EQUITRUST LIFE VARIABLE ACCOUNT II
485BPOS, 1999-04-30
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<PAGE>
   
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1999
    
 
   
                                                      REGISTRATION NO. 333-62221
                                                                       811-08981
    
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
   
                       POST-EFFECTIVE AMENDMENT NO. 1 TO
                                    FORM S-6
    
 
                   FOR REGISTRATION UNDER THE SECURITIES ACT
                    OF 1933 OF SECURITIES OF UNIT INVESTMENT
                    TRUSTS REGISTERED ON FORM N-8B-2    /X/
                            ------------------------
 
   
                       EQUITRUST LIFE VARIABLE ACCOUNT II
                           (Exact Name of Registrant)
    
 
   
                        EQUITRUST LIFE INSURANCE COMPANY
                              (Name of Depositor)
    
                            ------------------------
 
                             5400 UNIVERSITY AVENUE
                          WEST DES MOINES, IOWA 50266
                    (Address of Principal Executive Office)
 
                           STEPHEN M. MORAIN, ESQUIRE
                             5400 UNIVERSITY AVENUE
                          WEST DES MOINES, IOWA 50266
               (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. 20004-2415
 
    APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER
THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
 
    IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE
BOX):
 
   
    /X/ IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485;
    
 
   
    / / ON (DATE) PURSUANT TO PARAGRAPH (b) OF RULE 485;
    
 
   
    / /    DAYS AFTER FILING PURSUANT TO PARAGRAPH (a) OF RULE 485;
    
 
    / / ON (DATE) PURSUANT TO PARAGRAPH (a) OF RULE 485.
 
    TITLE OF SECURITIES BEING REGISTERED: FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
 
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<PAGE>
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
                                                                                                                   PAGE
                                                                                                                   -----
<S>                                                                                                             <C>
DEFINITIONS...................................................................................................           3
SUMMARY OF THE POLICY.........................................................................................           5
EQUITRUST LIFE INSURANCE COMPANY AND THE VARIABLE ACCOUNT.....................................................          10
      EquiTrust Life Insurance Company........................................................................          10
      The Variable Account....................................................................................          10
      Investment Options......................................................................................          10
      Addition, Deletion or Substitution of Investments.......................................................          13
THE POLICY....................................................................................................          14
      Purchasing the Policy...................................................................................          14
      Premiums................................................................................................          14
      Examination of Policy (Cancellation Privilege)..........................................................          16
      Policy Lapse and Reinstatement..........................................................................          16
      Special Transfer Privilege..............................................................................          17
POLICY BENEFITS...............................................................................................          18
      Accumulated Value Benefits..............................................................................          18
      Transfers...............................................................................................          20
      Loan Benefits...........................................................................................          21
      Death Proceeds..........................................................................................          23
      Accelerated Payments of Death Proceeds..................................................................          25
      Benefits at Maturity....................................................................................          26
      Payment Options.........................................................................................          26
CHARGES AND DEDUCTIONS........................................................................................          28
      Premium Expense Charge..................................................................................          28
      Monthly Deduction.......................................................................................          28
      Transfer Charge.........................................................................................          30
      Partial Withdrawal Fee..................................................................................          31
      Surrender Charge........................................................................................          31
      Variable Account Charges................................................................................          31
THE DECLARED INTEREST OPTION..................................................................................          32
      General Description.....................................................................................          32
      Declared Interest Option Accumulated Value..............................................................          32
      Transfers, Partial Withdrawals, Surrenders and Policy Loans.............................................          33
GENERAL PROVISIONS............................................................................................          33
      The Contract............................................................................................          33
      Incontestability........................................................................................          33
      Change of Provisions....................................................................................          33
      Misstatement of Age or Sex..............................................................................          34
      Suicide Exclusion.......................................................................................          34
      Annual Report...........................................................................................          34
      Non-Participation.......................................................................................          34
      Ownership of Assets.....................................................................................          34
      Written Notice..........................................................................................          34
      Postponement of Payments................................................................................          34
      Continuance of Insurance................................................................................          35
      Ownership...............................................................................................          35
      The Beneficiary.........................................................................................          35
      Changing the Policyowner or Beneficiary.................................................................          36
      Additional Insurance Benefits...........................................................................          36
</TABLE>
    
 
                                       1
<PAGE>
   
<TABLE>
<CAPTION>
                                                                                                                   PAGE
                                                                                                                   -----
<S>                                                                                                             <C>
DISTRIBUTION OF THE POLICIES..................................................................................          36
FEDERAL TAX MATTERS...........................................................................................          37
      Introduction............................................................................................          37
      Tax Status of the Policy................................................................................          37
      Tax Treatment of Policy Benefits........................................................................          37
      Possible Tax Law Change.................................................................................          39
      Taxation of the Company.................................................................................          39
      Employment-Related Benefit Plans........................................................................          39
ADDITIONAL INFORMATION........................................................................................          39
FINANCIAL STATEMENTS..........................................................................................          44
</TABLE>
    
 
                   The Policy is not available in all States.
 
This prospectus constitutes an offering only in those jurisdictions where such
offering may lawfully be made.
 
   
EquiTrust has not authorized any dealer, salesman or other person to give any
information or make any representations in connection with this offering other
than those contained in this prospectus. Do not rely on any such other
information or representations.
    
 
                                       2
<PAGE>
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DEFINITIONS
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ACCUMULATED VALUE: The total amount invested under the Policy. It is the sum of
the values of the Policy in each subaccount of the Variable Account, the value
of the Policy in the Declared Interest Option and any outstanding Policy Debt.
    
 
ATTAINED AGE: The Insured's age on his or her last birthday on the Policy Date
plus the number of Policy Years since the Policy Date.
 
BENEFICIARY: The person or entity the Policyowner named in the application, or
by later designation, to receive the death proceeds upon the Insured's death.
 
   
BUSINESS DAY: Each day that the New York Stock Exchange is open for trading,
except the day after Thanksgiving, the weekdays before and after Christmas (in
1999), the weekday after New Year's Day (in 2000) and any day on which the Home
Office is closed because of a weather-related or comparable type of emergency
and is unable to segregate orders and redemption requests received on that day.
    
 
   
COMPANY, WE, US, OUR: EquiTrust Life Insurance Company.
    
 
   
DECLARED INTEREST OPTION: A part of the Company's General Account. Policyowners
may allocate Net Premiums and transfer Accumulated Value to the Declared
Interest Option. The Company credits Accumulated Value in the Declared Interest
Option with interest at an annual rate guaranteed to be at least 4%.
    
 
DELIVERY DATE: The date when the Company issues the Policy and mails it to the
Policyowner.
 
DUE PROOF OF DEATH: Proof of death that is satisfactory to the Company. Such
proof may consist of the following if acceptable to the Company:
 
    (a) A certified copy of the death certificate;
 
    (b) A certified copy of a court decree reciting a finding of death; or
 
    (c) Any other proof satisfactory to the Company.
 
FUND: An open-end, diversified management investment company in which the
Variable Account invests.
 
GENERAL ACCOUNT: The assets of the Company other than those allocated to the
Variable Account or any other separate account.
 
   
GRACE PERIOD: The 61-day period beginning on the date the Company sends notice
to the Policyowner that Net Accumulated Value or Net Surrender Value is
insufficient to cover the monthly deduction.
    
 
HOME OFFICE: The Company's principal offices at 5400 University Avenue, West Des
Moines, Iowa 50266.
 
INSURED: The person upon whose life the Company issues a Policy.
 
INVESTMENT OPTION: A separate investment portfolio of a Fund.
 
   
MATURITY DATE: The Insured's Attained Age 115. It is the date when the Policy
terminates and the Policy's Accumulated Value less Policy Debt becomes payable
to the Policyowner or the Policyowner's estate.
    
 
MONTHLY DEDUCTION DAY: The same date in each month as the Policy Date. The
Company makes the monthly deduction on the Business Day coinciding with or
immediately following the Monthly Deduction Day. (See "CHARGES AND
DEDUCTIONS--Monthly Deduction.")
 
   
NET ACCUMULATED VALUE: The Accumulated Value of the Policy reduced by any
outstanding Policy Debt and increased by any unearned loan interest.
    
 
   
NET ASSET VALUE: The total current value of each Subaccount's securities, cash,
receivables and other assets less liabilities.
    
 
                                       3
<PAGE>
NET PREMIUM: The amount of premium remaining after we deduct the premium expense
charge (see "CHARGES AND DEDUCTIONS--Premium Expense Charge"). The Company will
allocate this amount, according to the Policyowner's instructions, among the
Subaccounts of the Variable Account and the Declared Interest Option.
 
   
NET SURRENDER VALUE: The Surrender Value minus any Policy Debt plus any unearned
loan interest.
    
 
   
PARTIAL WITHDRAWAL FEE: A fee we assess at the time of any partial withdrawal
equal to the lesser of $25 or 2% of the amount withdrawn.
    
 
POLICY: The flexible premium variable life insurance policy we offer and
describe in this prospectus, which term includes the Policy described in this
prospectus, the Policy application, and any supplemental applications and any
endorsements.
 
POLICY ANNIVERSARY: The same date in each year as the Policy Date.
 
POLICY DATE: The date set forth on the Policy data page which we use to
determine Policy Years, Policy Months and Policy Anniversaries. The Policy Date
may, but will not always, coincide with the effective date of insurance coverage
under the Policy. (See "THE POLICY--Purchasing the Policy.")
 
POLICY DEBT: The sum of all outstanding Policy Loans and any due and unpaid
Policy Loan interest.
 
POLICY LOAN: An amount the Policyowner borrows from the Company using the Policy
as the sole security. Interest on Policy Loans is payable in advance (for the
remainder of the Policy Year) upon taking a Policy Loan and upon each Policy
Anniversary thereafter (for the following Policy Year) until the Policy Loan is
repaid.
 
POLICY MONTH: A one-month period beginning on a Monthly Deduction Day and ending
on the day immediately preceding the next Monthly Deduction Day.
 
POLICYOWNER, YOU, YOUR: The person who owns a Policy. The original Policyowner
is named in the application.
 
POLICY YEAR: A twelve-month period that starts on the Policy Date or on a Policy
Anniversary.
 
SPECIFIED AMOUNT: The minimum death benefit payable under a Policy so long as
the Policy remains in force. The Specified Amount as of the Policy Date is set
forth on the data page in each Policy.
 
SUBACCOUNT: A subdivision of the Variable Account which invests exclusively in
shares of a designated Investment Option of a Fund.
 
   
SURRENDER CHARGE: A charge we assess at the time of any surrender during the
first six Policy Years and for six years following an increase in Specified
Amount.
    
 
   
SURRENDER VALUE: The Accumulated Value minus the Surrender Charge.
    
 
   
TARGET PREMIUM: A premium amount specified by the Company. We use this amount to
calculate the premium expense charge during periods when we declare a premium
expense charge less than the 7% guaranteed premium expense charge. We may
declare a lower percentage of premium expense charge on premiums paid in excess
of the Target Premium during a Policy Year. We also use Target Premium to
calculate registered representatives' compensation.
    
 
UNIT VALUE: The value determined by dividing each Subaccount's Net Asset Value
by the number of units outstanding at the time of calculation.
 
VALUATION PERIOD: The period between the close of business (3:00 p.m. central
time) on a Business Day and the close of business on the next Business Day.
 
   
VARIABLE ACCOUNT: EquiTrust Life Variable Account II, a separate investment
account the Company established to receive and invest the Net Premiums paid
under the Policies.
    
 
                                       4
<PAGE>
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SUMMARY OF THE POLICY
    
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    The following is a summary of the Policy's features. Please read the entire
    Prospectus and the Policy for more detailed information. Unless otherwise
    indicated, the description of the Policy contained in this Prospectus
    assumes that the Policy is in force and that there is no outstanding Policy
    Debt.
 
THE POLICY
 
    -   The Policy is a flexible premium variable life insurance policy
        providing for:
 
         -   death proceeds payable to the Beneficiary upon the Insured's death,
 
   
         -   the accumulation of Accumulated Value,
    
 
   
         -   withdrawal and surrender options, and
    
 
         -   loan privileges.
 
   
    -   We normally issue a Policy for a minimum Specified Amount of $50,000,
        but we may issue Policies for lower Specified Amounts.
    
 
    -   You have flexibility in determining the frequency and amount of
        premiums. (See "THE POLICY--Premiums.")
 
    -   We do not guarantee the amount and/or duration of the life insurance
        coverage.
 
   
    -   Accumulated Value may increase or decrease, depending upon the
        investment experience of the assets supporting the Policy. You bear the
        investment risk of any depreciation of, and reap the benefit of any
        appreciation in, the value of the underlying assets.
    
 
   
    -   If the Insured is alive and the Policy is in force on the Maturity Date,
        we will pay you the Accumulated Value as of the end of the Business Day
        coinciding with or immediately following the Maturity Date, reduced by
        any outstanding Policy Debt.
    
 
   
    -   CANCELLATION PRIVILEGE. You may examine and cancel the Policy by
        returning the Policy to us before midnight of the 20th day after you
        received the Policy. We will refund you the greater of:
    
 
   
         -   premiums paid, or
    
 
   
         -   the Accumulated Value on the Business Day we receive the Policy
             plus any charges we deducted. (See "THE POLICY--Examination of
             Policy (Cancellation Privilege).")
    
 
THE VARIABLE ACCOUNT
 
    -   The Variable Account has 15 Subaccounts, each of which invests
        exclusively in one of the following Investment Options offered by the
        Funds:
 
   
<TABLE>
        <S>                                                   <C>
        -  Value Growth Portfolio                             -  Personal Strategy Balanced Portfolio
 
        -  High Grade Bond Portfolio                          -  International Stock Portfolio
 
        -  High Yield Bond Portfolio                          -  Capital Appreciation Portfolio
 
        -  Money Market Portfolio                             -  Disciplined Stock Portfolio
 
        -  Blue Chip Portfolio                                -  International Equity Portfolio
 
        -  Equity Income Portfolio                            -  Small Cap Portfolio
 
        -  Mid-Cap Growth Portfolio                           -  Growth & Income Portfolio
 
        -  New America Growth Portfolio
</TABLE>
    
 
   
    -   You may instruct us to allocate Net Premiums and transfer Accumulated
        Values to any of the Subaccounts.
    
 
                                       5
<PAGE>
    -   We will allocate your initial premium to the Declared Interest Option.
 
    -   We will automatically allocate, without charge, your Accumulated Value
        in the Declared Interest Option according to your allocation
        instructions upon the earlier of:
 
   
         (1)  the date we receive a signed notice that you have received the
              Policy, or
    
 
         (2)  25 days after the Delivery Date.
 
   
    -   If we receive Net Premiums before (1) or (2) above, we will allocate
        those monies to the Declared Interest Option.
    
 
   
    -   We will allocate Net Premiums received after (1) or (2) above according
        to your allocation instructions.
    
 
THE DECLARED INTEREST OPTION
 
   
    -   You may allocate or transfer all or a portion of the Accumulated Value
        to the Declared Interest Option, which guarantees a specified minimum
        rate of return (at least 4% annually). (See "THE DECLARED INTEREST
        OPTION.")
    
 
PREMIUMS
 
    -   You choose when to pay and how much to pay.
 
   
    -   You must pay an initial premium that (when reduced by the premium
        expense charge) is enough to pay the first monthly deduction.
    
 
   
    -   We deduct a premium expense charge from each payment. (See "CHARGES and
        DEDUCTIONS--Premium Expense Charge.")
    
 
POLICY BENEFITS
 
   
ACCUMULATED VALUE BENEFITS (SEE "POLICY BENEFITS--ACCUMULATED VALUE BENEFITS.")
    
 
   
    -   Your Policy provides for an Accumulated Value. A Policy's Accumulated
        Value varies to reflect
    
 
   
         -   the amount and frequency of premium payments,
    
 
   
         -   the investment experience of the Subaccounts,
    
 
   
         -   interest earned on Accumulated Value in the Declared Interest
             Option,
    
 
   
         -   Policy Loans,
    
 
   
         -   partial withdrawals and
    
 
   
         -   charges we assess under the Policy.
    
 
   
    -   You may fully surrender your Policy and receive the Net Accumulated
        Value.
    
 
   
    -   You may obtain a partial withdrawal of your Net Accumulated Value
        (minimum $500) at any time before the Maturity Date.
    
 
   
    -   A partial withdrawal or surrender may have federal income tax
        consequences. (See "FEDERAL TAX MATTERS".)
    
 
TRANSFERS (SEE "POLICY BENEFITS--TRANSFERS.")
 
    -   You may transfer amounts (minimum $100) among the Subaccounts an
        unlimited number of times in a Policy Year.
 
