. had any laboratory tests, treatments, or diagnostic
procedures, including x-rays, scans, or EKGs?.............. [_] Yes [_] No

c. been advised to have any diagnostic test, hospitalization,
or treatment that was not completed?....................... [_] Yes [_] No

d. received or claimed disability or hospital indemnity
benefits or a pension for any injury, sickness,
disability, or impaired condition?......................... [_] Yes [_] No

8. Do you have any symptoms or knowledge of any other
condition that is not disclosed above?........................ [_] Yes [_] No

9. Family history:

Father: Age, if living Mother: Age, if living
---------------------------------- -------------------------

Age at death Age at death
---------------------------------- -------------------------

Current condition or Current condition or
cause of death cause of death
---------------------------------- -------------------------

10. Full details of any "yes" answers (please use additional sheet if
necessary):

Include such details as: date of first diagnosis; name and address of
doctor; tests performed; test results; medication(s) or recommended
treatment.

- --------------------------------------------------------------------------------
I have read the above statements or they have been read to me. The above
statements are true and complete to the best of my knowledge and belief. I
understand that this application: (1) will consist of Part A, Part B, Part C,
and, if applicable, any related forms; and (2) shall be the basis for any policy
issued on this application. I understand that any misrepresentation contained in
this application and relied on by the Company may be used to: reduce or deny a
claim or void the policy, if it is within its contestable period and if such
misrepresentation materially affects the acceptance of the risk. Except as may
be provided in a Limited Temporary Life Insurance Agreement (LTLIA) for which
all eligibility requirements are met. I understand and agree that no insurance
will be in effect pursuant to this application, or under any policy issued by
the Company, unless or until: the policy has been delivered and accepted; the
full first modal premium for the issued policy has been paid; and there has been
no change in the health of any proposed insured that would change the answers to
any questions in the application.

In order to determine eligibility for insurance coverage, I hereby give my
consent to any of the entities listed below to give to the Company or its legal
representative, all information they have pertaining to: my medical
consultations, treatments, or surgeries; hospital confinements, which concern
the physical and mental condition of me, my spouse, or my minor children; my use
of drugs or alcohol; or any other non-medical information. Non-medical
information could include items such as: personal finances; habits; hazardous
avocations; motor vehicle or court records; or foreign travel, etc. The list of
entities for which I give my consent to provide the information above is as
follows: any physician or medical practitioner; any hospital, clinic or other
health care facility; any insurance or reinsurance company; any consumer
reporting agency or insurance support organization; my employer; or the Medical
Information Bureau (MIB).

I, as well as any person authorized to act on my behalf, may upon written
request, obtain a copy of this consent from the Company.

This consent will be valid for 30 months from the date of this application. I
agree that a photocopy of this consent will be as valid as the original.

I understand and agree that no agent is authorized to: accept risks or pass upon
insurability; make or modify contracts; or waive any of the Company's rights or
requirements.

Any person who, with intent to defraud or facilitate a fraud against an insurer,
submits an application or files a claim containing a false or deceptive
statement may be guilty of insurance fraud.

Signature of proposed insured

- --------------------------------------------------------------------------------
(If under age 15, signature of parent or guardian)

Signed at (city) (state) date
- ------------------------------------ ---------------------- -----------------
Signature of examiner
- --------------------------------------------------------------------------------

AGLC 8003-99 Page 2
<PAGE>

SECTION 2-REPORT BY MEDICAL EXAMINER

Proposed insured Date of birth
- ----------------------------------------------- -------------------------------

Instructions to Examiner:

To be completed in private by Examiner only. This report is confidential between
the Company and the Examiner. Examination of heart and lungs must be with
stethoscope against bare skin.

1. Build
a. Did you weigh proposed insured?............................ [_] Yes [_] No

b. Is appearance unhealthy or older than stated age?.......... [_] Yes [_] No

Height (in shoes) ft. in. Weight (clothed) lbs.
--------------------------- -------- ----------------------------

2. Blood pressure (Record all readings.)

If blood pressure exceeds 140/90, please repeat determination at end of
examination and record in space provided.

Treated [_] Yes [_] No Rx
--------------------------------------

<S> <C> <C> <C> <C>
At rest After exercise 3 minutes later Repeat B.P.

