LSW VARIABLE ANNUITY ACCOUNT I, N-4, 1998-03-05

LSW VARIABLE ANNUITY ACCOUNT I
N-4, 1998-03-05

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<PAGE> 1
As filed with the Securities and Exchange Commission on March 5, 1998

File No. 333-
File No. 811-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. ___ [ ]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No.

LSW VARIABLE ANNUITY ACCOUNT I
(Exact Name of Registrant)

LIFE INSURANCE COMPANY OF THE SOUTHWEST
(Name of Depositor)

1300 West Mockingbird Lane
Dallas, Texas 75247-4921
(Address of Depositor's Principal Executive Offices)

Depositor's Telephone Number: (800) 228-4579

D. Russell Morgan, Esq.
National Life Insurance Company
National Life Drive
Montpelier, Vermont 05604

(Name and Address of Agent for Service of Process)

Copy to:

Stephen E. Roth, Esquire
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404

<PAGE> 2

Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of the registration statement.

Title of Securities Being Registered: Individual Flexible Premium
Variable Annuity Contracts.

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

<PAGE> 3

CROSS REFERENCE SHEET
Pursuant to Rules 481(a) and 495(a)

Showing location in Part A (prospectus) and Part B (statement of additional
information) of registration statement of information required by Form N-4

PART A

<TABLE>
<CAPTION>
ITEM OF FORM N-4 PROSPECTUS CAPTION
<S> <C> <C>
1. Cover Page Cover Page

2. Definitions Definitions

3. Synopsis Summary of Contract Expenses; Introduction

4. Condensed Financial
Information Advertising

5. General

(a) Depositor Life Insurance Company of the Southwest
(b) Registrant The Variable Account
(c) Portfolio Company Underlying Fund Options
(d) Fund Prospectus Underlying Fund Options
(e) Voting Rights Voting Rights
(f) Administrators N/A

6. Deductions and Expenses

(a) General Charges and Deductions; Introduction
(b) Sales Load Charges and Deductions; Introduction
(c) Special Purchase Plan N/A
(d) Commissions Distribution of the Contracts
(e) Expenses - Registrant Charges and Deductions; Introduction
(f) Fund Expenses Charges and Deductions
(g) Organizational Expenses N/A

7. Contracts

(a) Persons with Rights Introduction; Changes to Variable Account; Detailed
</TABLE>

<PAGE> 4
<TABLE>
<S> <C> <C>
Description of Contract Provisions; Contract Rights; Voting Rights
(b) (i) Allocation of
Purchase Payments Introduction; Premium Payments; Free-Look
(ii) Transfers Introduction; Transfers
(iii) Exchanges Transfers

(c) Changes Detailed Description of Contract Provisions; Changes to
Variable Account
(d) Inquiries Cover page; Owner Inquiries

8. Annuity Period Annuity Payment Options

9. Death Benefit Death of Owner; Death of Annuitant Prior to the Annuitization Date

10. Purchases and Contract Value

(a) Purchases Introduction; Issuance of a Contract; Premium Payments; Free Look; Transfers
(b) Valuation Definitions; Value of a Variable Account Accumulation Unit
(c) Daily Calculation Definitions; Value of a Variable Account Accumulation Unit
(d) Underwriter Distribution of the Contracts

11. Redemptions

(a) - By Owners Transfers; Surrender and Withdrawal; Payments; Annuity Payment Options; Federal
Income Tax Considerations
- By Annuitant Transfers; Surrender and Withdrawal; Payments; Annuity Payment Options; Federal
Income Tax Considerations
(b) Texas ORP N/A
(c) Check Delay N/A
(d) Lapse N/A
(e) Free Look Premium Payments; Free Look

12. Taxes Introduction; Required Distributions for Qualified Plans and Tax Sheltered Annuities;
Required Distributions for Individual Retirement Annuities; Generation-Skipping
Transfers; Loan Privilege-Qualified Plans and Tax Sheltered Annuities; Surrenders and
Withdrawals under a Tax Sheltered Annuity Contact; Federal Income Tax Considerations.
</TABLE>

<PAGE> 5
<TABLE>
<S> <C>
13. Legal Proceedings Legal Proceedings

14. Table of Contents for the
Statement of Additional
Information Table of Contents of Statement of Additional Information

PART B

ITEM OF FORM N-4 PART B CAPTION

15. Cover Page Cover Page

16. Table of Contents Table of Contents

17. General Information and Life Insurance Company
History of the Southwest

18. Services

(a) Fees and Expenses of
Registrant Charges and Deductions (prospectus)
(b) Management Contracts N/A
(c) Custodian Safekeeping of Account Assets
Independent Public
Accountant Experts
(d) Assets of Registrant The Variable Account (prospectus)
(e) Affiliated Persons N/A
(f) Principal Underwriter Distribution of the Contracts

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

20. Underwriters Distribution of the Contracts

21. Calculation of Performance
Data Calculation of Yields and Total Returns

22. Annuity Payments Annuity Payment Options (prospectus)

23. Financial Statements Financial Statements
</TABLE>

<PAGE> 6

<TABLE>
<CAPTION>
PART C -- OTHER INFORMATION
ITEM OF FORM N-4 PART C CAPTION
<S> <C> <C>
24. Financial Statements
and Exhibits Financial Statements and Exhibits

(a) Financial Statements (a) Financial Statements
(b) Exhibits (b) Exhibits

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

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

27. Number of Contractowners Number of Contract Owners

28. Indemnification Indemnification

29. Principal Underwriters Principal Underwriter

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

31. Management Services Management Services

32. Undertakings Undertakings

Signature Page Signatures
</TABLE>

<PAGE> 7

PART A

PROSPECTUS

<PAGE> 8
LIFE INSURANCE COMPANY OF THE SOUTHWEST
HOME 0FFICE
1300 WEST MOCKINGBIRD LANE
DALLAS, TEXAS 75427-4921
1-800-228-4579

RetireMax Variable Annuity

The RetireMax Variable Annuity policies described in this prospectus
(collectively referred to as the "Policies") are individual flexible premium
variable annuity policies supported by the LSW Variable Annuity Account I (the
"Variable Account"), a separate account of Life Insurance Company of the
Southwest ("LSW"). The Policies are sold either as Non-Qualified Policies or
in connection with certain retirement plans qualifying for favorable federal
income tax treatment ("Qualified Policies"). Annuity payments under the
Policies are deferred until a selected later date. Net Premium Payments are
allocated either to the Fixed Account or to the Variable Account, which is
divided into Subaccounts, each of which invests in shares of one of the
underlying fund options (each a "Fund") described below:

<TABLE>
<CAPTION>
FUNDS INVESTMENT ADVISOR
- ----- ------------------
<S> <C>
ALGER AMERICAN FUND
Alger American Small Capitalization Portfolio Fred Alger Management, Inc.
Alger American Growth Portfolio Fred Alger Management, Inc.
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio Fidelity Investments
Growth Portfolio Fidelity Investments
High Income Portfolio Fidelity Investments
Overseas Portfolio Fidelity Investments
VARIABLE INSURANCE PRODUCTS FUND II
Index 500 Portfolio Fidelity Investments
Contrafund Portfolio Fidelity Investments
THE MARKET STREET FUND
Growth Portfolio Sentinel Advisors Company
Sentinel Growth Portfolio Sentinel Advisors Company
Aggressive Growth Portfolio Sentinel Advisors Company
Bond Portfolio Sentinel Advisors Company
Managed Portfolio Sentinel Advisors Company
Money Market Portfolio Sentinel Advisors Company
International Portfolio Boston Company Asset Management Inc.
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Growth Fund II Strong Capital Management, Inc.
STRONG SPECIAL FUND II, INC. Strong Capital Management, Inc.
VAN ECK WORLDWIDE INSURANCE TRUST
WORLDWIDE BOND FUND Van Eck Associates Corporation
</TABLE>

This prospectus provides you with the basic information you should
know about the RetireMax Policies, the Variable Account and the Fixed Account
before investing. You should read it and keep it for future reference. A
Statement of Additional Information dated ,1998 containing
further information about the Policies and the Variable Account has been filed
with the Securities and Exchange Commission. You can obtain a copy without
charge from Life Insurance Company of the Southwest by calling 1-800-228-4579,
or writing to LSW at 1300 West Mockingbird Lane, Dallas, Texas 75247-4921. You
may also obtain prospectuses for each of the underlying Fund options identified
above without charge by calling or writing to the above telephone number or
address.

<PAGE> 9
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS MUST BE ACCOMPANIED BY CURRENT PROSPECTUSES FOR THE FUNDS.

INVESTMENTS IN THESE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, AND ARE NOT
GUARANTEED OR ENDORSED BY, THE ADVISER OF ANY OF THE UNDERLYING FUNDS
IDENTIFIED ABOVE, THE U.S. GOVERNMENT, OR ANY BANK OR BANK AFFILIATE.
INVESTMENTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE STATEMENT OF ADDITIONAL INFORMATION, DATED , 1998, IS
INCORPORATED HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF
ADDITIONAL INFORMATION APPEARS ON PAGE OF THE PROSPECTUS.

THE DATE OF THIS PROSPECTUS IS , 1998.

<PAGE> 10
TABLE OF CONTENTS

<TABLE>
<S> <C>
DEFINITIONS
SUMMARY OF POLICY EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UNDERLYING FUND ANNUAL EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INTRODUCTION
LIFE INSURANCE COMPANY OF THE SOUTHWEST, THE VARIABLE
ACCOUNT, AND THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Life Insurance Company of the Southwest . . . . . . . . . . . . . . . . . . . . . . . . . .
The Variable Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underlying Fund Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DETAILED DESCRIPTION OF POLICY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of the Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Initial Premium Payment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsequent Premium Payments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allocation of Net Premium Payments . . . . . . . . . . . . . . . . . . . . . . . .
Transfers
Value of a Variable Account Accumulation Unit . . . . . . . . . . . . . . . . . . . . . . .
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Determining the Accumulation Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuitization
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Election of Payment Options . . . . . . . . . . . . . . . . . . . . . . . . . . .
Frequency and Amount of Annuity Payments . . . . . . . . . . . . . . . . . . . . .
Annuitization - Variable Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value of an Annuity Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assumed Investment Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuitization - Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Payment Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Death of Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Death of Annuitant Prior to the Annuitization Date . . . . . . . . . . . . . . . . . . . . .
Required Distributions for Qualified Plans and Tax Sheltered Annuities . . . . . . . . . . .
Required Distributions for Individual Retirement Annuities . . . . . . . . . . . . . . . . .
Generation-Skipping Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ownership Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductions from the Variable Account . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent Deferred Sales Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual Policy Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium Taxes
Charge for Optional Enhanced Death Benefit Rider . . . . . . . . . . . . . . . . . . . . . .
Other Charges
POLICY RIGHTS
Free Look
Loan Privilege - Qualified Policies and Certain Tax Sheltered Annuities . . . . . . . . . .
Surrender and Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments
Surrenders and Withdrawals Under a Tax Sheltered Annuity Policy . . . . . . . . . . . . . .
Telephone Transaction Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available Automated Fund Management Features . . . . . . . . . . . . . . . . . . . . . . . .
Dollar Cost Averaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Rebalancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Systematic Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy Rights Under Certain Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

<PAGE> 11
<TABLE>
<S> <C>
THE FIXED ACCOUNT
Minimum Guaranteed and Current Interest Rates . . . . . . . . . . . . . . . . . . . . . . .
OPTIONAL ENHANCED DEATH BENEFIT RIDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEDERAL INCOME TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Qualified Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Pension and Profit-Sharing Plans . . . . . . . . . . . . . . . . . . . . . . . . .
Code Section 403(b) Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Individual Retirement Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Simple Retirement Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge for Tax Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rollover Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restrictions under Qualified Policies . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gender Neutrality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VOTING RIGHTS
CHANGES TO VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADVERTISING
DISTRIBUTION OF THE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STATEMENTS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OWNER INQUIRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . .
</TABLE>

<PAGE> 12

DEFINITIONS

ACCUMULATION UNIT- An accounting unit of measure used to calculate the Variable
Account Accumulation Value prior to the Annuitization Date.

ACCUMULATION VALUE- The sum of the value of all Variable Account Accumulation
Units attributable to the Policy, plus any amount held under the Policy in the
Fixed Account, minus any outstanding loans on the Policy and accrued interest
on such loans.

ANNUITANT- A person named in the Policy who is expected to become, at
Annuitization, the person upon whose continuation of life any annuity payments
involving life contingencies depends. Unless the Owner is a different
individual who is age 85 or younger, this person must be age 85 or younger at
the time of Policy issuance unless LSW has approved a request for an Annuitant
of greater age. The Owner may change the Annuitant prior to the Annuitization
Date, as set forth in the Policy.

ANNUITIZATION- The period during which annuity payments are actually received.

ANNUITIZATION DATE- The date on which annuity payments actually commence.

ANNUITY PAYMENT OPTION- The chosen form of annuity payments. Several options
are available under the Policy.

ANNUITY UNIT- An accounting unit of measure used to calculate the value of
Variable Annuity payments.

BENEFICIARY- The Beneficiary is the person designated to receive certain
benefits under the Policy upon the death of the Owner or Annuitant prior to the
Annuitization Date. The Beneficiary can be changed by the Owner as set forth
in the Policy.

CASH SURRENDER VALUE- An amount equal to Accumulation Value, minus any
applicable Contingent Deferred Sales Charge, minus any applicable premium tax
charge.

CHOSEN HUMAN BEING- An individual named at the time of Annuitization upon whose
continuation of life any annuity payments involving life contingencies depends.

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

COLLATERAL FIXED ACCOUNT- The portion of the Fixed Account which holds value
which secures a loan on the Policy.

DATE OF ISSUE- The date shown as the Date of Issue on the Data Page of the
Policy.

DEATH BENEFIT- The benefit payable to the Beneficiary upon the death of the
Owner or the Annuitant.

DISTRIBUTION- Any payment of part or all of the Accumulation Value.

FIXED ACCOUNT- The Fixed Account is made up of all assets of LSW other than
those in the Variable Account or any other segregated asset account of LSW.

FIXED ANNUITY- An annuity providing for payments which are guaranteed by LSW as
to dollar amount during Annuitization.

FUND- A registered management investment company in which the assets of a
Subaccount of the Variable Account will be invested.

HOME OFFICE- The main office of LSW located at 1300 West Mockingbird Lane,
Dallas, Texas.

1
<PAGE> 13
INDIVIDUAL RETIREMENT ANNUITY (IRA)- An annuity which qualifies for favorable
tax treatment under Section 408 of the Code. The Policies will not be issued
to Education IRA's.

INVESTMENT COMPANY ACT - The Investment Company Act of 1940, as amended from
time to time.

JOINT OWNERS- Two or more persons who own the Policy as tenants in common or as
joint tenants. If joint owners are named, references to "Owner" in this
prospectus will apply to both of the Joint Owners.

MATURITY DATE- The date on which annuity payments are scheduled to commence.
The Maturity Date is shown on the Data Page of the Policy, and is subject to
change by the Owner, within any applicable legal limits, subject to LSW's
approval.

MONTHLY POLICY DATE- The day in each calendar month which is the same day of
the month as the Date of Issue, or the last day of any month having no such
date, except that whenever the Monthly Policy Date would otherwise fall on a
date other than a Valuation Day, the Monthly Policy Date will be deemed to be
the next Valuation Day.

NON-QUALIFIED POLICY- A Policy which does not qualify for favorable tax
treatment under the provisions of Sections 401 or 403(a) (Qualified Plans), 408
(IRAs) or 403(b) (Tax-Sheltered Annuities) of the Code.

OWNER- The Owner is the person who possesses all rights under the Policy,
including the right to designate and change any designations of the Owner,
Annuitant, Beneficiary, Annuity Payment Option, and the Maturity Date, when
permitted under the terms of the Policy and the Code.

PAYEE- The person who is designated at the time of Annuitization to receive the
proceeds of the Policy upon Annuitization.

POLICY- The RetireMax individual flexible premium variable annuity policy
described in this prospectus.

POLICY ANNIVERSARY- An anniversary of the Date of Issue of the Policy.

POLICY YEAR- Each year the Policy remains in force commencing with the Date of
Issue.

PREMIUM PAYMENT- A deposit of new value into the Policy. The term "Premium
Payment" does not include transfers between the Variable Account and Fixed
Account, or among the Subaccounts.

NET PREMIUM PAYMENTS- The total of all Premium Payments made under the Policy,
less any premium tax deducted from premiums.

QUALIFIED POLICY - A Policy which qualifies for favorable tax treatment under
the provisions of Sections 401 or 403(a) (Qualified Plans), 408 (IRAs), 403(b)
(Tax-Sheltered Annuities) or 457 of the Code.

QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 or 403(a) of the Code.

SUBACCOUNTS- Separate and distinct divisions of the Variable Account, to which
specific underlying Fund shares are allocated and for which Accumulation Units
and Annuity Units are separately maintained.

TAX SHELTERED ANNUITY- An annuity which qualifies for favorable tax treatment
under Section 403(b) of the Code.

VALUATION DAY- Each day the New York Stock Exchange is open for business other
than the day after Thanksgiving and any day on which trading is restricted.
Unless otherwise indicated, whenever under

2
<PAGE> 14
a Policy an event occurs or a transaction is to be effected on a day that is
not a Valuation Day, it will be deemed to have occurred on the next Valuation
Day.

VALUATION PERIOD- The time between two successive Valuation Days.

VARIABLE ACCOUNT- The LSW Variable Annuity Account I, a separate investment
account of LSW into which Net Premium Payments under the Policies are
allocated. The Variable Account is divided into Subaccounts, each of which
invests in the shares of a separate underlying Fund.

VARIABLE ANNUITY- An annuity the accumulated value of which varies with the
investment experience of a separate account.

WITHDRAWAL- A payment made at the request of the Owner pursuant to the right to
withdraw a portion of the Accumulation Value of the Policy.

3
<PAGE> 15
SUMMARY OF POLICY EXPENSES

TRANSACTION EXPENSES

<TABLE>
<S> <C>
Sales Load Imposed on Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . See below(1)
Contingent Deferred Sales Charge (as a percentage of Net Premium Payments surrendered or withdrawn)(2)
Number of Completed Years from Date of Premium Payment
0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1%
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
After the fifteenth Policy Anniversary, no Contingent Deferred Sales Charge
will apply.
</TABLE>

<TABLE>
<S> <C>
ANNUAL EXPENSES
Mortality Risk Charge(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.85%
Expense Risk Charge(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40%
Administration Charge(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.15%
-----
Total Basic Variable Account Annual Percentage Expenses . . . . . . . . . . . . . . . . . . . . . . 1.40%

Annual Policy Fee(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30

Charge for Optional Enhanced Death Benefit Rider(5) . . . . . . . . . . . . . . . . . . . . . . . . 0.20%
</TABLE>

(1) A minority of states assess premium taxes on the Policies. LSW will make
a deduction for premium taxes at the time it pays premium taxes to the
applicable taxing authority. See "Premium Taxes", page .

(2) Each Policy Year, the Owner may withdraw without a Contingent Deferred
Sales Charge ("CDSC") an amount equal to 10% of the Accumulation Value as
of the most recent Policy Anniversary. In addition, any amount withdrawn
in order for the Policy to meet minimum Distribution requirements under
the Code shall be free of the CDSC. Withdrawals may be restricted for
Policies issued pursuant to the terms of a Tax Sheltered Annuity. This
CDSC-free Withdrawal privilege does not apply in the case of full
surrenders unless otherwise required by law, and is non-cumulative; that
is, free amounts not taken during any given Policy Year cannot be taken as
free amounts in a subsequent Policy Year (see "Contingent Deferred Sales
Charge", page ).

(3) The Mortality Risk Charge, the Expense Risk Charge and the Administration
Charge set forth above apply exclusively to allocations made to the
Subaccount(s) of the Variable Account. Such charges do not apply to, and
will not be assessed against, allocations made to the Fixed Account.

(4) The Annual Policy Fee is assessed only upon Policies which as of the Date
of Issue, or applicable Policy Anniversary, have an Accumulation Value
plus any outstanding loan and accrued interest of less than $50,000, and
is not assessed on Policy Anniversaries after the Annuitization Date.

(5) This charge, which applies to the Accumulation Value plus the amount of
any outstanding loan and accrued interest, is assessed only if the Owner
has elected the Enhanced Death Benefit Rider. See "Optional Enhanced
Death Benefit Rider", page .

<PAGE> 16
UNDERLYING FUND ANNUAL EXPENSES(6)(AS A PERCENTAGE OF UNDERLYING FUND NET
ASSETS)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
MANAGEMENT OTHER TOTAL MUTUAL
- ----------------------------------------------------------------------------------------------------------------------
FEES, EXPENSES, FUND EXPENSES,
- ----------------------------------------------------------------------------------------------------------------------
AFTER EXPENSE AFTER EXPENSE AFTER EXPENSE
- ----------------------------------------------------------------------------------------------------------------------
REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alger American Small Capitalization Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity Income Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-High Income Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Index 500 Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Market Street Growth Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Market Street Sentinel Growth Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Market Street Aggressive Growth Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Market Street Managed Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Market Street Bond Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Market Street International Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Market Street Money Market Portfolio % % %
- ----------------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. % % %
- ----------------------------------------------------------------------------------------------------------------------
Strong Growth Fund II % % %
- ----------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Bond Fund % % %
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

(6) The Fund expenses shown above are assessed at the underlying Fund level
and are not direct charges against Variable Account assets or reductions
from Accumulation Values. These underlying Fund expenses are taken into
consideration in computing each underlying Fund's net asset value, which
is the share price used to calculate the unit values of the Variable
Account. The management fees and other expenses are more fully described
in the prospectuses for each individual underlying Fund. The information
relating to the underlying Fund expenses was provided by the underlying
Fund and was not independently verified by LSW. In the absence of any fee
waivers or expense reimbursements, the Management Fees, Other Expenses,
and Total Expenses of the Funds listed below would have been as follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
MANAGEMENT OTHER TOTAL MUTUAL
- ---------------------------------------------------------------------------------------------------------------------
FEES EXPENSES FUND EXPENSES
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity VIP Fund II-Index 500 Portfolio % % %
- ---------------------------------------------------------------------------------------------------------------------
Market Street Sentinel Growth Portfolio % % %
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

EXAMPLE

The following chart depicts the dollar amount of expenses that would be
incurred under this Policy assuming a $1000 investment and 5% annual return,
and no election of the optional Enhanced Death Benefit Rider. THESE DOLLAR
FIGURES ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN BELOW.