    -   You may make one transfer per Policy Year between the Subaccounts and
        the Declared Interest Option.
 
   
    -   The first transfer in a Policy Year is free. We may deduct a $25 charge
        from the amount transferred on subsequent transfers in that Policy Year.
    
 
                                       6
<PAGE>
    -   We do not count certain transfers for purposes of the one free transfer
        limit. (See "THE POLICY--Special Transfer Privilege"; and "THE
        POLICY--Premiums--Allocation of Net Premiums.")
 
LOANS (SEE POLICY BENEFITS--"LOAN BENEFITS.")
 
   
    -   You may borrow up to 90% of the Policy's Accumulated Value, less any
        previously outstanding Policy Debt.
    
 
   
    -   We charge you a maximum annual interest rate of 5.5%.
    
 
   
    -   We secure your loan by segregating in the Declared Interest Option an
        amount equal to the Policy Loan. We credit this amount with an effective
        annual rate of interest equal to the greater of 4% or the current
        effective loan interest rate minus no more than 3%.
    
 
    -   Policy Loans may have federal income tax consequences. (See "FEDERAL TAX
        MATTERS.")
 
DEATH PROCEEDS (SEE "POLICY BENEFITS--DEATH PROCEEDS.")
 
    -   The Policy contains two death benefit options:
 
   
         -   Option A--the death benefit is the greater of the sum of the
             Specified Amount and the Policy's Accumulated Value, or the
             Accumulated Value multiplied by the specified amount factor for the
             Insured's Attained Age, as set forth in the Policy.
    
 
   
         -   Option B--the death benefit is the greater of the Specified Amount,
             or the Accumulated Value multiplied by the specified amount factor
             for the Insured's Attained Age, as set forth in the Policy.
    
 
    -   Under either death benefit option, so long as the Policy remains in
        force, the death benefit will not be less than the Specified Amount of
        the Policy on the date of death.
 
    -   To determine the death proceeds, we reduce the death benefit by any
        outstanding Policy Debt and increase the death benefit by any unearned
        loan interest and any premiums paid after the date of death. We may pay
        the proceeds in a lump sum or in accordance with a payment option.
 
    -   You may change the Specified Amount or the death benefit option.
 
CHARGES (SEE "CHARGES AND DEDUCTIONS")
 
PREMIUM EXPENSE CHARGE
 
   
    -   We deduct a Premium Expense Charge equal to a maximum of 7% of each
        premium up to the Target Premium, and 2% of each Premium in excess of
        the Target Premium. The remaining amount is the Net Premium.
    
 
   
ACCUMULATED VALUE CHARGES
    
 
    -   Each month, we make a monthly deduction (that varies from month to
        month) equal to the sum of:
 
         -   a cost of insurance charge,
 
         -   the cost of any additional insurance benefits added by rider, and
 
   
         -   a $5 policy expense charge.
    
 
   
    -   During the first 12 Policy Months and during the 12 Policy Months
        immediately following an increase in Specified Amount, the monthly
        deduction will include a first year monthly administrative charge of
        $0.05 per $1,000 of Specified Amount.
    
 
   
    -   We apply a $5 first year monthly expense charge during the first 12
        Policy Months.
    
 
   
    -   Upon partial withdrawal of a Policy, we assess a charge equal to the
        lesser of $25 or 2% of the amount withdrawn.
    
 
                                       7
<PAGE>
   
    -   Upon surrender of a Policy during the first six Policy years, as well as
        during the first six Policy years following an increase in Specifed
        Amount, we apply a charge per $1,000 of Specifed Amount which varies by
        age, sex, underwriting category and Policy Year (see "APPENDIX C--
        Maximum Surrender Charges").
    
 
    -   We may deduct a $25 charge from the amount transferred on the second and
        subsequent transfers in a Policy Year.
 
CHARGES AGAINST THE VARIABLE ACCOUNT
 
    -   We deduct a daily mortality and expense risk charge from the average
        daily net assets of each Subaccount. The charge equals an effective
        annual rate of .90%.
 
    -   We may assess a charge against the Variable Account for federal income
        taxes that may be attributable to the Variable Account.
 
    -   Because the Variable Account purchases shares of the Investment Options,
        the value of the average net assets of the Variable Account will reflect
        the investment advisory fee and other expenses incurred by each
        Investment Option. The following table indicates the Investment Options'
        fees and expenses for 1998.
 
   
<TABLE>
<CAPTION>
 
                                                                                                 OTHER            TOTAL
                                                                                                EXPENSES         EXPENSES
                                                                                             (AFTER WAIVER    (AFTER WAIVER
                                                                              ADVISORY             OR               OR
INVESTMENT OPTION                                                                FEE         REIMBURSEMENT)   REIMBURSEMENT)
<S>                                                                          <C>             <C>              <C>
EquiTrust Variable Insurance Series Fund
  Value Growth                                                                  0.45%             0.11%            0.56%
  High Grade Bond                                                               0.30%             0.20%            0.50%
  High Yield Bond                                                               0.45%             0.16%            0.61%
  Money Market                                                                  0.25%             0.27%            0.52%
  Blue Chip                                                                     0.20%             0.10%            0.30%
T. Rowe Price Equity Series, Inc.
  Equity Income                                                                 0.85%             0.00%            0.85%(1)
  Mid-Cap Growth                                                                0.85%             0.00%            0.85%(1)
  New America Growth                                                            0.85%             0.00%            0.85%(1)
  Personal Strategy Balanced                                                    0.90%             0.00%            0.90%(1)
T. Rowe Price International Series, Inc.
  International Stock                                                           1.05%             0.00%            1.05%(1)
Dreyfus Variable Investment Fund
  Capital Appreciation Portfolio                                                0.75%             0.06%            0.81%
  Disciplined Stock Portfolio                                                   0.75%             0.13%            0.88%
  Growth & Income Portfolio                                                     0.75%             0.03%            0.78%
  International Equity Portfolio                                                0.75%             0.24%            0.99%
  Small Cap Portfolio                                                           0.75%             0.02%            0.77%
</TABLE>
    
 
   
    (1)  Total annual investment option expenses are an all-inclusive fee and
         pay for investment management services and other operating costs.
    
 
                                       8
<PAGE>
OTHER POLICIES
 
    -   We offer other variable life insurance policies that invest in the same
        Investment Options of the Funds. These policies may have different
        charges that could affect Subaccount performance, and may offer
        different benefits more suitable to your needs. You may contact us to
        obtain more information about these policies.
 
TAX TREATMENT (SEE "FEDERAL TAX MATTERS")
 
    -   If we issue a Policy on the basis of a standard premium class, we
        believe that the Policy should qualify as a life insurance contract for
        federal income tax purposes.
 
    -   If we issue a Policy on a substandard basis, it is not clear whether or
        not the Policy would qualify as a life insurance contract for federal
        income tax purposes.
 
   
    -   If a Policy qualifies as a life insurance contract for federal income
        tax purposes, the Accumulated Value under a Policy should be subject to
        the same federal income tax treatment as cash value under a conventional
        fixed-benefit Policy--the Policyowner is not deemed to be in
        constructive receipt of Accumulated Values under a Policy until there is
        a distribution from the Policy.
    
 
   
    -   Death proceeds payable under a Policy should be completely excludable
        from the gross income of the Beneficiary. As a result, the Beneficiary
        generally will not be taxed on these proceeds.
    
 
                                       9
<PAGE>
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EQUITRUST LIFE INSURANCE COMPANY AND THE VARIABLE ACCOUNT
    
- --------------------------------------------------------------------------------
 
   
EQUITRUST LIFE INSURANCE COMPANY
    
 
   
    EquiTrust Life Insurance Company is a stock life insurance company which was
    incorporated in the State of Iowa on June 3, 1966. Our principal business is
    offering life insurance policies and annuity contracts. Our principal
    offices are at 5400 University Avenue, West Des Moines, Iowa 50266. We are
    admitted to do business in 38 states--Alabama, Alaska, Arizona, Arkansas,
    California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois,
    Indiana, Iowa, Kansas, Louisiana, Michigan, Minnesota, Mississippi,
    Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North
    Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee,
    Texas, Utah, Virginia, Washington, Wisconsin and Wyoming.
    
- --------------------------------------------------------------------------------
 
THE VARIABLE ACCOUNT
 
   
    We established the Variable Account as a separate account on January 6,
    1998. The Variable Account receives and invests the Net Premiums under the
    Policy, and may receive and invest net premiums for any other variable life
    insurance policies we issue.
    
 
    The Variable Account's assets are our property, and they are available to
    cover our general liabilities only to the extent that the Variable Account's
    assets exceed its liabilities arising under the Policies and any other
    policies it supports. The portion of the Variable Account's assets
    attributable to the Policies generally are not chargeable with liabilities
    arising out of any other business that we may conduct. We may transfer to
    the General Account any Variable Account assets which are in excess of such
    reserves and other Policy liabilities.
 
    The Variable Account currently has 15 Subaccounts but may, in the future,
    include additional subaccounts. Each Subaccount invests exclusively in
    shares of a single corresponding Investment Option. Income and realized and
    unrealized gains or losses from the assets of each Subaccount are credited
    to or charged against, that Subaccount without regard to income, gains or
    losses from any other Subaccount.
 
    We registered the Variable Account as a unit investment trust under the
    Investment Company Act of 1940. The Variable Account meets the definition of
    a separate account under the federal securities laws. Registration with the
    Securities and Exchange Commission does not mean that the Commission
    supervises the management or investment practices or policies of the
    Variable Account or the Company. The Variable Account is also subject to the
    laws of the State of Iowa which regulate the operations of insurance
    companies domiciled in Iowa.
- --------------------------------------------------------------------------------
 
INVESTMENT OPTIONS
 
    The Variable Account invests in shares of the Investment Options described
    below. Each of these Investment Options was formed as an investment vehicle
    for insurance company separate accounts. Each Investment Option has its own
    investment objectives and separately determines the income and losses for
    that Investment Option. While you may be invested in all Subaccounts, we
    only permit you to "actively participate" in a maximum of 10 Investment
    Options at any one time.
 
    The investment objectives and policies of certain Investment Options are
    similar to the investment objectives and policies of other portfolios that
    the same investment adviser, investment sub-adviser or manager may manage.
    The investment results of the Investment Options, however, may be higher or
    lower than the results of such other portfolios. There can be no assurance,
    and no representation is made, that the investment results of any of the
    Investment Options will be comparable to the investment results of any other
    portfolio, even if the other portfolio has the same investment adviser,
    investment sub-adviser or manager.
 
    The paragraphs below summarize each Investment Option's investment
    objectives and policies. There is no assurance that any Investment Option
    will achieve its stated objectives. Please refer to the
 
                                       10
<PAGE>
    prospectus for each Investment Option for more detailed information,
    including a description of risks, for each Investment Option. The Investment
    Option prospectuses must accompany or precede this Prospectus and you should
    read them carefully and retain them for future reference.
 
   
EQUITRUST VARIABLE INSURANCE SERIES FUND. Equitrust Investment Management
Services, Inc. is this Fund's investment adviser. The Fund is comprised of six
portfolios, the following five of which are available under the Policy:
    
 
   
<TABLE>
<CAPTION>
PORTFOLIO                      INVESTMENT OBJECTIVE
<S>                            <C>
Value Growth Portfolio         -  This Portfolio seeks long-term capital appreciation.
                                  Portfolio pursues its objective by investing primarily in
                                  equity securities of companies that the investment adviser
                                  believes have a potential to earn a high return on equity,
                                  and/or in equity securities that the investment adviser
                                  believes are undervalued by the market place. Such equity
                                  securities may include common stock, preferred stock and
                                  securities convertible or exchangeable into common stock.
High Grade Bond Portfolio      -  This Portfolio seeks as high a level of current income as is
                                  consistent with a high grade portfolio of debt securities.
                                  Portfolio pursues this objective by investing primarily in
                                  debt securities rated AAA, AA or A by Standard & Poor's,
                                  and/or Aaa, Aa or A by Moody's Investors Service, Inc., and
                                  in securities issued or guaranteed by the United States
                                  government or its agencies or instrumentalities.
High Yield Bond Portfolio      -  This Portfolio seeks, as a primary objective, as high a
                                  level of current income as is consistent with investment in
                                  a portfolio of fixed-income securities rated in the lower
                                  categories of established rating services (commonly known as
                                  "junk bonds"). As a secondary objective, the Portfolio seeks
                                  capital appreciation when consistent with its primary
                                  objective. The Portfolio pursues these objectives by
                                  investing primarily in fixed-income securities rated Baa or
                                  lower by Moody's Investors Service, Inc., and/or BBB or
                                  lower by Standard & Poor's, or in unrated securities of
                                  comparable quality. An investment in this Portfolio may
                                  entail greater than ordinary financial risk. (See the Fund
                                  Prospectus "HIGHER RISK SECURITIES AND INVESTMENT
                                  STRATEGIES--Lower Rated Debt Securities.")
Money Market Portfolio         -  This Portfolio seeks maximum current income consistent with
                                  liquidity and stability of principal. Portfolio pursues this
                                  objective by investing in high quality short-term money
                                  market instruments. The United States Government and its
                                  agencies do not insure or guarantee an investment in the
                                  Money Market Portfolio. There is no assurance that the
                                  Portfolio will be able to maintain a stable net asset value
                                  of $1.00 per share.
Blue Chip Portfolio            -  This Portfolio seeks growth of capital and income. Portfolio
                                  pursues this objective by investing primarily in common
                                  stocks of well-capitalized, established companies. Because
                                  this Portfolio may be invested heavily in particular stocks
                                  or industries, an investment in this Portfolio may entail
                                  relatively greater risk of loss.
</TABLE>
    
 
                                       11
<PAGE>
   
T. ROWE PRICE EQUITY SERIES, INC. T. Rowe Price Associates, Inc. is the
investment adviser to the Fund.
    
 
   
<TABLE>
<CAPTION>
PORTFOLIO                      INVESTMENT OBJECTIVE
<S>                            <C>
Equity Income Portfolio        -  This Portfolio seeks to provide substantial dividend income
                                  and long-term capital appreciation by investing primarily in
                                  established companies considered by the adviser to have
                                  favorable prospects for both increasing dividends and
                                  capital appreciation.
Mid-Cap Growth Portfolio       -  This Portfolio seeks long-term capital appreciation by
                                  investing primarily in common stocks of medium-sized
                                  (mid-cap) growth companies which offer the potential for
                                  above-average earnings growth.
New America Growth Portfolio   -  This Portfolio seeks long-term capital growth by investing
                                  primarily in common stocks of U.S. growth companies
                                  operating in service industries.
Personal Strategy Balanced     -  This Portfolio seeks the highest total return over time
Portfolio                         consistent with an emphasis on both capital appreciation and
                                  income.
</TABLE>
    
 
T. ROWE PRICE INTERNATIONAL SERIES, INC. Rowe Price-Fleming International, Inc.
is the investment adviser to the Fund.
 
   
<TABLE>
<CAPTION>
PORTFOLIO                      INVESTMENT OBJECTIVE
<S>                            <C>
International Stock Portfolio  -  This Portfolio seeks to provide capital appreciation through
                                  investments primarily in established companies based outside
                                  the United States.
</TABLE>
    
 
   
DREYFUS VARIABLE INVESTMENT FUND. The Dreyfus Corporation serves as the
investment adviser to the Fund. Fayez Sarofim and Co. serves as the
sub-investment adviser to the Dreyfus Variable Investment Fund: Capital
Appreciation Portfolio. The following Fund portfolios are available under the
Contract.
    