Systolic
Diastolic 5th phase
Pulse rate
Irregularities per min.
</TABLE>

3. Heart
a. Is there any cyanosis, dyspnea,edema, arteriosclerosis,
peripheral vascular, or other cardiovascular
disorder?.................................................. [_] Yes [_] No

b. Is heart enlarged? (If Yes, describe.)..................... [_] Yes [_] No

c. Is murmur present? (If Yes, complete 3.d.)................. [_] Yes [_] No

d. Before exercise, murmur is:

[_] Constant Transmitted to where
------------------------------------------
[_] Inconstant Localized at: [_] Apex [_] Base [_]Elsewhere
[_] Systolic (give details) ------------------------------------------
[_] Diastolic Murmur grade: 1/6 2/6 3/6 4/6
5/6 6/6 (please circle)
After exercise, murmur is:
[_] Unchanged [_]Decreased [_] Increased [_] Absent

Your impression:
----------------------------------------------------------------------------

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

4. Has this examination revealed abnormality of any of the following: (circle
applicable items)

a. Eyes, ears, nose, mouth, pharynx? (If vision or hearing
markedly impaired, indicate degree and correction.)........ [_] Yes [_] No

b. Endocrine system (including thyroid and breasts)?.......... [_] Yes [_] No

c. Nervous system (including reflexes, gait, paralysis)?...... [_] Yes [_] No

d. Respiratory system?........................................ [_] Yes [_] No

e. Abdomen (including scars)?................................. [_] Yes [_] No

f. Genito-urinary system (including prostate)?................ [_] Yes [_] No

g. Skin (including scars), lymph nodes, blood vessels
(including varicose veins)?................................ [_] Yes [_] No

h. Musculoskeletal system (including spine, joints,
amputations, deformities)?................................. [_] Yes [_] No

AGLC 8003-99 Page 3
<PAGE>

_______________________________________________________________________________
REPORT BY MEDICAL EXAMINER continued

5. Have any of the following been completed in conjunction
with this exam?............................................... [_] Yes [_] No

[_] EKG [_] Chest x-ray [_] Blood drawn [_] Urine

6. Do you have any pertinent information not disclosed above?.... [_] Yes [_] No

7. Specimen kit

Please indicate where and when specimen kit was sent

[_] CRL [_] Other
--------------------------------------------

Date mailed
----------------------------------------------------------------

8. Details of "yes" answers to Questions 1 - 6. (Identify items. Please use
additional sheet if necessary.)

9. Examiner

Are you related to the proposed insured by blood or
marriage or do you have any business or professional
relationship with the proposed insured?....................... [_] Yes [_] No

If yes, explain.

10. Please send this completed examination form directly to:

Underwriting Department
P.O. Box 2764
Houston, Texas 77252-2764

I certify that this exam was conducted the day of, , at
-------------- -----------------

[ ] a.m. [ ] p.m.
--------------------------

Location of exam
- -------------------------------------------------------------------------------

Authorized by
- -------------------------------------------------------------------------------

Examiner's signature
- -------------------------------------------------------------------------------

Examiner's name
- -------------------------------------------------------------------------------

Examiner's Social Security # or tax I.D. #
- -------------------------------------------------------------------------------

(must be furnished under authority of law)
- -------------------------------------------------------------------------------

Examiner's address
- -------------------------------------------------------------------------------

Examiner's phone #
- -------------------------------------------------------------------------------

AGLC 8003-99 Page 4

<PAGE>

EXHIBIT (10)(d)(ii)

<PAGE>

<TABLE>
<CAPTION>
AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL")
Home Office: Houston, Texas
JOINT AND LAST SURVIVOR VARIABLE UNIVERSAL LIFE INSURANCE
SUPPLEMENTAL APPLICATION
(This supplement must accompany the appropriate application for life insurance.)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PART 1. APPLICANT'S INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
Supplement to the application on the lives of __________________ and _________________________, dated ______________________________
- ------------------------------------------------------------------------------------------------------------------------------------
PART 2. INITIAL ALLOCATION PERCENTAGES
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPTIONS: In the "Premium Allocation" column, indicate how each premium received is to be allocated. In the "Deduction
Allocation" column, indicate which investment options are to be used for the deduction of monthly charges. Total allocations in each
column must equal 100%. Use whole percentages only.