<TABLE>
<S> <C> <C>
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
POLICY AT THE END OF YOUR POLICY AT THE END OF POLICY AT THE END OF
THE APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD
</TABLE>

<PAGE> 17
<TABLE>
<CAPTION>
Subaccount* 1 Yr. 3 Yrs. 1 Yr. 3 Yrs. 1 Yr.** 3 Yrs.**
----------------------- ----------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alger American Small Capitalization $ $ $ $ $ $
- ---------------------------------------------------------------------------------------------------------------------------------
Alger American Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity Income
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-High Income
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Index 500
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Sentinel Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Aggressive Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Managed
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Bond
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street International
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Money Market
- ---------------------------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Strong Growth Fund II
- ---------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Bond
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

For an Owner who has elected the Enhanced Death Benefit Rider (see "Optional
Enhanced Death Benefit Rider", page ), and again assuming a $1000
investment and 5% annual return, the chart below depicts the annual expenses
that would be incurred under this Policy:

<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
POLICY AT THE END OF YOUR POLICY AT THE END OF POLICY AT THE END OF
THE APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD

Subaccount* 1 Yr. 3 Yrs. 1 Yr. 3 Yrs. 1 Yr.** 3 Yrs.**
-------------------------- ----------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alger American Small Capitalization $ $ $ $ $ $
- ---------------------------------------------------------------------------------------------------------------------------------
Alger American Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity Income
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-High Income
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Index 500
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Sentinel Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Aggressive Growth
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Managed
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Bond
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street International
- ---------------------------------------------------------------------------------------------------------------------------------
Market Street Money Market
- ---------------------------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Strong Growth Fund II
- ---------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Bond
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

*For purposes of computing the Annual Policy Fee, the Annual Policy Fee has
been converted into a per-dollar per-day charge. The per-dollar per-day change
has been estimated based on the distribution of LSW's non-variable single
premium deferred annuity block of business, and works out to 0.06%

<PAGE> 18
per annum. The Annual Policy Fee is waived for Policies with Accumulation
Values in excess of $50,000.

**The Policy may not be annuitized in the first five years from the Date of
Issue.

The purpose of the Summary of Policy Expenses and Example is to assist
the Owner in understanding the various costs and expenses that will be borne
directly or indirectly when investing in the Policy. The expenses of the
Variable Account as well as those of the underlying Funds are reflected in the
Example. For more complete descriptions of the expenses of the Variable
Account, see "Charges and Deductions", page . For more complete information
regarding expenses paid out of the assets of the underlying Funds, see the
underlying Fund prospectuses. Deductions for premium taxes may also apply but
are not reflected in the Example shown above (see "Premium Taxes", page ).
Certain states impose a premium tax, currently ranging up to 3.5%.

INTRODUCTION

These Policies may be offered as: (1) Non-Qualified Policies, or (2)
Qualified Policies.

The Policy is available, with certain exceptions, to Owners age 85 and
younger. See "Issuance of a Policy", page . The initial Premium Payment
must be at least $5,000 for Non-Qualified Policies, and in general must be at
least $2000 for Individual Retirement Annuities or Tax Sheltered Annuities.
LSW will also accept Policies contemplating monthly payments of at least $100
by salary reduction, deduction or electronic funds transfer (see "Premium
Payments - The Initial Premium Payment", page ) and may at its discretion
permit initial Premium Payments lower than the above minimums for groups.
Subsequent Premium Payments may be made at any time, but must be at least $100
($50 for Individual Retirement Annuities and Tax Sheltered Annuities), and
these minimums may be waived for groups or if the Premium Payments are remitted
electronically. The cumulative total of all Premium Payments under Policies
issued on the life of any one Designated Annuitant may not exceed $1,000,000
without the prior consent of LSW (see "Premium Payments", page ).

If the Accumulation Value at the Annuitization Date is less than
$3,500, the Accumulation Value may be distributed in one lump sum in lieu of
annuity payments. If any annuity payment would be less than $100, LSW shall
have the right to change the frequency of payments to such intervals as will
result in payments of at least $100. In no event, however, will annuity
payments be made less frequently than annually (see "Annuitization - Frequency
and Amount of Annuity Payments", page ).

LSW does not deduct a sales charge from Premium Payments made for
these Policies. However, if a Withdrawal is made with respect to any part of
the Accumulation Value of such Policies, or the Policy is surrendered, LSW
will, with certain exceptions, deduct from the Owner's Accumulation Value a
Contingent Deferred Sales Charge not to exceed 7% of the lesser of the total of
all Net Premium Payments made within 84 months prior to the date of the request
to surrender, or the amount surrendered. This charge, when applicable, is
imposed to permit LSW to recover sales expenses which have been advanced by LSW
(see "Contingent Deferred Sales Charge", page ).

LSW deducts from the Variable Account an amount, computed daily, which
is equal to an annual rate of 1.40% of the daily net asset value. This charge
consists of a 0.15% Administration Charge, a 0.85% Mortality Risk Charge and a
0.40% Expense Risk Charge. The Mortality Risk Charge and the Expense Risk
Charge are for the mortality and expense risks assumed by LSW under the
Policies. The Administration Charge will reimburse LSW for the administrative
expenses related to the issue and maintenance of the Policies (see "Charges and
Deductions," page ). LSW will also assess an Annual Policy fee in the
amount of $30, payable on the Date of Issue and at each Policy Anniversary
thereafter if on the Date of Issue or such Policy Anniversary the Accumulation
Value plus any outstanding loan and accrued interest is less than $50,000 (see
"Annual Policy Fee", page ).

7
<PAGE> 19
To be sure that the Owner is satisfied with the Policy, the Owner has
a ten day free look. Some states may require a longer period. Within ten days
of the day the Policy is received, it may be returned to the Home Office of
LSW, at the address shown on page 1 of this prospectus. When the Policy is
received by LSW, LSW will void the Policy and refund the Accumulation Value
plus any charges assessed at issue, including the Annual Policy Fee, any
applicable charge for the optional Enhanced Death Benefit Rider, and any
premium tax, unless otherwise required by state and/or federal law.

In the case of Individual Retirement Annuities and Policies issued in
states that require the return of Premium Payments, LSW will refund the greater
of: (i) Premium Payments or (ii) Accumulation Value plus any amount deducted by
LSW for state premium taxes. In these cases, LSW may require that all
Accumulation Value allocated to the Variable Account initially be held in the
Market Street Money Market Subaccount (see "Free Look", page ). At the end
of the free look period, Accumulation Value will be allocated among the
Subaccounts of the Variable Account and the Fixed Account based on the
allocation percentages specified in the application. For this purpose, LSW
assumes the free look period ends 20 days after the date the Policy is issued.

LIFE INSURANCE COMPANY OF THE SOUTHWEST,
THE VARIABLE ACCOUNT, AND THE FUNDS

LIFE INSURANCE COMPANY OF THE SOUTHWEST

LSW, a stock life insurance company founded in 1955 under Texas law,
is authorized to transact life insurance and annuity business in Texas, and in
48 other states and the District of Columbia. LSW assumes all mortality and
expense risks under the Policies and its assets support the Policy's benefits.
Financial Statements for LSW are contained in the Statement of Additional
Information.

THE VARIABLE ACCOUNT

The Variable Account was established by LSW on December 4, 1997,
pursuant to the provisions of Texas law. LSW has caused the Variable Account
to be registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act.
Such registration does not involve supervision of the management of the
Variable Account or LSW by the Securities and Exchange Commission.

The Variable Account is a separate investment account of LSW and, as
such, is not chargeable with liabilities arising out of any other business LSW
may conduct. LSW does not guarantee the investment performance of the Variable
Account. Obligations under the Policies, however, are obligations of LSW.
Income, gains and losses, whether or not realized, from the assets of the
Variable Account are, in accordance with the Policies, credited to or charged
against the Variable Account without regard to other income, gains, or losses
of LSW.

Net Premium Payments are allocated within the Variable Account among
one or more Subaccounts made up of shares in the underlying Fund options
designated by the Owner. A separate Subaccount is established within the
Variable Account for each of the underlying Fund options that may be designated
by the Owner.

UNDERLYING FUND OPTIONS

Owners may choose from among a number of different Subaccount options.
However, LSW reserves the right to limit the number of different Subaccounts
used in any Policy over its entire life to 17.

8
<PAGE> 20
Summary information, including the investment objectives for each of
the underlying Funds held in the Subaccounts is set forth below. THERE CAN BE
NO ASSURANCE THAT THE INVESTMENT OBJECTIVES WILL BE ACHIEVED.

THE ALGER AMERICAN FUND

The Alger American Fund is a "series" type Fund registered with the
SEC as a diversified open-end management investment company issuing a number of
series or classes of shares, each of which represents an interest in a
Portfolio of the Alger American Fund. It was organized on April 6, 1988 as a
Massachusetts business trust. Fred Alger Management, Inc., acts as the Fund's
investment advisor.

ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO

Investment Objective: To seek long-term capital appreciation by
investing in a diversified, actively managed portfolio of equity
securities, at least 65% in companies with a total market
capitalization within the range of companies included in the Russell
2000 Growth Index or the S&P SmallCap 600 Index, updated quarterly
(both of the above indexes are broad indexes of small capitalization
stocks).

ALGER AMERICAN GROWTH PORTFOLIO

FIDELITY VARIABLE INSURANCE PRODUCTS FUND

The Fund is an open-end, diversified, management investment company
organized as a Massachusetts business trust on November 13, 1981. Fidelity
Management & Research Company ("FMR") is the Fund's manager.

-EQUITY-INCOME PORTFOLIO

Investment Objective: To seek reasonable income by investing primarily
in income-producing equity securities. In choosing these securities
FMR also will consider the potential for capital appreciation. The
Portfolio's goal is to achieve a yield which exceeds the composite
yield on the securities comprising the Standard & Poor's 500 Composite
Stock Price Index.

-GROWTH PORTFOLIO

Investment Objective: Seeks to achieve capital appreciation. This
Portfolio will invest in the securities of both well-known and
established companies, and smaller, less well-known companies which
may have a narrow product line or whose securities are thinly traded.
These latter securities will often involve greater risk than may be
found in the ordinary investment security. FMR's analysis and
expertise plays an integral role in the selection of securities and,
therefore, the performance of the Portfolio. Many securities which
FMR believes would have the greatest potential may be regarded as
speculative, and investment in the Portfolio may involve greater risk
than is inherent in other underlying Funds. It is also important to
point out that the Portfolio makes most sense for you if you can
afford to ride out changes in the stock market, because it invests
primarily in common stocks. FMR also can make temporary investments
in securities such as investment-grade bonds, high-quality preferred
stocks and short-term notes, for defensive purposes when it believes
market conditions warrant.

-HIGH INCOME PORTFOLIO

9
<PAGE> 21

Investment Objective: Seeks to obtain a high level of current income
by investing primarily in high-risk, lower-rated, high-yielding,
fixed-income securities, while also considering growth of capital.
The Portfolio manager will seek high current income normally by
investing the Portfolio's assets as follows:

- at least 65% in income-producing debt securities and
preferred stocks, including convertible securities; and

- up to 20% in common stocks and other equity securities when
consistent with the Portfolio's primary objective or acquired
as part of a unit combining fixed-income and equity
securities.

The Portfolio's investment strategy may provide the opportunity for
higher than average yields by investing in securities with higher than
average risk, such as lower rated and unrated debt and comparable
equity instruments. For a discussion of the risks associated with
such investments, please see the "Risks of Lower Rated Debt
Securities" section of the Portfolio's prospectus.

-OVERSEAS PORTFOLIO

Investment Objective: To seek long term growth of capital primarily
through investments in foreign securities. The Overseas Portfolio
provides a means for investors to diversify their own portfolios by
participating in companies and economies outside of the United States.

FIDELITY VARIABLE INSURANCE PRODUCTS FUND II

The Variable Insurance Products Fund II is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
March 21, 1988. FMR is the Fund's manager.

-INDEX 500 PORTFOLIO

Investment Objective: To seek to match the total return of the
Standard & Poors' Composite Index of 500 Stocks ("S&P 500") while
keeping expenses low. FMR normally invests at least 80% of the fund's
assets in equity securities of companies that compose the S&P 500.

-CONTRAFUND PORTFOLIO

Investment Objective: To seek capital appreciation by investing
primarily in companies that the Fund manager believes to be
undervalued due to an overly pessimistic appraisal by the public.
This strategy can lead to investments in domestic or foreign
companies, small and large, many of which may not be well known. The
Fund primarily invests in common stock and securities convertible into
common stock, but it has the flexibility to invest in any type of
security that may produce capital appreciation.

MARKET STREET FUND, INC.

The Market Street Fund, Inc. is a "series" type Fund registered with
the SEC as a diversified open-end management investment company issuing a
number of series or classes of shares, each of which represents an interest in
a Portfolio of the Fund. It was incorporated under Maryland law on March 21,
1985. Sentinel Advisors Company acts as the Fund's investment advisor for all
portfolios except the International Fund, whose investment advisor is
Providentmutual Investment Management Company, and whose subadvisor is The
Boston Company Asset Management, Inc.

GROWTH PORTFOLIO

10
<PAGE> 22
Investment Objective: To seek intermediate and long-term growth of
capital. A reasonable level of income is an important secondary objective.
This Portfolio pursues its objectives by investing primarily in common stocks
of companies believed to offer above-average growth potential over both the
intermediate and the long term.

SENTINEL GROWTH PORTFOLIO

Investment Objective: To seek long-term growth of capital through
equity participation in companies having growth potential believed by its
investment adviser to be more favorable than the U.S. economy as a whole,
with a focus on relatively well-established companies.

AGGRESSIVE GROWTH PORTFOLIO

Investment Objective: To seek to achieve a high level of long-term
capital appreciation by investing in securities of a diverse group of
smaller emerging companies.

BOND PORTFOLIO

Investment Objective: To seek to generate a high level of current
income consistent with prudent investment risk by investing in a
diversified portfolio of marketable debt securities.

MANAGED PORTFOLIO

Investment Objective: To seek to realize as high a level of long-term
total rate of return as is consistent with prudent investment risk by
investing in stocks, bonds, money market instruments or a combination
thereof.

INTERNATIONAL PORTFOLIO

Investment Objective: To seek long-term growth of capital principally
through investments in a diversified portfolio of marketable equity
securities of established non-United States companies.

MONEY MARKET PORTFOLIO

Investment Objective: To seek to provide maximum current income
consistent with capital preservation and liquidity by investing in
high-quality money market instruments. AN INVESTMENT IN THE MONEY MARKET
PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT, AND
THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.

STRONG VARIABLE INSURANCE FUNDS, INC.

Strong Variable Insurance Funds, Inc. is an open-end management investment
company incorporated in the State of Wisconsin on December 28, 1990. Strong
Capital Management, Inc. is the investment advisor to the Funds.

-GROWTH FUND II

Investment Objective: To seek capital growth. It invests primarily in
equity securities that the advisor believes have above-average growth
prospects.

11
<PAGE> 23
STRONG SPECIAL FUND II, INC.

The Strong Special Fund II, Inc. is a diversified, open-end management
company, incorporated in Wisconsin on December 28, 1990. Strong
Capital Management, Inc. is the investment advisor for the Fund.

Investment Objective: To seek capital appreciation through investments
in a diversified portfolio of equity securities.

VAN ECK WORLDWIDE INSURANCE TRUST

Van Eck Worldwide Insurance Trust is an open-end management investment
company organized as a Massachusetts business trust on January 7, 1987. The
investment advisor and manager is Van Eck Associates Corporation.

WORLDWIDE BOND FUND

Investment Objective: To seek high total return through a flexible
policy of investing globally, primarily in debt securities.

LSW has entered into or may enter into agreements with Funds pursuant
to which the adviser or distributor pays LSW a fee based upon an annual
percentage of the average net asset amount invested by LSW on behalf of the
Variable Account and other separate accounts of LSW. These percentages may
differ, and LSW may be paid a greater percentage by some investment advisers or
distributors than other advisers or distributors. These agreements reflect
administrative services provided by LSW.

The underlying Fund options may also be available to registered
separate accounts offering variable annuity and variable life products of other
participating insurance companies, as well as to the Variable Account and other
separate accounts of LSW. Although LSW does not anticipate any disadvantages
to this, there is a possibility that a material conflict may arise between the
interest of the Variable Account and one or more of the other separate accounts
participating in the underlying Funds. A conflict may occur due to a change in
law affecting the operations of variable life and variable annuity separate
accounts, differences in the voting instructions of the Owners and those of
other companies, or some other reason. In the event of conflict, LSW will take
any steps necessary to protect Owners and variable annuity payees, including
withdrawal of the Variable Account from participation in the underlying Fund or
Funds which are involved in the conflict.

DETAILED DESCRIPTION OF POLICY PROVISIONS

ISSUANCE OF A POLICY

If the Owner is a human being, the Policy is available to Owners up to
and including age 85 on the Date of Issue. If the Policy is issued to Joint
Owners, then the oldest of the Joint Owners must be 85 years of age or younger
on the Date of Issue. If the Owner is not a human being, then the age of the
Annuitant governs, and must meet the requirements for Owners set forth above.

In order to purchase a Policy, an individual must forward an
application to LSW through a licensed LSW agent who is also a registered
representative of Equity Services, Inc. ("ESI"), the principal underwriter of
the Policies, or another broker/dealer having a Selling Agreement with ESI or a
broker/dealer having a Selling Agreement with such a broker/dealer.

PREMIUM PAYMENTS

The Initial Premium Payment. In general, the initial Premium Payment
must be at least $5,000 for Non-Qualified Policies, and must be at least $2000
for Qualified Policies. LSW will also accept

12
<PAGE> 24
Policies contemplating monthly payments of at least $100 by salary reduction,
deduction or electronic funds transfer; in such a case, if no payments are
received on a Policy for six consecutive months and the aggregate Premium
Payments made are less than the normal $2000 or $5000 minimums, LSW may at its
option cancel the Policy and return the Accumulated Value, with no deduction
for a CDSC, to the Owner. LSW may also at its discretion permit initial
Premium Payments lower than the above minimums for groups.

Subsequent Premium Payments. Subsequent Premium Payments may be made
at any time, but must be at least $100, and these minimums may be waived for
groups or if the Premium Payments are remitted electronically. Subsequent
Premium Payments to the Variable Account will be priced on the basis of the
Accumulation Unit Value next computed for the appropriate Subaccount after the
additional Premium Payment is received.

The cumulative total of all Premium Payments under Policies issued on
the life of any one Annuitant may not exceed $1,000,000 without the prior
consent of LSW.

Premium Payments will not be processed on the following days: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving, the day after Thanksgiving and Christmas Day.

Allocation of Net Premium Payments. In the application for the
Policy, the Owner will indicate how Net Premium Payments are to be allocated
among the Subaccounts of the Variable Account and/or the Fixed Account. These
allocations may be changed at any time by the Owner by written notice to LSW at
its Home Office, or if the telephone transaction privilege has been elected, by
telephone instructions (see "Telephone Transaction Privilege", page ). The
percentages of Net Premium Payments that may be allocated to any Subaccount
must be in whole numbers of not less than 5%, and the sum of the allocation
percentages must be 100%. LSW will allocate the initial Net Premium Payment
within two business days after receipt, if the application and all information
necessary for processing the order are complete. If the application is not
properly completed, LSW will retain the initial Premium Payment for up to five
business days while attempting to complete the application. If the application
is not complete at the end of the five day period, LSW will inform the
applicant of the reason for the delay and the initial Premium Payment will be
returned immediately, unless the applicant specifically consents to LSW
retaining the initial Premium Payment until the application is complete. Once
the application is complete, the initial Net Premium Payment will be allocated
as designated by the Owner within two business days.

Notwithstanding the foregoing, in jurisdictions where LSW must refund
the greater of aggregate Premium Payments or Accumulation Value plus any amount
deducted for state premium taxes in the event the Owner exercises the free look
right, any portion of the initial Net Premium Payment to be allocated to the
Variable Account will be allocated to the Market Street Money Market
Subaccount for the free look period following the Date of Issue. At the end of
that period, the amount in the Market Street Money Market Subaccount will be
allocated to the Subaccounts as designated by the Owner based on the proportion
that the allocation percentage for each such Subaccount bears to the sum of the
allocation percentages to the Subaccounts set forth in the Net Premium Payment
allocation schedule then in effect.

LSW will allocate subsequent Net Premium Payments as of the Valuation
Date it receives such Net Premium Payments at its Home Office, based on the
Owner's allocation percentages then in effect. At the time of allocation, Net
Premium Payments are applied to the purchase of shares of the respective
underlying Funds at net asset value for the respective Subaccount(s) and
converted into Accumulation Units.

LSW reserves the right to limit the number of Variable Account
Subaccounts used in a single Policy over the entire life of the Policy to 17.

The values of the Subaccounts will vary with their investment
experience and the Owner bears the entire investment risk. Owners should
periodically review their allocation percentages in light of market conditions
and the Owner's overall financial objectives.

13
<PAGE> 25
TRANSFERS

The Owner may transfer the Accumulation Value among the Subaccounts of
the Variable Account, and between the Variable Account and the Fixed Account,
subject to the limitations set forth below, by making a written transfer
request to LSW, or if the telephone transaction privilege has been elected, by
telephone instructions to LSW. See "Telephone Transaction Privilege", page .
Transfers between and among the Subaccounts of the Variable Account and the
Fixed Account are made as of the Valuation Day that the request for transfer is
received at the Home Office. Transfers to or from the Subaccounts of the
Variable Account may be postponed under certain circumstances. See "Payments,"
page .

LSW currently allows transfers to the Fixed Account of all or any part
of the Variable Account Accumulation Value, without charge or penalty. With
respect to transfers from the Variable Account to the Fixed Account, LSW
reserves the right to restrict transfers to the Fixed Account to 25% of the
Variable Account Accumulation Value for any Policy Year determined as of the
most recent Policy Anniversary.

Owners may, once per year within 45 days after the end of the calendar
year, transfer a portion of the unloaned value in the Fixed Account to the
Variable Account. The maximum percentage that may be transferred will be
determined by LSW in its sole discretion prior to the end of the calendar year,
but will not be less than 10% of the Accumulation Value in the Fixed Account
as of the date the request is made. Following a transfer from the Fixed
Account to the Variable Account, LSW reserves the right to require that the
value so transferred remain in the Variable Account for at least one year
before it may be transferred back to the Fixed Account.