 
   
<TABLE>
<CAPTION>
PORTFOLIO                      INVESTMENT OBJECTIVE
<S>                            <C>
Dreyfus Variable Investment    -  This Portfolio primarily seeks long-term capital growth,
Fund: Capital Appreciation        consistent with the preservation of capital; current income
Portfolio                         is a secondary investment objective. This Portfolio invests
                                  primarily in the common stocks of domestic and foreign
                                  issuers.
Dreyfus Variable Investment    -  This Portfolio seeks to provide investment results that are
Fund: Disciplined Stock           greater than the total return performance of publicly-traded
Portfolio                         common stocks in the aggregate, as represented by the
                                  Standard & Poor's 500 Composite Stock Price Index. The
                                  Portfolio will use quantitative statistical modeling
                                  techniques to construct a portfolio in an attempt to achieve
                                  its investment objective, without assuming undue risk
                                  relative to the broad stock market.
Dreyfus Variable Investment    -  This Portfolio seeks to provide long-term capital growth,
Fund: Growth and Income           current income and growth of income, consistent with
Portfolio                         reasonable investment risk by investing primarily in equity
                                  securities, debt securities and money market instruments of
                                  domestic and foreign issuers.
Dreyfus Variable Investment    -  This Portfolio seeks to maximize capital growth through
Fund: International Equity        investments in equity securities of foreign issuers located
Portfolio                         throughout the world.
</TABLE>
    
 
                                       12
<PAGE>
   
<TABLE>
<CAPTION>
PORTFOLIO                      INVESTMENT OBJECTIVE
<S>                            <C>
Dreyfus Variable Investment    -  This Portfolio seeks maximum capital appreciation by
Fund: Small Cap Portfolio         investing primarily in common stocks of domestic and foreign
                                  issuers. The Portfolio will be particularly alert to
                                  companies considered by the adviser to be emerging
                                  smaller-sized companies which are believed to be
                                  characterized by new or innovative products, services or
                                  processes which should enhance prospects for growth in
                                  future earnings.
</TABLE>
    
 
    The Funds currently sell shares: (1) to the Variable Account as well as to
    separate accounts of insurance companies that may or may not be affiliated
    with the Company or each other; and (2) to separate accounts to serve as the
    underlying investment for both variable life insurance policies and variable
    annuity contracts. We currently do not foresee any disadvantage to
    Policyowners arising from the sale of shares to support variable life
    insurance policies and variable annuity contracts, or from shares being sold
    to separate accounts of insurance companies that may or may not be
    affiliated with the Company. However, we will monitor events in order to
    identify any material irreconcilable conflicts that might possibly arise. In
    that event, we would determine what action, if any, should be taken in
    response to those events or conflicts. In addition, if we believe that a
    Fund's response to any of those events or conflicts insufficiently protects
    Policyowners, we will take appropriate action on our own, including
    withdrawing the Variable Account's investment in that Fund. (See the Fund
    prospectuses for more detail.)
 
    We may receive compensation from an affiliate(s) of one or more of the Funds
    based upon an annual percentage of the average assets we hold in the
    Investment Options. These amounts are intended to compensate us for
    administrative and other services we provide to the Funds and/or
    affiliate(s).
 
    Each Fund is registered with the Securities and Exchange Commission as an
    open-end, diversified management investment company. Such registration does
    not involve supervision of the management or investment practices or
    policies of the Fund by the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
 
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
 
   
    We reserve the right, subject to compliance with applicable law, to make
    additions to, deletions from or substitutions for the shares of the
    Investment Options that the Variable Account holds or that the Variable
    Account may purchase. If the shares of an Investment Option are no longer
    available for investment or if, in our judgment, further investment in any
    Investment Option should become inappropriate in view of the purposes of the
    Variable Account, we reserve the right to dispose of the shares of any
    Investment Option and to substitute shares of another Investment Option. We
    will not substitute any shares attributable to a Policyowner's Accumulated
    Value in the Variable Account without notice to and prior approval of the
    Securities and Exchange Commission, to the extent required by the Investment
    Company Act of 1940 or other applicable law. In the event of any such
    substitution or change, we may, by appropriate endorsement, make such
    changes in these and other policies as may be necessary or appropriate to
    reflect such substitution or change. Nothing contained in this Prospectus
    shall prevent the Variable Account from purchasing other securities for
    other series or classes of policies, or from permitting a conversion between
    series or classes of policies on the basis of requests made by Policyowners.
    
 
    We also reserve the right to establish additional subaccounts of the
    Variable Account, each of which would invest in shares of a new Investment
    Option, with a specified investment objective. We may establish new
    subaccounts when, in our sole discretion, marketing, tax or investment
    conditions warrant, and we may make any new subaccounts available to
    existing Policyowners on a basis we determine. Subject to obtaining any
    approvals or consents required by applicable law, we may transfer the assets
    of one or more Subaccounts to any other Subaccount(s), or one or more
    Subaccounts may be eliminated or combined with any other Subaccount(s) if,
    in our sole discretion, marketing, tax or investment conditions warrant.
 
                                       13
<PAGE>
    If we deem it to be in the best interests of persons having voting rights
    under the Policies, we may
 
         -  operate the Variable Account as a management company under the
            Investment Company Act of 1940,
 
         -  deregister the Variable Account under that Act in the event such
            registration is no longer required, or,
 
         -  subject to obtaining any approvals or consents required by
            applicable law, combine the Variable Account with other Company
            separate accounts.
 
    To the extent permitted by applicable law, we may also transfer the Variable
    Account's assets associated with the Policies to another separate account.
    In addition, we may, when permitted by law, restrict or eliminate any voting
    rights of Policyowners or other persons who have voting rights as to the
    Variable Account. (See "ADDITIONAL INFORMATION--Voting Rights.")
 
- --------------------------------------------------------------------------------
 
THE POLICY
- --------------------------------------------------------------------------------
 
PURCHASING THE POLICY
 
   
    In order to issue a Policy, we must receive a completed application,
    including payment of the initial premium, at our Home Office. We ordinarily
    will issue a Policy only for Insureds who are 0 to 80 years of age at their
    last birthday and who supply satisfactory evidence of insurability to the
    Company. Acceptance is subject to our underwriting rules and we may, in our
    sole discretion, reject any application or premium for any lawful reason.
    The minimum Specified Amount for which we will issue a Policy is normally
    $50,000, although we may, in our discretion, issue Policies with Specified
    Amounts of less than $50,000.
    
 
   
    The effective date of insurance coverage under the Policy will be the later
    of:
    
 
   
        -   the Policy Date,
    
 
   
        -   the date the Insured signs the last of any amendments to the initial
            application required by our underwriting rules, or
    
 
   
        -   the date when we receive the full initial premium at the Home
            Office.
    
 
    The Policy Date will be the later of
 
        -   (1)  the date of the initial application, or
 
        -   (2)  the date we receive any additional information at the Home
                 Office if our underwriting rules require additional medical or
                 other information.
 
   
    The Policy Date may also be any other date mutually agreed to by you and the
    Company. If the later of (1) or (2) above is the 29th, 30th or 31st of any
    month, the Policy Date will be the 28th of such month. We use the Policy
    Date to determine Policy Years, Policy Months and Policy Anniversaries. The
    Policy Date may, but will not always, coincide with the effective date of
    insurance coverage under the Policy.
    
- --------------------------------------------------------------------------------
 
PREMIUMS
 
    Subject to certain limitations, a Policyowner has flexibility in determining
    the frequency and amount of premiums.
 
   
    PREMIUM FLEXIBILITY. We do not require you to pay premiums in accordance
    with a rigid and inflexible premium schedule. We may require you to pay an
    initial premium that, when reduced by the premium expense charge, will be
    sufficient to pay the monthly deduction for the first Policy Month.
    
 
                                       14
<PAGE>
   
    Thereafter, subject to the minimum and maximum premium limitations described
    below, you may also make unscheduled premium payments at any time prior to
    the Maturity Date.
    
 
    PLANNED PERIODIC PREMIUMS. Each Policyowner will determine a planned
    periodic premium schedule that provides for the payment of a level premium
    over a specified period of time on a quarterly, semi-annual or annual basis.
    We may, at our discretion, permit you to make planned periodic premium
    payments on a monthly basis. We ordinarily will send periodic reminder
    notices to the Policyowner for each planned periodic premium. Depending on
    the duration of the planned periodic premium schedule, the timing of planned
    payments could affect the tax status of the Policy. (See "FEDERAL TAX
    MATTERS.")
 
    You are not required to pay premiums in accordance with the planned periodic
    premium schedule. Furthermore, you have considerable flexibility to alter
    the amount, frequency and the time period over which you pay planned
    periodic premiums; however, we must consent to any planned periodic payment
    less than $100. Changes in the planned premium schedule may have federal
    income tax consequences. (See "FEDERAL TAX MATTERS.")
 
   
    Paying a planned periodic premium will not guarantee that the Policy remains
    in force. Instead, the duration of the Policy depends upon the Policy's
    Accumulated Value. Thus, even if you do pay planned periodic premiums, the
    Policy will nevertheless lapse if, during the first three Policy Years, Net
    Accumulated Value or, after three Policy Years, Net Surrender Value, is
    insufficient on a Monthly Deduction Day to cover the monthly deduction (see
    "CHARGES AND DEDUCTIONS-- Monthly Deduction") and a Grace Period expires
    without a sufficient payment (see "THE POLICY--Policy Lapse and
    Reinstatement--LAPSE").
    
 
    UNSCHEDULED PREMIUMS. Each unscheduled premium payment must be at least
    $100; however, we may, in our discretion, waive this minimum requirement. We
    reserve the right to limit the number and amount of unscheduled premium
    payments. An unscheduled premium payment may have federal income tax
    consequences. (See "FEDERAL TAX MATTERS.")
 
    PREMIUM LIMITATIONS. In no event may the total of all premiums paid, both
    planned periodic and unscheduled, exceed the applicable maximum premium
    limitation imposed by federal tax laws. Because the maximum premium
    limitation is in part dependent upon the Specified Amount for each Policy,
    changes in the Specified Amount may affect this limitation. If at any time
    you pay a premium that would result in total premiums exceeding the
    applicable maximum premium limitation, we will accept only that portion of
    the premium which will make total premiums equal the maximum. We will return
    any part of the premium in excess of that amount and we will not accept
    further premiums until allowed by the applicable maximum premium limitation.
 
    PAYMENT OF PREMIUMS. We will treat any payments you make first as payment of
    any outstanding Policy Debt unless you indicate that the payment should be
    treated otherwise. Where you make no indication, we will treat any portion
    of a payment that exceeds the amount of any outstanding Policy Debt as a
    premium payment.
 
    NET PREMIUMS. The Net Premium is the amount available for investment. The
    Net Premium equals the premium paid less the premium expense charge. (See
    "CHARGES AND DEDUCTIONS-- Premium Expense Charge.")
 
    ALLOCATING NET PREMIUMS. In the application for a Policy, you can allocate
    Net Premiums or portions thereof to the Subaccounts, to the Declared
    Interest Option, or both. We will allocate Net Premiums to the Declared
    Interest Option if we receive them either
 
             (1)  before the date we obtain a signed notice from you that you
                  have received the Policy, or
 
             (2)  before the end of 25 days after the Delivery Date (the date we
                  issue and mail the Policy to you).
 
                                       15
<PAGE>
   
    Upon the earlier of (1) or (2) above, we will automatically allocate the
    Accumulated Value in the Declared Interest Option, without charge, among the
    Subaccounts and Declared Interest Option in accordance with your allocation
    instructions.
    
 
    We allocate Net Premiums received on or after (1) or (2) above in accordance
    with your instructions, to the Variable Account, the Declared Interest
    Option, or both. You do not waive your cancellation privilege by sending us
    the signed notice of receipt of the Policy (see "THE POLICY--Examination of
    Policy (Cancellation Privilege)").
 
    The following additional rules apply to Net Premium allocations:
 
        -   You must allocate at least 10% of each premium to any subaccount of
            the Variable Account or to the Declared Interest Option.
 
        -   Your allocation percentages must be in whole numbers (we do not
            permit fractional percentages).
 
        -   You may change the allocation percentages for future Net Premiums
            without charge, at any time while the Policy is in force, by
            providing us with a written notice signed by you on a form we
            accept. The change will take effect on the date we receive the
            written notice at the Home Office and will have no effect on prior
            cash values.
- --------------------------------------------------------------------------------
 
EXAMINATION OF POLICY (CANCELLATION PRIVILEGE)
 
    You may cancel the Policy by delivering or mailing written notice or sending
    a telegram to us at the Home Office, and returning the Policy to us at the
    Home Office before midnight of the 20th day you receive the Policy. Notice
    given by mail and return of the Policy by mail are effective on being
    postmarked, properly addressed and postage prepaid.
 
   
    With respect to all Policies, we will refund, within seven days after
    receipt of satisfactory notice of cancellation and the returned Policy at
    our Home Office, an amount equal to the greater of:
    
 
   
        -   premiums paid, or
    
 
   
        -   the Accumulated Value on the Business Day on or next following the
            date we receive the Policy at the Home Office, plus
    
 
   
        -   any premium expense charges we deducted, plus
    
 
        -   monthly deductions made on the Policy Date and any Monthly Deduction
            Day, and
 
   
        -   amounts approximating the daily mortality and expense risk charges
            against the Variable Account.
    
- --------------------------------------------------------------------------------
 
POLICY LAPSE AND REINSTATEMENT
 
   
    LAPSE. Your Policy may lapse (terminate without value) during the first
    three Policy Years if the Net Accumulated Value, or after three Policy Years
    if Net Surrender Value is insufficient on a Monthly Deduction Day to cover
    the monthly deduction (see "CHARGES AND DEDUCTIONS--Monthly Deduction") AND
    a Grace Period expires without a sufficient payment. Insurance coverage will
    continue during the Grace Period, but we will deem the Policy to have no
    Accumulated Value for purposes of Policy Loans and surrenders during such
    Grace Period. The death proceeds payable during the Grace Period will equal
    the amount of the death proceeds payable immediately prior to the
    commencement of the Grace Period, reduced by any due and unpaid monthly
    deductions.
    
 
                                       16
<PAGE>
   
    A Grace Period of 61 days will commence on the date we send you a notice of
    any insufficiency, at which time the Accumulated Value in each Subaccount
    will be automatically transferred without charge to the Declared Interest
    Option.
    
 
   
    To avoid lapse and termination of the Policy without value, we must receive
    from you during the Grace Period a premium payment that, when reduced by the
    premium expense charge (see "CHARGES AND DEDUCTIONS--Premium Expense
    Charge"), will be at least equal to three times the monthly deduction due on
    the Monthly Deduction Day immediately preceding the Grace Period (see
    "CHARGES AND DEDUCTIONS--Monthly Deduction"). If your Policy enters a Grace
    Period, the amount transferred to the Declared Interest Option will remain
    there unless and until you provide us with allocation instructions.
    
 
    REINSTATEMENT. Prior to the Maturity Date, you may reinstate a lapsed Policy
    at any time within five years of the Monthly Deduction Day immediately
    preceding the Grace Period which expired without payment of the required
    premium. You must submit the following items to us:
 
        -   A written application for reinstatement signed by the Policyowner
            and the Insured;
 
        -   Evidence of insurability we deem satisfactory;
 
        -   A premium that, after the deduction of the premium expense charge,
            is at least sufficient to keep the Policy in force for three months;
            and
 
        -   An amount equal to the monthly cost of insurance for the two Policy
            Months prior to lapse.
 
   
    State law may limit the premium to be paid on reinstatement to an amount
    less than that described. To the extent that we did not deduct the first
    year monthly administrative charge for a total of twelve Policy Months prior
    to lapse, we will continue to deduct such charge following reinstatement of
    the Policy until we have assessed such charge, both before and after the
    lapse, for a total of 12 Policy Months. (See "CHARGES AND
    DEDUCTIONS--Monthly Deduction.") We will not reinstate a Policy surrendered
    for its Net Surrender Value. The lapse of a Policy with loans outstanding
    may have adverse tax consequences (see "FEDERAL TAX MATTERS--Policy
    Proceeds.")
    
 
    The effective date of the reinstated Policy will be the Monthly Deduction
    Day coinciding with or next following the date we approve the application
    for reinstatement. Upon reinstatement of your Policy, the amount tranferred
    to the Declared Interest Option during the Grace Period will remain there
    unless and until you provide us with allocation instructions.
- --------------------------------------------------------------------------------
 
SPECIAL TRANSFER PRIVILEGE
 
   
    A Policyowner may, at any time prior to the Maturity Date while the Policy
    is in force, operate the Policy as a flexible premium fixed-benefit life
    insurance policy by requesting that we transfer all of the Accumulated Value
    in the Variable Account to the Declared Interest Option. You may exercise
    this special transfer privilege once each Policy Year. Once you exercise the
    special transfer privilege, we automatically will credit all future premium
    payments to the Declared Interest Option, until you request a change in
    allocation to convert the Policy back to a flexible premium variable life
    insurance policy. The Company will not impose any charge for transfers
    resulting from the exercise of the special transfer privilege.
    
 
                                       17
<PAGE>
- --------------------------------------------------------------------------------
 
POLICY BENEFITS
- --------------------------------------------------------------------------------
 
   
    While a Policy is in force, it provides for certain benefits prior to the
    Maturity Date. Subject to certain limitations, the Policyowner may at any
    time obtain all or a portion of the Net Accumulated Value by surrendering or
    taking a partial withdrawal from the Policy. (See "POLICY BENEFITS--
    Accumulated Value Benefits--SURRENDER PRIVILEGES.") In addition, the
    Policyowner has certain policy loan privileges under the Policies. (See
    "POLICY BENEFITS--Loan Benefits--POLICY LOANS.") The Policy also provides
    for the payment of death proceeds upon the death of the Insured under one of
    two death benefit options selected by the Policyowner (see "POLICY
    BENEFITS--Death Proceeds--DEATH BENEFIT OPTIONS"), and benefits upon the
    maturity of a Policy (see "POLICY BENEFITS--Benefits at Maturity").
    