PREMIUM DEDUCTION PREMIUM DEDUCTION
ALLOCATION ALLOCATION ALLOCATION ALLOCATION
---------- ---------- ---------- ----------
AIM VARIABLE INSURANCE FUNDS, INC. MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
AIM V.I. International Equity Division (1) ___% ___% Equity Growth Division (10) ___% ___%
AIM V.I. Value Division (2) ___% ___% High Yield Division (11) ___% ___%
AMERICAN GENERAL SERIES PORTFOLIO COMPANY PUTNAM VARIABLE TRUST
International Equities Division (3) ___% ___% Putnam VT Diversified Income Division (12) ___% ___%
MidCap Index Division (4) ___% ___% Putnam VT Growth and Income Division (13) ___% ___%
Money Market Division (5) ___% ___% Putnam VT Int'l Growth and Income Division (14) ___% ___%
Stock Index Division (6) ___% ___% SAFECO RESOURCE SERIES TRUST
DREYFUS VARIABLE INVESTMENT FUND Equity Division (15) ___% ___%
Quality Bond Division (7) ___% ___% Growth Division (16) ___% ___%
Small Cap Division (8) ___% ___% VAN KAMPEN LIFE INVESTMENT TRUST
MFS VARIABLE INSURANCE TRUST Strategic Stock Division (17) ___% ___%
MFS Emerging Growth Series (9) ___% ___% AGL Declared Fixed Interest Account (18) ___% ___%
OTHER: ________________________________ ___% ___%
100% 100%
- ------------------------------------------------------------------------------------------------------------------------------------
PART 3. MODIFIED ENDOWMENT CONTRACT
- ------------------------------------------------------------------------------------------------------------------------------------
If any premium payment causes the policy to be classified as a modified endowment contract under Section 7702A of the United States
Internal Revenue Code, there may be potentially adverse U.S. tax consequences. Such consequences include: (1) withdrawals or loans
being taxed to the extent of gain; and (2) a 10% penalty tax on the taxable amount. In order to avoid modified endowment status, I
request any excess premium that could cause such status to be refunded. [_] YES [_] NO
- ------------------------------------------------------------------------------------------------------------------------------------
PART 4. DOLLAR COST AVERAGING
- ------------------------------------------------------------------------------------------------------------------------------------
DOLLAR COST AVERAGING: ($5,000 MINIMUM BEGINNING ACCUMULATION VALUE) An amount can be systematically transferred from the Money
Market Division (5) and transferred to one or more of the investment options below. The AGL Declared Fixed Interest Account is not
available for Dollar Cost Averaging. Please refer to the prospectus for more information on the Dollar Cost Averaging option.

DAY OF THE MONTH FOR TRANSFERS: __________________________ (Choose a day of the month between 1-28.)
FREQUENCY OF TRANSFERS: [_] Monthly [_] Quarterly [_] Semiannually [_] Annually
TRANSFER $__________________ ($100 MINIMUM, WHOLE DOLLARS ONLY) from the AGSPC Money Market Division to the following Division(s):
(1) AIM V.I. International Equity $______ (10) Equity Growth $______
(2) AIM V.I. Value $______ (11) High Yield $______
(3) International Equities $______ (12) Putnam VT Diversified Income $______
(4) MidCap Index $______ (13) Putnam VT Growth and Income $______
(6) Stock Index $______ (14) Putnam VT Int'l Growth and Income $______
(7) Quality Bond $______ (15) Equity $______
(8) Small Cap $______ (16) Growth $______
(9) MFS Emerging Growth Series $______ (17) Strategic Stock $______
Other: ________________________________ $______
NOTE: Dollar Cost Averaging is not available if the Automatic Rebalancing option has been chosen.
- ------------------------------------------------------------------------------------------------------------------------------------
PART 5. AUTOMATIC REBALANCING
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMATIC REBALANCING: ($5,000 MINIMUM BEGINNING ACCUMULATION VALUE) Variable division assets will be automatically rebalanced based
on the premium percentages designated in Part 2. If the AGL Declared Fixed Interest Account has been designated for premium
allocation in Part 2, the rebalancing will be based on the proportion allocated to the variable divisions. Please refer to the
prospectus for more information on the Automatic Rebalancing option.

[_] CHECK HERE FOR AUTOMATIC REBALANCING.

FREQUENCY: [_] Quarterly [_] Semiannually [_] Annually

NOTE: Automatic Rebalancing is not available if the Dollar Cost Averaging option has been chosen.
- ------------------------------------------------------------------------------------------------------------------------------------
PAGE 1 of 2
AGLC 0093-99
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
AMERICAN GENERAL LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART 6. DEATH BENEFIT COMPLIANCE TEST
- ------------------------------------------------------------------------------------------------------------------------------------
[_] Guideline Premium Test [_] Cash Value Accumulation Test
- ------------------------------------------------------------------------------------------------------------------------------------
PART 7. SPECIFIED AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
Base Coverage $_____________ Supplemental Coverage $____________ = Total Specified Amount $_____________
- ------------------------------------------------------------------------------------------------------------------------------------
PART 8. TELEPHONE AUTHORIZATION
- ------------------------------------------------------------------------------------------------------------------------------------
I (or we, if Joint Owners), hereby authorize AGL to act on telephone instructions to transfer values among the variable divisions
and the AGL Declared Fixed Interest Account and to change allocations for future purchase payments and monthly deductions given by:
(Initial appropriate box below.)

[_] Policy Owner(s) - if Joint Owners, either of us acting independently.

[_] Policy Owner(s) or the Agent/Registered Representative who is appointed to represent AGL and the firm authorized to service my
policy.