LSW does not permit transfers between the Variable Account and the
Fixed Account after the Annuitization Date.

LSW has no current intention to impose a transfer charge in the
foreseeable future. However, LSW reserves the right, upon prior notice to
Owners, to impose a transfer charge of $25 for each transfer in excess of
twelve transfers in any one Policy Year. See "Transfer Charge", page .

VALUE OF A VARIABLE ACCOUNT ACCUMULATION UNIT

The value of a Variable Account Accumulation Unit for each Subaccount
was arbitrarily set initially at $10 when the Subaccounts commenced operations.
The value for any subsequent Valuation Period is determined by multiplying the
Accumulation Unit value for each Subaccount for the immediately preceding
Valuation Period by the Net Investment Factor for the Subaccount during the
subsequent Valuation Period. The value of an Accumulation Unit may increase or
decrease from Valuation Period to Valuation Period. No minimum Accumulation
Unit value is guaranteed. The number of Accumulation Units will not change as
a result of investment experience.

Net Investment Factor. Each Subaccount of the Variable
Account has its own Net Investment Factor. The Net Investment Factor measures
the daily investment performance of that Subaccount. The Net Investment Factor
may be greater or less than one; therefore, the value of an Accumulation Unit
may increase or decrease. It should be noted that changes in the Net
Investment Factor may not be directly proportional to changes in the net asset
value of underlying Fund shares, because of the deduction for the Mortality
Risk Charge, the Expense Risk Charge and the Administration Charge.

Underlying Fund shares in the Variable Account will be valued at their
net asset value. For underlying Funds that credit dividends on a daily basis
and pay such dividends once a month (the Market Street Money Market Portfolio),
the Net Investment Factor allows for the monthly reinvestment of these daily
dividends.

14
<PAGE> 26
DETERMINING THE ACCUMULATION VALUE

The Accumulation Value is the sum of: 1) the value of all Variable
Account Accumulation Units, and 2) amounts allocated and credited to the Fixed
Account, minus any outstanding loans on the Policy and accrued interest on such
loans. When charges or deductions are made against the Accumulation Value, an
appropriate number of Accumulation Units from the Variable Account and an
appropriate amount from the Fixed Account will be deducted in the same
proportion that the Owner's interest in the Variable Account and Fixed Account
bears to the total Accumulation Value. Value held in the Fixed Account is not
subject to Variable Account charges (Mortality and Expense Risk and
Administration Charges), but may be subject to Contingent Deferred Sales
Charges, the Annual Policy Fee, optional Enhanced Death Benefit Rider charge,
and premium taxes, if applicable.

ANNUITIZATION

Maturity Date. The Owner selects a Maturity Date at the time of
application. Such date must be at least 5 years after the Date of Issue,
unless otherwise approved. If no specific Maturity Date is selected, the
Maturity Date will be the Owner's age 90 (the Annuitant's age 90 if the Owner
is not a human being); or, if later, ten years after the Date of Issue.

If the Owner requests in writing (see "Ownership Provisions",
page ), and LSW approves the request, the Maturity Date may be accelerated or
deferred.

Election of Payment Options. The Owner may, upon prior written notice
to LSW, at any time prior to the Annuitization Date, elect one of the Annuity
Payment Options. The Accumulation Value in each Subaccount less any premium tax
previously unpaid, will be applied to provide a Variable Annuity payment and
the Accumulation Value in the Fixed Account, less any premium tax previously
unpaid, will be applied to provide a Fixed Annuity payment.

If an election of an Annuity Payment Option is not on file with LSW on
the Annuitization Date, the proceeds will be paid as Option 3 - Payments for
Life with 120 months certain. An Annuity Payment Option may be elected,
revoked or changed by the Owner at any time before the Annuitization Date upon
30 days prior written notice. The Annuity Payment Options available are
described below.

Frequency and Amount of Annuity Payments. Annuity payments will be
paid as monthly installments, unless the Owner selects annual, semi-annual or
quarterly installments. However, if the amount to be applied under any Annuity
Payment Option is less than $3,500, LSW shall have the right to pay such amount
in one lump sum in lieu of the payments otherwise provided for. In addition,
if the payments provided for would be or become less than $100, LSW shall have
the right to change the frequency of payments to such intervals as will result
in payments of at least $100. In no event will LSW make payments under an
annuity option less frequently than annually.

ANNUITIZATION - VARIABLE ACCOUNT

The dollar amount of the first Variable Annuity payment shall be
determined by dividing the Variable Account Accumulation Value on the
Annuitization Date by 1,000 and applying the result in accordance with the
applicable Annuity Table. The amount of each Variable Annuity payment will
depend on the age of the Chosen Human Being at the time the first payment is
due, and the sex of the Chosen Human Being, if applicable, unless otherwise
required by law.

Subsequent Variable Annuity payments vary in amount in accordance with
the investment performance of the Variable Account. The dollar amount of the
first annuity payment determined as above is divided by the value of an Annuity
Unit as of the Annuitization Date to establish the number of Annuity Units
representing each monthly annuity payment. This number of Annuity Units
remains fixed during the annuity payment period. The dollar amount of the
second and subsequent payments is not predetermined and may change from month
to month. The dollar amount of each subsequent payment is determined by
multiplying the fixed number of Annuity Units by the value of an Annuity Unit
for the Valuation Period in which the payment is due. LSW guarantees that the
dollar amount of

15
<PAGE> 27
each payment after the first will not be affected by variations in mortality
experience from mortality assumptions used to determine the first payment.

Value of an Annuity Unit. The value of an Annuity Unit for a
Subaccount was arbitrarily set initially at $10 when the first underlying Fund
shares were purchased. The value of an Annuity Unit for a Subaccount for any
subsequent Valuation Period is determined by multiplying the value of an
Annuity Unit for the immediately preceding Valuation Period by the applicable
Net Investment Factor for the Valuation Period for which the value of an
Annuity Unit is being calculated, and multiplying the result by an interest
factor to neutralize the assumed investment rate of 3.5% per annum (see "Net
Investment Factor", page ).

Assumed Investment Rate. A 3.5% Assumed Investment Rate is built into
the Annuity Tables contained in the Policies. A higher assumption would mean a
higher initial payment but more slowly rising or more rapidly falling
subsequent payments. A lower assumption would have the opposite effect. If
the actual investment return is at the annual rate of 3.5%, the annuity
payments will be level.

ANNUITIZATION - FIXED ACCOUNT

A Fixed Annuity is an annuity with payments which are guaranteed by
LSW as to dollar amount during the annuity payment period. The amount of the
periodic Fixed Annuity payments will be determined by applying the Fixed
Account Accumulation Value to the applicable Annuity Table in accordance with
the Annuity Payment Option elected. This will be done at the Annuitization
Date on an age nearest birthday basis.

LSW does not credit discretionary interest to Fixed Annuity payments
during the annuity payment period for annuity options based on life
contingencies. The Annuitant must rely on the Annuity Tables applicable to the
Policies to determine the amount of such Fixed Annuity payments.

ANNUITY PAYMENT OPTIONS

Any of the following Annuity Payment Options may be elected:

Option 1-Payments for a Stated Time. Monthly payments will be made
for the number of years selected, which may range from 5 years to 30
years.

Option 2-Payments for Life-An annuity payable monthly during the
lifetime of a Chosen Human Being (who may be named at the time of
election of the Payment Option), ceasing with the last payment due
prior to the death of the Chosen Human Being. IT WOULD BE POSSIBLE
UNDER THIS OPTION FOR THE PAYEE TO RECEIVE ONLY ONE ANNUITY PAYMENT IF
THE CHOSEN HUMAN BEING DIED BEFORE THE SECOND ANNUITY PAYMENT DATE,
TWO ANNUITY PAYMENTS IF THE CHOSEN HUMAN BEING DIED BEFORE THE THIRD
ANNUITY PAYMENT DATE, AND SO ON.

Option 3-Payments for Life with Period Certain-Guaranteed - An annuity
that if at the death of the Chosen Human Being payments have been made
for fewer than 120 or 240 months, as selected, guaranteed annuity
payments will be continued during the remainder of the selected period
to the Payee, or another recipient as chosen by the Payee at the time
the Annuity Payment Option was selected. In the alternative, the
recipient may, at any time, elect to have the present value of the
guaranteed number of annuity payments remaining paid in a lump sum,
computed as of the date on which notice of death of the Chosen Human
Being is received by LSW at its Home Office.

Other Annuity Payment Options may be available.

Some of the stated Annuity Payment Options may not be available in all
states. The Owner may request an alternative non-guaranteed option by giving
notice in writing prior to Annuitization. If such a request is approved by
LSW, it will be permitted under the Policy.

<PAGE> 28
Individual Retirement Annuities and Tax Sheltered Annuities are
subject to the minimum Distribution requirements set forth in the Code.

Under Payment Option 1, the Owner may change to any other Payment
Option at any time. At the time of the change, the remaining value will be
applied to the new Payment Option to determine the amount of the payments.
Under Payment Option 1, the Owner may also fully surrender the Policy at any
time or make Withdrawals at any time or from time to time. A surrender or
Withdrawal will be subject to any applicable Contingent Deferred Sales Charge
at the time of the surrender or Withdrawal.

DEATH OF OWNER

If any Owner or Joint Owner dies prior to the Annuitization Date,
then, unless the Enhanced Death Benefit Rider has been elected, a Death Benefit
in an amount equal to, if such Owner or Joint Owner dies prior to attaining age
81, the greater of (a) the Accumulation Value, or (b) the Net Premium Payments
made to the Policy minus all Withdrawals (including any CDSC deducted in
connection with such Withdrawals) and any outstanding loan on the Policy and
accrued interest, and, in the case of both (a) and (b), minus any applicable
premium tax charge to be assessed upon distribution, will be paid to the
Beneficiary. If such Owner or Joint Owner dies after attaining age 81, then
the Death Benefit shall be equal to the Accumulation Value, minus any
applicable premium tax charge.

Unless the Beneficiary is the deceased Owner's (or Joint Owner's)
spouse, the Death Benefit must be distributed within five years of such Owner's
death. The Beneficiary may, however, elect to receive Distribution in the form
of a life annuity or an annuity for a period not exceeding his or her life
expectancy. Such annuity must begin within one year following the date of the
Owner's death, and is currently available only as a Fixed Annuity. If the
Beneficiary is the spouse of the deceased Owner (or Joint Owner), then the
Policy may be continued without any required Distribution. If the deceased
Owner (or Joint Owner) and the Annuitant are the same person, the death of that
person will be treated as the death of the Owner for purposes of determining
the Death Benefit payable.

Qualified Policies may be subject to specific rules set forth in the
Plan, Policy, or Code concerning Distributions upon the death of the Owner.

DEATH OF ANNUITANT PRIOR TO THE ANNUITIZATION DATE

If an Annuitant who is not an Owner dies prior to the Annuitization
Date, the Policy will mature, and a Death Benefit equal to the Cash Surrender
Value of the Policy will be payable to the Beneficiary, unless, in the case
where the Owner is a human being, a contingent Annuitant has been named or the
Owner names a contingent Annuitant within 90 days of such Annuitant's death, in
which case the Policy may be continued without any required Distribution. If
no Beneficiary is named (or if the Beneficiary predeceases the Annuitant), then
the Death Benefit will be paid to the Owner. If the Owner is not a human
being, then the death of the Annuitant will be treated as if it were the death
of the Owner, and the disposition of the Policy will follow the death of the
Owner provisions set forth above.

In any case where a Death Benefit is paid, the value of the Death
Benefit will be determined as of the Valuation Day coincident with or next
following the date LSW receives in writing (1) due proof of the Annuitant's or
an Owner's (or Joint Owner's) death, (2) an election for either a single sum
payment or an Annuity Payment Option (currently only Fixed Annuities are
available in these circumstances); and (3) any form required by state insurance
laws. If a single sum payment is requested, payment will be made in accordance
with any applicable laws and regulations governing the payment of Death
Benefits. If an Annuity Payment Option is requested, election must be made by
the Beneficiary during the 90-day period commencing with the date written
notice is received by LSW, and as otherwise required by law. If no election
has been made by the end of such 90-day period commencing with the date written
notice is received by LSW, or as otherwise required by law, the Death Benefit
will be paid in a single sum payment.

17
<PAGE> 29
REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS AND TAX SHELTERED ANNUITIES

The entire interest of an Annuitant under a Qualified Plan or a Tax
Sheltered Annuity Policy will be distributed in a manner consistent with the
Minimum Distribution and Incidental Benefit (MDIB) provisions of Section
401(a)(9) of the Code and regulations thereunder, as applicable, and will be
paid, notwithstanding anything else contained herein, to the Owner/Annuitant
under the Annuity Payments Option selected, over a period not exceeding:

(a) the life of the Owner/Annuitant or the lives of the
Owner/Annuitant and the Owner/Annuitant's Beneficiary; or

(b) a period not extending beyond the life expectancy of the
Owner/Annuitant or the life expectancy of the Owner/Annuitant and the
Owner/Annuitant's Beneficiary.

If the Owner/Annuitant's entire interest is to be distributed in equal
or substantially equal payments over a period described in (a) or (b), such
payments will commence not later than the first day of April following the
calendar year in which the Owner/Annuitant attains age 70 1/2 (the required
beginning date). Beginning January 1, 1997, for an Owner/Annuitant other than
a "5 percent owner" (as defined in Code Section 416) in the case of a
governmental plan (as defined in Code Section 414(d)), or church plan (as
defined in Code Section 401(a)(9)(C)), the Required Beginning Date will be the
later of the dates determined under the preceding sentence or April 1 of the
calendar year following the calendar year in which the Annuitant retires.

If the Owner dies prior to the commencement of his or her
Distribution, the interest in the Qualified Plan or Tax Sheltered Annuity must
be distributed by December 31 of the calendar year in which the fifth
anniversary of his or her death occurs unless:

(a) the Owner names his or her surviving spouse as the Beneficiary and
such spouse elects to:

(i) in the case of a Tax-Sheltered Annuity, treat the annuity as a
Tax Sheltered Annuity established for his or her benefit; or

(ii) receive Distribution of the account in nearly equal payments
over his or her life (or a period not exceeding his or her
life expectancy) and commencing not later than December 31 of
the year in which the Owner would have attained age 70 1/2; or

(b) the Owner names a Beneficiary other than his or her surviving spouse
and such Beneficiary elects to receive a Distribution of the account
in nearly equal payments over his or her life (or a period not
exceeding his or her life expectancy) commencing not later than
December 31 of the year following the year in which the Owner dies.

If the Owner/Annuitant dies after Distribution has commenced,
Distribution must continue at least as rapidly as under the schedule being used
prior to his or her death.

Payments commencing on the Required Beginning Date will not be less
than the lesser of the quotient obtained by dividing the entire interest of the
Owner/Annuitant by the life expectancy of the Owner/Annuitant, or the joint and
last survivor expectancy of the Owner/Annuitant and the Owner/Annuitant's
Designated Beneficiary (whichever is applicable under the applicable Minimum
Distribution or MDIB provisions). Life expectancy and joint and last survivor
expectancy are computed by the use of return multiples contained in Section
1.72-9 of the Treasury Regulations.

Other distribution rules may apply to Section 457 plans.

If the amounts distributed to the Owner are less than those mentioned
above, a penalty tax of 50% is levied on the amount that should have been
distributed for that year.

18
<PAGE> 30
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES

Distribution from an Individual Retirement Annuity must begin not
later than April 1 of the calendar year following the calendar year in which
the Owner attains age 70 1/2. Distribution may be accepted in a lump sum or in
nearly equal payments over: (a) the Owner's life or the lives of the Owner and
the Owner's spouse or designated Beneficiary, or (b) a period not extending
beyond the Owner and the Owner's spouse or designated Beneficiary.

If the Owner dies prior to the commencement of the Distribution, the
interest in the Individual Retirement Annuity must be distributed by December
31 of the calendar year in which the fifth anniversary of the Owner's death
occurs unless:

(a) The Owner has named his or her surviving spouse as the designated
Beneficiary and such spouse elects to:

(i) treat the annuity as an Individual Retirement Annuity
established for his or her benefit; or

(b) The Owner has named a Beneficiary other than his or her surviving
spouse and such Beneficiary elects to receive a Distribution of the
account in nearly equal payments over his or her life (or a period not
exceeding his or her life expectancy) commencing not later than
December 31 of the year following the year in which the Owner dies.

If the Owner dies after Distribution has commenced, the Distribution
must continue at least as rapidly as under the schedule being used prior to the
Owner's death, except to the extent that a surviving spouse Beneficiary may
elect to treat the Policy as his or her own, in the same manner as is described
in section (a)(i) of this provision.

If the amounts distributed to the Owner are less than those mentioned
above, a penalty tax of 50% is levied on the amount that should have been
distributed for that year.

A pro-rata portion of all Distributions will be included in the gross
income of the person receiving the Distribution and taxed at ordinary income
tax rates. The portion of the Distribution which is taxable is based on the
ratio between the amount by which non-deductible Premium Payments exceed prior
non-taxable Distributions and total account balances at the time of the
Distribution. The Owner must annually report the amount of non-deductible
Premium Payments, the amount of any Distribution, the amount by which
non-deductible Premium Payments for all years exceed non-taxable Distributions
for all years and the total balance of all Individual Retirement Annuities.

Individual Retirement Annuity Distributions will not receive the
benefit of the tax treatment of a lump sum Distribution from a Qualified Plan.
If the Owner dies prior to the time Distribution of the Owner's interest in the
annuity is completed, the balance will also be included in the Owner's gross
estate.

GENERATION-SKIPPING TRANSFERS

LSW may determine whether the Death Benefit or any other payment
constitutes a direct skip as defined in Section 2612 of the Code, and the
amount of the tax on the generation-skipping transfer resulting from such
direct skip. If applicable, the payment will be reduced by any tax LSW is
required to pay by Section 2603 of the Code.

A direct skip may occur when property is transferred to or a Death
Benefit is paid to an individual two or more generations younger than the
Owner.

19
<PAGE> 31
OWNERSHIP PROVISIONS

Unless otherwise provided, the Owner has all rights under the Policy.
IF THE PURCHASER NAMES SOMEONE OTHER THAN HIMSELF OR HERSELF AS OWNER, THE
PURCHASER WILL HAVE NO RIGHTS UNDER THE POLICY. If Joint Owners are named,
each Joint Owner will possess an undivided interest in the Policy. The death
of any Joint Owner will trigger the provisions of the Policy relating to the
death of the Owner. Unless otherwise provided, when Joint Owners are named,
the exercise of any ownership right in the Policy (including the right to
surrender the Policy or make a Withdrawal, to change the Owner, the Annuitant,
a Contingent Annuitant, the Beneficiary, the Annuity Payment Option or the
Maturity Date) shall require a written indication of an intent to exercise that
right, signed by all Joint Owners.

Prior to the Annuitization Date, the Owner may name a new Owner. Such
change may be subject to state and federal gift taxes, and may also result in
current federal income taxation (see "Federal Income Tax Considerations",
page "). Any change of Owner will automatically revoke any prior Owner
designation. Any request for change of Owner must be (1) made by proper written
application, (2) received and recorded by LSW at its Home Office, and (3) may
include a signature guarantee as specified in the "Surrender and Withdrawal"
provision on page . The change will become effective as of the date the
written request is signed. A new choice of Owner will not apply to any payment
made or action taken by LSW prior to the time it was received and recorded.

The Owner may request a change in the Annuitant or contingent
Annuitant before the Annuitization Date. Such a request must be made in
writing on a form acceptable to LSW and must be signed by the Owner and the
person to be named as Annuitant or contingent Annuitant. Any such change is
subject to underwriting and approval by LSW.

CHARGES AND DEDUCTIONS

All of the charges described in this section apply to Variable Account
allocations. Allocations to the Fixed Account are subject to Contingent
Deferred Sales Charges, the Annual Policy Fee and Premium Tax deductions and
the charge for the Enhanced Death Benefit Rider, if applicable, but are not
subject to charges exclusive to the Variable Account: the Mortality Risk
Charge, the Expense Risk Charge and the Administration Charge.

LSW deducts the charges described below to cover its costs and
expenses, services provided and risks assumed under the Policies. LSW incurs
certain costs and expenses for the distribution and administration of the
Policies and for providing the benefits payable thereunder. More particularly,
the administrative services include: processing applications for and issuing
the Policies, processing purchases and redemptions of Fund shares as required
(including automatic withdrawal services), maintaining records, administering
annuity payouts, furnishing accounting and valuation services (including the
calculation and monitoring of daily Subaccount values), reconciling and
depositing cash receipts, providing Policy confirmations, providing toll-free
inquiry services and furnishing telephone transaction privileges. The risks
LSW assumes include: the risk that the actual life-span of persons receiving
annuity payments under Policy guarantees will exceed the assumptions reflected
in LSW's guaranteed rates (these rates are incorporated in the Policy and
cannot be changed); the risk that Death Benefits, or the Enhanced Death Benefit
under the optional Enhanced Death Benefit Rider, will exceed the actual
Accumulation Value; the risk that more Owners than expected will qualify for
waivers of the Contingent Deferred Sales Charge; and the risk that LSW's costs
in providing the services will exceed its revenues from the Policy charges
(which cannot be changed by LSW). The amount of a charge will not necessarily
correspond to the costs associated with providing the services or benefits
indicated by the designation of the charge. For example, the Contingent
Deferred Sales Charge collected may not fully cover all of the distribution
expenses incurred by LSW.

20
<PAGE> 32
DEDUCTIONS FROM THE VARIABLE ACCOUNT

LSW deducts from the Variable Account an amount, computed daily, which
is equal to an annual rate of 1.40% of the daily net asset value. The charge
consists of a 0.15% Administration Charge, a 0.85% Mortality Risk Charge, and a
0.40% Expense Risk Charge.

CONTINGENT DEFERRED SALES CHARGE

No deduction for a sales charge is made from the Premium Payments for
these Policies. However, during the period prior to the fifteenth Policy
Anniversary, if a Withdrawal is made with respect to any part of the
Accumulation Value of such a Policy or a Policy is surrendered, LSW will, with
certain exceptions, deduct a Contingent Deferred Sales Charge not to exceed 7%
of the lesser of the total of all Net Premium Payments made within 84 months
prior to the date of the request to surrender, or the amount withdrawn. No
Contingent Deferred Sales Charge will apply after the fifteenth Policy
Anniversary, even with respect to Premium Payments made within 84 months of a
Withdrawal or surrender.