- --------------------------------------------------------------------------------
 
   
ACCUMULATED VALUE BENEFITS
    
 
   
    SURRENDER AND WITHDRAWAL PRIVILEGES. At any time prior to the Maturity Date
    while the Policy is in force, you may surrender the Policy or make a partial
    withdrawal by sending a written request to the Company at our Home Office. A
    Surrender Charge will apply to any surrender during the first six Policy
    Years, as well as during the first six years following an increase in
    Specified Amount. A Partial Withdrawal Fee equal to the lesser of $25 or 2%
    of the amount withdrawn will be payable upon each partial withdrawal. (See
    "CHARGES AND DEDUCTIONS--Surrender Charge, and --Partial Withdrawal Fee").
    We ordinarily mail surrender and withdrawal proceeds to the Policyowner
    within seven days after we receive a signed request at our Home Office,
    although we may postpone payments under certain circumstances. (See "GENERAL
    PROVISIONS--Postponement of Payments.")
    
 
   
    SURRENDERS. The amount payable upon surrender of the Policy is the Net
    Accumulated Value at the end of the Valuation Period when we receive the
    request. We may pay this amount in a lump sum or under one of the payment
    options specified in the Policy, as requested by the Policyowner. (See
    "POLICY BENEFITS--Payment Options"). If you surrender the entire Policy, all
    insurance in force will terminate. See "FEDERAL TAX MATTERS" for a
    discussion of the tax consequences associated with complete surrenders.
    
 
   
    PARTIAL WITHDRAWALS. A Policyowner may obtain a portion of the Policy's Net
    Accumulated Value upon partial withdrawal of the Policy.
    
 
        -   A partial surrender must be at least $500.
 
   
        -   A partial surrender cannot exceed the lesser of (1) the Net
            Accumulated Value less $500 or (2) 90% of the Net Accumulated Value.
    
 
   
    We deduct the Partial Withdrawal Fee from the remaining Accumulated Value.
    The Policyowner may request that we pay the proceeds of a partial surrender
    in a lump sum or under one of the payment options specified in the Policy.
    (See "POLICY BENEFITS--Payment Options").
    
 
   
    We will allocate a partial withdrawal (together with the Partial Withdrawal
    Fee) among the Subaccounts and the Declared Interest Option in accordance
    with the Policyowner's written instructions. If we do not receive any such
    instructions with the request for partial withdrawal, we will allocate the
    partial withdrawal among the Subaccounts and the Declared Interest Option in
    the same proportion that the Accumulated Value in each of the Subaccounts
    and the Accumulated Value in the Declared Interest Option, reduced by any
    outstanding Policy Debt, bears to the total Accumulated Value on the date we
    receive the request at the Home Office.
    
 
   
    Partial withdrawals will affect both the Policy's Accumulated Value and the
    death proceeds payable under the Policy. (See "POLICY BENEFITS--Death
    Proceeds.")
    
 
   
        -   The Policy's Accumulated Value will be reduced by the amount of the
            partial surrender.
    
 
                                       18
<PAGE>
   
        -   If the death benefit payable under either death benefit option both
            before and after the partial surrender is equal to the Accumulated
            Value multiplied by the specified amount factor set forth in the
            Policy, a partial surrender will result in a reduction in death
            proceeds equal to the amount of the partial surrender, multiplied by
            the specified amount factor then in effect.
    
 
        -   If the death benefit is not so affected by the specified amount
            factor, the reduction in death proceeds will be equal to the partial
            surrender.
 
   
    If Option B is in effect at the time of surrender, partial surrenders will
    reduce the Policy's Specified Amount by the amount of Accumulated Value
    surrendered. If Option A is in effect at the time of the surrender, there
    will be no effect on Specified Amount. (See "POLICY BENEFITS--Death
    Proceeds--DEATH BENEFIT OPTIONS.") The Specified Amount remaining in force
    after a partial surrender may not be less than the minimum Specified Amount
    for the Policy in effect on the date of the partial surrender, as published
    by the Company. As a result, the Company will not process any partial
    surrender that would reduce the Specified Amount below this minimum.
    
 
    If increases in the Specified Amount previously have occurred, a partial
    surrender will first reduce the Specified Amount of the most recent
    increase, then the next most recent increases successively, then the
    coverage under the original application. Thus, a partial surrender may
    either increase or decrease the amount of the cost of insurance charge,
    depending upon the particular circumstances. (See "CHARGES AND
    DEDUCTIONS--Monthly Deduction--COST OF INSURANCE.") For a discussion of the
    tax consequences associated with partial surrenders, see "FEDERAL TAX
    MATTERS."
 
   
    NET ACCUMULATED VALUE. Net Accumulated Value equals the Policy's Accumulated
    Value reduced by any outstanding Policy Debt and increased by any unearned
    loan interest.
    
 
   
    CALCULATING ACCUMULATED VALUE. The Policy provides for the accumulation of
    Accumulated Value. The Accumulated Value of the Policy is equal to the sum
    of the Accumulated Values in each Subaccount, plus the Accumulated Value in
    the Declared Interest Option, including amounts transferred to the Declared
    Interest Option to secure outstanding Policy Debt. We determine Accumulated
    Value on each Business Day, and there is no guaranteed minimum Accumulated
    Value.
    
 
   
        -   Accumulated Value will reflect a number of factors, including
    
 
             -   Net Premiums paid,
 
   
             -   partial withdrawals,
    
 
             -   Policy Loans,
 
             -   charges assessed in connection with the Policy,
 
   
             -   interest earned on the Accumulated Value in the Declared
                 Interest Option, and
    
 
   
             -   investment performance of the Subaccounts to which the
                 Accumulated Value is allocated.
    
 
   
    As of the Policy Date, the Accumulated Value equals the initial Net Premium
    less the monthly deduction made on the Policy Date.
    
 
   
    On the Business Day coinciding with or immediately following the date we
    receive notice that the Policyowner has received the Policy, but no later
    than 25 days after the Delivery Date, we will automatically transfer the
    Accumulated Value (all of which is in the Declared Interest Option) among
    the Subaccounts and the Declared Interest Option in accordance with your
    percentage allocation instructions. At the end of each Valuation Period
    thereafter, the Accumulated Value in a Subaccount will equal:
    
 
   
        -   The total Subaccount units represented by the Accumulated Value at
            the end of the preceding Valuation Period, multiplied by the
            Subaccount's unit value for the current Valuation Period; PLUS
    
 
                                       19
<PAGE>
        -   Any Net Premiums received during the current Valuation Period which
            are allocated to the Subaccount; PLUS
 
   
        -   All Accumulated Values transferred to the Subaccount from the
            Declared Interest Option or from another Subaccount during the
            current Valuation Period; MINUS
    
 
   
        -   All Accumulated Values transferred from the Subaccount to another
            Subaccount or to the Declared Interest Option during the current
            Valuation Period, including amounts transferred to the Declared
            Interest Option to secure Policy Debt; MINUS
    
 
        -   All partial surrenders (and any portion of the Surrender Charge)
            from the Subaccount during the current Valuation Period; MINUS
 
        -   The portion of any monthly deduction charged to the Subaccount
            during the current Valuation Period to cover the Policy Month
            following the Monthly Deduction Day.
 
   
    The Policy's total Accumulated Value in the Variable Account equals the sum
    of the Policy's Accumulated Value in each Subaccount.
    
 
   
    UNIT VALUE. Each Subaccount has a Unit Value. When you allocate Net Premiums
    or transfer other amounts into a Subaccount, we purchase a number of units
    based on the Unit Value of the Subaccount as of the end of the Valuation
    Period during which the allocation or transfer is made. Likewise, when
    amounts are transferred out of a Subaccount, units are redeemed on the same
    basis. On any day, a Policy's Accumulated Value in a Subaccount is equal to
    the number of units held in such Subaccount, multiplied by the Unit Value of
    such Subaccount on that date.
    
 
    For each Subaccount, we initially set the Unit Value set at $10 when the
    Subaccount first purchased shares of the designated Investment Option. We
    calculate the Unit Value for each subsequent valuation period by dividing
    (a) by (b) where:
 
        (a)  is (1) the Net Asset Value of the net assets of the Subaccount at
             the end of the preceding Valuation Period, plus
 
             (2)  the investment income and capital gains, realized or
                  unrealized, credited to the net assets of that Subaccount
                  during the Valuation Period for which the Unit Value is being
                  determined, minus
 
             (3)  the capital losses, realized or unrealized, charged against
                  those assets during the Valuation Period, minus
 
             (4)  any amount charged against the Subaccount for taxes, or any
                  amount we set aside during the Valuation Period as a provision
                  for taxes attributable to the operation or maintenance of that
                  Subaccount, minus
 
             (5)  a charge no greater than 0.0024548% of the average daily net
                  assets of the Subaccount for each day in the Valuation Period.
                  This corresponds to an effective annual rate of .90% of the
                  average daily net assets of the Subaccount for mortality and
                  expense risks incurred in connection with the Policies.
 
        (b)  is the number of units outstanding at the end of the preceding
             Valuation Period.
 
    The Unit Value for a Valuation Period applies for each day in the period. We
    value the assets in the Variable Account at their fair market value in
    accordance with accepted accounting practices and applicable laws and
    regulations.
- --------------------------------------------------------------------------------
 
TRANSFERS
 
    The following features apply to transfers under the Policy:
 
        -   You may transfer amounts among the Subaccounts an unlimited number
            of times in a Policy Year; however, you may only make one transfer
            per Policy Year between the Declared Interest Option and the
            Variable Account.
 
                                       20
<PAGE>
   
        -   You may make transfers by written request to the Home Office or, if
            you elected the "Telephone Transfer Authorization" on the
            supplemental application, by calling the Home Office toll-free at
            the phone number shown on the cover of the Prospectus.
    
 
   
        -   The amount of the transfer must be at least $100, or if less than
            $100, the total Accumulated Value in the Subaccount or in the
            Declared Interest Option (reduced, in the case of the Declared
            Interest Option, by any outstanding Policy Debt). The Company may,
            at its discretion, waive the $100 minimum requirement.
    
 
        -   The transfer will be effective as of the end of the Valuation Period
            during which we receive the request at the Home Office.
 
   
        -   The first transfer in each Policy Year is free. Each time you
            subsequently transfer amounts in that Policy Year, we may assess a
            transfer charge of $25. We will deduct the transfer charge from the
            amount transferred unless you submit payment for the charge at the
            time of your request. Once we issue a Policy, we will not increase
            this charge. (See "CHARGES AND DEDUCTIONS--Transfer Charge.")
    
 
        -   For purposes of these limitations and charges, we consider all
            transfers effected on the same day as a single transfer.
- --------------------------------------------------------------------------------
 
LOAN BENEFITS
 
   
    POLICY LOANS. So long as the Policy remains in force and has a positive Net
    Accumulated Value, you may borrow money from the Company at any time using
    the Policy as the sole security for the Policy Loan. A loan taken from, or
    secured by, a Policy may have federal income tax consequences. (See "FEDERAL
    TAX MATTERS.")
    
 
   
    The maximum amount that you may borrow at any time is 90% of the Accumulated
    Value as of the end of the Valuation Period during which we receive the
    request for the Policy Loan at the Home Office, less any previously
    outstanding Policy Debt. The Company's claim for repayment of Policy Debt
    has priority over the claims of any assignee or other person.
    
 
    During any time that there is outstanding Policy Debt, we will treat
    payments you make first as payment of outstanding Policy Debt, unless you
    indicate that we should treat the payment otherwise. Where no indication is
    made, we will treat as a premium payment any portion of a payment that
    exceeds the amount of any outstanding Policy Debt.
 
   
    ALLOCATION OF POLICY LOAN. When you take a Policy Loan, we segregate an
    amount equal to the Policy Loan within the Declared Interest Option as
    security for the Policy Loan. If, immediately prior to the Policy Loan, the
    Accumulated Value in the Declared Interest Option less Policy Debt
    outstanding is less than the amount of such Policy Loan, we will transfer
    the difference from the subaccounts of the Variable Account, which have
    Accumulated Value, in the same proportions that the Policy's Accumulated
    Value in each Subaccount bears to the Policy's total Accumulated Value in
    the Variable Account. We will determine Accumulated Values as of the end of
    the Valuation Period during which we receive the request for the Policy Loan
    at the Home Office.
    
 
    We normally will mail loan proceeds to you within seven days after receipt
    of a written request. Postponement of a Policy Loan may take place under
    certain circumstances. (See "GENERAL PROVISIONS--Postponement of Payments.")
 
    Amounts segregated within the Declared Interest Option as security for
    Policy Debt will bear interest at an effective annual rate set by the
    Company. (See "POLICY BENEFITS--Loan Benefits--EFFECT ON INVESTMENT
    PERFORMANCE.")
 
   
    LOAN INTEREST CHARGED. The interest rate charged on Policy Loans is not
    fixed. The maximum annual loan interest rate we charge will be the higher of
    the "Published Monthly Average of the Composite Yield on Seasoned Corporate
    Bonds" as published by Moody's Investors Service, Inc. (or any successor
    thereto) for the calendar month ending two months before the date on which
    the rate is determined; or 5.5%. We may elect to change the interest rate at
    any time, of which you will be
    
 
                                       21
<PAGE>
   
    notified. The new rate will take effect on the Policy Anniversary coinciding
    with, or next following, the date the rate is changed.
    
 
    Interest is payable in advance at the time you make any Policy Loan (for the
    remainder of the Policy Year) and on each Policy Anniversary thereafter (for
    the entire Policy Year) so long as there is Policy Debt outstanding. We will
    subtract interest payable at the time you make a Policy Loan from the loan
    proceeds. Thereafter, we will add interest not paid when due to the existing
    Policy Debt and it will bear interest at the same rate charged for Policy
    Loans. We will segregate the amount equal to unpaid interest within the
    Declared Interest Option in the same manner that amounts for Policy Loans
    are segregated within the Declared Interest Option. (See "POLICY
    BENEFITS--Loan Benefits--ALLOCATION OF POLICY LOAN.")
 
   
    Because we charge interest in advance, we will add any interest that has not
    been earned to the death benefit payable at the Insured's death and to the
    Accumulated Value upon complete surrender, and we will credit it to the
    Accumulated Value in the Declared Interest Option upon repayment of Policy
    Debt.
    
 
   
    EFFECT ON INVESTMENT PERFORMANCE. Amounts transferred from the Variable
    Account as security for Policy Debt will no longer participate in the
    investment performance of the Variable Account. We will credit all amounts
    held in the Declared Interest Option as security for Policy Debt with
    interest on each Monthly Deduction Day at an effective annual rate equal to
    the greater of 4% or the current effective loan interest rate minus no more
    than 3%, as determined and declared by the Company. We will not credit
    additional interest to these amounts. The interest credited will remain in
    the Declared Interest Option unless and until transferred by the Policyowner
    to the Variable Account, but will not be segregated within the Declared
    Interest Option as security for Policy Debt.
    
 
   
    From time to time, we may allow a loan spread of 0% on the gain in a Policy
    in effect a minimum of ten years.
    
 
   
    Even though you may repay Policy Debt in whole or in part at any time prior
    to the Maturity Date if the Policy is still in force, Policy Loans will
    affect the Accumulated Value of a Policy and may affect the death proceeds
    payable. The effect could be favorable or unfavorable depending upon whether
    the investment performance of the Subaccount(s) from which the Accumulated
    Value was transferred is less than or greater than the interest rates
    actually credited to the Accumulated Value segregated within the Declared
    Interest Option as security for Policy Debt while Policy Debt is
    outstanding. In comparison to a Policy under which no Policy Loan was made,
    Accumulated Value will be lower where such interest rates credited were less
    than the investment performance of the Subaccount(s), but will be higher
    where such interest rates were greater than the performance of the
    Subaccount(s). In addition, death proceeds will reflect a reduction of the
    death benefit by any outstanding Policy Debt.
    