AGL and any non-owner designated by this authorization will not be responsible for any claim, loss or expense based upon telephone
instructions received and acted on in good faith, including losses due to telephone instruction communication errors. AGL's
liability for erroneous transfers and allocations, unless clearly contrary to instructions received, will be limited to correction
of the allocations on a current basis. If an error, objection or other claim arises due to a telephone transaction, I will notify
AGL in writing within five working days from receipt of confirmation of the transaction from AGL. I understand that this
authorization is subject to the terms and provisions of my variable universal life insurance policy and its related prospectus. This
authorization will remain in effect until my written notice of its revocation is received by AGL at its home office.

[_] INITIAL HERE TO DECLINE THE ABOVE TELEPHONE AUTHORIZATION.
- ------------------------------------------------------------------------------------------------------------------------------------
PART 9. SUITABILITY (ALL QUESTIONS MUST BE ANSWERED.)
- ------------------------------------------------------------------------------------------------------------------------------------
YES NO
1. Have you, the Proposed Insureds or Owner(s) (if different), received the variable universal life insurance
policy prospectus and the prospectuses describing the investment options? [_] [_]
(If "yes," please furnish the Prospectus dates.)
Variable Universal Life Insurance Policy Prospectus: _______________
Supplements (if any): _______________

2. Do you understand and acknowledge:

a. THAT THE POLICY APPLIED FOR IS VARIABLE, EMPLOYS THE USE OF SEGREGATED ACCOUNTS WHICH MEANS
THAT YOU NEED TO RECEIVE AND UNDERSTAND CURRENT PROSPECTUSES FOR THE POLICY AND THE
UNDERLYING ACCOUNTS? [_] [_]

b. THAT ANY BENEFITS, VALUES OR PAYMENTS BASED ON PERFORMANCE OF THE SEGREGATED ACCOUNTS MAY VARY;
AND

(1) ARE NOT GUARANTEED BY THE COMPANY, ANY OTHER INSURANCE COMPANY, THE U.S. GOVERNMENT OR
ANY STATE GOVERNMENT? [_] [_]

(2) ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
FEDERAL OR STATE? [_] [_]

c. THAT IN ESSENCE, ALL RISK IS BORNE BY THE OWNER EXCEPT FOR FUNDS PLACED IN THE AGL DECLARED
FIXED INTEREST ACCOUNT? [_] [_]

d. THAT THE POLICY IS DESIGNED TO PROVIDE LIFE INSURANCE COVERAGE AND TO ALLOW FOR THE ACCUMULATION
OF VALUES IN THE SEGREGATED ACCOUNTS? [_] [_]

e. THE AMOUNT OR DURATION OF THE DEATH BENEFIT MAY INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT? [_] [_]

f. THE POLICY VALUES MAY INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT EXPERIENCE OF THE SEPARATE
ACCOUNT, THE AGL DECLARED FIXED INTEREST ACCOUNT ACCUMULATION, AND CERTAIN EXPENSE DEDUCTIONS? [_] [_]

3. Do you believe the Policy you selected meets your insurance and investment objectives and your anticipated
financial needs? [_] [_]

Signed at: ______________________________________________________________________ Date:_______________________________
CITY STATE

X____________________________________________________________ X____________________________________________________________
SIGNATURE OF PROPOSED CONTINGENT INSURED (REQUIRED) SIGNATURE OF REGISTERED REPRESENTATIVE

X____________________________________________________________ X____________________________________________________________
SIGNATURE OF OTHER PROPOSED CONTINGENT INSURED (REQUIRED) PRINT NAME OF BROKER/DEALER

X____________________________________________________________ X____________________________________________________________
SIGNATURE(S) OF OWNER(S) (IF DIFFERENT FROM PROPOSED INSURED) SIGNATURE(S) OF ADDITIONAL OWNER(S) (IF DIFFERENT FROM
PROPOSED INSURED)

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

PAGE 2 of 2
AGLC 0093-99
</TABLE>

<PAGE>

Exhibit (10)(e)(ii)

<PAGE>

SERVICE REQUEST

PLATINUM
__________________________________
INVESTOR(SM) SURVIVOR
__________________________________
AMERICAN GENERAL LIFE

______________________________________________________________________________

PLATINUM INVESTOR--VARIABLE DIVISIONS

AIM Variable Insurance Funds, Inc.

. Division 1 - AIM V.I. International Equity
. Division 2 - AIM V.I. Value

American General Series Portfolio Company

. Division 3 - International Equities
. Division 4 - MidCap Index
. Division 5 - Money Market
. Division 6 - Stock Index

Dreyfus Variable Investment Fund

. Division 7 - Quality Bond
. Division 8 - Small Cap

MFS Variable Insurance Trust

. Division 9 - MFS Emerging Growth

Morgan Stanley Dean Witter Universal Funds, Inc.