The Contingent Deferred Sales Charge is calculated by multiplying the
applicable Contingent Deferred Sales Charge percentages noted below by the Net
Premium Payments that are withdrawn or surrendered. For purposes of
calculating the Contingent Deferred Sales Charge, Withdrawals or surrenders are
considered to come first from the oldest Net Premium Payment made to the
Policy, then the next oldest Net Premium Payment and so forth, with any
earnings attributable to such Net Premium Payments considered withdrawn only
after all Net Premium Payments made to the Policy have been considered
withdrawn (no Contingent Deferred Sales Charge is ever assessed with respect to
a Withdrawal or surrender of earnings) . For tax purposes, a surrender is
usually treated as a withdrawal of earnings first. This charge will apply in
the amounts set forth below to Net Premium Payments within the time periods set
forth.

The Contingent Deferred Sales Charge applies to Net Premium Payments
as follows:

<TABLE>
<CAPTION>
NUMBER OF COMPLETED CONTINGENT DEFERRED NUMBER OF COMPLETED CONTINGENT DEFERRED
YEARS FROM DATE OF SALES CHARGE YEARS FROM DATE OF SALES CHARGE
NET PREMIUM PAYMENT PERCENTAGE NET PREMIUM PAYMENT PERCENTAGE
------------------- ---------- ------------------- ----------
<S> <C> <C> <C>
0 7% 4 3%
1 6% 5 2%
2 5% 6 1%
3 4% 7 0%
</TABLE>

In any Policy Year after the first Policy Year, the Owner may effect
Withdrawals without a Contingent Deferred Sales Charge ("CDSC") of an aggregate
amount equal to 10% of the Accumulation Value as of the most recent Policy
Anniversary. Unless otherwise required by applicable state law, this CDSC-free
Withdrawal privilege does not apply to full surrenders of the Policy, and if a
full surrender is made within one year of exercising a CDSC-free Withdrawal,
then the Contingent Deferred Sales Charge which would have been assessed at the
time of the Withdrawal will be assessed at the time of surrender. The
CDSC-free feature is also non-cumulative; so that free amounts not taken during
any given Policy Year cannot be taken as free amounts in a subsequent Policy
Year. In addition, any amount withdrawn in order to meet minimum Distribution
requirements under the Code shall be free of CDSC. In the first Policy Year a
CDSC-free Withdrawal is available only by setting up a monthly systematic
Withdrawal program for an amount not exceeding the annual CDSC-free Withdrawal
amount (see "Available Automated Fund Management Features-Systematic
Withdrawals", page ). The Owner may be subject to a tax penalty if the
Owner takes Withdrawals prior to age 59 1/2 (see "Federal Income Tax
Considerations).

In addition, no Contingent Deferred Sales Charge will be deducted: (1)
upon the Annuitization of Policies, (2) upon payment of a death benefit
pursuant to the death of the Owner, (3) from any values which have been held
under a Policy for at least 84 months, or (4) as noted above, after the

<PAGE> 33
fifteenth Policy Anniversary. No Contingent Deferred Sales Charge applies upon
the transfer of value among the Subaccounts or between the Fixed Account and
the Variable Account.

When a Policy is held by a charitable remainder trust, the amount
which may be withdrawn from this Policy without application of a Contingent
Deferred Sales Charge, after the first Policy Year, shall be the larger of (a)
or (b), where (a) is the amount which would otherwise be available for
Withdrawal without application of a Contingent Deferred Sales Charge; and where
(b) is the difference between the Accumulation Value as of the last Policy
Anniversary and the Net Premium Payments made to the Policy, less all
Withdrawals and less any outstanding loan and accrued interest, as of the last
Policy Anniversary.

LSW will waive the Contingent Deferred Sales Charge if the Owner dies,
or if the Owner annuitizes (in such a case, however, the Owner may not elect a
settlement option under which he or she has the right to receive a lump sum
prior to seven years after the date of the last Premium Payment, unless a
Contingent Deferred Sales Charge is paid at the time of payment of the lump
sum).

LSW will also waive the CDSC if, following the first Policy
Anniversary, the Owner has been confined to an eligible nursing home (as
defined in the Policy) for at least the 90 consecutive days ending on the date
of the Withdrawal request.

ANNUAL POLICY FEE

For Policies with an Accumulation Value plus any outstanding loan and
accrued interest of less than $50,000 as of the Date of Issue, or any
subsequent Policy Anniversary prior to the Annuitization Date, LSW will assess
an Annual Policy Fee of $30.00. This fee will be assessed annually in advance
on the Date of Issue and thereafter on each Policy Anniversary on which the
Accumulation Value plus any outstanding loans and accrued interest is less than
$50,000, until the Annuitization Date. No Annual Policy Fee will be assessed
after the Annuitization Date. This fee will be taken pro rata from all
Subaccounts of the Variable Account and the unloaned portion of the Fixed
Account.

TRANSFER CHARGE

Currently, unlimited transfers are permitted among the Subaccounts, and
transfers between the Fixed Account and the Variable Account are permitted
within the limits described on page , in each case without charge. LSW
has no present intention to impose a transfer charge in the foreseeable future.
However, LSW reserves the right to impose in the future a transfer charge of
$25 on each transfer in excess of twelve transfers in any Policy Year.

If imposed, the transfer charge will be deducted from the amount being
transferred. All transfers requested on the same Valuation Day are treated as
one transfer transaction. Any future transfer charge will not apply to
transfers resulting from loans, and any transfers made pursuant to the Dollar
Cost Averaging and Portfolio Rebalancing features. These transfers will not
count against the twelve free transfers in any Policy Year.

PREMIUM TAXES

If a governmental entity imposes premium taxes, LSW will make a
deduction for premium taxes in a corresponding amount. Certain states impose a
premium tax, currently ranging up to 3.5%. LSW will pay premium taxes at the
time imposed under applicable law. Where LSW is required to pay this premium
tax when a premium is paid, it may deduct an amount equal to premium taxes from
the Premium Payment. In the remaining states which assess premium taxes, LSW
will make a deduction for premium taxes at the time it pays premium taxes to
the applicable taxing authority.

CHARGE FOR OPTIONAL ENHANCED DEATH BENEFIT RIDER

Annual charges are made if the Owner has elected the optional Enhanced
Death Benefit Rider. See "Optional Enhanced Death Benefit Rider," page .
The annual charge for the Enhanced Death

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<PAGE> 34
Benefit Rider is 0.20% of Accumulation Value as of the date the charge is
deducted plus the amount of any outstanding loan and accrued interest. The
annual charge will be deducted at issue (or at the time of election, if elected
subsequent to issue), and then on each Policy Anniversary thereafter, up to and
including age 80 on an age-nearest-birthday basis as of the relevant Policy
Anniversary. After age 80, the charge will be discontinued. The charge will
be taken pro rata from the Subaccounts of the Variable Account and the unloaned
portion of the Fixed Account.

REDUCTION OF CHARGES

The CDSC, Annual Policy Charge and Expense Risk Charge described above
may be reduced or eliminated for Policies issued in circumstances where the
Company estimates that it will incur lower distribution or administrative
expenses or perform fewer sales or administrative services than those
originally contemplated in establishing the level of these charges. Lower
distribution and administrative expenses may be the result of economies
associated with (a) the use of mass enrollment procedures, (b) the performance
of administrative or enrollment functions by an employer, (c) the use by an
employer of automated techniques in submitting Premium Payments or information
related to Premium Payments on behalf of its employees, or (d) any other
circumstances which reduce distribution or administrative expenses. The exact
amount of the CDSC, Annual Policy Charge or Expense Risk Charge applicable to a
particular Policy will be stated in that Policy.

OTHER CHARGES

The Variable Account purchases shares of the Funds at net asset value.
The net asset value of those shares reflect management fees and expenses
already deducted from the assets of the Funds. Information on the fees and
expenses for the Funds is set forth in "Underlying Fund Annual Expenses" on
page .

More detailed information is contained in the Funds' prospectuses
which accompany this prospectus.

POLICY RIGHTS

FREE LOOK

The Owner may revoke the Policy at any time between the Date of Issue
and the date 10 days after receipt of the Policy, and receive a refund of the
Accumulation Value plus any charges assessed at issue, including the Annual
Policy Fee, charge for the optional Enhanced Death Benefit Rider, and any
premium tax, unless otherwise required by state and/or federal law. Some
states may require a longer period. Where the Accumulation Value is refunded,
the Owner will have borne the investment risk and been entitled to the benefit
of the investment performance of the chosen Subaccounts during the time the
Policy was in force.

In the case of Individual Retirement Annuities and states that require
the return of Premium Payments, LSW will refund the greater of: (i) Premium
Payments or (ii) Accumulation Value plus any amount deducted by LSW for state
premium taxes. LSW may require that all Accumulation Value allocated to the
Variable Account initially be held in the Market Street Money Market
Subaccount. At the end of the free look period, Accumulation Value will be
allocated among the Subaccounts of the Variable Account and the Fixed Account
based on the allocation percentages specified in the application. For this
purpose, LSW assumes the free look period ends 20 days after the date the
Policy is issued.

In order to revoke the Policy, it must be mailed or delivered to the
Home Office of LSW at the mailing address shown on page 1 of this prospectus.
Mailing or delivery must occur on or before 10 days after receipt of the Policy
for revocation to be effective, except where LSW required the allocation of
Accumulation Value to the Market Street Money Market Subaccount for the free
look period. In order to revoke the Policy, if it has not been received,
written notice must be mailed or delivered to the Home Office of LSW at the
mailing address shown on page 1 of this prospectus.

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<PAGE> 35
The liability of the Variable Account under this provision is limited
to the Accumulation Value in each Subaccount on the date of revocation. Any
additional amounts refunded to the Owner will be paid by LSW.

LOAN PRIVILEGE - QUALIFIED POLICIES AND TAX SHELTERED ANNUITIES

Prior to the Annuitization Date, the Owner of a Qualified Policy under
section 401(a) (which includes section 401(k) plans) or 403(a) of the Code, or
a section 403(b) Tax Sheltered Annuity Policy, may receive a loan, subject to
the terms of the Policy, the Plan, and the Code, which may impose restrictions
on loans.

Loans from eligible Policies are available beginning one year after
the Date of Issue. The Owner may borrow a minimum of $1500. The maximum loan
balance which may be outstanding at any time is 50% of the Accumulation Value,
but not more than $50,000. The $50,000 limit will be reduced by the highest
loan balances owed during the prior one-year period, which may be more than the
amount outstanding at the time of the loan if an interest payment or principal
repayment has been made. Only one loan may be outstanding with respect to any
one Policy at any time. Loans may only be secured by the Accumulation Value.

All loans are made from the Collateral Fixed Account. An amount equal
to the principal amount of the loan will be transferred to the Collateral Fixed
Account. Unless instructed to the contrary by the Owner, LSW will transfer to
the Collateral Fixed Account an amount equaling the loan from the Subaccounts
of the Variable Account and unloaned portion of the Fixed Account in the same
proportion that such amounts bear to the total Accumulation Value. No CDSC is
deducted at the time of the loan, or on any transfers to the Collateral Fixed
Account. If the Owner provides specific instructions, loan amounts must be
taken first from the Variable Account, and may only be taken from the unloaned
portion of the Fixed Account to the extent that the Accumulation Value in the
Variable Account is insufficient to provide the loan. If the loan cannot be
processed in accordance with instructions provided by the Owner, then the loan
will not be processed until LSW receives further instructions from the Owner.

Until the loan has been repaid in full, that portion of the Collateral
Fixed Account equal to the outstanding loan balance shall be credited on each
Policy Anniversary with interest at an annual rate declared from time to time
by LSW, but will never be less than an annual rate of 3.0%. Specific loan
terms are disclosed at the time of loan application or loan issuance.

Loans must be repaid in substantially level payments, not less
frequently than quarterly, within five years. Loans used to purchase the
principal residence of the Owner must be repaid within 15 years. During the
loan term, the outstanding balance of the loan will continue to accrue interest
at an annual rate specified in the loan agreement. Once established, this
interest rate will be fixed for the life of the loan. Loan repayments will
consist of principal and interest in amounts set forth in the loan agreement.
Loan principal repayments will, on the date they are received, be allocated
among the Fixed Account and Subaccounts of the Variable Account in accordance
with the allocation of Net Premium Payments then in effect.

If the Policy is surrendered while the loan is outstanding, the Owner
will receive the Cash Surrender Value. If the Owner/Annuitant dies while the
loan is outstanding, the Death Benefit will also be reduced to reflect the
amount of the loan outstanding plus accrued interest. If annuity payments
start while the loan is outstanding, the Accumulation Value will be reduced by
the amount of the outstanding loan plus accrued interest. Until the loan is
repaid, LSW reserves the right to restrict any transfer of the Policy which
would otherwise qualify as a transfer as permitted in the Code.

If a loan payment is not made when due, interest will continue to
accrue. If a loan payment is not made within 31 days of when it was due, then
the entire balance of the loan is considered in default. This amount may be
taxable to the borrower, and may be subject to the early withdrawal tax
penalty. If the Owner is not eligible to take a distribution pursuant to the
Policy or plan provisions, the

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<PAGE> 36
deemed distribution will be reportable for tax purposes, but will not be offset
against the Policy Value until such time as a distribution may be made.

Loans may also be subject to additional limitations or restrictions
under the terms of the employer's plan. Loans permitted under this Policy may
still be taxable in whole or part if the participant has additional loans from
other plans or policies. LSW will calculate the maximum nontaxable loan based
on the information provided by the participant or the employer.

All payments received from the Owner will be considered loan
repayments. Any payments received from the employer of the Owner will be
considered premium payments unless specifically identified as loan repayments.
LSW reserves the right to modify the terms or procedures associated with the
loan privilege in the event of a change in the laws or regulations relating to
the treatment of loans. LSW also reserves the right to assess a loan
processing fee. Individual Retirement Annuities and Non-Qualified Policies are
not eligible for loans. (See "Non-Qualified Policies", page and
"Individual Retirement Annuities", page )

SURRENDER AND WITHDRAWAL

At any time prior to the Annuitization Date, or thereafter if Payment
Option 1 has been elected, the Owner may, upon proper written application by
the Owner deemed by LSW to be in good order, surrender the Policy. "Proper
written application" means that the Owner must request the surrender in writing
and include the Policy. LSW may require that the signature(s) be guaranteed by
a member firm of a major stock exchange or other depository institution
qualified to give such a guaranty.

LSW will, upon receipt of any such written request, pay to the Owner
the Cash Surrender Value. The Cash Surrender Value will be reduced by any
applicable Contingent Deferred Sales Charge (see "Contingent Deferred Sales
Charge"), as well as any outstanding loan and accrued interest and, in certain
states, a premium tax charge (see "Premium Taxes", page ). The Cash
Surrender Value may be more or less than the total of Premium Payments made by
a Owner, depending on the market value of the underlying Fund shares, the
amount of any applicable Contingent Deferred Sales Charge, and other factors.

LSW will normally not permit Withdrawal or surrender of Premium
Payments made by check within the 15 calendar days prior to the date the
request for Withdrawal or surrender is received.

At any time before the death of the Owner and after 30 days from the
Date of Issue, the Owner may make a Withdrawal of a portion of the Cash
Surrender Value. The minimum Withdrawal is $500, and the maximum Withdrawal is
that amount which would leave $3500 in remaining Accumulation Value. If the
amount requested is more than the maximum or less than the minimum, the
Withdrawal will not be processed until LSW receives further instructions from
the Owner.

Generally, Withdrawals in the first Policy Year and Withdrawals in
excess of 10% of the Accumulation Value as of the most recent Policy
Anniversary in any Policy Year prior to the sixteenth Policy Year are subject
to the Contingent Deferred Sales Charge. See "Contingent Deferred Sales
Charge", page . However, see "Available Automated Fund Management
Features-Systematic Withdrawals" page , for information on a limited means
of making systematic Withdrawals in the first year free of the Contingent
Deferred Sales Charge. Withdrawals will be deemed to be taken from Net Premium
Payments in chronological order, with the oldest Net Premium Payment being
withdrawn first. This method will tend to minimize the amount of the
Contingent Deferred Sales Charge.

The Withdrawal will be taken from the Subaccounts of the Variable
Account based on the instructions of the Owner at the time of the Withdrawal
(however, during the first Policy Year, LSW may require that Withdrawal be
taken pro rata from the Subaccounts of the Variable Account and the unloaned
portion of the Fixed Account). If the Owner provides specific instructions,
amounts must be deducted first from the Variable Account, and may only be
deducted from the unloaned portion of the Fixed Account to the extent that the
Accumulation Value in the Variable Account is insufficient to accomplish the
Withdrawal. If specific allocation instructions are not provided by the Owner,
the

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<PAGE> 37
Withdrawal will be deducted pro rata from the Subaccounts of the Variable
Account and from the unloaned portion of the Fixed Account. Any Contingent
Deferred Sales Charge associated with a Withdrawal will be deducted from the
Subaccounts of the Variable Account and from the Fixed Account based on the
allocation percentages of the Withdrawal itself, except that any amount that
would be so deducted from a Subaccount which is in excess of the available
value in that Subaccount will be deducted pro rata among the remaining
Subaccounts and the unloaned portion of the Fixed Account. If the Withdrawal
cannot be processed in accordance with instructions provided by the Owner, then
it will not be processed until LSW receives further instructions from the
Owner.

A surrender or a Withdrawal may have tax consequences. See "Federal
Income Tax Considerations", page .

PAYMENTS

LSW will pay any funds surrendered or withdrawn from the Variable
Account within 7 days of receipt of such request in LSW's Home Office.
However, LSW reserves the right to suspend or postpone the date of any payment
or transfer of any benefit or values for any Valuation Period (1) when the New
York Stock Exchange ("Exchange") is closed, (2) when trading on the Exchange is
restricted, (3) when an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably practicable or it is
not reasonably practicable to determine the value of the Variable Account's net
assets, or (4) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of security holders,
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (2) and (3)
exist. LSW reserves the right to delay payment of any amounts allocated to the
Fixed Account which are payable as a result of a surrender, Withdrawal or loan
for up to six months after it has received a written request in a form
satisfactory to it.

SURRENDERS AND WITHDRAWALS UNDER A TAX SHELTERED ANNUITY POLICY

Where the Policy has been issued as a Tax Sheltered Annuity, the
Owner may surrender or make a Withdrawal of part or all of the Accumulation
Value at any time this Policy is in force prior to the earlier of the
Annuitization Date or the death of the Designated Annuitant except as provided
below:

A. The surrender or Withdrawal of Accumulation Value attributable to
contributions made pursuant to a salary reduction agreement (within
the meaning of Code Section 402(g)(3)(A) or (C)), or transfers from a
Custodial Account described in Section 403(b)(7) of the Code, may be
executed only:

1. when the Owner attains age 59 1/2, separates from service,
dies, or becomes disabled (within the meaning of Code Section
72(m)(7)); or

2. in the case of hardship (as defined for purposes of Code
Section 401 (k)), provided that any surrender of Accumulation
Value in the case of hardship may not include any income
attributable to salary reduction contributions.

B. The surrender and Withdrawal limitations described in A. above for Tax
Sheltered Annuities apply to:

1. salary reduction contributions to Tax Sheltered Annuities made
for plan years beginning after December 31, 1988;

2. earnings credited to such policies after the last plan year
beginning before January 1, 1989, on amounts attributable to
salary reduction contributions; and

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<PAGE> 38
3. all amounts transferred from 403(b)(7) Custodial Accounts
(except that earnings, and employer contributions as of
December 31, 1988 in such Custodial Accounts may be withdrawn
in the case of hardship).

C. Any Distribution other than the above, including exercise of a
contractual ten-day free look provision (when available) may result in
the immediate application of taxes and penalties and/or retroactive
disqualification of a Qualified Policy or Tax Sheltered Annuity.

A premature Distribution may not be eligible for rollover treatment.
To assist in preventing disqualification in the event of a ten-day free look,
LSW will agree to transfer the proceeds to another policy which meets the
requirements of Section 403(b) of the Code, upon proper direction by the Owner.
The foregoing is LSW's understanding of the withdrawal restrictions which are
currently applicable under Section 403(b)(11) and Revenue Ruling 90-24. Such
restrictions are subject to legislative change and/or reinterpretation from
time to time. Distributions pursuant to Qualified Domestic Relations Orders
will not be considered to be a violation of the restrictions stated in this
provision.

The Policy surrender and Withdrawal provisions may also be modified
pursuant to the plan terms and Code tax provisions for Qualified Policies.

TELEPHONE TRANSACTION PRIVILEGE

If the telephone transaction privilege has been elected, either on the
application for the Policy or by thereafter providing a proper written
authorization to LSW, an Owner, or his or her LSW agent, if the Owner has so
provided on the application or by written authorization, may effect changes in
Net Premium Payment allocation, transfers, initiate dollar cost averaging or
portfolio rebalancing, and, in the case of Tax Deferred Annuity Policies, loans
of up to $10,000, by providing instructions to LSW at its Home Office over the
telephone. LSW reserves the right to suspend telephone transaction privileges
at any time, for any reason, if it deems such suspension to be in the best
interests of Policy Owners.

LSW will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. If LSW follows these procedures it will
not be liable for any losses due to unauthorized or fraudulent instructions.
LSW may be liable for any such losses if those reasonable procedures are not
followed. The procedures to be followed for telephone transfers will include
one or more of the following: requiring some form of personal identification
prior to acting on instructions received by telephone, providing written
confirmation of the transaction, and making a tape recording of the
instructions given by telephone.

AVAILABLE AUTOMATED FUND MANAGEMENT FEATURES

LSW currently offers, at no charge to Owners, the following automated
fund management features. However, LSW is not legally obligated to continue to
offer these features, and although it has no current intention to do so, it may
cease offering one or more of such features at any time, after providing 60
days prior written notice to all Owners who are currently utilizing the
features being discontinued. Only one automated fund management feature is
available under any single Policy at one time.

Dollar Cost Averaging. This feature permits an Owner to automatically
transfer funds from the Money Market Subaccount to any other Subaccounts on a
monthly basis. It may be elected at issue by marking the appropriate box on
the initial application, and completing the appropriate instructions, or, after
issue, by filling out similar information on a change request form and sending
it to the Home Office.