 
   
    POLICY DEBT. Policy Debt equals the sum of all unpaid Policy Loans and any
    due and unpaid policy loan interest. Policy Debt is not included in Net
    Accumulated Value, which is equal to Accumulated Value less Policy Debt. If,
    during the first three Policy Years, Net Accumulated Value or, after three
    Policy Years, Net Surrender Value, is insufficient on a Monthly Deduction
    Day to cover the monthly deduction (see "CHARGES AND DEDUCTIONS--Monthly
    Deduction"), the Company will notify the Policyowner. To avoid lapse and
    termination of the Policy without value (see "THE POLICY-- Policy Lapse and
    Reinstatement--Lapse"), the Policyowner must, during the Grace Period, make
    a premium payment that, when reduced by the premium expense charge (see
    "CHARGES AND DEDUCTIONS--Premium Expense Charge"), will be at least equal to
    three times the monthly deduction due on the Monthly Deduction Day
    immediately preceding the Grace Period (see "CHARGES AND DEDUCTIONS--Monthly
    Deduction"). Therefore the greater the Policy Debt under a Policy, the more
    likely it would be to lapse.
    
 
   
    REPAYMENT OF POLICY DEBT. You may repay Policy Debt in whole or in part any
    time during the Insured's life and before the Maturity Date so long as the
    Policy is in force. We subtract any Policy Debt not repaid from the death
    benefit payable at the Insured's death, from Accumulated Value upon complete
    surrender or from the maturity benefit. Any payments made by a Policyowner
    will be treated first as the repayment of any outstanding Policy Debt,
    unless the Policyowner indicates
    
 
                                       22
<PAGE>
   
    otherwise. Upon partial or full repayment of Policy Debt, we will no longer
    segregate within the Declared Interest Option the portion of the Accumulated
    Value securing the repaid portion of the Policy Debt, but that amount will
    remain in the Declared Interest Option unless and until transferred to the
    Variable Account by the Policyowner. We will notify you when your Policy
    Debt is repaid in full.
    
 
    For a discussion of the tax consequences associated with Policy Loans and
    lapses, see "FEDERAL TAX MATTERS."
- --------------------------------------------------------------------------------
 
DEATH PROCEEDS
 
    So long as the Policy remains in force, the Policy provides for the payment
    of death proceeds upon the death of the Insured.
 
        -   You may name one or more primary Beneficiaries or contingent
            Beneficiaries and we will pay proceeds to the primary Beneficiary or
            a contingent Beneficiary.
 
        -   If no Beneficiary survives the Insured, we will pay the death
            proceeds to the Policyowner or his estate. We may pay death proceeds
            in a lump sum or under a payment option. (See "POLICY
            BENEFITS--Payment Options.")
 
    To determine the death proceeds, we will reduce the death benefit by any
    outstanding Policy Debt and increase it by any unearned loan interest and
    any premiums paid after the date of death. We will ordinarily mail proceeds
    within seven days after receipt by the Company of Due Proof of Death. We may
    postpone payment, however, under certain circumstances. (See "GENERAL
    PROVISIONS-- Postponement of Payments.") We pay interest on those proceeds,
    at an annual rate of no less than 3.0% or any rate required by law, from the
    date of death to the date payment is made.
 
    DEATH BENEFIT OPTIONS. Policyowners designate in the initial application one
    of two death benefit options offered under the Policy. The amount of the
    death benefit payable under a Policy will depend upon the option in effect
    at the time of the Insured's death.
 
    Under Option A, the death benefit will be equal to the greater of
 
   
        (1)  the sum of the current Specified Amount and the Accumulated Value,
             or
    
 
   
        (2)  the Accumulated Value multiplied by the specified amount factor.
    
 
   
    We will determine Accumulated Value as of the end of the Business Day
    coinciding with or immediately following the date of death. The specified
    amount factor is 2.50 for an Insured Attained Age 40 or below on the date of
    death. For Insureds with an Attained Age over 40 on the date of death, the
    factor declines with age as shown in the Specified Amount Factor Table in
    Appendix B. Accordingly, under Option A, the death proceeds will always vary
    as the Accumulated Value varies (but will never be less than the Specified
    Amount). Policyowners who prefer to have favorable investment performance
    and additional premiums reflected in increased death benefits generally
    should select Option A.
    
 
    Under Option B, the death benefit will be equal to the greater of:
 
        -   the current Specified Amount, or
 
   
        -   the Accumulated Value (determined as of the end of the Business Day
            coinciding with or immediately following the date of death)
            multiplied by the specified amount factor.
    
 
   
    The specified amount factor is the same as under Option A. Accordingly,
    under Option B the death benefit will remain level at the Specified Amount
    unless the Accumulated Value multiplied by the specified amount factor
    exceeds the current Specified Amount, in which case the amount of the death
    benefit will vary as the Accumulated Value varies. Policyowners who are
    satisfied with the amount of their insurance coverage under the Policy and
    who prefer to have favorable investment performance and additional premiums
    reflected in higher Accumulated Value, rather than increased death benefits,
    generally should select Option B.
    
 
                                       23
<PAGE>
    Appendix B shows examples illustrating Option A and Option B.
 
   
    CHANGING THE DEATH BENEFIT OPTION. You may change the death benefit option
    in effect at any time by sending a written request to the Company at our
    Home Office. The effective date of such a change will be the Monthly
    Deduction Day coinciding with or immediately following the date we approve
    the change. A change in death benefit options may have federal income tax
    consequences. (See "FEDERAL TAX MATTERS.")
    
 
   
    If you change the death benefit option from Option A to Option B, the
    current Specified Amount will not change. If you change the death benefit
    option from Option B to Option A, we will reduce the current Specified
    Amount by an amount equal to the Accumulated Value on the effective date of
    the change. You may not make a change in the death benefit option if it
    would result in a Specified Amount which is less than the minimum Specified
    Amount in effect on the effective date of the change, or if after the change
    the Policy would no longer qualify as life insurance under federal tax law.
    
 
    We impose no charges in connection with a change in death benefit option;
    however, a change in death benefit option will affect the cost of insurance
    charges. (See "CHARGES AND DEDUCTIONS--Monthly Deduction--COST OF
    INSURANCE.")
 
    CHANGE IN EXISTING COVERAGE. After a Policy has been in force for one Policy
    Year, you may adjust the existing insurance coverage by increasing or
    decreasing the Specified Amount. To make a change, you must send us a
    written request at our Home Office. Any change in the Specified Amount may
    affect the cost of insurance rate and the net amount at risk, both of which
    will affect a Policyowner's cost of insurance charge. (See "CHARGES AND
    DEDUCTIONS--Monthly Deduction--COST OF INSURANCE RATE, and--NET AMOUNT AT
    RISK.") If decreases in the Specified Amount cause the premiums paid to
    exceed the maximum premium limitations imposed by federal tax law (see "THE
    POLICY--Premiums--PREMIUM LIMITATIONS"), the decrease will be limited to the
    extent necessary to meet these requirements. A change in existing coverage
    may have federal income tax consequences. (See "FEDERAL TAX MATTERS.")
 
    Any decrease in the Specified Amount will become effective on the Monthly
    Deduction Day coinciding with or immediately following the date we approve
    the request. The decrease will first reduce the Specified Amount provided by
    the most recent increase, then the next most recent increases successively,
    then the Specified Amount under the original application. The Specified
    Amount following a decrease can never be less than the minimum Specified
    Amount for the Policy in effect on the date of the decrease. A Specified
    Amount decrease will not reduce the Surrender Charge.
 
   
    To apply for an increase, you must provide us with evidence of insurability
    we deem satisfactory. Any approved increase will become effective on the
    Monthly Deduction Day coinciding with or immediately following the date we
    approve the request. An increase will not become effective, however, if the
    Policy's Accumulated Value on the effective date would not be sufficient to
    cover the deduction for the increased cost of the insurance for the next
    Policy Month.
    
 
   
    CHANGES IN INSURANCE PROTECTION. A Policyowner may increase or decrease the
    pure insurance protection provided by a Policy--the difference between the
    death benefit and the Accumulated Value--in one of several ways as insurance
    needs change. These ways include increasing or decreasing the Specified
    Amount of insurance, changing the level of premium payments and, to a lesser
    extent, partially surrendering Accumulated Value.
    
 
    Although the consequences of each of these methods will depend upon the
    individual circumstances, they may be summarized as follows:
 
   
        -   A decrease in the Specified Amount will, subject to the applicable
            specified amount factor limitations (see "POLICY BENEFITS--Death
            Proceeds--DEATH BENEFIT OPTIONS"), decrease the pure insurance
            protection and the cost of insurance charges under the Policy
            without generally reducing the Accumulated Value.
    
 
                                       24
<PAGE>
   
        -   An increase in the Specified Amount may increase the amount of pure
            insurance protection, depending on the amount of Accumulated Value
            and the resultant applicable specified amount factor. If the
            insurance protection is increased, the cost of insurance charge
            generally will increase as well.
    
 
   
        -   If you elect Option B, an increased level of premium payments will
            increase the Accumulated Value and reduce the pure insurance
            protection, until the Accumulated Value multiplied by the applicable
            specified amount factor exceeds the Specified Amount. Increased
            premiums should also increase the amount of funds available to keep
            the Policy in force.
    
 
   
        -   If you elect Option B, a reduced level of premium payments generally
            will increase the amount of pure insurance protection, depending on
            the applicable specified amount factor. It also will result in a
            reduced amount of Accumulated Value and will increase the
            possibility that the Policy will lapse.
    
 
   
        -   A partial surrender will reduce the death benefit. (See "POLICY
            BENEFITS-- Accumulated Value Benefits--SURRENDER PRIVILEGES.")
            However, it only affects the amount of pure insurance protection if
            the death benefit payable is based on the specified amount factor,
            because otherwise the decrease in the benefit is offset by the
            amount of Accumulated Value withdrawn. The primary use of a partial
            surrender is to withdraw cash and reduce Accumulated Value.
    
 
   
    In comparison, an increase in the death benefit due to the operation of the
    specified amount factor occurs automatically and is intended to help assure
    that the Policy remains qualified as life insurance under federal tax law.
    The calculation of the death benefit based upon the specified amount factor
    occurs only when the Accumulated Value of a Policy reaches a certain
    proportion of the Specified Amount (which may or may not occur). Additional
    premium payments, favorable investment performance and large initial
    premiums tend to increase the likelihood of the specified amount factor
    becoming operational after the first few Policy Years. Such increases will
    be temporary, however, if the investment performance becomes unfavorable
    and/or premium payments are stopped or decreased. A change in insurance
    protection may have federal income tax consequences. (See "FEDERAL TAX
    MATTERS.")
    
- --------------------------------------------------------------------------------
 
ACCELERATED PAYMENTS OF DEATH PROCEEDS
 
    In the event that the Insured becomes terminally ill (as defined below), the
    Policyowner (if residing in a state that has approved such an endorsement)
    may, by written request and subject to the conditions stated below, have the
    Company pay all or a portion of the accelerated death benefit immediately to
    the Policyowner. If not attached to the Policy beforehand, the Company will
    issue an accelerated death benefit endorsement (the "Endorsement") providing
    for this right.
 
    For this purpose, an Insured is terminally ill when a physician (as defined
    by the Endorsement) certifies that he or she has a life expectancy of 12
    months or less.
 
    The accelerated death benefit is equal to the Policy's death benefit as
    described on page 6, up to a maximum of $250,000 (the $250,000 maximum
    applies in aggregate to all policies issued by the Company on the Insured),
    less an amount representing a discount for 12 months at the interest rate
    charged for loans under the Policy. The accelerated death benefit does not
    include the amount of any death benefit payable under a rider that covers
    the life of someone other than the Insured.
 
    In the event that there is a loan outstanding under the Policy on the date
    that the Policyowner requests a payment under the Endorsement, we reduce the
    accelerated death benefit by a portion of the outstanding loan in the same
    proportion that the requested payment under the Endorsement bears to the
    total death benefit under the Policy. If the amount you request to be paid
    under the Endorsement is less than the total death benefit under the Policy
    and the Specified Amount of the Policy is equal to or greater than the
    minimum Specified Amount, the Policy will remain in force with
 
                                       25
<PAGE>
    all values and benefits under the Policy being reduced in the same
    proportion that the new Policy benefit bears to the Policy benefit before
    exercise of the Endorsement.
 
    There are several other restrictions associated with the Endorsement. These
    are:
 
        (1)  the Endorsement is not valid if the Policy is within five years of
             being matured,
 
        (2)  the consent of any irrevocable beneficiary or assignee is required
             to exercise the Endorsement,
 
        (3)  the Company reserves the right, in its sole discretion, to require
             the consent of the Insured or of any beneficiary, assignee, spouse
             or other party of interest before permitting the exercise of the
             Endorsement,
 
        (4)  the Company reserves the right to obtain the concurrence of a
             second medical opinion as to whether any Insured is terminally ill,
             and
 
        (5)  the Endorsement is not effective where:
 
             (a)   the Insured or the Policyowner would be otherwise required by
                   law to use the Endorsement to meet the claims of creditors,
                   or
 
             (b)   the Insured would be otherwise required by any government
                   agency to exercise the Endorsement in order to apply for,
                   obtain or keep a government benefit or entitlement.
 
    The Endorsement will terminate at the earlier of the end of the grace period
    for which any premium is unpaid, upon receipt in the Home Office of a
    written request from the Policyowner to cancel the Endorsement or upon
    termination of the Policy.
 
    The Company believes that for federal income tax purposes, an accelerated
    death benefit payment received under an accelerated death benefit
    endorsement should be fully excludable from the gross income of the
    beneficiary, as long as the beneficiary is the insured under the Policy.
    However, the Policyowner should consult a qualified tax adviser about the
    consequences of adding this Endorsement to a Policy or requesting an
    accelerated death benefit payment under this Endorsement.
- --------------------------------------------------------------------------------
 
BENEFITS AT MATURITY
 
   
    If the Insured is alive and the Policy is in force on the Maturity Date, the
    Company will pay to the Policyowner the Policy's Accumulated Value as of the
    end of the Business Day coinciding with or immediately following the
    Maturity Date, reduced by any outstanding Policy Debt. (See "POLICY
    BENEFITS--Loan Benefits--REPAYMENT OF POLICY DEBT.") We may pay benefits at
    maturity in a lump sum or under a payment option. The Maturity Date is
    Attained Age 115.
    
- --------------------------------------------------------------------------------
 
PAYMENT OPTIONS
 
   
    We may pay death proceeds and Accumulated Value due at maturity, or upon
    surrender or partial withdrawal of a Policy, in whole or in part under a
    payment option. There are currently five payment options available. We also
    may make payments under any new payment option available at the time
    proceeds become payable. In addition, we may pay proceeds in any other
    manner acceptable to us.
    
 
    You may designate an option in the application or notify us in writing at
    our Home Office. During the life of the Insured, the Policyowner may select
    a payment option; in addition, during that time the Policyowner may change a
    previously selected option by sending written notice to the Company
    requesting the cancellation of the prior option and the designation of a new
    option. If the Policyowner has not chosen an option prior to the Insured's
    death, the Beneficiary may choose an option. The Beneficiary may change a
    payment option by sending a written request to the Company, provided that a
    prior option chosen by the Policyowner is not in effect.
 
                                       26
<PAGE>
    If no option is chosen, the Company will pay the proceeds of the Policy in
    one sum. The Company will also pay the proceeds in one sum if,
 
        (1)  the proceeds are less than $2,000;
 
        (2)  periodic payments would be less than $20; or
 
        (3)  the payee is an assignee, estate, trustee, partnership, corporation
             or association.
 
    Amounts paid under a payment option are paid pursuant to a payment contract
    and will not depend upon the investment performance of the Variable Account.
    Proceeds applied under a payment option earn interest at a rate guaranteed
    to be no less than 3.0% compounded yearly. The Company may be crediting
    higher interest rates on the effective date of the payment contract. The
    Company may, but is not obligated to, declare additional interest to be
    applied to such funds.
 
    If a payee dies, any remaining payments will be paid to a contingent payee.
    At the death of the last payee, the commuted value of any remaining payments
    will be paid to the last payee's estate. A payee may not withdraw funds
    under a payment option unless the Company has agreed to such withdrawal in
    the payment contract. The Company reserves the right to defer a withdrawal
    for up to six months and to refuse to allow partial withdrawals of less than
    $250.
 
    Payments under Options 2, 3, 4 or 5 will begin as of the date of the
    Insured's death, on surrender or on the Maturity Date. Payments under Option
    1 will begin at the end of the first interest period after the date proceeds
    are otherwise payable.
 
    OPTION 1--INTEREST INCOME. Periodic payments of interest earned from the
    proceeds will be paid. Payments can be annual, semi-annual, quarterly or
    monthly, as selected by the payee, and will begin at the end of the first
    period chosen. Proceeds left under this plan will earn interest at a rate
    determined by the Company, in no event less than 3.0% compounded yearly. The
    payee may withdraw all or part of the proceeds at any time.
 