. Division 10 - Equity Growth
. Division 11 - High Yield

Putnam Variable Trust

. Division 12 - Putnam VT Diversified Income
. Division 13 - Putnam VT Growth and Income
. Division 14 - Putnam VT International Growth and Income

SAFECO Resource Series Trust

. Division 15 - Equity
. Division 16 - Growth

Van Kampen Life Investment Trust

. Division 17 - Strategic Stock

PLATINUM INVESTOR--FIXED OPTION

. Division 18 - Declared Fixed Interest Account
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL") [American General
Complete and return this request to: --------------------------------------------- Logo
Variable Universal Life Operations A Subsidiary of American General Corporation appears here]
PO Box 4880 Houston, TX 77210-4880 ---------------------------------------------
(888) 325-9315 or (713) 831-3443 Houston, Texas
Fax: (877) 445-3098
Hearing Impaired/TDD: (888) 436-5258 VARIABLE UNIVERSAL LIFE INSURANCE SERVICE REQUEST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
[ ] POLICY 1.| POLICY #:____________________________________ CONTINGENT INSURED:_______________________________
IDENTIFICATION | CONTINGENT INSURED:_______________________________
| ADDRESS:________________________________________________________________________ New Address (yes)(no)
COMPLETE THIS SECTION |
FOR ALL REQUESTS. | Primary Owner (If other than an insured):__________________________________________
|
| Address:________________________________________________________________________ New Address (yes)(no)
|
| Primary Owner's S.S. No. or Tax I.D. No._____________________________ Phone Number: ( )____ - ______
|
| Joint Owner (If applicable):____________________________________________________
|
| Address:________________________________________________________________________ New Address (yes)(no)
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] NAME 2.|
CHANGE | Change Name Of: (Circle One) Contingent Insured Owner Payor Beneficiary
|
Complete this section if | Change Name From: (First, Middle, Last) Change Name To: (First, Middle, Last)
the name of one of the |
Contingent Insureds, | _________________________________________ _________________________________________________
Owner, Payor or Beneficiary|
has changed. (Please note,|
this does not change the | Reason for Change: (Circle One) Marriage Divorce Correction Other (Attach copy of legal proof)
Contingent Insureds, |
Owner, Payor or
Beneficiary designation) |
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] MODE OF PREMIUM 3.|
PAYMENT/BILLING | Indicate frequency and premium amount desired: $______ Annual $______ Semi-Annual $_______ Quarterly
METHOD CHANGE |
| $______ Monthly (Bank Draft Only)
Use this section to change |
the billing frequency and/ | Indicate billing method desired:_____ Direct Bill ______ Pre-Authorized Bank Draft (attach a Bank Draft
or method of premium pay- | Authorization Form and "Void" Check)
ment. Note, however, that |
AGL will not bill you on a | Start Date: ______/______/_____
direct monthly basis. Refer|
to your policy and its |
related prospectus for |
further information |
concerning minimum premiums|
and billing options. |
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] LOST POLICY 4.|
CERTIFICATE | I/we hereby certify that the policy of insurance for the listed policy has been ____LOST_____DESTROYED
| _____OTHER.
Complete this section if | Unless I/we have directed cancellation of the policy, I/we request that a:
applying for a Certificate |
of Insurance or duplicate | _________ Certificate of Insurance at no charge
policy to replace a lost or|
misplaced policy. If a full| _________ Full duplicate policy at a charge of $25
duplicate policy is being |
requested, a check or money| be issued to me/us. If the original policy is located, I/we will return the Certificate or duplicate
order for $25 payable to | policy to AGL for cancellation.
AGL must be submitted with|
this request. |
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] DOLLAR COST 5.| Designate the day of the month for transfers:_________(choose a day from 1-28)
AVERAGING |
($5,000 minimum initial | Frequency of transfers (check one): _______Monthly _______Quarterly ______Semi-Annually _____Annually
accumulation value) An |
amount may be deducted | I want: $___________($100 minimum) taken from the Money Market Division and transferred to the
periodically from the | following Divisions:
Money Market Division and |
placed in one or more of | AIM Variable Insurance Funds, Inc. Morgan Stanley Dean Witter Universal Funds, Inc.
the Divisions listed. The | $_________(1) AIM V.I. International Equity $________(10) Equity Growth
Declared Fixed Interest | $_________(2) AIM V.I. Value $________(11) High Yield
Account is not available | American General Series Portfolio Company Putnam Variable Trust
for Dollar Cost Averaging.| $_________(3) International Equities $________(12) Putnam VT Diversified Income
Please refer to the pros- | $_________(4) MidCap Index $________(13) Putnam VT Growth and Income
pectus for more infor- | $_________(6) Stock Index $________(14) Putnam VT Int'l Growth & Income
mation on the Dollar Cost | Dreyfus Variable Investment Fund SAFECO Resource Series Trust
Averaging Option. | $_________(7) Quality Bond $________(15) Equity
Note: Automatic | $_________(8) Small Cap $________(16) Growth
Rebalancing is not | MFS Variable Insurance Trust Van Kampen Life Investment Trust
available if the Dollar | $_________(9) MFS Emerging Growth $________(17) Strategic Stock
Cost Averaging Option is |