If this feature is elected, the amount to be transferred will be taken
from the Money Market Subaccount and transferred to the Subaccount or
Subaccounts designated to receive the funds, each

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<PAGE> 39
month on the Monthly Policy Date (starting with the Monthly Policy Date next
succeeding the Date of Issue, or next succeeding the date of an election
subsequent to purchase), until the amount in the Money Market Fund is depleted.
The minimum monthly transfer by Dollar Cost Averaging is $100, except for the
transfer which reduces the amount in the Money Market Subaccount to zero. An
Owner may discontinue Dollar Cost Averaging at any time by sending an
appropriate change request form to the Home Office.

This feature allows an Owner to move funds into the various investment
classes on a more gradual and systematic basis than the frequency on which
Premium Payments ordinarily are made. The periodic investment of the same
amount will result in higher numbers of units being purchased when unit prices
are lower, and lower numbers of units being purchased when unit prices are
higher. This will result, over time, in a lower cost per unit than the average
of the unit costs on the days on which the automated purchases are made. This
technique will not, however, assure a profit or protect against a loss in
declining markets. Moreover, for the dollar cost averaging technique to be
effective, amounts should be available for allocation from the Money Market
Subaccount through periods of low price levels as well as higher price levels.

Portfolio Rebalancing. This feature permits an Owner to automatically
rebalance the value in the Subaccounts on a monthly, quarterly, semi-annual or
annual basis, based on the Owner's premium allocation percentages in effect at
the time of the rebalancing. It may be elected at issue by marking the
appropriate box on the initial application, or, after issue, by completing a
change request form and sending it to the Home Office.

In Policies utilizing Portfolio Rebalancing from the Date of Issue, an
automatic transfer will take place which causes the percentages of the current
values in each Subaccount to match the current premium allocation percentages,
starting with the Monthly Policy Date three, six or twelve months after the
Date of Issue, and then on each Monthly Policy Date three, six or twelve months
thereafter. Policies electing Portfolio Rebalancing after issue will have the
first automated transfer occur as of the Monthly Policy Date on or next
following the date that the election is received at the Home Office, and
subsequent rebalancing transfers will occur every three, six or twelve months
from such date. An Owner may discontinue Portfolio Rebalancing at any time by
submitting an appropriate change request form to the Home Office.

In the event that an Owner changes the Policy's premium allocation
percentages, Portfolio Rebalancing will automatically be discontinued unless
the Owner specifically directs otherwise.

Portfolio Rebalancing will result in periodic transfers out of
Subaccounts that have had relatively favorable investment performance in
relation to the other Subaccounts to which a Policy allocates premiums, and
into Subaccounts which have had relatively unfavorable investment performance
in relation to the other Subaccounts to which the Policy allocates premiums.

Systematic Withdrawals- At any time after one year from the Date of
Issue, and provided that the Accumulation Value at the time of initiation of
the program is at least $20,000, the Owner may elect in writing on a form
provided by LSW to take systematic Withdrawals of a specified dollar amount (of
at least $100) on a monthly, quarterly, semi-annual or annual basis. The Owner
may provide specific instructions as to how the systematic Withdrawals are to
be taken, but the Withdrawals must be taken first from the Subaccounts of the
Variable Account, and may only be taken from the unloaned portion of the Fixed
Account to the extent that the Accumulation Value in the Variable Account is
insufficient to accomplish the Withdrawal. If the Owner has not provided
specific instructions, or if such specific instructions cannot be carried out,
LSW will process the Withdrawals by taking on a pro-rata basis Accumulation
Units from all of the Subaccounts in which the Owner has an interest and the
unloaned portion of the Fixed Account. Each systematic Withdrawal is subject
to federal income taxes on the taxable portion. In addition, a 10% federal
penalty tax may be assessed on systematic Withdrawals if the Owner is under age
59 1/2. If directed by the Owner, LSW will withhold federal income taxes from
each systematic Withdrawal. A systematic Withdrawal program will terminate
automatically when a systematic Withdrawal would cause the remaining
Accumulation Value to be $3,500 or less. If a systematic Withdrawal would
cause the Accumulation Value to be

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<PAGE> 40
$3,500 or less, then that systematic Withdrawal transaction will not be
processed. The Owner may discontinue systematic Withdrawals at any time by
notifying LSW in writing.

A Contingent Deferred Sales Charge may apply to systematic Withdrawals
in accordance with the considerations set forth in "Contingent Deferred Sales
Charge", page . If the Owner withdraws amounts pursuant to a systematic
Withdrawal program, then the Owner may withdraw in each Policy Year after the
first Policy Year without a CDSC an amount up to 10% of the Accumulation Value
as of the most recent Policy Anniversary. Both Withdrawals at the specific
request of the Owner and Withdrawals pursuant to a systematic Withdrawal
program will count toward the limit of the amount that may be withdrawn in any
Policy Year free of the CDSC. In addition, any amount withdrawn from any
Individual Retirement Annuity Policy in order to meet minimum Distribution
requirements shall be free of CDSC.

Limited systematic Withdrawals are also available in the first Policy
Year (but after 30 days from issue). These systematic Withdrawals are limited
to monthly systematic Withdrawal programs only. The maximum aggregate amount
for the remaining months of the first Policy Year is 10% of the Accumulation
Value. These systematic Withdrawals will not be subject to a CDSC. The other
rules for systematic Withdrawals made after the first Policy Year, including
the $20,000 minimum Accumulation Value, minimum $100 payment, and allocation
rules, will apply to these systematic Withdrawals.

POLICY RIGHTS UNDER CERTAIN PLANS

Policies may be purchased in connection with a plan sponsored by an
employer. In such cases, all rights under the Policy rest with the Owner,
which may be the employer or other obligor under the plan, and benefits
available to participants under the plan will be governed solely by the
provisions of the plan. Accordingly, some of the options and elections under
the Policy may not be available to participants under the provisions of the
plan. In such cases, participants should contact their employers for
information regarding the specifics of the plan.

THE FIXED ACCOUNT

Net Premium Payments under the Fixed Account portion of the Policy and
transfers to the Fixed Account portion become part of the general account of
LSW, which support insurance and annuity obligations. Because of exemptive and
exclusionary provisions, interests in the general account have not been
registered under the Securities Act of 1933 ("Securities Act"), nor is the
general account registered as an investment company under the Investment
Company Act. Accordingly, neither the general account nor any interest therein
are generally subject to the provisions of the Securities Act or Investment
Company Act, and LSW has been advised that the staff of the Securities and
Exchange Commission has not reviewed the disclosures in this prospectus which
related to the guaranteed interest portion. Disclosures regarding the Fixed
Account portion of the Policy and the general account, 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.

The Fixed Account is made up of all the general assets of LSW, other
than those in the Variable Account and any other segregated asset account.
Fixed Account Net Premium Payments will be allocated to the Fixed Account by
election of the Owner at the time of purchase, or by a later change in
allocation of Net Premium Payments. LSW will invest the assets of the Fixed
Account in those assets chosen by LSW and allowed by applicable law.

MINIMUM GUARANTEED AND CURRENT INTEREST RATES

The Accumulation Value held in the Fixed Account which is not held in
a Collateral Fixed Account is guaranteed to accumulate at a minimum effective
annual interest rate of 3.0%. LSW may credit the non-loaned Accumulation Value
in the Fixed Account with current rates in excess of the

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<PAGE> 41
minimum guarantee but is not obligated to do so. Since LSW, in its sole
discretion, anticipates changing the current interest rate from time to time,
allocations to the Fixed Account made at different times are likely to be
credited with different current interest rates. An interest rate will be
declared by LSW each month to apply to amounts allocated or transferred to the
Fixed Account in that month. The rate declared on such amounts will remain in
effect for twelve months. At the end of the 12-month period, LSW reserves the
right to declare a new current interest rate on such amounts and accrued
interest thereon (which may be a different current interest rate than the
current interest rate on new allocations to the Fixed Account on that date).
Any interest credited on the amounts in the Fixed Account in excess of the
minimum guaranteed rate of 3.0% per year will be determined in the sole
discretion of LSW. The Owner assumes the risk that interest credited may not
exceed the guaranteed minimum rate.

Amounts deducted from the unloaned portion of the Fixed Account for
Optional Benefits charges, the Annual Policy Fee, loans or transfers to the
Variable Account are, for the purpose of crediting interest, accounted for on a
last in, first out basis. Amounts deducted from the unloaned portion of the
Fixed Account for Withdrawals are accounted for on a first in, first out
basis for such purpose.

LSW reserves the right to change the method of crediting interest from
time to time, provided that such changes do not have the effect of reducing the
guaranteed rate of interest below 3.0% per annum or shorten the period for
which the interest rate applies to less than 12 months.

OPTIONAL ENHANCED DEATH BENEFIT RIDER

The Enhanced Death Benefit Rider, which is subject to the restrictions
and limitations set forth in the Policy Rider, may be included in a Policy at
the option of the Owner. Election of this optional benefit involves an
additional cost. This Rider may not be available in all states. If the Owner
has elected the Enhanced Death Benefit Rider, then the following enhanced death
benefit will be payable to the Beneficiary if the Owner (or the first of Joint
Owners) dies prior to reaching age 81 (on an age nearest birthday basis): the
highest of (a) Accumulation Value; (b) the total of all Net Premium Payments,
less all Withdrawals, and less any outstanding loan and accrued interest, and
(c) the largest Accumulation Value as of any prior Policy Anniversary after the
Enhanced Death Benefit Rider was applicable to the Policy, plus any Net Premium
Payments and less any Withdrawals (including any CDSC deducted in connection
with such Withdrawals), loan and accrued interest, in each case since such
Policy Anniversary, and in each case calculated as of the date LSW receives due
proof of death. Any applicable premium tax charge payable on the death of the
Owner will be applied to reduce the value of the above determined enhanced
death benefit (see "Premium Taxes, page ).

If the Owner (or the first of Joint Owners) dies at age 81 or later,
the death benefit will not be enhanced, and will be an amount equal to
Accumulation Value, less any applicable premium tax charge.

The Enhanced Death Benefit Rider will be available at issue to Owners
age 75 and younger. It will be available after issue to Owners age 75 or
younger only as of a Policy Anniversary, and only if at the time of the Rider
is requested, the Accumulation Value is greater than the total of all Net
Premium Payments less all Withdrawals. The annual charge for this Rider is
0.20% of Accumulation Value. After the Owner reaches age 80, on an age nearest
birthday basis, the charge will be discontinued. See "Charge for Optional
Enhanced Death Benefit Rider", page .

The Enhanced Death Benefit will be distributed in the same manner as
the normal Death Benefit. See "Death of Owner", page .

30
<PAGE> 42
FEDERAL INCOME TAX CONSIDERATIONS

INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE
OF A PERSONAL TAX ADVISOR.

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

Section 72 of the Code governs taxation of annuities in general. That
section sets forth different rules for: (1) Qualified Plans; (2) Individual
Retirement Annuities and Individual Retirement Accounts; (3) Tax Sheltered
Annuities; or (4) Non-Qualified Policies. Each type of annuity is discussed
below.

NON-QUALIFIED POLICIES

The rules applicable to Non-Qualified Policies provide that a portion
of each annuity payment received is excludable from taxable income based on the
ratio between the Owner's investment in the Policy and the expected return on
the Policy. The maximum amount excludable from income is the investment in the
Policy. If the Annuitant dies prior to excluding from income the entire
investment in the Policy, the Annuitant's final tax return may reflect a
deduction for the balance of the investment in the Policy.

Distributions made from the Policy prior to the Annuitization Date are
includible in gross income and taxable to the Owner to the extent that the cash
value of the Policy exceeds the Owner's investment at the time of the
Distribution. Distributions, for this purpose, include surrenders,
Withdrawals, dividends, loans, or any portion of the Policy which is assigned
or pledged; or for Policies issued after April 22, 1987, any portion of the
Policy transferred by gift. For these purposes, a transfer by gift may occur
upon Annuitization if the Owner and the Annuitant are not the same individual.
In determining the taxable amount of a Distribution, all annuity policies
issued by the same company to the same Owner during any 12 month period, will
be treated as one annuity policy. Additional limitations on the use of
multiple policies may be imposed by Treasury regulations.

In general, certain Non-Qualified Policies held by entities other than
individuals are taxed currently on the earnings on the Policy. There are
exceptions for immediate annuities and certain Policies owned for the benefit
of an individual. An immediate annuity, for purposes of this discussion, is a
single premium Policy on which payments begin within one year of purchase. Any
non-individual (such as a trust) contemplating the purchase of a Non-Qualified
Policy should consult a tax advisor prior to such purchase.

Code Section 72 also provides for a penalty, equal to 10% of any
Distribution which is includible in gross income, if such Distribution is made
prior to attaining age 59 1/2 or the death or disability of the Owner. The
penalty also does not apply if the Distribution is one of a series of
substantially equal periodic payments made over the life or life expectancy (or
joint lives or life expectancies) of the taxpayer (and the taxpayer's
Beneficiary), or for the purchase of an immediate annuity, or is allocable to
an investment in the Policy before August 14, 1982. An Owner wishing to begin
taking Distributions to which the 10% tax penalty does not apply should forward
a written request to LSW. Upon receipt of a written request from the Owner,
LSW will inform the Owner of the procedures pursuant to LSW policy and subject
to limitations of the Policy including but not limited to first year
withdrawals.

31
<PAGE> 43
In order to qualify as an annuity policy under Section 72 of the Code,
the Policy must provide that the entire interest in the Policy be distributed
upon the death of any Owner before the Annuitization Date In such case, the
Beneficiary generally must receive this Distribution within 5 years of such
Owner's death. However, the Beneficiary may elect for payments to be made over
their life or life expectancy if such payments begin within one year from the
death of the Owner. If the Beneficiary is the surviving spouse of the deceased
Owner, such spouse may be treated as the Owner and the Policy may be continued
throughout the life of the surviving spouse. In the event any Owner dies on or
after the Annuitization Date and before the entire interest has been
distributed, the remaining portion must be distributed at least as rapidly as
under the method of Distribution being used as of the date of such Owner's
death (see "Required Distribution For Qualified Plans and Tax Sheltered
Annuities"). If the Owner is not an individual, the death of the Annuitant (or
a change in the Annuitant) will result in a Distribution pursuant to these
rules, regardless of whether a Contingent Annuitant has been named.

LSW is required to withhold tax from certain Distributions to the
extent that such Distribution would constitute income to the Owner. The Owner
is generally entitled to elect not to have federal income tax withheld from any
such Distribution, but may be subject to penalties in the event insufficient
federal income tax is withheld during a calendar year.

Generally, the taxable portion of any Distribution from a Policy to a
nonresident alien of the United States is subject to tax withholding at a rate
equal to thirty percent (30%) of such amount or, if applicable, a lower treaty
rate. A payment may not be subject to withholding where the recipient
sufficiently establishes that such payment is effectively connected to the
recipient's conduct of a trade or business in the United States and such
payment is includible in the recipient's gross income.

LSW may be required to determine whether the Death Benefit or any
other payment constitutes a direct skip as defined in Section 2612 of the Code,
and the amount of the tax on the generation-skipping transfer resulting from
such direct skip. If applicable, such payment will be reduced by any tax LSW
is required to pay by Section 2603 of the Code. A direct skip may occur when
property is transferred to or a Death Benefit is paid to an individual two or
more generations younger than the Owner.

Amounts may be distributed from a Policy because of an Owner's death
or the death of the Annuitant. Generally, such amounts are includible in the
income of the recipient as follows: (i) if distributed in a lump sum, they are
taxed in the same manner as a surrender of the Policy, or (ii) if distributed
under a Payment Option, they are taxed in the same way as annuity payments.

A transfer or assignment of ownership of a Policy, the designation of
an Annuitant of other than the Owner, the selection or change of certain
Maturity Dates, or the exchange of a Policy may result in certain tax
consequences to the Owner that are not discussed herein. An Owner
contemplating any such transfer, assignment or exchange, should consult a tax
advisor as to the tax consequences.

QUALIFIED POLICIES

The Qualified Policy is designed for use with several types of
retirement plans. The tax rules applicable to participants and beneficiaries
in retirement plans vary according to the type of plan and the terms and
conditions of the plan. Special favorable tax treatment may be available for
certain types of contributions and distributions. Adverse tax consequences may
result from contributions in excess of specified limits; distributions prior to
age 59 1/2 (subject to certain exceptions); distributions that do not conform
to specified commencement and minimum distribution rules; aggregate
distributions in excess of a specified annual amount; and in other specified
circumstances.

LSW makes no attempt to provide more than general information about
use of the Policies with the various types of retirement plans. Owners and
participants under retirement plans as well as Annuitants and Beneficiaries are
cautioned that the rights of any person to any benefits under Qualified
Policies may be subject to the terms and conditions of the Policy issued in
connection with

32
<PAGE> 44
such a plan. Some retirement plans are subject to distribution and other
requirements that are not incorporated in the administration of the Policies.
Owners are responsible for determining that contributions, distributions and
other transactions with respect to the Policies satisfy applicable law.
Federal income tax withholding will generally be made from Distributions under
Qualified Policies, unless the participant elects not to have tax withheld.
Withholding is required from certain tax distributions (see "Rollover
Distributions", page ). Purchasers of Policies for use with any retirement
plan should consult their legal counsel and tax advisor regarding the
suitability of the Policy.

Distributions to participants from Qualified Plans or Tax Sheltered
Annuities are generally taxed when received. A portion of each Distribution
for such Annuities is excludable from income based on the ratio between the
after tax investment of the Owner/Annuitant in the Policy and the value of the
Policy at the time of the withdrawal or Annuitization. For Qualified Plans,
thereafter the tax investment of the Owner/Annuitant may be zero.

Distributions from Individual Retirement Annuities and Policies owned
by Individual Retirement Accounts are also generally taxed when received. The
portion of each such payment which is excludable is based on the ratio between
the amount by which nondeductible Premium Payments to all such Policies exceeds
prior non-taxable Distributions from such Policies, and the total account
balances in such Policies at the time of the Distribution. The Owner of such
Individual Retirement Annuities or the Designated Annuitant under Policies held
by Individual Retirement Accounts must annually report to the Internal Revenue
Service the amount of nondeductible Premium Payments, the amount of any
Distribution, the amount by which nondeductible Premium Payments for all years
exceed non-taxable Distributions for all years, and the total balance in all
Individual Retirement Annuities and Accounts. Owners should consult a
financial consultant, legal counsel or tax advisor to discuss in detail the
taxation and the use of the Policies.

CORPORATE PENSION AND PROFIT-SHARING PLANS

Code section 401(a) permits employers to establish various types of
retirement plans for employees, and permits self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the Policies to accumulate
retirement savings under the plans. Adverse tax consequences to the plan, to
the participant or to both may result if this Policy is assigned or transferred
to any individual as a means to provide benefit payments.

CODE SECTION 403(b) PLANS

Under Code section 403(b), payments made by public school systems and
certain tax-exempt organizations to purchase annuity policies for their
employees are excludable from the gross income of the employee, subject to
certain limitations. However, these payments may be subject to FICA (Social
Security) taxes.

Code section 403(b)(11) restricts the distribution under Code section
403(b) annuity policies of: (1) elective contributions made in years beginning
after December 31, 1988; (2) earnings on those contributions; and (3) earnings
in such years on amounts held as of the last year beginning before January 1,
1989. Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not
be distributed in the case of hardship. Employee loans may be available,
subject to certain restrictions (see "Loan Privilege - Qualified Policies and
Certain Tax-Sheltered Annuities", page ).

DEFERRED COMPENSATION PLANS

Code section 457 provides for certain deferred compensation plans.
These plans may be offered with respect to service for state governments, local
governments, political subdivisions, agencies, instrumentalities and certain
affiliates of such entities, and tax-exempt organizations. These plans are

<PAGE> 45
subject to various restrictions on contributions and distributions. The plans
may permit participants to specify the form of investment for their deferred
compensation account. In general, with respect to non-governmental plans, all
investments are owned by the sponsoring employer and are subject to the claims
of the general creditors of the employer. Depending on the terms of the
particular plan, a non-government employer may be entitled to draw on deferred
amounts for purposes unrelated to its section 457 plan obligations. In
general, all amounts received under a section 457 plan are taxable.

INDIVIDUAL RETIREMENT ANNUITIES

The Policy may be purchased as an Individual Retirement Annuity under
Section 408(b) of the Code. The Owner should seek competent advice as to the
tax consequences associated with the use of a Policy as an Individual
Retirement Annuity. Both regular and Roth IRA's may purchase the Policy, but
the Policy is not available for Education IRA's.

Individual Retirement Accounts and Individual Retirement Annuities may
not provide life insurance benefits. If the Death Benefit exceeds the greater
of the cash value of the Policy or the sum of all Premium Payments (less any
surrender, the sum of all Withdrawals, or any outstanding loan and accrued
interest on such loan), it is possible the Internal Revenue Service could
determine that the Individual Retirement Account or Individual Retirement
Annuity did not qualify for the desired tax treatment.

The Internal Revenue Service has not reviewed the Policy for
qualification as an IRA and has not generally ruled whether a Death Benefit
provision such as the provision in the Policy comports with IRA qualification
requirements.

DIVERSIFICATION

The Internal Revenue Service has promulgated regulations under Section
817(h) of the Code relating to diversification standards for the investments
underlying a variable annuity policy. The regulations provide that a variable
annuity policy which does not satisfy the diversification standards will not be
treated as an annuity policy, unless the failure to satisfy the regulations was
inadvertent, the failure is corrected, and the Owner or LSW pays an amount to
the Internal Revenue Service. The amount will be based on the tax that would
have been paid by the Owner if the income, for the period the policy was not
diversified, had been received by the Owner. If the failure to diversify is
not corrected in this manner, the Owner of an annuity policy will be deemed the
owner of the underlying securities and will be taxed on the earnings of his or
her account. LSW believes, under its interpretation of the Code and
regulations thereunder, that the investments underlying this Policy meet these
diversification standards.

In certain circumstances, owners of variable annuity policies have
been considered for Federal income tax purposes to be the owners of the assets
of the Variable Account supporting their policies due to their ability to
exercise investment control over those assets. When this is the case, the
policy owners have been currently taxed on income and gains attributable to the
variable account assets. There is little guidance in this area, and some
features of the Policies, such as the flexibility of an Owner to allocate Net
Premium Payments and transfer Accumulation Value, have not been explicitly
addressed in published rulings. While LSW believes that the Policies do not
give Owners investment control over Variable account assets, LSW reserves the
right to modify the Policies as necessary to prevent an Owner from being
treated as the owner of the variable Account assets supporting the Policy.