    OPTION 2--INCOME FOR A FIXED PERIOD. Periodic payments will be made for a
    fixed period not longer than 30 years. Payments can be annual, semi-annual,
    quarterly or monthly. Guaranteed amounts payable under the plan will earn
    interest at a rate determined by the Company, in no event less than 3.0%
    compounded yearly.
 
    OPTION 3--LIFE INCOME WITH TERM CERTAIN. Equal periodic payments will be
    made for a guaranteed minimum period elected. If the payee lives longer than
    the minimum period, payments will continue for his or her life. The minimum
    period can be 0, 5, 10, 15 or 20 years. Guaranteed amounts payable under
    this plan will earn interest at a rate determined by the Company, in no
    event less than 3.0% compounded yearly.
 
    OPTION 4--INCOME OF A FIXED AMOUNT. Equal periodic payments of a definite
    amount will be paid. Payments can be annual, semi-annual, quarterly or
    monthly. The amount paid each period must be at least $20 for each $1,000 of
    proceeds. Payments will continue until the proceeds are exhausted. The last
    payment will equal the amount of any unpaid proceeds. Unpaid proceeds will
    earn interest at a rate determined by the Company, in no event less than
    3.0% compounded yearly.
 
    OPTION 5--JOINT AND TWO-THIRDS SURVIVOR MONTHLY LIFE INCOME. Equal monthly
    payments will be made for as long as two payees live. The guaranteed amount
    payable under this plan will earn interest at a minimum rate of 3.0%
    compounded yearly. When one payee dies, payments of two-thirds of the
    original monthly payment will be made to the surviving payee. Payments will
    stop when the surviving payee dies.
 
    ALTERNATE PAYMENT OPTION. In lieu of one of the above options, we may settle
    the cash value, cash surrender value or death benefit, as applicable, under
    any other payment option we make available or under any other payment option
    you request and we agree to.
 
                                       27
<PAGE>
- --------------------------------------------------------------------------------
 
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
 
    We deduct certain charges in connection with the Policy to compensate us for
    (1) the services and benefits we provide; (2) the costs and expenses we
    incur; and (3) the risks we assume, some of which are described below.
 
<TABLE>
<S>                                          <C>        <C>
SERVICES AND BENEFITS WE PROVIDE:                    -  the death benefit, cash and loan benefits
                                                        under the Policy
                                                     -  investment options, including premium
                                                        allocations
                                                     -  administration of elective options
                                                     -  the distribution of reports to Policyowners
 
COSTS AND EXPENSES WE INCUR:                         -  costs associated with processing and
                                                        underwriting applications, issuing and
                                                        administering the Policy (including any
                                                        Policy riders)
                                                     -  overhead and other expenses for providing
                                                        services and benefits
                                                     -  sales and marketing expenses
                                                     -  other costs of doing business, such as
                                                        collecting premiums, maintaining records,
                                                        processing claims, effecting transactions,
                                                        and paying Federal, state and local premium
                                                        and other taxes and fees
 
RISKS WE ASSUME:                                     -  that the cost of insurance charges we may
                                                        deduct are insufficient to meet our actual
                                                        claims because Insureds die sooner than we
                                                        estimate
                                                     -  that the costs of providing the services
                                                        and benefits under the Policies exceed the
                                                        charges we deduct
</TABLE>
 
    The nature and amount of these charges are described more fully below.
- --------------------------------------------------------------------------------
 
PREMIUM EXPENSE CHARGE
 
   
    Before allocating Net Premiums among the Subaccounts and the Declared
    Interest Option, we reduce premiums paid by a premium expense charge. The
    premium less the premium expense charge equals the Net Premium.
    
 
   
    The premium expense charge is 7% of each premium up to the Target Premium
    (or 2% for each premium over the Target Premium) and is used to compensate
    us for expenses incurred in distributing the Policy, including agent sales
    commissions, the cost of printing prospectuses and sales literature,
    advertising costs and charges we consider necessary to pay all taxes imposed
    by states and subdivisions thereof (which currently range from 1% to 3%).
    
- --------------------------------------------------------------------------------
 
MONTHLY DEDUCTION
 
   
    We deduct certain charges monthly from the Accumulated Value of each Policy
    ("monthly deduction") to compensate us for the cost of insurance coverage
    and any additional benefits added by rider (See "GENERAL
    PROVISIONS--Additional Insurance Benefits"), for underwriting and start-up
    expenses in connection with issuing a Policy and for certain administrative
    costs. We deduct the monthly deduction on the Policy Date and on each
    Monthly Deduction Day. We deduct it from the
    
 
                                       28
<PAGE>
   
    Declared Interest Option and each Subaccount in the same proportion that the
    Policy's Net Accumulated Value in the Declared Interest Option and the
    Policy's Accumulated Value in each Subaccount bear to the total Net
    Accumulated Value of the Policy. For purposes of making deductions from the
    Declared Interest Option and the Subaccounts, we determine Accumulated
    Values as of the end of the Business Day coinciding with or immediately
    following the Monthly Deduction Day. Because portions of the monthly
    deduction, such as the cost of insurance, can vary from month to month, the
    monthly deduction itself will vary in amount from month to month.
    
 
    During the first 12 Policy Months and during the 12 Policy Months
    immediately following an increase in Specified Amount, the monthly deduction
    will include a first year monthly administrative charge.
 
    We make the monthly deduction on the Business Day coinciding with or
    immediately following each Monthly Deduction Day and it will equal:
 
        -  the cost of insurance for the Policy; plus
 
        -  the cost of any optional insurance benefits added by rider; plus
 
   
        -  the monthly policy expense charge.
    
 
    COST OF INSURANCE. This charge is designed to compensate us for the
    anticipated cost of paying death proceeds to Beneficiaries of those Insureds
    who die prior to the Maturity Date. We determine the cost of insurance on a
    monthly basis, and we determine it separately for the initial Specified
    Amount and for any subsequent increases in Specified Amount. We will
    determine the monthly cost of insurance charge by dividing the applicable
    cost of insurance rate, or rates, by 1,000 and multiplying the result by the
    net amount at risk for each Policy Month.
 
    NET AMOUNT AT RISK. Under Option A the net amount at risk for a Policy Month
    is equal to (a) divided by (b); and under Option B the net amount at risk
    for a Policy Month is equal to (a) divided by (b), minus (c), where:
 
        (a)   is the Specified Amount;
 
   
        (b)  is 1.0032737(1); and
    
 
   
        (c)   is the Accumulated Value.
    
 
   
    We determine the Specified Amount and the Accumulated Value as of the end of
    the Business Day coinciding with or immediately following the Monthly
    Deduction Day.
    
 
   
    We determine the net amount at risk separately for the initial Specified
    Amount and any increases in Specified Amount. In determining the net amount
    at risk for each Specified Amount, we first consider the Accumulated Value a
    part of the initial Specified Amount. If the Accumulated Value exceeds the
    initial Specified Amount, we will consider it to be a part of any increase
    in the Specified Amount in the same order as the increases occurred.
    
 
    COST OF INSURANCE RATE. We base the cost of insurance rate for the initial
    Specified Amount on the Insured's sex, premium class and Attained Age. For
    any increase in Specified Amount, we base the cost of insurance rate on the
    Insured's sex, premium class and age at last birthday on the effective date
    of the increase. Actual cost of insurance rates may change and we will
    determine the actual monthly cost of insurance rates by the Company based on
    its expectations as to future mortality experience. However, the actual cost
    of insurance rates will never be greater than the guaranteed maximum cost of
    insurance rates set forth in the Policy. These guaranteed rates are based on
    the 1980 Commissioners' Standard Ordinary Non-Smoker and Smoker Mortality
    Table. Current cost of insurance rates are generally less than the
    guaranteed maximum rates. Any change in the cost of insurance rates will
    apply to all persons of the same age, sex and premium class whose Policies
    have been in force the same length of time.
 
- ------------------------
   
(1)   Dividing by this number reduces the net amount at risk, solely for the
      purposes of computing the cost of insurance, by taking into account
      assumed monthly earnings at an annual rate of 4%.
    
 
                                       29
<PAGE>
   
    The cost of insurance rates generally increase as the Insured's Attained Age
    increases. The premium class of an Insured also will affect the cost of
    insurance rate. The Company currently places Insureds into a standard
    premium class or into premium classes involving a higher mortality risk. In
    an otherwise identical Policy, Insureds in the standard premium class will
    have a lower cost of insurance rate than those in premium classes involving
    higher mortality risk. The standard premium class is also divided into two
    categories: tobacco and non-tobacco. (The Company may offer preferred
    classes in addition to the standard tobacco and non-tobacco classes.)
    Non-tobacco-using Insureds will generally have a lower cost of insurance
    rate than similarly situated Insureds who use tobacco.
    
 
   
    We determine the cost of insurance rate separately for the initial Specified
    Amount and for the amount of any increase in Specified Amount. In
    calculating the cost of insurance charge, we apply the rate for the premium
    class on the Policy Date to the net amount at risk for the initial Specified
    Amount; for each increase in Specified Amount, we use the rate for the
    premium class applicable to the increase. However, if we calculate the death
    benefit as the Accumulated Value times the specified amount factor, we will
    use the rate for the premium class for the most recent increase that
    required evidence of insurability for the amount of death benefit in excess
    of the total Specified Amount.
    
 
    ADDITIONAL INSURANCE BENEFITS. The monthly deduction will include charges
    for any additional benefits provided by rider. (See "GENERAL
    PROVISIONS--Additional Insurance Benefits.")
 
   
    MONTHLY POLICY EXPENSE CHARGE. We have primary responsibility for the
    administration of the Policy and the Variable Account. Administrative
    expenses include premium billing and collection, recordkeeping, processing
    death benefit claims, cash withdrawals, surrenders and Policy changes, and
    reporting and overhead costs. As reimbursement for administrative expenses
    related to the maintenance of each Policy and the Variable Account, we
    assess a $5 monthly administrative charge against each Policy. We guarantee
    this charge will not exceed $7 per Policy Month.
    
 
   
    FIRST YEAR MONTHLY ADMINISTRATIVE CHARGE. We deduct monthly administrative
    charges from Accumulated Value as part of the monthly deduction during the
    first twelve Policy Months and during the twelve Policy Months immediately
    following an increase in Specified Amount. The charge will compensate us for
    first year underwriting, processing and start-up expenses incurred in
    connection with the Policy and the Variable Account. These expenses include
    the cost of processing applications, conducting medical examinations,
    determining insurability and the Insured's premium class, and establishing
    policy records. The first year monthly administrative charge is $0.05 per
    $1,000 of Specified Amount, or increase in Specified Amount. We guarantee
    this charge will not exceed $0.07 per $1,000 of Specified Amount.
    
 
   
    FIRST YEAR MONTHLY EXPENSE CHARGE. We will deduct a monthly expense charge
    of $5 from Accumulated Value during the first twelve Policy Months. We
    guarantee this charge will not exceed $7 per Policy Month.
    
- --------------------------------------------------------------------------------
 
TRANSFER CHARGE
 
   
    We may impose a transfer charge of $25 for the second and each subsequent
    transfer during a Policy Year to compensate us for the costs in making the
    transfer.
    
 
        -   Unless paid in cash, we will deduct the transfer charge from the
            amount transferred.
 
        -   Once we issue a Policy, we will not increase this charge for the
            life of the Policy.
 
                                       30
<PAGE>
   
        -   We will not impose a transfer charge on transfers that occur as a
            result of Policy Loans, the exercise of the special transfer
            privilege or the initial allocation of Accumulated Value among the
            Subaccounts and the Declared Interest Option following acceptance of
            the Policy by the Policyowner.
    
 
    Currently there is no charge for changing the net premium allocation
    instructions.
- --------------------------------------------------------------------------------
 
   
PARTIAL WITHDRAWAL FEE
    
 
   
    Upon partial withdrawal of a Policy, we assess a charge equal to the lesser
    of $25 or 2% of the amount withdrawn to compensate us for costs incurred in
    accomplishing the withdrawal. We deduct this fee from Accumulated Value.
    
- --------------------------------------------------------------------------------
 
   
SURRENDER CHARGE
    
 
   
    We apply a Surrender Charge during the first six Policy Years, as well as
    during the first six years following an increase in Specified Amount. This
    charge is an amount per $1,000 of Specified Amount which declines to $0 in
    the seventh year and varies by age, sex, underwriting category and Policy
    Year. We have listed below the maximum Surrender Charge for select ages in
    various underwriting categories in the first Policy Year.
    
 
   
<TABLE>
<CAPTION>
    ISSUE AGE         MALE, TOBACCO      FEMALE, TOBACCO     UNISEX, TOBACCO
<S>                 <C>                 <C>                 <C>
        30                10.49               10.40                9.76
        50                26.80               15.49               24.41
        70                34.49               34.49               34.49
</TABLE>
    
 
   
    The Surrender Charge is level within each Policy Year. (See "APPENDIX
    C--Maximum Surrender Charges.")
    
 
   
    We reserve the right to waive the Surrender Charge after the first Policy
    Year if the Insured is terminally ill or stays in a qualified nursing care
    center for 90 days.
    
 
    VARIABLE ACCOUNT CHARGES
 
   
    MORTALITY AND EXPENSE RISK CHARGE. We deduct a daily mortality and expense
    risk charge from each Subaccount at an effective annual rate of .90% of the
    average daily net assets of the Subaccounts. We guarantee this charge will
    not exceed 1.05% of the average daily net assets of the Subaccounts. We may
    realize a profit from this charge and may use such profit for any lawful
    purpose, including payment of our distribution expenses.
    
 
    The mortality risk we assume is that Insureds may die sooner than
    anticipated and therefore, we may pay an aggregate amount of life insurance
    proceeds greater than anticipated. The expense risk assumed is that expenses
    incurred in issuing and administering the Policies will exceed the amounts
    realized from the administrative charges assessed against the Policies.
 
    FEDERAL TAXES. Currently no charge is made to the Variable Account for
    federal income taxes that may be attributable to the Variable Account. We
    may, however, make such a charge in the future. Charges for other taxes, if
    any, attributable to the Account may also be made. (See "FEDERAL TAX
    MATTERS--Taxation of the Company.")
 
    INVESTMENT OPTION EXPENSES. The value of net assets of the Variable Account
    will reflect the investment advisory fee and other expenses incurred by each
    Investment Option. The investment advisory fee and other expenses applicable
    to each Investment Option are listed in the "SUMMARY OF THE POLICY" and
    described in the prospectus for each Fund's Investment Option.
 
                                       31
<PAGE>
- --------------------------------------------------------------------------------
 
THE DECLARED INTEREST OPTION
- --------------------------------------------------------------------------------
 
   
    Policyowners may allocate Net Premiums and transfer Accumulated Value to the
    Declared Interest Option. Because of exemptive and exclusionary provisions,
    we have not registered interests in the Declared Interest Option under the
    Securities Act of 1933 and we have not registered the Declared Interest
    Option as an investment company under the Investment Company Act of 1940.
    Accordingly, neither the Declared Interest Option nor any interests therein
    are subject to the provisions of these Acts and, as a result, the staff of
    the Securities and Exchange Commission has not reviewed the disclosures in
    this Prospectus relating to the Declared Interest Option. Disclosures
    regarding the Declared Interest Option may, however, be subject to certain
    generally applicable provisions of the federal securities laws relating to
    the accuracy and completeness of statements made in prospectuses. Please
    refer to the Policy for complete details regarding the Declared Interest
    Option.
    
- --------------------------------------------------------------------------------
 
GENERAL DESCRIPTION
 
    Our General Account supports the Declared Interest Option. The General
    Account consists of all assets we own other than those in the Variable
    Account and other separate accounts. Subject to applicable law, we have sole
    discretion over the investment of the General Account's assets.
 
   
    A Policyowner may elect to allocate Net Premiums to the Declared Interest
    Option, the Variable Account, or both. The Policyowner may also transfer
    Accumulated Value from the Subaccounts to the Declared Interest Option, or
    from the Declared Interest Option to the Subaccounts. Allocating or
    transferring funds to the Declared Interest Option does not entitle a
    Policyowner to share in the investment experience of the General Account.
    Instead, we guarantee that Accumulated Value in the Declared Interest Option
    will accrue interest at an effective annual rate of at least 4%, independent
    of the actual investment experience of the General Account.
    