chosen. | ________INITIAL HERE TO REVOKE DOLLAR COST AVERAGING ELECTION.
- -----------------------------------------------------------------------------------------------------------------------------------
PAGE 2 OF 4
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
[ ] TELEPHONE 6.| I (/we if Joint Owners) hereby authorize AGL to act on telephone instructions to transfer values among
PRIVILEGE | the Variable Divisions and Declared Fixed Interest Account and to change allocations for future
AUTHORIZATION | purchase payments and monthly deductions.
|
Complete this section if | Initial the designation you prefer:
you are applying for or |
revoking current telephone| __________Policy Owner(s) only--If Joint Owners, either one acting independently.
privileges. | __________Policy Owner(s) and Agent/Registered Representative who is appointed to represent AGL and the
| firm authorized to service my policy.
|
| AGL and any non-owner designated by this authorization will not be responsible for any claim, loss or
| expense based upon telephone transfer or allocation instructions received and acted upon in good faith,
| including losses due to telephone instruction communication errors. AGL's liability for erroneous
| transfers or allocations, unless clearly contrary to instructions received, will be limited to
| correction of the allocations on a current basis. If an error, objection or other claim arises due to a
| telephone transaction, I will notify AGL in writing within five working days from the receipt of the
| confirmation of the transaction from AGL. I understand that this authorization is subject to the terms
| and provisions of my variable universal life insurance policy and its related prospectus. This
| authorization will remain in effect until my written notice of its revocation is received by AGL at
| the address printed on the top of this service request form.
|
|___________INITIAL HERE TO REVOKE TELEPHONE PRIVILEGE AUTHORIZATION.
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] CORRECT AGE 7.|
| Name of Contingent Insured for whom this correction is submitted:___________________________________
|
Use this section to correct| Correct DOB: ________/________/________
the age of any person |
covered under this policy. |
Proof of the correct date |
of birth must accompany |
this request. |
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] TRANSFER OF 8.| (Division Name or Number) (Division Name or Number)
ACCUMULATED VALUES |
|
| Transfer $________ or ______% from_______________________________to__________________________________
Use this section if you |
want to move money between | Transfer $________ or ______% from_______________________________to__________________________________
divisions. The minimum |
amount for transfers is | Transfer $________ or ______% from_______________________________to__________________________________
$500.00. Withdrawals |
from the Declared Fixed | Transfer $________ or ______% from_______________________________to__________________________________
Interest Account to a |
Variable Division may only | Transfer $________ or ______% from_______________________________to__________________________________
be made within 60 days |
after a contract anniver- | Transfer $________ or ______% from_______________________________to__________________________________
sary. See transfer limit- |
ations outlined in pros- | Transfer $________ or ______% from_______________________________to__________________________________
pectus. If a transfer |
causes the balance in any | Transfer $________ or ______% from_______________________________to__________________________________
division to drop below |
$500, AGL reserves the | Transfer $________ or ______% from_______________________________to__________________________________
right to transfer the |
remaining balance. | Transfer $________ or ______% from_______________________________to__________________________________
Amounts to be transferred |
should be indicated in |
dollar or percentage |
amounts, maintaining |
consistency throughout. |
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] CHANGE IN 9.| INVESTMENT DIVISION PREM % DED % INVESTMENT DIVISION PREM % DED %
ALLOCATION |
PERCENTAGES | AIM Variable Insurance Funds, Inc. Morgan Stanley Dean Witter
| (1) AIM V.I. Int'l Equity ______ ______ Universal Funds, Inc.
Use this section to | (2) AIM V.I. Value ______ ______ (10) Equity Growth ______ ______
indicate how premiums or | (11) High Yield ______ ______
monthly deductions are to | American General Series Portfolio Co.
be allocated. Total | (3) International Equities ______ ______ Putnam Variable Trust
allocation in each | (4) MidCap Index ______ ______ (12) Putnam VT Diversified
column must equal 100%; | (5) Money Market ______ ______ Income ______ ______
whole numbers only | (6) Stock Index ______ ______ (13) Putnam VT Growth
| and Income ______ ______
| Dreyfus Variable Investment Fund (14) Putnam VT Int'l
| (7) Quality Bond ______ ______ Growth and Income ______ ______
| (8) Small Cap ______ ______
| SAFECO Resources Series Trust
| MFS Variable Insurance Trust (15) Equity ______ ______
| (9) MFS Emerging Growth ______ ______ (16) Growth ______ ______
|
| Van Kampen Life Investment
| Trust
| (17) Strategic Stock ______ ______
| (18) Declared Fixed ______ ______
| Interest Account ______ ______
- -----------------------------------------------------------------------------------------------------------------------------------
PAGE 3 OF 4
</TABLE>