TAX LEGISLATION. In past years, legislation has been proposed in the
U.S. Congress which would have adversely modified the federal taxation of
certain annuity policies. For example, one such proposal would have adversely
affected annuity policies that do not have "substantial life contingencies" by
taxing income as it is credited to the annuity policy. Although Congress is
not now actively considering any legislation regarding the taxation of annuity
policies, there is no way of knowing if legislation affecting the taxation of
annuity policies will, at some time, be enacted, or the extent to which any
change in the taxation of annuity policies would be retroactive in effect
(i.e., effective prior to the date of enactment).

34
<PAGE> 46
CHARGE FOR TAX PROVISIONS

LSW is no longer required to maintain a capital gain reserve liability
on Non-Qualified Policies since capital gains attributable to assets held in
the Variable Account for such Policies are not taxable to LSW. However, LSW
reserves the right to implement and adjust the tax charge in the future, if the
tax laws change.

ROLLOVER DISTRIBUTIONS

The Code permits the rollover of most Distributions from Qualified
Plans to other Qualified Plans, Individual Retirement Accounts, or Individual
Retirement Annuities. Most Distributions from Tax Sheltered Annuities may be
rolled into another Tax Sheltered Annuity, an Individual Retirement Account, or
an Individual Retirement Annuity. Distributions which may not be rolled over
are those which are:

1. one of a series of substantially equal annual (or more frequent)
payments made: (a) over the life (or life expectancy) of the employee,
(b) the joint lives (or joint life expectancies) of the employee and
the employee's designated Beneficiary, or (c) for a specified period
of ten years or more, or

2. a required minimum Distribution, or

3. Distributions in respect of after-tax contributions to a Qualified
Plan.

Any Distribution eligible for rollover will be subject to federal tax
withholding at a 20% rate unless the Distribution is transferred directly to an
appropriate plan as described above. Owner's should consult a financial
consultant to discuss in detail a particular tax situation and the use of the
Policies.

RESTRICTIONS UNDER QUALIFIED POLICIES

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

GENDER NEUTRALITY

In 1983, the United States Supreme Court held that optional annuity
benefits provided under an employee's deferred compensation plan could not,
under Title VII of the Civil Rights Act of 1964 vary between men and women on
the basis of sex. The Court applied its decision to benefits derived from
contributions made on or after August 1, 1983. Lower federal courts have since
held that the Title VII prohibition of sex-distinct benefits may apply at an
earlier date. In addition, some states prohibit using sex-distinct mortality
tables.

The Policy uses sex-distinct actuarial tables, unless state law
requires the use of sex-neutral actuarial tables. As a result, the Policy
generally provides different benefits to men and women of the same age.
Employers and employee organizations which may consider buying Policies in
connection with any employment-related insurance or benefits program should
consult their legal advisors to determine whether the Policy is appropriate for
this purpose.

VOTING RIGHTS

Voting rights under the Policies apply only with respect to Net
Premium Payments or accumulated amounts allocated to the Variable Account.

In accordance with its view of present applicable law, LSW will vote
the shares of the underlying Funds held in the Variable Account at regular and
special meetings of the shareholders of

35
<PAGE> 47
the underlying Funds. These shares will be voted in accordance with
instructions received from Owners who have an interest in the Variable Account.
If the Investment Company Act or any regulation thereunder should be amended or
if the present interpretation thereof should change, and as a result LSW
determines that it is permitted to vote the shares of the underlying Funds in
its own right, it may elect to do so.

The person having the voting interest under a Policy shall be the
Owner. The number of underlying Fund shares attributable to each Owner is
determined by dividing the Owner's interest in each respective Subaccount of
the Variable Account by the net asset value of the underlying Fund
corresponding to the Subaccount.

The number of shares which a person has the right to vote will be
determined as of the date to be chosen by LSW not more than 90 days prior to
the meeting of the underlying Fund. Voting instructions will be solicited by
written communication at least 21 days prior to such meeting.

Underlying Fund shares held in the Variable Account as to which no
timely instructions are received will be voted by LSW in the same proportion as
the voting instructions which are received with respect to all Policies
participating in the Variable Account.

Each person having a voting interest will receive periodic reports
relating to the underlying Fund, proxy material and a form with which to give
such voting instructions.

CHANGES TO VARIABLE ACCOUNT

LSW reserves the right to create one or more new separate accounts,
combine or substitute separate accounts, or to add new investment Funds for use
in the Policies at any time. In addition, if the shares of the underlying
Funds described in this prospectus should no longer be available for investment
by the Variable Account or if, in the judgment of LSW's management, further
investment in such underlying Fund shares should become inappropriate, LSW may
eliminate Subaccounts, combine two or more Subaccounts or substitute one or
more underlying Funds for other underlying Fund shares already purchased or to
be purchased in the future by Net Premium Payments under the Policy. No
substitution of securities in the Variable Account may take place without prior
approval of the Securities and Exchange Commission, and under such requirements
as it may impose. LSW may also operate the Variable Account as a management
investment company under the Investment Company Act, deregister the Variable
Account under the Investment Company Act if such registration is no longer
required, transfer all or part of the assets of the Variable Account to another
separate account or to the Fixed Account (subject to obtaining all necessary
regulatory approvals), and make any other changes reasonably necessary under
the Investment Company Act or applicable state law.

ADVERTISING

A "yield" and "effective yield" may be advertised for the Market
Street Money Market Portfolio Subaccount. "Yield" is a measure of the net
dividend and interest income earned over a specific seven-day period (which
period will be stated in the advertisement) expressed as a percentage of the
offering price of the Subaccount's units. Yield is an annualized figure, which
means that it is assumed that the Subaccount generates the same level of net
income over a 52-week period. The "effective yield" is calculated similarly
but includes the effect of assumed compounding, calculated under rules
prescribed by the Securities and Exchange Commission. The effective yield will
be slightly higher than yield due to this compounding effect.

LSW may also from time to time advertise the performance of the
Subaccounts of the Variable Account relative to the performance of other
variable annuity Subaccounts or underlying Funds with similar or different
objectives, or the investment industry as a whole. Other investments to which
the Subaccounts may be compared include, but are not limited to: precious
metals; real estate; stocks and bonds; closed-end funds; CDs; bank money market
deposit accounts and passbook savings; and the Consumer Price Index.

36
<PAGE> 48
The Subaccounts of the Variable Account may also be compared to
certain market indexes, which may include, but are not limited to: S&P 500;
Shearson/Lehman Intermediate Government/Corporate Bond Index; Shearson/Lehman
Long-Term Government/Corporate Bond Index; Donoghue Money Fund Average; U.S.
Treasury Note Index; Bank Rate Monitor National Index of 2 Year CD Rates; and
Dow Jones Industrial Average.

Normally these rankings and ratings are published by independent
tracking services and publications of general interest including, but not
limited to: Lipper Analytical Services, Inc., CDA/ Wiesenberger, Morningstar,
Donoghue's; magazines such as Money, Forbes, Kiplinger's Personal Finance
Magazine, Financial World, Consumer Reports, Business Week, Time, Newsweek,
National Underwriter, U.S. News and World Report; rating services such as
LIMRA, Value, Best's Agent Guide, Western Annuity Guide, Comparative Annuity
Reports; and other publications such as the Wall Street Journal, Barron's,
Investor's Daily, and Standard & Poor's Outlook. In addition, Variable Annuity
Research & Data Service (The VARDS Report) is an independent rating service
that ranks over 500 variable annuity funds based upon total return performance.
These rating services and publications rank the performance of the underlying
Funds against all underlying Funds over specified periods and against funds in
specified categories. The rankings may or may not include the effects of sales
or other charges.

LSW is also ranked and rated by independent financial rating services,
among which are A.M. Best and Duff & Phelps. The purpose of these ratings is
to reflect the financial strength or claims-paying ability of LSW. The ratings
are not intended to reflect the investment experience or financial strength of
the Variable Account. LSW may advertise these ratings from time to time. In
addition, LSW may include in certain advertisements, endorsements in the form
of a list of organizations, individuals or other parties which recommend LSW or
the Policies. Furthermore, LSW may occasionally include in advertisements
comparisons of currently taxable and tax deferred investment programs, based on
selected tax brackets, or discussions of alternative investment vehicles and
general economic conditions.

LSW may from time to time advertise several types of historical
performance for the Subaccounts of the Variable Account. LSW may advertise for
the Subaccounts "average annual total return". "Average annual total return"
will show the percentage rate of return of a hypothetical initial investment of
$1,000 for at least the most recent one, five and ten year period, or for a
period covering the time the underlying Fund option held in the Subaccount has
been in existence, if the underlying Fund option has not been in existence for
one of the prescribed periods. This calculation reflects the deduction of all
applicable charges made to the Policies except for premium taxes, which may be
imposed by certain states.

"Average annual total return" will also be calculated in a similar
manner and for the same time periods but will assume an initial investment of
$10,000 and will not reflect the deduction of any applicable Contingent
Deferred Sales Charge, which, if reflected, would decrease the level of
performance shown. The Contingent Deferred Sales Charge is not reflected
because the Policies are designed for long term investment. An assumed initial
investment of $10,000 will be used because that figure more closely
approximates the size of a typical Policy than does the $1,000 figure used in
calculating the standardized average annual total return quotations.

The tables below provide performance information for each Subaccount
for specified periods ending December 31, 1997. Because all the Subaccounts
had not commenced operations as of that date, performance information for the
Policies will be calculated based on the performance of the Fund portfolios and
the assumption that the Subaccounts were in existence for the same periods with
the level of Policy charges that were in effect at the inception of the
Subaccounts.

All performance information and comparative material advertised by LSW
is historical in nature and is not intended to represent or guarantee future
results. An Owner's Accumulation Value at redemption may be more or less than
original cost.

Below are quotations of average annual total return, for each of the
Subaccounts available within the Variable Account for which there is
significant investment history. These figures are based

37
<PAGE> 49
upon historical earnings and are not necessarily representative of future
results. The first set of charts assumes that the Enhanced Death Benefit Rider
has not been elected by the Owner.

AVERAGE ANNUAL TOTAL RETURN, ASSUMING AN INVESTMENT OF $10,000, NO SURRENDER AT
THE END OF THE PERIOD, AND NO ELECTION OF THE ENHANCED DEATH BENEFIT RIDER

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1 YEAR TO 5 YEARS TO 10 YEARS TO LIFE OF FUND DATE FUND
- -----------------------------------------------------------------------------------------------------------------------------
12/31/97 12/31/97 TO 12/31/97 12/31/97 EFFECTIVE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alger American Small Capitalization % % N/A% 18.48% 9/21/88
- -----------------------------------------------------------------------------------------------------------------------------
Alger American Growth N/A 1/9/89
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity Income 10/9/86
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth 10/9/86
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-High Income 9/19/85
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas N/A 1/28/87
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Index 500 N/A 8/27/92
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund N/A N/A 1/3/95
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Growth
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Sentinel Growth N/A N/A 3/18/96
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Aggressive Growth N/A 5/1/89
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Managed 12/12/85
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Bond 2/24/84
- -----------------------------------------------------------------------------------------------------------------------------
Market Street International N/A 11/1/91
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Money Market 2/24/84
- -----------------------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. N/A 5/8/92
- -----------------------------------------------------------------------------------------------------------------------------
Strong Growth Fund II N/A N/A 1/1/97
- -----------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Bond N/A 9/1/89
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

38
<PAGE> 50
AVERAGE ANNUAL TOTAL RETURN, ASSUMING AN INVESTMENT OF $1000, FULL SURRENDER AT
THE END OF THE PERIOD, WITH THE APPLICABLE CDSC, IF
ANY IMPOSED, AND NO ELECTION OF THE ENHANCED DEATH BENEFIT RIDER

AVERAGE ANNUAL TOTAL RETURN, ASSUMING AN INVESTMENT OF $10,000, NO SURRENDER AT
THE END OF THE PERIOD, AND ELECTION OF THE ENHANCED DEATH BENEFIT RIDER

AVERAGE ANNUAL TOTAL RETURN, ASSUMING AN INVESTMENT OF $1000, FULL SURRENDER AT
THE END OF THE PERIOD, WITH THE APPLICABLE CDSC, IF ANY, IMPOSED,
AND ELECTION OF THE ENHANCED DEATH BENEFIT RIDER

39
<PAGE> 51
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1 YEAR TO 5 YEARS TO 10 YEARS TO LIFE OF FUND DATE FUND
- -----------------------------------------------------------------------------------------------------------------------------
12/31/97 12/31/97 TO 12/31/97 12/31/97 EFFECTIVE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alger American Small Capitalization % % N/A% 18.48% 9/21/88
- -----------------------------------------------------------------------------------------------------------------------------
Alger American Growth N/A 1/9/89
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity Income 10/9/86
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth 10/9/86
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-High Income 9/19/85
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas N/A 1/28/87
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Index 500 N/A 8/27/92
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund N/A N/A 1/3/95
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Growth
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Sentinel Growth N/A N/A 3/18/96
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Aggressive Growth N/A 5/1/89
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Managed 12/12/85
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Bond 2/24/84
- -----------------------------------------------------------------------------------------------------------------------------
Market Street International N/A 11/1/91
- -----------------------------------------------------------------------------------------------------------------------------
Market Street Money Market 2/24/84
- -----------------------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. N/A 5/8/92
- -----------------------------------------------------------------------------------------------------------------------------
Strong Growth Fund II N/A N/A 1/1/97
- -----------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Bond N/A 9/1/89
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

40
<PAGE> 52
DISTRIBUTION OF THE POLICIES

The principal underwriter for the Policies is ESI, which is an
SEC-registered broker-dealer firm which is a member of the National Association
of Securities Dealers, Inc. ESI is a wholly-owned subsidiary of National Life
Insurance Company, which owns a majority of the outstanding stock of LSW. ESI
distributes a full line of securities products, including mutual funds, unit
investment trusts, and variable insurance contracts, and provides individual
securities brokerage services. The maximum commission payable for selling the
Policies will generally be 6.5%; however, during an introductory period of
approximately six months to be announced by LSW, the maximum commission payable
on Policies purchased will be 7.0%. Commissions are lower with respect to
Premium Payments received after the tenth Policy Anniversary.

STATEMENTS AND REPORTS

LSW will mail to Owners, at their last known address of record, any
statements and reports required by applicable laws or regulations. Owners
should therefore give LSW prompt notice of any address change. LSW will send a
confirmation statement to Owners each time a transaction is made affecting the
Owner's Variable Account Accumulation Value, such as making additional Premium
Payments, transfers, exchanges or Withdrawals. Quarterly statements are also
mailed detailing the Policy activity during the calendar quarter. Instead of
receiving an immediate confirmation of transactions made pursuant to some types
of periodic payment plans (such as a dollar cost averaging program) or salary
reduction arrangement, the Owner may receive confirmation of such transactions
in their quarterly statements. The Owner should review the information in
these statements carefully. All errors or corrections must be reported to LSW
immediately to assure proper crediting to the Owner's Policy. LSW will assume
all transactions are accurately reported on quarterly statements or
confirmation statements unless the Owner notifies LSW otherwise within 30 days
after receipt of the statement. LSW will also send to Owners each year an
annual report and a semi-annual report containing financial statements for the
Variable Account, as of December 31 and June 30, respectively.

OWNER INQUIRIES

Owner inquiries may be directed to LSW by writing to it at 1300 West
Mockingbird Lane, Dallas, Texas 75247-4921, or calling 1-800-228-4579.

LEGAL PROCEEDINGS

There are no material legal proceedings involving LSW or the Variable
Account which are likely to have a material adverse effect upon the Variable
Account or upon the ability of LSW to meet its obligations under the Policies.
ESI is not engaged in any litigation of any material nature.

LSW is a party to ordinary routine litigation incidental to its
business, none of which is expected to have a material adverse effect upon its
ability to meet its obligations under the Policies.

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

<PAGE> 53
<TABLE>
<S> <C>
Money Market Subaccount Yields . . . . . . . . . . . . . . . . .
Other Subaccount Yields . . . . . . . . . . . . . . . . . . . .
Average Annual Total Returns . . . . . . . . . . . . . . . . . .
Other Total Returns . . . . . . . . . . . . . . . . . . . . . .
Effect of the Annual Policy Fee on Performance Data . . . . . .
Distribution of the Policies . . . . . . . . . . . . . . . . . . . . . .
Safekeeping of Account Assets . . . . . . . . . . . . . . . . . . . . . .
State Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements:
</TABLE>

<PAGE> 54

PART B

STATEMENT OF ADDITIONAL INFORMATION

<PAGE> 55

LIFE INSURANCE COMPANY OF THE SOUTHWEST

LSW VARIABLE ANNUITY ACCOUNT I

RETIREMAX VARIABLE ANNUITY POLICY
STATEMENT OF ADDITIONAL INFORMATION

OFFERED BY
LIFE INSURANCE COMPANY OF THE SOUTHWEST

1300 WEST MOCKINGBIRD LANE
DALLAS, TEXAS 75247-4921

This Statement of Additional Information expands upon subjects discussed
in the current Prospectus for the above-named Retiremax Variable Annuity Policy
("Policy") offered by Life Insurance Company of the Southwest. You may obtain
a copy of the Prospectus dated , 1998 by calling
1-800-228-4579, or writing to Life Insurance Company of the Southwest, 1300
West Mockingbird Lane, Dallas, Texas 75247-4921. Definitions of terms used in
the current Prospectus for the Policy are incorporated in this Statement of
Additional Information.

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

Dated , 1998

<PAGE> 56

TABLE OF CONTENTS

<TABLE>
<S> <C>
Life Insurance Company of the Southwest . . . . . . . . . . . . . . . . .
Additional Policy Provisions . . . . . . . . . . . . . . . . . . . . . .
The Policy . . . . . . . . . . . . . . . . . . . . . . . . . . .
Misstatement of Age or Sex . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calculation of Yields and Total Returns . . . . . . . . . . . . . . . . .
Money Market Subaccount Yields . . . . . . . . . . . . . . . . .
Other Subaccount Yields . . . . . . . . . . . . . . . . . . . .
Average Annual Total Returns . . . . . . . . . . . . . . . . . .
Other Total Returns . . . . . . . . . . . . . . . . . . . . . .
Effect of the Annual Policy Fee on Performance Data . . . . . .
Distribution of the Policies .......................... . . . . . . . . .
Safekeeping of Account Assets . . . . . . . . . . . . . . . . . . . . . .
State Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements:
1997-1995 Statutory Basis Financial Statements . . . . . . . . . F-1
</TABLE>

<PAGE> 57
LIFE INSURANCE COMPANY OF THE SOUTHWEST

Life Insurance Company of the Southwest ("LSW") has operated as a
stock life insurance company since 1955 domiciled in the State of Texas, and
has done business continuously as "Life Insurance Company of the Southwest."

ADDITIONAL POLICY PROVISIONS
The Policy

The entire contract is made up of the Policy and the application. The
statements made in the application are deemed representations and not
warranties. LSW cannot use any statement in defense of a claim or to void the
Policy unless it is contained in the application and a copy of the application
is attached to the Policy at issue.

Misstatement of Age or Sex

If the age or sex of the Chosen Human Being has been misstated, the
amount which will be paid is that which is appropriate to the correct age and
sex.

Dividends

The Policy is participating; however, no dividends are expected to be
paid on the Policy. If dividends are ever declared, they will be paid in cash.

Assignment

Where permitted, the Owner may assign some or all of the rights under
the Policy at any time during the lifetime of the Annuitant prior to the
Annuitization Date. Such assignment will take effect upon receipt and
recording by LSW at its Home Office of a written notice executed by the Owner.
LSW assumes no responsibility for the validity or tax consequences of any
assignment. LSW shall not be liable as to any payment or other settlement made
by LSW before recording of the assignment. Where necessary for the proper
administration of the terms of the Policy, an assignment will not be recorded
until LSW has received sufficient direction from the Owner and assignee as to
the proper allocation of Policy rights under the assignment.

Any portion of Accumulation Value which is pledged or assigned shall
be treated as a Distribution and shall be included in gross income to the
extent that the cash value exceeds the investment in the Policy for the taxable
year in which assigned or pledged. In addition, any Accumulation Values
assigned may, under certain conditions, be subject to a tax penalty equal to
10% of the amount which is included in gross income. Assignment of the entire
Accumulation Value may cause the portion of the Accumulation Value which
exceeds the total investment in the Policy and previously taxed amounts to be
included in gross income for federal income tax purposes each year that the
assignment is in effect. Qualified Policies are not eligible for assignment.

CALCULATION OF YIELDS AND TOTAL RETURNS

From time to time, LSW may disclose yields, total returns, and other
performance data pertaining to the Policies or a Subaccount. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the Securities and Exchange
Commission.

Because of the charges and deductions imposed under a Policy, the
yield for the Subaccounts will be lower than the yield for their respective
Portfolios. The calculations of yields, total returns, and

<PAGE> 58
other performance data do not reflect the effect of any premium tax that may be
applicable to a particular Policy. Premium taxes currently rate from 0% to
3.5% of premium based on the state in which the Policy is sold.

Money Market Subaccount Yields

From time to time, advertisements and sales literature may quote the
current annualized yield of the Money Market Subaccount for a seven-day period
in a manner which does not take into consideration any realized or unrealized
gains or losses on shares of the Market Street Money Market Portfolio or on its
portfolio securities.

This current annualized yield is computed by determining the net
change (exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) at the end of the seven-day period in
the value of a hypothetical account under a Policy having a balance of 1 unit
of the Money Market Subaccount at the beginning of the period, dividing such
net change in account value by the value of the hypothetical account at the
beginning of the period to determine the base period return, and annualizing
this quotient on a 365-day basis. The net change in account value reflects:
1) net income from the Portfolio attributable to the hypothetical account; and
2) charges and deductions imposed under the Policy which are attributable to
the hypothetical account. The charges and deductions include the per unit
charges for the hypothetical account for: 1) the Annual Policy Fee; 2)
Administration Charge; and 3) the Mortality and Expense Risk Charge. For
purposes of calculating current yields for a Policy, an average per unit Annual
Policy Fee is used based on the $30 Annual Policy Fee deducted at the beginning
of each Policy Year. For the class of Policies with the Enhanced Death Benefit
Rider, the charge for that optional benefit will be included. Current Yield
will be calculated according to the following formula:

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

Where:

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

ES = per unit expenses attributable to the hypothetical
account for the seven-day period.

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

The effective yield of the Money Market Subaccount determined on a
compounded basis for the same seven-day period may also be quoted.