- --------------------------------------------------------------------------------
 
   
DECLARED INTEREST OPTION ACCUMULATED VALUE
    
 
   
    Net premiums allocated to the Declared Interest Option are credited to the
    Policy. The Company bears the full investment risk for these amounts. The
    Company guarantees that interest credited to each Policyowner's Accumulated
    Value in the Declared Interest Option will not be less than an effective
    annual rate of 4%. The Company may, in its sole discretion, credit a higher
    rate of interest, although it is not obligated to credit interest in excess
    of 4% per year, and might not do so. Any interest credited on the Policy's
    Accumulated Value in the Declared Interest Option in excess of the
    guaranteed rate of 4% per year will be determined in the sole discretion of
    the Company and may be changed at any time by the Company, in its sole
    discretion. The Policyowner assumes the risk that the interest credited may
    not exceed the guaranteed minimum rate of 4% per year. The interest credited
    to the Policy's Accumulated Value in the Declared Interest Option that
    equals Policy Debt may be greater than 4%, but will in no event be greater
    than the current effective loan interest rate minus no more than 3%. From
    time to time, we may allow a loan spread of 0% on the gain in a Policy in
    effect a minimum of ten years. The Accumulated Value in the Declared
    Interest Option will be calculated no less frequently than each Monthly
    Deduction Day.
    
 
   
    The Company guarantees that, at any time prior to the Maturity Date, the
    Accumulated Value in the Declared Interest Option will not be less than the
    amount of the Net Premiums allocated or Accumulated Value transferred to the
    Declared Interest Option, plus interest at the rate of 4% per year, plus any
    excess interest which the Company credits, less the sum of all policy
    charges allocable to the Declared Interest Option and any amounts deducted
    from the Declared Interest Option in connection with partial surrenders or
    transfers to the Variable Account.
    
 
                                       32
<PAGE>
- --------------------------------------------------------------------------------
 
   
TRANSFERS, PARTIAL WITHDRAWALS, SURRENDERS AND POLICY LOANS
    
 
   
    You may transfer amounts between the Subaccounts and the Declared Interest
    Option. However, only one transfer between the Variable Account and the
    Declared Interest Option is permitted in each Policy Year. We may impose a
    transfer charge of $25 in connection with the transfer unless such transfer
    is the first transfer requested by the Policyowner during such Policy Year.
    Unless you submit the transfer charge in cash with your request, we will
    deduct the charge from the amount transferred. No more than 50% of the Net
    Accumulated Value in the Declared Interest Option may be transferred from
    the Declared Interest Option unless the balance in the Declared Interest
    Option immediately after the transfer will be less than $1,000. If the
    balance in the Declared Interest Option after a transfer would be less than
    $1,000, you may transfer the full Net Accumulated Value in the Declared
    Interest Option. A Policyowner may also make surrenders and obtain Policy
    Loans from the Declared Interest Option at any time prior to the Policy's
    Maturity Date.
    
 
   
    We may delay transfers, partial withdrawals and surrenders from, and
    payments of Policy Loans allocated to, the Declared Interest Option for up
    to six months.
    
 
- --------------------------------------------------------------------------------
 
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
 
THE CONTRACT
 
    We issue the Policy in consideration of the statements in the application
    and the payment of the initial premium. The Policy, the application, and any
    supplemental applications and endorsements make up the entire contract. In
    the absence of fraud, we will treat the statements made in an application or
    supplemental application as representations and not as warranties. We will
    not use any statement to void the Policy or in defense of a claim unless the
    statement is contained in the application or any supplemental application.
- --------------------------------------------------------------------------------
 
INCONTESTABILITY
 
    The Policy is incontestable, except for fraudulent statements made in the
    application or supplemental applications, after it has been in force during
    the lifetime of the Insured for two years from the Policy Date or date of
    reinstatement. Any increase in Specified Amount will be incontestable only
    after it has been in force during the lifetime of the Insured for two years
    from the effective date of the increase.
- --------------------------------------------------------------------------------
 
CHANGE OF PROVISIONS
 
    The Company reserves the right to change the Policy, in the event of future
    changes in the federal tax law, to the extent required to maintain the
    Policy's qualification as life insurance under federal tax law.
 
    Except as provided in the foregoing paragraph, no one can change any part of
    the Policy except the Policyowner and the President, a Vice President, the
    Secretary or an Assistant Secretary of the Company. Both must agree to any
    change and such change must be in writing. No agent may change the Policy or
    waive any of its provisions.
 
                                       33
<PAGE>
- --------------------------------------------------------------------------------
 
MISSTATEMENT OF AGE OR SEX
 
    If the Insured's age or sex was misstated in the application, we will adjust
    each benefit and any amount to be paid under the Policy to reflect the
    correct age and sex.
- --------------------------------------------------------------------------------
 
SUICIDE EXCLUSION
 
   
    If the Policy is in force and the Insured commits suicide, while sane or
    insane, within one year from the Policy Date, we will limit life insurance
    proceeds payable under the Policy to all premiums paid, reduced by any
    outstanding Policy Debt and any partial withdrawals, and increased by any
    unearned loan interest. If the Policy is in force and the Insured commits
    suicide, while sane or insane, within one year from the effective date of
    any increase in Specified Amount, we will not pay any increase in the death
    benefit resulting from the requested increase in Specified Amount. Instead,
    we will refund to the Policyowner an amount equal to the total cost of
    insurance applied to the increase.
    
- --------------------------------------------------------------------------------
 
ANNUAL REPORT
 
    At least once each year, we will send an annual report to each Policyowner.
    The report will show
 
        -   the current death benefit,
 
   
        -   the Accumulated Value in each Subaccount and in the Declared
            Interest Option,
    
 
        -   outstanding Policy Debt, and
 
        -   premiums paid, partial surrenders made and charges assessed since
            the last report.
 
    The report will also include any other information required by state law or
    regulation. Further, the Company will send the Policyowner the reports
    required by the Investment Company Act of 1940.
- --------------------------------------------------------------------------------
 
NON-PARTICIPATION
 
    The Policy does not participate in the Company's profits or surplus
    earnings. No dividends are payable.
- --------------------------------------------------------------------------------
 
OWNERSHIP OF ASSETS
 
    The Company shall have the exclusive and absolute ownership and control over
    assets, including the assets of the Variable Account.
- --------------------------------------------------------------------------------
 
WRITTEN NOTICE
 
    You should send any written notice to the Company at our Home Office. The
    notice should include the policy number and the Insured's full name. Any
    notice we send to a Policyowner will be sent to the address shown in the
    application unless you filed an appropriate address change form with the
    Company.
- --------------------------------------------------------------------------------
 
POSTPONEMENT OF PAYMENTS
 
   
    The Company will usually mail the proceeds of complete surrenders, partial
    withdrawals and Policy Loans within seven days after we receive the
    Policyowner's signed request at the Home Office. The Company will usually
    mail death proceeds within seven days after receipt of Due Proof of Death
    and maturity benefits within seven days of the Maturity Date. However, we
    may postpone payment of any
    
 
                                       34
<PAGE>
    amount upon complete or partial surrender, payment of any Policy Loan, and
    payment of death proceeds or benefits at maturity whenever:
 
        -  the New York Stock Exchange is closed other than customary weekend
           and holiday closings, or trading on the New York Stock Exchange is
           restricted as determined by the Securities and Exchange Commission;
 
        -  the Securities and Exchange Commission by order permits postponement
           for the protection of Policyowners; or
 
        -  an emergency exists, as determined by the Securities and Exchange
           Commission, as a result of which disposal of the securities is not
           reasonably practicable or it is not reasonably practicable to
           determine the value of the net assets of the Variable Account.
 
    We also may postpone transfers under these circumstances.
 
    Payments under the Policy which are derived from any amount paid to the
    Company by check or draft may be postponed until such time as the Company is
    satisfied that the check or draft has cleared the bank upon which it is
    drawn.
- --------------------------------------------------------------------------------
 
CONTINUANCE OF INSURANCE
 
    The insurance under a Policy will continue until the earlier of:
 
   
        -  the end of the Grace Period following the Monthly Deduction Day on
           which the Net Accumulated Value during the first three Policy Years,
           or Net Surrender Value after three Policy Years, is less than the
           monthly deduction for the following Policy Month;
    
 
   
        -  the date the Policyowner surrenders the Policy for its entire Net
           Accumulated Value;
    
 
        -  the death of the Insured; or
 
        -  the Maturity Date.
 
    Any rider to a Policy will terminate on the date specified in the rider.
- --------------------------------------------------------------------------------
 
OWNERSHIP
 
    The Policy belongs to the Policyowner. The original Policyowner is the
    person named as owner in the application. Ownership of the Policy may change
    according to the ownership option selected as part of the original
    application or by a subsequent endorsement to the Policy. During the
    Insured's lifetime, all rights granted by the Policy belong to the
    Policyowner, except as otherwise provided for in the Policy.
 
    Special ownership rules may apply if the Insured is under legal age (as
    defined by state law in the state in which the Policy is delivered) on the
    Policy Date.
 
    The Policyowner may assign the Policy as collateral security. The Company
    assumes no responsibility for the validity or effect of any collateral
    assignment of the Policy. No assignment will bind us unless in writing and
    until we receive notice of the assignment at the Home Office. The assignment
    is subject to any payment or action we may have taken before we received
    notice of the assignment at the Home Office. Assigning the Policy may have
    federal income tax consequences. [See "FEDERAL TAX MATTERS."]
- --------------------------------------------------------------------------------
 
THE BENEFICIARY
 
    The Policyowner designates the primary Beneficiaries and contingent
    Beneficiaries in the application. If changed, the primary Beneficiary or
    contingent Beneficiary is as shown in the latest change filed with the
    Company. One or more primary or contingent Beneficiaries may be named in the
 
                                       35
<PAGE>
    application. In such case, the proceeds will be paid in equal shares to the
    survivors in the appropriate beneficiary class, unless requested otherwise
    by the Policyowner.
 
    Unless a payment option is chosen, we will pay the proceeds payable at the
    Insured's death in a lump sum to the primary Beneficiary. If the primary
    Beneficiary dies before the Insured, we will pay the proceeds to the
    contingent Beneficiary. If no Beneficiary survives the Insured, we will pay
    the proceeds to the Policyowner or the Policyowner's estate.
- --------------------------------------------------------------------------------
 
CHANGING THE POLICYOWNER OR BENEFICIARY
 
    During the Insured's life, the Policyowner and the Beneficiary may be
    changed. To make a change, you must send a written request to the Company at
    its Home Office. The request and the change must be in a form satisfactory
    to the Company and we must actually receive and record the request. The
    change will take effect as of the date you sign the request. The change will
    be subject to any payment made before the Company recorded the change. The
    Company may require return of the Policy for endorsement.
- --------------------------------------------------------------------------------
 
ADDITIONAL INSURANCE BENEFITS
 
    Subject to certain requirements, you may add one or more of the following
    additional insurance benefits to a Policy by rider:
 
        -  Universal Cost of Living Increase;
 
        -  Universal Waiver of Charges;
 
        -  Universal Adult Term Insurance;
 
        -  Universal Children's Term Insurance; and
 
        -  Universal Guaranteed Insurability Option.
 
    We will deduct the cost of any additional insurance benefits as part of the
    monthly deduction. (See "CHARGES AND DEDUCTIONS--Monthly Deduction.") You
    may obtain detailed information concerning available riders from the agent
    selling the Policy.
 
- --------------------------------------------------------------------------------
 
DISTRIBUTION OF THE POLICIES
- --------------------------------------------------------------------------------
 
   
    The Policies will be sold by individuals who in addition to being licensed
    as life insurance agents for the Company, are also registered
    representatives of the principal underwriter of the Policies, EquiTrust
    Marketing Services, LLC ("EquiTrust Marketing"), a broker-dealer having a
    selling agreement with EquiTrust Marketing or a broker-dealer having a
    selling agreement with such broker-dealer. EquiTrust Marketing, a
    corporation organized on May 7, 1970, under the laws of the State of
    Delaware, is registered with the Securities and Exchange Commission under
    the Securities Exchange Act of 1934 as a broker-dealer and is a member of
    the National Association of Securities Dealers, Inc.
    
 
   
    The maximum sales commission payable to broker-dealers will be 100% of
    premiums up to the first-year Target Premium, 6% of renewal Target Premium
    and 4% of excess premium in all years. These commissions (and other
    distribution expenses, such as production incentive bonuses, agent's
    insurance and pensions benefits, agency management compensation and bonuses
    and expense allowances) are paid by the Company. They do not result in any
    additional charges against the Policy that are not described above under
    "CHARGES AND DEDUCTIONS."
    
 
                                       36
<PAGE>
- --------------------------------------------------------------------------------
 
FEDERAL TAX MATTERS
- --------------------------------------------------------------------------------
 
INTRODUCTION
 
    The following summary provides a general description of the Federal income
    tax considerations associated with the policy and does not purport to be
    complete or to cover all tax situations. This discussion is not intended as
    tax advice. Counsel or other competent tax advisors should be consulted for
    more complete information. This discussion is based upon our understanding
    of the present Federal income tax laws. No representation is made as to the
    likelihood of continuation of the present Federal income tax laws or as to
    how they may be interpreted by the Internal Revenue Service.
- --------------------------------------------------------------------------------
 
TAX STATUS OF THE POLICY
 
    In order to qualify as a life insurance contract for Federal income tax
    purposes and to receive the tax treatment normally accorded life insurance
    contracts under Federal tax law, a life insurance policy must satisfy
    certain requirements which are set forth in the Internal Revenue Code.
    Guidance as to how these requirements are to be applied is limited.
    Nevertheless, we believe that a Policy issued on the basis of a standard
    rate class should satisfy the applicable requirements. There is less
    guidance, however, with respect to a Policy issued on a substandard basis
    (I.E., a premium class involving higher than standard mortality risk) and it
    is not clear whether such a policy will in all cases satisfy the applicable
    requirements, particularly if you pay the full amount of premiums permitted
    under the Policy. If it is subsequently determined that a policy does not
    satisfy the applicable requirements, we may take appropriate steps to bring
    the policy into compliance with such requirements and we reserve the right
    to modify the Policy as necessary in order to do so.
 
   
    In certain circumstances, owners of variable life insurance policies have
    been considered for Federal income tax purposes to be the owners of the
    assets of variable account supporting their contracts due to their ability
    to exercise investment control over those assets. Where this is the case,
    the policyowners have been currently taxed on income and gains attributable
    to variable account assets. There is little guidance in this area, and some
    features of the Policy, such as the flexibility to allocate premium payments
    and Accumulated Values, have not been explicitly addressed in published
    rulings. While we believe that the Policy does not give the Policyowner
    investment control over Variable Account assets, we reserve the right to
    modify the Policy as necessary to prevent the Policyowner from being treated
    as the owner of the Variable Account assets supporting the Policy.
    
 
    In addition, the Code requires that the investments of the Subaccounts be
    "adequately diversified" in order for the Policy to be treated as a life
    insurance contract for Federal income tax purposes. It is intended that the
    Subaccounts, through the funds, will satisfy these diversification
    requirements.
 
    The following discussion assumes that the Policy will qualify as a life
    insurance contract for Federal income tax purposes.
- --------------------------------------------------------------------------------
 
TAX TREATMENT OF POLICY BENEFITS
 
    IN GENERAL. The Company believes that the death benefit under a Policy
    should be excludible from the gross income of the beneficiary. Federal,
    state and local estate, inheritance, transfer, and other tax consequences of
    ownership or receipt of policy proceeds depend on the circumstances of each
    Policyowner or beneficiary. A tax adviser should be consulted on these
    consequences.
 
   
    Generally, a Policyowner will not be deemed to be in constructive receipt of
    the Accumulated Value until there is a distribution. When distributions from
    a Policy occur, or when loans are taken out from or secured by a Policy, the
    tax consequences depend on whether the Policy is classified as a "modified
    endowment contract."
    
 
                                       37
<PAGE>
    MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain life
    insurance contracts are classified as "modified endowment contracts," with
    less favorable tax treatment than other life insurance contracts. Due to the
    flexibility of the Policy as to premium payments and benefits, the
    individual circumstances of each Policy will determine whether it is
    classified as a modified endowment contract. The rules are too complex to be
    summarized here, but generally depend on the amount of premium payments made
    during the first seven Policy years. Certain changes in a Policy after it is
    issued could also cause it to be classified as a modified endowment
    contract. You should consult with a competent tax adviser to determine
    whether a Policy transaction will cause the Policy to be classified as a
    modified contract.
 
    DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT
    CONTRACTS. Policies classified as modified endowment contracts are subject
    to the following tax rules:
 
        (1)  All distributions other than death benefits from a modified
             endowment contract, including distributions upon surrender and
             withdrawals, will be treated first as distributions of gain taxable
             as ordinary income and as tax-free recovery of the Policyowner's
             investment in the Policy only after all gain has been distributed.
 
        (2)  Loans taken from or secured by a Policy classified as a modified
             endowment contract are treated as distributions and taxed
             accordingly.
 