<PAGE>

- ------------------------------------------------------------------------------------------------------------------------------------
<S> |<C> <C>
[ ] AUTOMATIC 10.| Indicate frequency: _______ Quarterly ______ Semi-Annually ______ Annually
REBALANCING |
| (Division Name or Number) (Division Name or Number)
($5,000 minimum | %_________:________________________________________ %_________:____________________________________
accumulation value) Use |
this section to apply for | %_________:________________________________________ %_________:____________________________________
or make changes to |
Automatic Rebalancing of | %_________:________________________________________ %_________:____________________________________
the variable divisions. |
Please refer to the | %_________:________________________________________ %_________:____________________________________
prospectus for more |
information on the | %_________:________________________________________ %_________:____________________________________
Automatic Rebalancing |
Option. Note: Dollar Cost | %_________:________________________________________ %_________:____________________________________
Averaging is not available |
if the Automatic |
Rebalancing Option is | _________INITIAL HERE TO REVOKE AUTOMATIC REBALANCING ELECTION.
chosen. |
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] REQUEST FOR 11.| _________I request a partial surrender of $_________ or _________% of the net cash surrender value.
PARTIAL |
SURRENDER/ | _________I request a loan in the amount of $________.
POLICY LOAN |
| _________I request the maximum loan amount available from my policy.
Use this section to apply |
for a partial surrender | Unless you direct otherwise below, proceeds are allocated according to the deduction allocation
from or policy loan against| percentages in effect, if available; otherwise they are taken pro-rata from the Declared Fixed Interest
policy values. For detailed| Account and Variable Divisions in use.
information concerning |
these two options please | ______________________________________________________________________________________________________
refer to your policy and |
its related prospectus. If | ______________________________________________________________________________________________________
applying for a partial |
surrender, be sure to | ______________________________________________________________________________________________________
complete the Notice of |
Withholding section of this| ______________________________________________________________________________________________________
Service Request in addition|
to this section. |
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] NOTICE OF 12.| The taxable portion of the distribution you receive from your variable universal life insurance policy
WITHHOLDING | is subject to federal income tax withholding unless you elect not to have withholding apply.
| Withholding of state income tax may also be required by your state of residence. You may elect not to
Complete this section if | have withholding apply by checking the appropriate box below. If you elect not to have withholding
you have applied for a | apply to your distribution or if you do not have enough income tax withheld, you may be responsible for
partial surrender in | payment of estimated tax. You may incur penalties under the estimated tax rules, if your withholding
Section 11. | and estimated tax are not sufficient.
|
| Check one: _______ I DO want income tax withheld from this distribution.
|
| _______ I DO NOT want income tax withheld from this distribution.
|
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] AFFIRMATION/ 13.| CERTIFICATION: Under penalties of perjury, I certify: (1) that the number shown on this form is my
SIGNATURE | correct taxpayer identification number and; (2) that I am not subject to backup withholding under
| Section 3406(a)(1)(C) of the Internal Revenue Code.
|
| The Internal Revenue Service does not require your consent to any provision of this document other
Complete this section for | than the certification required to avoid backup withholding.
ALL requests. |
|
| Dated at __________________________________ this _________ day of ________________________, ________.
|
|
| X_________________________________________________ X_____________________________________________
| SIGNATURE OF OWNER SIGNATURE OF WITNESS
|
| X_________________________________________________ X_____________________________________________
| SIGNATURE OF JOINT OWNER SIGNATURE OF WITNESS
|
| X_________________________________________________ X_____________________________________________
| SIGNATURE OF ASSIGNEE SIGNATURE OF WITNESS
|
|
|
- -----------------------------------------------------------------------------------------------------------------------------------
AGLC0094 1099 PAGE 4 OF 4
</TABLE>

<PAGE>

OTHER EXHIBITS - EXHIBIT (2)(a)
<PAGE>

AMERICAN
GENERAL
LIFE COMPANIES
2929 ALLEN PARKWAY (A40-04), HOUSTON, TEXAS 77019

PAULETTA P. COHN
DEPUTY GENERAL COUNSEL
Direct Line (713) 831-1230
FAX (713) 620-3270
E-mail: [email protected]

February 4, 2000

American General Life Insurance Company
2727-A Allen Parkway
Houston, TX 77019

Dear Ladies and Gentlemen:

As Deputy General Counsel of American General Life Companies, I have acted as
counsel to American General Life Insurance Company (the "Company") in
connection with the filing of Pre-effective Amendment No. 1 to the Registration
Statement on Form S-6, File Nos. 333-90787 and 811-08561 ("Registration
Statement") for Separate Account VL-R ("Separate Account VL-R") of the Company
with the Securities and Exchange Commission. The Registration Statement relates
to the proposed issuance of Platinum Investor (SM) Survivor - Variable (policy
form No. 99206) flexible premium variable life insurance policies by the Company
(APolicies"). Net premiums received under the Policies are allocated by the
Company to Separate Account VL-R to the extent directed by owners of the
Policies. Net premiums under other policies that may be issued by the Company
may also be allocated to Separate Account VL-R. The Policies are designed to
provide retirement protection and are to be offered in the manner described in
the prospectus and the prospectus supplements included in the Registration
Statement. The Policies will be sold only in jurisdictions authorizing such
sales.