The effective yield is calculated by compounding the unannualized base
period return according to the following formula:

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

Where:

<PAGE> 59
ES = per unit expenses attributable to the hypothetical
account for the seven day period.

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

Because of the charges and deductions imposed under the Policy, the
yield for the Money Market Subaccount will be lower than the yield for the
Market Street Money Market Portfolio.

The current yield for the Money Market Subaccount as of December 31,
1997 was %, and the effective yield for that Subaccount as of the same
date was %. These yields were calculated based on the performance of
the Market Street Money Market Portfolio for the seven days ended December 31,
1997, and the assumption that the Money Market Subaccount was in existence for
this period with the level of Policy charges that was in effect at the
inception of the Money Market Subaccount.

The current and effective yields on amounts held in the Money Market
Subaccount normally will fluctuate on a daily basis. THEREFORE, THE DISCLOSED
YIELD FOR ANY GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION OF
FUTURE YIELDS OR RATES OF RETURN. The Money Market Subaccount's actual yield
is affected by changes in interest rates on money market securities, average
portfolio maturity of the Market Street Money Market Portfolio, the types of
quality of portfolio securities held by the Market Street Money Market
Portfolio and the Market Street Money Market Portfolio's operating expenses.
Yields on amounts held in the Money Market Subaccount may also be presented for
periods other than a seven-day period.

Other Subaccount Yields

From time to time, sales literature or advertisements may quote the
current annualized yield of one or more of the Subaccounts (except the Money
Market Subaccount) for a Policy for 30-day or one-month periods. The
annualized yield of a Subaccount refers to income generated by the Subaccount
over a specific 30-day or one-month period. Because the yield is annualized,
the yield generated by a Subaccount during a 30-day or one-month period is
assumed to be generated each period over a 12-month period.

The yield is computed by: 1) dividing the net investment income of
the Portfolio attributable to the Subaccount units less Subaccount expenses for
the period; by (2) the maximum offering price per unit on the last day of the
period times the daily average number of units outstanding for the period; by
3) compounding that yield for a six-month period; and by 4) multiplying that
result by 2. Expenses attributable to the Subaccount include the Annual Policy
Fee, the Administration Charge and the Mortality and Expense Risk Charge. For
the class of Policies with the Enhanced Death Benefit Rider, the charge for
that optional benefit will be included. For purposes of calculating the 30-day
or one -month yield, an average Annual Policy Fee per dollar of Accumulation
Value in the Variable Account is used to determine the amount of the charge
attributable to the Subaccount for the 30-day or one-month period. The 30-day
or one-month yield is calculated according to the following formula:

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

Where:

NI = net income of the Portfolio for the 30-day or one-month period
attributable to the Subaccount's units.

ES = expenses of the Subaccount for the 30-day or one-month period.

<PAGE> 60
U = the average number of units outstanding.

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

Because of the charges and deductions imposed under the Policies, the
yield for the Subaccount will be lower than the yield for the corresponding
Fund.

The yield on the amounts held in the Subaccounts normally will
fluctuate over time. Therefore, the disclosed yield for any given past period
is not an indication or representation of future yields or rates of return.
The Subaccount's actual yield is affected by the types and quality of portfolio
securities held by the Portfolio and its operating expenses.

Yield calculations do not take into account the Surrender Charge under
the Policy equal to from 1% to 7% of premiums paid during the seven years prior
to the surrender or Withdrawal (including the year in which the surrender is
made) on amounts surrendered or withdrawn under the Policy (however, there will
never be a Surrender Charge after the fifteenth Policy Year). A Surrender
Charge will not be imposed on Withdrawals in any Policy Year on an amount up to
10% of the Accumulation Value as of the most recent Policy Anniversary.
However, if a Policy is subsequently surrendered within a year after taking a
Withdrawal that benefits from the CDSC-free provision, then a CDSC will be
assessed at the time of the surrender as if the surrender had been taken as a
single step.

Average Annual Total Returns

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

Average annual total returns represent the average annual compounded
rates of return that would equate an initial investment of $1,000 under a
Policy to the redemption value of that investment as of the last day of each of
the periods. The ending date for each period for which total return quotations
are provided will be for the most recent month-end practicable, considering the
type and media of the communication and will be stated in the communication.

For purposes of calculating average annual total return, an average
per dollar Annual Policy fee attributable to the hypothetical account for the
period is used. The calculation also assumes surrender of the Policy at the
end of the period for the return quotation. Total returns will therefore
reflect a deduction of the CDSC for any period less than seven years. The
average annual total return will then be calculated according to the following
formula:

TR = (( ERV/P) 1/N) - 1

Where:

TR = the average annual total return net of Subaccount recurring
charges.

ERV= the ending redeemable value (net of any applicable surrender
charge) of the hypothetical account at the end of the period.

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

N = the number of years in the period.

<PAGE> 61
The Funds have provided the total return information, including the
Fund total return information used to calculate the total returns of the
Subaccounts for periods prior to the inception of the Subaccounts. The Alger
American Fund, Variable Insurance Products Fund, Variable Insurance Product
Fund II, Strong Special Fund II, Inc., Strong Variable Insurance Funds, Inc.
and Van Eck Worldwide Insurance Trust are not affiliated with LSW.

Average annual total return may be calculated either taking into
account or not taking into account the impact of the Enhanced Death Benefit
Rider.

Such average annual total return information for the Subaccounts is
set forth in the Prospectus.

Other Total Returns

From time to time, sales literature or advertisements may also quote
average annual total returns that do not reflect the Surrender Charge. These
are calculated in exactly the same way as average annual total returns
described above, except that the ending redeemable value of the hypothetical
account for the period is replaced with an ending value for the period that
does not take into account any charges on amounts surrendered or withdrawn, and
that the initial investment is assumed to be $10,000 rather than $1,000. Such
information is also set forth in the Prospectus.

LSW may disclose Cumulative Total Returns in conjunction with the
standard formats described above. The Cumulative Total Returns will be
calculated using the following formula:

CTR = (ERV/P) - 1

Where:

CTR = The Cumulative Total Return net of Subaccount recurring
charges for the period.

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

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

Effect of the Annual Policy Fee on Performance Data

The Policy provides, for all Policies with an Accumulation Value of
less than $50,000 on the Date of Issue or any subsequent Policy Anniversary,
for a $30 Annual Policy Fee to be deducted annually at the beginning of each
Policy Year, from the Subaccounts and the unloaned portion of the Fixed Account
based on the proportion that the value of each such account bears to the total
Accumulation Value. For purposes of reflecting the Annual Policy Fee in the
yield and total return quotations, the Annual Policy Fee is converted into a
per-dollar per-day charge. The per-dollar per-day charge has been estimated
based on the distribution of LSW's non-variable single premium deferred annuity
block of business. The per-dollar per-day average charge will then be adjusted
to reflect the basis upon which the particular quotation is calculated.

DISTRIBUTION OF THE POLICIES

The principal underwriter for the Policies is Equity Services, Inc., a
wholly-owned subsidiary of National Life Insurance Company, the parent company
of LSW. The Policies will be offered on a continuous basis and will be sold by
licensed insurance agents in the states where the Policies may lawfully be
sold. Such agents will be representatives of broker-dealers registered under
the Securities

<PAGE> 62
Exchange Act of 1934 who are members of the National Association of Securities
Dealers, Inc. Broker-dealers other than Equity Services, Inc. will have
executed Selling Agreements with Equity Services, Inc.

SAFEKEEPING OF ACCOUNT ASSETS

LSW holds the title to the assets of the Variable Account. The assets
are kept physically segregated and held separate and apart from LSW's General
Account assets and from the assets in any other separate account.

Records are maintained of all purchases and redemptions of Fund shares
held by each of the Subaccounts.

STATE REGULATION

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

RECORDS AND REPORTS

LSW will maintain all records and accounts relating to the Variable
Account. As presently required by the Investment Company Act of 1940 and
regulations promulgated thereunder, reports containing such information as may
be required under the Act or by any other applicable law or regulation will be
sent to Policy Owners semi-annually at the last address known to the Company.

LEGAL MATTERS

All matters relating to Texas law pertaining to the Policies,
including the validity of the Policies and LSW's authority to issue the
Policies, have been passed upon by Susan Jennings, General Counsel of LSW.
Sutherland, Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain matters relating to the Federal securities laws.

EXPERTS

The statutory basis financial statements of LSW as of and for the
years ended December 31, 1997 and 1996, which are included in this Statement of
Additional Information and in the registration statement, have been audited by
Price Waterhouse LLP, independent auditors, of [Dallas
address] , as set forth in their report included herein, and are
included herein in reliance upon such report and upon the authority of such
firm as experts in accounting and auditing.

The statutory basis financial statements of LSW for the year ended
December 31, 1995, which are included in this Statement of Additional
Information and in the registration statement, have been audited by KPMG Peat
Marwick LLP, independent auditors, of [Dallas address] , as set
forth in their report included herein, and are included herein in reliance upon
such report and upon the authority of such firm as experts in accounting and
auditing.

OTHER INFORMATION

<PAGE> 63
A registration statement has been filed with the SEC under the
Securities Act of 1933 as amended, with respect to the Policies discussed in
this Statement of Additional Information. Not all the information set forth in
the registration statement, amendments and exhibits thereto has been included
in this Statement of Additional Information. Statements contained in this
Statement of Additional Information concerning the content of the Policies and
other legal instruments are intended to be summaries. For a complete statement
of the terms of these documents, reference should be made to the instruments
filed with the SEC at 450 Fifth Street, N.W., Washington, DC 20549.

FINANCIAL STATEMENTS

LSW's statutory basis financial statements as of December 31, 1997 and
1996, and for the years ended December 31, 1997, 1996 and 1995, which are
included in this Statement of Additional Information, should be considered only
as bearing on LSW's ability to meet its obligations under the Policies. They
should not be considered as bearing on the investment performance of the assets
held in the Variable Account.

<PAGE> 64

PART C

OTHER INFORMATION
<PAGE> 65
PART C - OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial statements and schedule included in Part B:

Independent Auditor's Report.

Consolidated Balance Sheets (Statutory Basis)
as of December 31, 1997 and 1996.

Consolidated Statements of Operations and
Surplus (Statutory Basis) for the years ended
December 31, 1997 and 1996.

Consolidated Statements of Cash Flow
(Statutory Basis) for the years ended
December 31, 1997 and 1996.

Notes to Consolidated Financial Statements.

Independent Auditor's Report.

Statement of Operations and Surplus
(Statutory Basis) for the year ended
December 31, 199__.

Statement of Cash Flows (Statutory Basis) for
the year ended December 31, 199__.

Notes to Financial Statements

(b) Exhibits

(1) Resolution of the Depositor's Board of
Directors authorizing the establishment of
the Registrant.

(2) Not Applicable.

(3) Form of Distribution Agreement between the
Variable Account/Registrant and Principal
Underwriter.*

(4) (a) The form of the variable annuity
policy.*
(b) Form of Enhanced Death Benefit
Rider.*

(5) Variable Annuity Application*

(6) (a) Articles of Incorporation of
Depositor
(b) By-Laws of Depositor.

(7) Not Applicable.

(8) (a) Form of Participation Agreement by
and among Market Street Fund, Inc., Life
Insurance Company of the Southwest and Equity
Services, Inc. dated , 1998*.

C-1
<PAGE> 66

(b) Form of Participation Agreement by
and among Variable Insurance Products Fund,
Fidelity Distributors Corporation and Life
Insurance Company of the Southwest dated
, 1998*.

(c) Form of Participation Agreement by
and among The Alger American Fund, Life
Insurance Company of the Southwest and Fred
Alger and Company, dated , 1998*.

(d) Form of Participation Agreement by
and among Life Insurance Company of the
Southwest, LSW Variable Annuity Account I and
Strong Variable Insurance Funds, Inc., Strong
Fund II, Inc., and Strong Funds Distributors,
Inc., dated ,1998.*

(e) Form of Participation Agreement by
and among Variable Insurance Products Fund
II, Fidelity Distributors Corporation and
Life Insurance Company of the Southwest,
dated , 1998*.

(f) Form of Participation Agreement by
and among Van Eck.Worldwide Insurance Trust
and Life Insurance Company of the Southwest,
dated ________, 1998.*

(9) Opinion and Consent of Susan J. Jennings,
General Counsel of Life Insurance Company of
the Southwest.*

(10) (a) Consent of Sutherland, Asbill &
Brennan LLP*

(b) Consent of Price Waterhouse LLP*

(11) Not Applicable.

(12) Not Applicable.

(13) Performance Advertising Calculation
Schedules.*

*To be filed by amendment.

Item 25. Directors and Officers of the Depositor

<TABLE>
<CAPTION>
Name and Principal Business Address* Position with Depositor
- ------------------------------------ -----------------------

<S> <C>
Wade H. Mayo President, Chief Executive
Officer and Director

Carl J. Lutz Senior Vice President and
Director

Thomas H. MacLeay Chairman of the Board and Director
National Life Drive
Montpelier, Vermont 05604
</TABLE>

C-2
<PAGE> 67

<TABLE>
<S> <C>
Karl-Heinz Klaeser Director
[address to be provided]

Rodney A. Buck Director
National Life Drive
Montpelier, Vermont 05604

Joseph M. Rob Director
National Life Drive
Montpelier, Vermont 05604

D. Russell Morgan Director
National Life Drive
Montpelier, Vermont 05604

Susan J. Jennings Vice President, General Counsel and
Secretary

Micheal F. Goni Managing Vice President - Finance
</TABLE>

*Unless otherwise indicated, the principal business address is 1300 West
Mockingbird Lane, Dallas, Texas 75247-4921.

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

A list of all persons directly or indirectly controlled by or under
common control with National Life Insurance Company, the two thirds
owner of LSW, is as set forth below:

National Life Insurance Company owns 100% of Administrative Services,
Inc. and National Financial Services, Inc. National Financial
Services, Inc. owns 66.667% of LSW National Holdings, Inc.; LSW
National Holdings, Inc. owns 100% of Insurance Investors Life
Insurance Company; Insurance Investors Life Insurance Company owns
100% of LSW.

National Life Insurance Company owns 100% of National Life Investment
Management Company, Inc. National Life Investment Management
Company, Inc. owns 100% of Sentinel Advisors, Inc., Equity Services,
Inc. and NL Capital Management, Inc. Equity Services, Inc. owns 100%
of Sentinel Administrative Service Corporation. Sentinel
Administrative Service Corporation is the majority partner of
Sentinel Administrative Service Company and Sentinel Advisors, Inc.
is the majority partner of Sentinel Advisors Company.

National Life Investment Management Company, Inc. is the majority
partner of Sentinel Management Company, and Sentinel Financial
Services Company. Sentinel Management Company owns 100% of American
Guaranty & Trust Company.

All of National Life Insurance Company, Administrative Services,
Inc., National Financial Services, Inc., LSW National Holdings, Inc.,
National Life Investment Management Company, Inc., NL Capital
Management, Inc., Equity Services, Inc., and Sentinel Administrative
Service Corporation are corporations organized under the laws of
Vermont. Insurance Investors Life Insurance Company is a corporation
organized under the laws of Texas.

C-3
<PAGE> 68

Sentinel Advisors, Inc. and American Guaranty & Trust Company are
corporations organized under the laws of Delaware.

Each of Sentinel Management Company, Sentinel Advisors Company,
Sentinel Financial Services Company and Sentinel Administrative
Service Company is a general partnership formed under Vermont law.

Item 27. Number of Contract Owners

No contracts have been issued to date.

Item 28. Indemnification

The By-Laws of Depositor provide, in Section 7 of Article IV, as
follows:

Section 7. The corporation shall indemnify each
Director and officer of the corporation, whether or not then
in office, and his heirs, executors and administrators,
against all costs and expenses reasonably incurred by or
imposed upon him in connection with or arising out of any
action, suit or proceeding in which he may be involved by
reason of his being or having been a Director or an officer of
the corporation, whether the claim asserted against him is
based on matters which occurred prior to or subsequent to the
adoption of this Bylaw. Such costs and expenses shall
include, but shall not be limited to, attorneys' fees and all
amounts paid or payable to him (other than amounts paid or
payable to the corporation itself) pursuant to any judgment
or any reasonable settlement agreement. The corporation shall
not, however, indemnify any Director or officer or his heirs,
executors or administrators, with respect to such matters as
to which he shall be finally adjudged in such action, suit or
proceeding or (in the case of a settlement) as to which he
shall have been determined by the Board of Directors of the
corporation (in the event a Director is involved, he shall not
be entitled to vote on the matter) to have been guilty of
gross negligence or willful misconduct in performance of his
duty as such Director or officer. The foregoing right of
indemnification shall not be exclusive of other rights to
which any Director or officer shall be entitled as a matter of
law.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 such 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 of 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.

Item 29 Principal Underwriter

(a) Equity Services, Inc. (ESI) is the principal underwriter for
LSW Variable Annuity Account I, National Life Variable Annuity Account II and
National Variable Life Insurance Account.

(b) The following information is furnished with respect to the
officers and directors of ESI:

C-4
<PAGE> 69

<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address* with ESI
- ------------------- --------

<S> <C>
Joseph M. Rob Chairman, President & Chief Executive Officer & Director
John M. Grab, Jr. Senior Vice President, Chief Financial Officer and Treasurer
Stephen A. Englese Vice President - Financial Products
Budd A. Shedaker Assistant Vice President - Communications
Greg D. Teese Vice President - Compliance
D. Russell Morgan Counsel
Lisa A. Pettrey Secretary
Patrick E. Welch Director
Thomas H. MacLeay Director
Rodney A. Buck Director
</TABLE>

*Unless otherwise indicated, principal business address is One National Life
Drive, Montpelier, Vermont 05604.

Item 30. Location of Accounts and Records

All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and the rules thereunder are maintained by
Life Insurance Company of the Southwest at 1300 West Mockingbird Lane, Dallas,
Texas 75247-4921, or One National Life Drive, Montpelier, Vermont 05604.

Item 31. Management Services

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

Item 32 Undertakings

(a) Registrant hereby undertakes to file a post-effective
amendment to this registration statement as frequently as is necessary to
ensure that the audited financial statements in the registration statement are
never more than sixteen (16) months old for so long as payments under the
variable annuity contracts may be accepted.

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

(c) Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statement required to be made
available under this form promptly upon written or oral request.

(d) Reliance on No-Action Letter Regarding Section 403(b)
Retirement Plan. Life Insurance Company of the Southwest and the
Registrant/Variable Account rely on a no-action letter issued by the Division
of Investment Management to the American Council of Life Insurance on November
28, 1988 and represent that the conditions enumerated therein have been or will
be complied with.

C-5
<PAGE> 70

(e) Life Insurance Company of the Southwest hereby represents that
the fees and charges deducted under the Contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Life Insurance Company of the Southwest.

C-6
<PAGE> 71

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, LSW Variable Annuity Account I,
has duly caused this Registration Statement to be signed on its behalf, in the
City of Dallas and the State of Texas, on the 27th day of February, 1998.

LSW VARIABLE ANNUITY ACCOUNT I
(Registrant)

Attest: By: /s/ SSJ /s/ WHM
---------------- -------------------------
Susan S. Jennings Wade H. Mayo, President &
Secretary Chief Executive Officer
Life Insurance Company of the Southwest

By: LIFE INSURANCE COMPANY OF THE SOUTHWEST
(Depositor)

Attest: By: /s/ SSJ /s/ WHM
---------------- -------------------------
Susan S. Jennings Wade H. Mayo, President &
Secretary Chief Executive Officer

SIGNATURES

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

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

/s/ WHM 2/11/98
- ------------------ President -----------
Wade H. Mayo and Chief Executive Officer,
and Director

/s/ THM 2/20/98
- ------------------ Chairman of the Board and -----------
Thomas H. MacLeay Director

C-7
<PAGE> 72

/s/ MFG 2/11/98
- ------------------ Managing Vice President - Finance -----------
Michael F. Goni (Chief Accounting Officer)

/s/ RAB 2/20/98
- ------------------ Director -----------
Rodney A. Buck

/s/ CJL 2/11/98
- ------------------ Senior Vice President and Director -----------
Carl J. Lutz

/s/ JMR 2/20/98
- ------------------ Director -----------
Joseph M. Rob

/s/ DRM 2/23/98
- ------------------ Director -----------
D. Russell Morgan

- ------------------ Director -----------
Karl-Heinz Klaeser

C-8

<PAGE> 1

EXHIBIT (b)(1)

LIFE INSURANCE COMPANY OF THE SOUTHWEST
BOARD OF DIRECTORS MEETING
DECEMBER 4,1997

ESTABLISHING A SEPARATE ACCOUNT
LSW VARIABLE ANNUITY ACCOUNT I

BE IT RESOLVED, that the Company, pursuant to the provisions of Article 3.75 of
the Texas Insurance Code, hereby establishes a separate account designated,
"LSW Variable Annuity Account I"("Variable Account") for the following use and
purposes, and subject to such conditions as hereinafter set forth:

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

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

FURTHER RESOLVED, that the fundamental investment policy of the Variable
Account shall be to invest or reinvest the assets of the Variable Account in
securities issued by investment companies registered under the Investment
Company Act of 1940 as may be specified in the respective Contracts or in the
case of a separate account registered as a Management Company under the
Investment Company Act of 1940, to invest directly in stocks, bonds,
derivatives, real estate, or other investment assets as may be specified in the
respective Contracts; and

FURTHER RESOLVED, that thirty investment divisions be, and hereby are
established within the Variable Account to which net payments under the
Contracts will be allocated in accordance with instructions received from
contractholders, and that the Board of Directors be, and hereby is, authorized
to increase or decrease the number of investment divisions in the Variable
Account as it deems necessary or appropriate; and

FURTHER RESOLVED, that each such investment division shall invest only in the
shares of a single mutual fund or a single mutual fund portfolio of an
investment
<PAGE> 2

company organized as a series fund pursuant to the Investment Company Act of
1940 or a separate account which is registered as a Management Company as
defined in the Investment Act of 1940; and

FURTHER RESOLVED, that the President and any Senior Vice President be, and they
hereby are, authorized to deposit such amounts in the Variable Account or in
each investment division thereof as may be necessary or appropriate to
facilitate the commencement of the Account's operations; and

FURTHER RESOLVED, that the President and any Senior Vice President be, and they
hereby are, authorized to transfer funds from time to time between the
Company's general account and the Variable Account as deemed necessary or
appropriate and consistent with the terms of the Contracts; and

FURTHER RESOLVED, that the Board of Directors of the Company be, and is hereby,
authorized to change the designation of the Variable Account to such other
designation as it may deem necessary or appropriate; and

FURTHER RESOLVED, that the appropriate officers of the Company, with such
assistance from the Company's auditors, legal counsel and independent
consultants or others as they may require, be, and they hereby are, authorized
and directed to take all action necessary to: (a) register the Variable Account
as a unit investment trust under the Investment Company Act of 1940, as
amended; (b) register the Contracts in such amounts, which may be an indefinite
amount, as the officers of the Company shall from time to time deem appropriate
under the Securities Act of 1933; and (c) take all other actions which are
necessary in connection with the offering of said Contracts for sale and the
operation of the Variable Account in order to comply with the Investment
Company Act of 1940, the Securities Exchange Act of 1934, the Securities Act of
1933, and other applicable federal laws, including the filing of any amendments
to registration statement, any undertakings, and any applications for
exemptions from the Investment Company Act of 1940 or other applicable federal
laws as the officers of the Company shall deem necessary or appropriate; and

FURTHER RESOLVED, that the President, any Senior Vice President, and the
General Counsel, and each of them with full power to act without the others,
hereby are severally authorized and empowered to prepare, execute, in person or
by attorney-in-fact, and cause to be filed with the Securities and Exchange
Commission on behalf of the Variable Account, and by the Company as sponsor and
depositor a Registration Statement under the Securities Act of 1933 registering
the Contracts, and any and all amendments to the foregoing on behalf of the
Variable Account and the Company and on behalf of and as attorneys for the
principal executive officer and/or the principal financial officer and/or the
principal accounting officer and/or any other officer of the Company; and

2
<PAGE> 3

FURTHER RESOLVED, that the General Counsel is hereby appointed as agent for
service under any such registration statement duly authorized to receive
communications and notices from the Securities and Exchange Commission with
respect thereto; and

FURTHER RESOLVED, that the appropriate officers of the Company be, and they
hereby are, authorized on behalf of the Variable Account and on behalf of the
Company to take any and all action that they may deem necessary or advisable in
order to sell the Contracts, including any registrations, filings and
qualifications of the Company, its officers, agents and employees, and the
Contracts under the insurance and securities laws of any of the states of the
United States of America or other jurisdictions, and in connection therewith to
prepare, execute, deliver and file all such applications, reports, convenants,
resolutions, applications for exemptions, consents to service of process and
other papers and instruments as may be required under such laws, and to take
any and all further action which said officers or counsel of the Company may
deem necessary or desirable (including entering into whatever agreements and
contracts may be necessary) in order to maintain such registrations or
qualifications for as long as said officers or counsel deem it to be in the
best interest of the Variable Account and the Company; and

FURTHER RESOLVED, that the President, any Senior Vice President and the General
Counsel of the Company be, and they hereby are, authorized in the names and on
behalf of the variable Account and of the Company to execute and file
irrevocable written consents on the part of the Variable Account and of the
Company to be used in such states wherein such consents to service of process
may be requisite under the insurance or securities laws therein in connection
with said registration or qualification of Contracts and to appoint the
appropriate state official, or such other person as may be allowed by said
insurance or securities laws, agent of the Variable Account and of the Company
for the purpose of receiving and accepting process; and

FURTHER RESOLVED, that the President and any Senior Vice President of the
Company be, and hereby is, authorized to establish procedures under which the
Company will provide voting rights for owners of such Contracts with respect to
securities owned by the Variable Account; and

FURTHER RESOLVED, that the President and any Senior Vice President of the
Company is hereby authorized to execute such agreement or agreements as deemed
necessary and appropriate (i) with Equity Services, Inc., ('ESI') or other
qualified entity under which ESI or such other entity will be appointed
principal underwrite and distributor for the Contracts and (ii) with one or
more qualified banks or other qualified entities to provide administrative
and/or custodial services in connection with the establishment and maintenance
of the Variable Account and the design, issuance and administration of the
Contracts; and

FURTHER RESOLVED, that, since it is expected that the Variable Account will
invest in the securities issued by one ore more investment companies, the
appropriate officers of the Company are hereby authorized to execute whatever
agreement or agreements as may be necessary or appropriate to enable such
investments to be made; and

3
<PAGE> 4

FURTHER RESOLVED, that the appropriate officers of the Company, and each of
them, are hereby authorized to execute and deliver all such documents and
papers and to do or cause to be done all such acts and things as he/she may
deem necessary or desirable to carry out the forgoing resolutions and the
intent and purpose thereof.

<PAGE> 1

EXHIBIT (b)(6)(A)

RESTATED ARTICLES OF INCORPORATION

ARTICLE ONE

Life Insurance Company of the Southwest, pursuant to the provisions of Article
4.07 of the Texas Business Corporation Act, hereby adopts Restated Articles of
Incorporation which accurately copy the Articles of Incorporation and all
amendments thereto that are in effect to date and as further amended by such
Restated Articles of Incorporation as hereinafter set forth and which contain
no other change in any provision thereof.

ARTICLE TWO

The Articles of Incorporation of the corporation are amended by the Restated
Articles of Incorporation as follows:

ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION

Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, the undersigned corporation adopts the following Articles of Amendment to
its Articles of Incorporation:

ARTICLE ONE

The name of the corporation is Life Insurance Company of the Southwest.

ARTICLE TWO

The following amendment to the Articles of Incorporation was adopted by the
shareholders of the corporation on February 6, 1990.

The amendment alters or changes Article V of the original or amended Articles
of Incorporation and the full text of each provision added is as follows:

ARTICLE V

The Company is authorized to issue Three Hundred Thousand (300,000) shares of
common stock with a par value of Ten dollars ($10.00) each, all of which stock
of the aggregate par value of Three Million Dollars ($3,000,000) has been
subscribed and fully paid for, and all of which shares shall be non-assessable.

ARTICLE THREE

The number of shares of the corporation outstanding at the time of such
adoption was 200,000; and the number of shares entitled to vote thereon was
200,000.

ARTICLE FOUR

The holders of all of the shares outstanding and entitled to vote on said
amendment have signed a consent in writing adoption said amendment.
<PAGE> 2

ARTICLE FIVE

The manner in which any exchange, reclassification or cancellation of issued
shares provided for in the amendment shall be effected, is as follows:

ARTICLE SIX

The manner in which such amendment effects a change in the amount of stated
capital, and the amount of stated capital as changed by such Amendment, are as
follows:

ARTICLE V

The company is authorized to issue Three Hundred Thousand (300,000) shares of
common stock with a par value of Ten Dollars ($10.00) each, all of which stock
of the aggregate par value of Three Million Dollars ($3,000,000) has been
subscribed and fully paid for, and all of which shares shall be non-assessable.

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

ARTICLE THREE

Each such amendment made by these Restated Articles of Incorporation has been
effected in conformity with the provisions of the Texas Business Corporation
Act and such Restated Articles of Incorporation and each such amendment made by
the Restated Articles of Incorporation were duly adopted by the shareholder of
the corporation on the 6th day of February, 1990.

ARTICLE FOUR

The number of shares outstanding was 200,000, and the number of shares entitled
to vote on the Restated Articles of Incorporation as so amended was 200,000,
the holder of all of which has signed a written consent to the adoption of such
Restated Articles of Incorporation as amended.

ARTICLE FIVE

The Articles of Incorporation and all amendments and supplements thereto are
hereby superseded by the following Restated Articles of Incorporation which
accurately copy the entire text thereof and as amended as above set forth:

THE STATE OF TEXAS Section
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF COLEMAN Section

THAT WE, SAM T. COBB, SR., SAM T. COBB, JR., and RICHARD R. LEE, all
citizens of Texas, under and by virtue of the laws of the State of Texas, do
hereby voluntarily associate ourselves for the purpose of forming an insurance
corporation under and by virtue of the provisions of the Insurance Code of the
State of Texas, upon the following terms and conditions:

ARTICLE I

The name of the corporation is Life Insurance Company of the
Southwest (the "Company").

2
<PAGE> 3

ARTICLE II

The name and place of residence of each of the incorporators are as
follows:

NAME RESIDENCE
---- ---------

Sam T. Cobb, Sr. Coleman, Texas

Sam T. Cobb, Jr. Coleman, Texas

Richard R. Lee Coleman, Texas

ARTICLE III

The location of the Home Office of said corporation is 1300 West
Mockingbird Lane, Dallas, Dallas County, Texas.

ARTICLE IV

The kind or kinds of insurance business said corporation proposes to
transact is that of a life, health and accident insurance company as such
companies are defined in Article 3.03 of the Insurance Code of the State of
Texas. Said company shall be a limited stock company within the meaning of
said Article 3.03 of the Insurance Code of the State of Texas, engaging
generally in the business of life, health and accident insurance but with the
limitations prescribed in said Article.

ARTICLE V

The Company is authorized to issue Three Hundred Thousand (300,000)
shares of common stock with a par value of Ten Dollars ($10.00) each, all of
which stock of the aggregate par value of Three Million Dollars ($3,000,000)
has been subscribed and fully paid for, and all of which shares shall be
non-assessable.

ARTICLE VI

The period of time said corporation is to exist is to be five hundred
(500) years.

ARTICLE VII

At all elections of directors, each share of stock shall be entitled
to only one vote and each fractional share, if any, shall be entitled to an
equivalent fractional vote only, and multiplication of votes by the number of
directors to be elected, or cumulative voting, is expressly prohibited.

ARTICLE VIII

Shareholders are denied the pre-emptive right to acquire additional
shares of the corporation now or hereafter authorized, and no shareholder of
this corporation shall, by reason of his holding shares of any class, have any
pre-emptive or preferential right to purchase or subscribe to any shares of any
class of this corporation, now or hereafter to be authorized, or any notes,
debentures, bonds, or other securities convertible into or carrying rights,
options or

3
<PAGE> 4

warrants to purchase shares of any class, now or hereafter to be authorized,
whether or not the issuance of any such shares, or such bonds, notes,
debentures or other securities, would adversely affect the dividend or voting
rights of such shareholder, other than such rights, if any, as the Board of
Directors, in its discretion from time to time may grant, and at such price as
the Board of Directors in its discretion may fix; and the Board of Directors
may issue shares of any class of this corporation, or any notes, debentures,
bonds, or other securities convertible into or carrying rights, options or
warrants to purchase shares of any class, without offering any such shares of
any class, either in whole or in part, to the existing shareholders of any
class.

Dated February 23, 1990

Life Insurance Company of the Southwest

By: /s/JHL
----------------------------------
John H. Lancaster, Its President

And: /s/SJJ
-----------------------------------
Susan J. Jennings, Its Secretary

STATE OF TEXAS

COUNTY OF DALLAS

Before me, a notary public, on this day personally appeared John H.
Lancaster and Susan J. Jennings, known to me to be the persons whose names are
subscribed to the foregoing document and, being by first duly sworn, declared
that the statements therein contained are true and correct.

Given under my hand and seal of office this 23rd day of February,
A.D., 1990.

/s/John J. Irvin, Notary Public
-------------------------------

Notary Name Printed:
John J. Irvin

My Commission Expires:
0ctober 31, 1992
----------------

<PAGE> 1

EXHIBIT (b)(6)(b)

LIFE INSURANCE COMPANY OF THE SOUTHWEST

AND FURTHER BE IT RESOLVED, that the BYLAWS OF THE COMPANY are
hereby restated incorporating all prior amendments as follows:

ARTICLE I
NAME AND OFFICES

Section 1. The name of this corporation and the location of its Home
Office shall be such as is provided in the Articles of Incorporation, as
amended.

Section 2. An Executive Office of the Company may be located in the
City of Dallas, Dallas County, Texas.

Section 3. Branch Offices for the transaction of the business of the
corporation may be located at such other places as the Board of Directors shall
from time to time determine.

ARTICLE II
CAPITAL STOCK AND STOCK CERTIFICATES

Section 1. The amount of the capital stock shall be as provided in
the Articles of Incorporation, as amended.

Section 2. All certificates of stock shall be signed by the President
or a Vice President and the Secretary or an Assistant Secretary, and shall be
sealed with the corporate seal.

Section 3. Transfers of stock shall be made only on the books of the
corporation in accordance with the Texas Uniform Stock Transfer Act.

Section 4. In case of loss or destruction of a certificate of stock,
no new certificate shall be issued in lieu thereof except upon satisfactory
proof of such loss or destruction and upon the giving of satisfactory security,
by bond or otherwise, against loss to the corporation.

ARTICLE III
STOCKHOLDERS MEETINGS

Section 1. The Annual Meeting of the Stockholders of this Company
may be held at any convenient time during the month of April of each year.

Section 2. The Chief Executive Officer, President or a majority of
the Board of Directors may convene the stockholders in a special meeting on
their own motion; or upon the written

1
<PAGE> 2

request of stockholders representing a majority of the capital stock of the
Company, the Chief Executive Officer shall convene the stockholders in a
special meeting.

Section 3. The Chief Executive Officer, President or the Secretary
or an Assistant Secretary of the Company shall notify each stockholder of the
date of each Annual or any Special Meeting a sufficient time in advance thereof
to comply with any statutory requirement with reference to business to be
transacted thereat, and if no different statutory period is prescribed, such
notice shall be given at least ten (10) days in advance thereof by depositing
in the United States Mails such notice directed to the last known address of
the shareholder for whom it is intended as shown on the Company's record of
stockholders. The notice required hereby may be waived by any person entitled
to such notice.

Section 4. The Chief Executive Officer or in his absence the
President, shall preside at all meetings of stockholders. In the event of the
absence of the Chief Executive Officer and President, a Chairman may be elected
from among those present. The Secretary of the Company, if present, shall act
as Secretary for the meeting of stockholders, and in the absence of the
Secretary any other officer of the Company designated by the President may act
as Secretary for the meeting of stockholders, and in the event the President
fails to do so, a Secretary may be elected from among those present.

Section 5. At every meeting of stockholders, each stockholder shall
be entitled to cast one vote for each share of stock standing in his name on
the stock records of the Company and to cast an equivalent fractional vote for
each fractional share, if any, standing in his name. Cumulative voting in the
election of directors is expressly prohibited. Votes may be cast either in
person or by proxy, provided, however, all proxies shall be in writing and
shall be filed with the Secretary of the meeting.

Section 6. A quorum for the transaction of any business at any
meeting of stockholders shall consist of stockholders representing a simple
majority of the number of issued shares of capital stock (either in person or
by proxy) ; but the stockholders present at any meeting, though less than a
quorum, may adjourn the meeting to a future date.

Section 7. The stockholders shall have power, by a majority vote at
any meeting, to remove from office, for cause, with or without notice, any
director or officer.

ARTICLE IV
DIRECTORS

Section 1. The business and property of the corporation shall be
managed by a Board of Directors who shall be elected annually by a vote of the
stockholders. Said Board shall consist of not less than five (5) members.
Subject to the limitation specified above, the number of Directors shall be
determined by resolution of the stockholders at any annual meeting or at any
special meeting called for that purpose. A Director need not be a stockholder
of the corporation.

2
<PAGE> 3

Section 2. A meeting of the newly elected Directors shall be held at
the earliest practicable time following the Annual Meeting of stockholders at
which such directors are elected, and additional directors meetings shall be
held at such times and places as shall be determined by the Chairman of the
Board or the Chief Executive Officer or by as many as three members of the
Board of Directors from time to time.

Section 3. Notice of all Regular and Special Meetings shall be given
each Director at least three days prior to the time fixed for the meeting. By
unanimous consent of the Directors, Special Meetings of the Board may be held
without notice at any time an d place. Notice may be waived by any individual
director.

Section 4. A quorum for the transaction of business at any Regular
or Special Meeting of the directors shall consist of a majority of the then
elected and qualified directors; but a majority of those present at any Regular
or Special Meeting shall have power to adjourn any such meeting to a future
time. The directors shall elect the officers of the corporation. Any officer
may be removed at any time for any reason by a two-thirds vote of the full
Board of Directors.

Section 5. Vacancies in the Board of Directors may be filled for the
unexpired terms by the remaining directors at any Regular or Special Meeting of
the directors.

Section 6. The directors may elect from their number an Executive
Committee to consist of the Chief Executive Officer and two or more other
members. The Chief Executive officer shall serve as Chairman, if unable to
serve, the Committee shall elect from their members a Chairman. The Committee
may exercise all of the powers vested in the Board of Directors except such as
are required to be exercised by the Board of Directors under the statutes of
the State of Texas and, without limiting the foregoing, such Committee shall
act as a salary committee with respect to all officers and employee directors
of the corporation with full power to fix salaries and compensation of such
officers and employee directors; provided, however, that the Board of Directors
may place such limitation upon the Executive Committee as the Board may by
majority vote impose. Such Committee shall meet upon call of the Chief
Executive Officer or Chairman of the Committee at time and places designated in
the call. The Committee shall keep minutes of its meetings in a book used for
such purpose. A majority of the members of the Committee shall constitute a
quorum for the transaction of business.

3
<PAGE> 4

matters as to which he shall be finally adjudged in such action, suit or
proceeding or (in the case of a settlement) as to which he shall have been
determined by the Board of Directors of the corporation (in the event a
Director is involved, he shall not be entitled to vote on the matter) to have
been guilty of gross negligence or willful misconduct in performance of his
duty as such Director or officer. The foregoing right of indemnification shall
not be exclusive of other rights to which any Director or officer shall be
entitled as a matter of law.

ARTICLE V
OFFICERS

Section 1. The officers of this corporation shall be a Chief
Executive Officer, President, one or more Vice Presidents, one of whom may be
designated Executive Vice President, a Treasurer, and a Secretary. The
remuneration of such officers shall be fixed by the Executive Committee of the
Board of Directors pursuant to Section 6 of Article IV hereof or by the Board
of Directors. In addition, there may be one or more Assistant Vice Presidents,
one or more Assistant Secretaries, one or more Assistant Treasurers, one or
more Agency Directors, and such other officers as the directors may deem
advisable, all of whose duties shall be such as may be prescribed by these
By-Laws, by resolution of the Board of Directors or by the Chief Executive
Officer, President or a Vice President of the Company. One individual may hold
more than one office at the same time, except that the same person may not be
President and Secretary at the same time. No one shall be eligible to the
office of President who is not a director of the corporation.

Section 2. The Chairman of the Board shall preside at all meetings of
the directors, or in the event of his absence, the Chief Executive Officer or
in the absence of both, the President, shall preside in that order. If none of
these named be present, then a presiding officer may be chosen from those
present.

Section 3. The Chief Executive officer shall preside at stockholders'
meetings, and shall have general supervision over the affairs of the
corporation and may perform special duties when specifically delegated to him
by the Board of Directors. The Chief Executive Officer or the President or any
Vice President to whom the Chief Executive Officer or President delegates shall
have authority to execute contracts, deeds, assignments, releases, and all
instruments appropriate in the conduct of the business of the Company.

Section 4. The President shall supervise the day to day operations of
the Company. In the absence or disability of the Chief Executive Officer, he
shall preside at stockholders' meetings and perform any of the other duties of
the Chief Executive Officer.

Section 5. The Executive Vice President, if there be one, shall act
in the absence or disability of the President, and perform such other duties as
are delegated to him by the Board of Directors, and in the event there is no
Executive Vice President, a Vice President designated by the Board of Directors
shall act in the absence or disability of the President. All Vice Presidents
shall perform such duties as are delegated to them by the Board of Directors.

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Section 6. The Secretary or an Assistant Secretary shall issue
notices of all directors and stockholders meetings, and shall attend and keep
the minutes of same; shall have charge of all corporate books, records and
papers, shall be custodian of the corporate seal; shall attest with his
signature and impress with the corporate seal all resolutions passed by the
Directors or Stockholders, and all written instruments to which the corporation
may be a party, and shall perform such other duties as are incident to the
office, or delegated thereunto by the Board of Directors.

Section 7. Each Assistant Secretary shall be under the general
supervision of the Secretary and shall perform such duties as are incident to
his office or delegated to him by the Board of Directors, and shall act in the
absence or disability of the Secretary to the extent he is designated to do so
by the President or the Board of Directors.

Section 8. The Treasurer, if one is elected, shall have custody of
all money and securities of the corporation and shall perform such other duties
as are incident to his office or delegated to him by the Board of Directors.

Section 9. Each Assistant Treasurer shall be under the general
supervision of the Treasurer, and shall perform such duties as are incident to
his office or delegated to him by the Board of Directors, and shall act in the
absence or disability of the Treasurer.

Section 10. Each Assistant Vice President shall be under the general
supervision of the Executive Vice President or such other Vice President as may
have been designated by the Board of Directors, and shall perform such duties
as are incident to his office or delegated to him by the Board of Directors.

Section 11. Each Agency Director shall perform such duties as shall
be delegated to him by the Board of Directors or the President, and as may be
fixed by any written contract with the Company.

Section 12. In the event the Board of Directors shall deem it
advisable to have other officers of the corporation, the Board shall designate
the duties of any such office by a resolution duly passed.

ARTICLE VI
DIVIDENDS AND CORPORATE SEAL

Section 1. The Board of Directors shall have authority to declare
dividends subject to such limitations as are imposed by statute.

Section 2. The seal of the corporation shall consist of a circle
within which shall be inscribed the name and address of the Company.

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WRITTEN CONSENT
OF THE SOLE SHAREHOLDER OF
LIFE INSURANCE COMPANY OF THE SOUTHWEST

Pursuant to Article 9.10 A. of the Texas Business Corporation Act, the
undersigned, being the sole shareholder of Life Insurance Company of the
Southwest (the "Company"), hereby consents to, approves, and adopts the
following resolution, which resolution shall have the same force and effect as
if adopted at a regular meeting of the shareholder of the Company, duly called
and held for the purpose of acting upon proposals to adopt such resolution:

RESOLVED, that effective March 1, 1994, the By-laws of the Company
shall be amended by deleting Section 1 in Article III in its entirety
and replacing it with the following:

ARTICLE III
STOCKHOLDERS MEETING

Section 1. An annual meeting of the stockholders shall be held at the
principal office of the Company, or at such place as may be designated
in the notice of the meeting, not earlier than January 1 nor later
than April 30 of each and every year, the exact date, time and place
thereof to be fixed by the Board of Directors from year to year.

IN WITNESS WHEREOF, the undersigned has set his hand effective as of
the 1st day of March, 1994.

INSURANCE INVESTORS LIFE INSURANCE COMPANY

By: /s/ WHM
--------------------------------
Wade H. Mayo, President

being the sole shareholder of LIFE INSURANCE
COMPANY OF THE SOUTHWEST