In connection with rendering this opinion, I have examined and am familiar with
originals or copies, certified or otherwise identified to my satisfaction, of
the corporate records of the Company and all such other documents as I have
deemed necessary or appropriate as a basis for the opinion expressed herein and
have assumed that prior to the issuance or sale of any Policies, the
Registration Statement, as finally amended, will be effective.
<PAGE>

American General Life Insurance Company
February 4, 2000
Page 2

Based on and subject to the foregoing and the limitations, qualifications,
exceptions and assumptions set forth herein, I am of the opinion that:

l. The Company is a corporation duly organized and validly existing under the
laws of the State of Texas.

2. Separate Account VL-R was duly established and is maintained by the Company
pursuant to the laws of the State of Texas, under which income, gains and
losses, whether or not realized, from assets allocated to Separate Account
VL-R, are, in accordance with the Policies, credited to or charged against
Separate Account VL-R without regard to other income, gains or losses of
the Company.

3. Assets allocated to Separate Account VL-R will be owned by the Company.
The Company is not a trustee with respect thereto. The Policies provide
that the portion of the assets of Separate Account VL-R equal to the
reserves and other Policy liabilities with respect to Separate Account VL-
R will not be chargeable with liabilities arising out of any other business
the Company may conduct. The Company reserves the right to transfer assets
of Separate Account VL-R in excess of such reserves and other Policy
liabilities to the general account of the Company.

4. When issued and sold as described above, the Policies (including any units
of Separate Account VL-R duly credited thereunder) will be duly authorized
and will constitute validly issued and binding obligations of the Company
in accordance with their terms.

I am admitted to the bar in the State of Texas, and I do not express any opinion
as to the laws of any other jurisprudence.

This opinion is being furnished in accordance with the requirements of Item
601(b)(5), Regulation S-K of the Securities Act of 1933 and I hereby consent to
the use of this opinion as an exhibit to the Registration Statement.

Sincerely,

/s/ PAULETTA P. COHN
----------------------------

PPC:mlc

<PAGE>

OTHER EXHIBITS - EXHIBIT 2(b)
<PAGE>

Writer's Direct Number
(713) 831-2738
February 3, 2000

American General Life Insurance Company
2727-A Allen Parkway
Houston, Texas 77019

Dear Ladies and Gentlemen:

This opinion is furnished in connection with the Registration Statement on Form
S-6, File No. 333-90787 ("Registration Statement") of Separate Account VL-R
("Separate Account VL-R") of American General Life Insurance Company ("AGL")
covering an indefinite number of units of interest in Separate Account VL-R
under Platinum Investor (SM) Survivor (policy form No. 99206) flexible premium
variable life insurance policies ("Policies"). Net premiums received under the
Policies may be allocated to Separate Account VL-R as described in the
prospectus included in the Registration Statement.

I participated in the preparation of the Policies and I am familiar with their
provisions. I am also familiar with the description contained in the prospectus.
In my opinion:

The Illustrations of Hypothetical Policy Benefits appearing on pages 26 and
27 of the Prospectus (the "Illustrations") are consistent with the
provisions of the Policies. The assumptions upon which these Illustrations
are based, including the current charges and the .20% and .30% reductions
in the daily charges after a specified number of years, are stated in the
prospectus and are reasonable. The Policies have not been designed so as
to make the relationship between premiums and benefits, as shown in the
Illustrations, appear disproportionately more favorable to prospective
purchasers of Policies for preferred risk (the best premium class offered
by AGL) non-tobacco user males and females both age 55, than to prospective
purchasers of Policies for males and females at other ages within this
premium class or any other premium class. The particular Illustrations
shown were not selected for the purpose of making the relationship appear
more favorable.

I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Accounting and
Actuarial Experts" in the prospectus.

/s/ ROBERT M. BEUERLEIN
-------------------------------
Robert M. Beuerlein
Senior Vice President & Chief Actuary

<PAGE>

OTHER EXHIBITS - EXHIBIT 6
<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference made to our firm under the caption "Independent
Auditors" and to the use of our report dated February 16, 1999, as to American
General Life Insurance Company, in Pre-Effective Amendment No. 1 to the
Registration Statement (Form S-6, Nos. 333-90787 and 811-08561) of American
General Life Insurance Company.

/s/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP

Houston, Texas
February 2, 2000