        (3)  A 10 percent additional income tax is imposed on the amount subject
             to tax except where the distribution or loan is made when the
             Policyowner has attained age 59 1/2 or is disabled, or where the
             distribution is part of a series of substantially equal periodic
             payments for the life (or life expectancy) of the Policyowner or
             the joint lives (or joint life expectancies) of the Policyowner and
             the Policyowner's beneficiary or designated beneficiary.
 
    DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED
    ENDOWMENT CONTRACTS. Distributions other than death benefits from a Policy
    that is not classified as a modified endowment contract are generally
    treated first as a recovery of the Policyowner's investment in the Policy,
    and only after the recovery of all investment in the Policy, as taxable
    income. However, certain distributions which must be made in order to enable
    the Policy to continue to qualify as a life insurance contract for Federal
    income tax purposes if Policy benefits are reduced during the first 15
    Policy years may be treated in whole or in part as ordinary income subject
    to tax.
 
    Loans from or secured by a Policy that is not a modified endowment contract
    will generally not be treated as taxable distributions.
 
    Finally, neither distributions from, nor loans from or secured by, a Policy
    that is not a modified endowment contract are subject to the 10 percent
    additional income tax.
 
    INVESTMENT IN THE POLICY. Your investment in the Policy is generally your
    aggregate premiums. When a distribution is taken from the Policy, your
    investment in the Policy is reduced by the amount of the distribution that
    is tax-free.
 
    POLICY LOAN INTEREST. In general, interest on a Policy Loan will not be
    deductible.
 
    MULTIPLE POLICIES. All modified endowment contracts that are issued by the
    Company (or its affiliates) to the same Policyowner during any calendar year
    are treated as one modified endowment contract for purposes of determining
    the amount includible in the Policyowner's income when a taxable
    distribution occurs.
 
    ACCELERATED DEATH BENEFITS. The Company believes that for federal income tax
    purposes, an accelerated death benefit payment received under an accelerated
    death benefit endorsement should be fully excludable from the gross income
    of the beneficiary, as long as the beneficiary is the insured under the
    Policy. However, you should consult a qualified tax adviser about the
    consequences of adding this Endorsement to a Policy or requesting an
    accelerated death benefit payment under this Endorsement.
 
                                       38
<PAGE>
    EXCHANGES. The Company believes that an exchange of a fixed-benefit policy
    issued by the Company for a Policy as provided under "THE POLICY--Exchange
    Privilege" generally should be treated as a non-taxable exchange of life
    insurance policies within the meaning of section 1035 of the Code. However,
    in certain circumstances, the exchanging owner may receive a cash
    distribution that might have to be recognized as income to the extent there
    was gain in the fixed-benefit policy. Moreover, to the extent a
    fixed-benefit policy with an outstanding loan is exchanged for an
    unencumbered Policy, the exchanging owner could recognize income at the time
    of the exchange up to an amount of such loan (including any due and unpaid
    interest on such loan). An exchanging Policyowner should consult a tax
    adviser as to whether an exchange of a fixed-benefit policy for the Policy
    will have adverse tax consequences.
 
    OTHER POLICYOWNER TAX MATTERS. Businesses can use the Policy in various
    arrangements, including nonqualified deferred compensation or salary
    continuance plans, split dollar insurance plans, executive bonus plans, tax
    exempt and nonexempt welfare benefit plans, retiree medical benefit plans
    and others. The tax consequences of such plans may vary depending on the
    particular facts and circumstances. If you are purchasing the Policy for any
    arrangement the value of which depends in part on its tax consequences, you
    should consult a qualified tax adviser. In recent years, moreover, Congress
    has adopted new rules relating to life insurance owned by businesses. Any
    business contemplating the purchase of a new Policy or a change in an
    existing Policy should consult a tax adviser.
- --------------------------------------------------------------------------------
 
POSSIBLE TAX LAW CHANGES
 
    Although the likelihood of legislative changes is uncertain, there is always
    the possibility that the tax treatment of the Policy could change by
    legislation or otherwise. Consult a tax adviser with respect to legislative
    developments and their effect on the Policy.
- --------------------------------------------------------------------------------
 
TAXATION OF THE COMPANY
 
    At the present time, the Company makes no charge for any Federal, state or
    local taxes (other than the charge for state premium taxes) that may be
    attributable to the Variable Account or to the policies. The Company
    reserves the right to charge the Subaccounts of the Variable Account for any
    future taxes or economic burden the Company may incur.
- --------------------------------------------------------------------------------
 
EMPLOYMENT-RELATED BENEFIT PLANS
 
    The Supreme Court held in Arizona Governing Committee v. Norris that
    optional annuity benefits provided under an employer'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. In addition, legislative,
    regulatory or decisional authority of some states may prohibit use of
    sex-distinct mortality tables under certain circumstances. The Policy
    described in this Prospectus contains guaranteed cost of insurance rates and
    guaranteed purchase rates for certain payment options that distinguish
    between men and women. Accordingly, employers and employee organizations
    should consider, in consultation with legal counsel, the impact of Norris,
    and Title VII generally, on any employment-related insurance or benefit
    program for which a Policy may be purchased.
 
- --------------------------------------------------------------------------------
 
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
 
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS
 
    The Company holds the assets of the Variable Account. The assets are kept
    physically segregated and held separate and apart from the General Account.
    The Company maintains records of all purchases and redemptions of shares by
    each Investment Option for each corresponding Subaccount. Additional
    protection for the assets of the Variable Account is afforded by a blanket
    fidelity bond issued by
 
                                       39
<PAGE>
    Chubb Insurance Group in the amount of $5,000,000 covering all the officers
    and employees of the Company.
- --------------------------------------------------------------------------------
 
VOTING RIGHTS
 
    To the extent required by law, the Company will vote the Fund shares held in
    the Variable Account at regular and special shareholder meetings of the
    Funds in accordance with instructions received from persons having voting
    interests in the corresponding Subaccounts. If, however, the Investment
    Company Act of 1940 or any regulation thereunder should be amended or if the
    present interpretation thereof should change, and, as a result, the Company
    determines that it is permitted to vote the Fund shares in its own right, it
    may elect to do so.
 
   
    The number of votes which a Policyowner has the right to instruct are
    calculated separately for each Subaccount and are determined by dividing a
    Policy's Accumulated Value in a Subaccount by the net asset value per share
    of the corresponding Investment Option in which the Subaccount invests.
    Fractional shares will be counted. The number of votes of the Investment
    Option which the Policyowner has the right to instruct will be determined as
    of the date coincident with the date established by that Investment Option
    for determining shareholders eligible to vote at such meeting of the Fund.
    Voting instructions will be solicited by written communications prior to
    such meeting in accordance with procedures established by each Fund. Each
    person having a voting interest in a Subaccount will receive proxy
    materials, reports and other materials relating to the appropriate
    Investment Option.
    
 
    The Company will vote Fund shares attributable to Policies as to which no
    timely instructions are received (as well as any Fund shares held in the
    Variable Account which are not attributable to Policies) in proportion to
    the voting instructions which are received with respect to all Policies
    participating in each Investment Option. Voting instructions to abstain on
    any item to be voted upon will be applied on a pro rata basis to reduce the
    votes eligible to be cast on a matter.
 
    Fund shares may also be held by separate accounts of other affiliated and
    unaffiliated insurance companies. The Company expects that those shares will
    be voted in accordance with instructions of the owners of insurance policies
    and contracts issued by those other insurance companies. Voting instructions
    given by owners of other insurance policies will dilute the effect of voting
    instructions of Policyowners.
 
    DISREGARD OF VOTING INSTRUCTIONS. The Company may, when required by state
    insurance regulatory authorities, disregard voting instructions if the
    instructions require that the shares be voted so as to cause a change in the
    sub-classification or investment objective of an Investment Option or to
    approve or disapprove an investment advisory contract for an Investment
    Option. In addition, the Company itself may disregard voting instructions in
    favor of changes initiated by a Policyowner in the investment policy or the
    investment adviser of an Investment Option if the Company reasonably
    disapproves of such changes. A change would be disapproved only if the
    proposed change is contrary to state law or prohibited by state regulatory
    authorities, or the Company determined that the change would have an adverse
    effect on the General Account in that the proposed investment policy for an
    Investment Option may result in overly speculative or unsound investments.
    In the event the Company does disregard voting instructions, a summary of
    that action and the reasons for such action will be included in the next
    annual report to Policyowners.
- --------------------------------------------------------------------------------
 
STATE REGULATION OF THE COMPANY
 
    The Company, a stock life insurance company organized under the laws of
    Iowa, is subject to regulation by the Iowa Insurance Department. An annual
    statement is filed with the Iowa Insurance Department on or before March lst
    of each year covering the operations and reporting on the financial
    condition of the Company as of December 31st of the preceding year.
    Periodically, the Iowa Insurance Department examines the liabilities and
    reserves of the Company and the Variable Account
 
                                       40
<PAGE>
    and certifies their adequacy, and a full examination of operations is
    conducted periodically by the National Association of Insurance
    Commissioners.
 
    In addition, the Company is subject to the insurance laws and regulations of
    other states within which it is licensed or may become licensed to operate.
    Generally, the insurance department of any other state applies the laws of
    the state of domicile in determining permissible investments.
 
   
    One hundred percent of our outstanding voting shares are owned by Farm
    Bureau Life Insurance Company which is 100% owned by FBL Financial Group,
    Inc. At December 31, 1998, Iowa Farm Bureau Federation owned 54.30% of the
    outstanding voting shares of FBL Financial Group, Inc.
    
 
   
    Iowa Farm Bureau Federation is an Iowa not-for-profit corporation, the
    members of which are county Farm Bureau organizations and their individual
    members. Iowa Farm Bureau Federation is primarily engaged, through various
    divisions and subsidiaries, in the formulation, analysis and promotion of
    programs (at local, state, national and international levels) that are
    designed to foster the educational, social and economic advancement of its
    members. The principal offices of Iowa Farm Bureau Federation are at 5400
    University Avenue, West Des Moines, Iowa 50266.
    
- --------------------------------------------------------------------------------
 
   
OFFICERS AND DIRECTORS OF EQUITRUST LIFE INSURANCE COMPANY
    
 
    The principal business address of each person listed, unless otherwise
    indicated, is 5400 University Avenue, West Des Moines, Iowa 50266. The
    principal occupation shown reflects the principal employment of each
    individual during the past five years.
 
   
<TABLE>
<CAPTION>
      NAME AND POSITION
       WITH THE COMPANY         PRINCIPAL OCCUPATION LAST FIVE YEARS
<S>                             <C>
Edward M. Wiederstein           Farmer; Chairman and Director, FBL Financial Group, Inc.; President
President and Director            and Director, Iowa Farm Bureau Federation, FBL Insurance
                                  Brokerage, Inc., Farm Bureau Mutual Insurance Company, Utah Farm
                                  Bureau Insurance Company, FBL Financial Services, Inc., Universal
                                  Assurors Life Insurance Company and Farm Bureau Agricultural
                                  Business Corporation; Director, Multi-Pig Corporation, Western
                                  Agricultural Insurance Company, Western Ag Insurance Agency, Inc.,
                                  Western Farm Bureau Life Insurance Company and American Ag
                                  Insurance Company.
Richard D. Harris               Senior Vice President and Secretary-Treasurer, Farm Bureau Mutual
Senior Vice President,            Insurance Company, FBL Insurance Brokerage, Inc., Universal
Secretary-Treasurer and           Assurors Life Insurance Company, Utah Farm Bureau Insurance
Director                          Company, Western Farm Bureau Life Insurance Company, FBL Financial
                                  Services, Inc. and FBL Financial Group, Inc.; Senior Vice
                                  President and Assistant Secretary-Treasurer, South Dakota Farm
                                  Bureau Mutual Insurance Company
Stephen M. Morain               Senior Vice President, General Counsel and Management Director, FBL
Senior Vice President, General    Financial Group, Inc.
Counsel and Director
Thomas R. Gibson                Chief Executive Officer and Management Director, FBL Financial
Chief Executive Officer and       Group, Inc.
Director
</TABLE>
    
 
                                       41
<PAGE>
   
<TABLE>
<CAPTION>
      NAME AND POSITION
       WITH THE COMPANY         PRINCIPAL OCCUPATION LAST FIVE YEARS
<S>                             <C>
William J. Oddy                 Chief Operating Officer, FBL Financial Group, Inc.
Executive Vice President,
General Manager and Director
Timothy J. Hoffman              Vice President, Chief Property/Casualty Officer, FBL Financial
Vice President and Director       Group, Inc.
James W. Noyce                  Chief Financial Officer, FBL Financial Group, Inc.
Chief Financial Officer and
Director
Barbara J. Moore                Vice President-Market Development, FBL Financial Group, Inc.
Vice President
JoAnn W. Rumelhart              Vice President-Life Operations, FBL Financial Group, Inc.
Vice President-Life Operations
John M. Paule                   Vice President-Corporate Administration, FBL Financial Group, Inc.
Vice President-Corporate
Administration
Lynn E. Wilson                  Vice President-Life Sales, FBL Financial Group, Inc.
Vice President-Life Sales
F. Walter Tomenga               Vice President-Corporate Affairs and Marketing Services, FBL
Vice President - Corporate        Financial Group, Inc.
Affairs and Marketing Services
Robert L. Tatge                 Vice President-Property/Casualty Operations, FBL Financial Group,
Vice President                    Inc.
LouAnn Sandburg                 Vice President-Investments and Assistant Treasurer, FBL Financial
Vice President - Investments      Group, Inc.
and Assistant Treasurer
Thomas E. Burlingame            Vice President-Associate General Counsel, FBL Financial Group, Inc.
Vice President - Associate
General Counsel
Kathryn Coleson Horner          Accounting Vice President, FBL Financial Group, Inc.
Accounting Vice President
Dennis M. Marker                Investment Vice President, Administration, FBL Financial Group, Inc.
Investment Vice President,
Administration
Paul Grinvalds                  Variable Operations Vice President, Appointed Actuary, FBL Financial
Variable Operations Vice          Group, Inc.
President
James P. Brannen                Controller and Vice President, FBL Financial Group, Inc.
Controller and Vice President
Christopher G. Daniels          Life Product Development and Pricing Vice President, FBL Financial
Life Product Development and      Group, Inc.
Pricing Vice President
Don Seibel                      GAAP Accounting Vice President, FBL Financial Group, Inc.
GAAP Accounting Vice President
</TABLE>
    
 
                                       42
<PAGE>
   
<TABLE>
<CAPTION>
      NAME AND POSITION
       WITH THE COMPANY         PRINCIPAL OCCUPATION LAST FIVE YEARS
<S>                             <C>
James E. McCarthy               Trust Sales Vice President, FBL Financial Group, Inc.
Trust Sales Vice President
James M. Mincks                 Human Resources Vice President, FBL Financial Group, Inc.
Human Resources Vice President
Scott Shuck                     Marketing Services Vice President, FBL Financial Group, Inc.
Marketing Services Vice
President
Jim Streck                      Traditional Operations Vice President, FBL Financial Group, Inc.
Traditional Operations Vice
President
Blake D. Weber                  Sales Services Vice President, FBL Financial Group, Inc.
Sales Services Vice President
</TABLE>
    
 
- --------------------------------------------------------------------------------
 
LEGAL MATTERS
 
    Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
    certain legal matters relating to federal securities laws applicable to the
    issuance of the flexible premium variable life insurance policy described in
    this Prospectus. All matters of Iowa law pertaining to the Policy, including
    the validity of the Policy and the Company's right to issue the Policy under
    Iowa Insurance Law, have been passed upon by Stephen M. Morain, Senior Vice
    President and General Counsel of the Company.
- --------------------------------------------------------------------------------
 
LEGAL PROCEEDINGS
 
    The Company, like other insurance companies, is involved in lawsuits.
    Currently, there are no class action lawsuits naming the Company as a
    defendant or involving the Variable Account. In some lawsuits involving
    other insurers, substantial damages have been sought and/or material
    settlement payments have been made. Although the outcome of any litigation
    cannot be predicted with certainty, the Company believes that at the present
    time, there are no pending or threatened lawsuits that are reasonably likely
    to have a material adverse impact on the Variable Account or the Company.
- --------------------------------------------------------------------------------
 
EXPERTS
 
   
    The statutory-basis financial statements of the Company at December 31, 1998
    and 1997 and for the years then ended, appearing herein, have been audited
    by Ernst & Young LLP, independent auditors, as set forth in their report
    thereon appearing elsewhere herein and is included in reliance upon such
    report given upon the authority of such firm as experts in accounting and
    auditing.
    
 
    Actuarial matters included in this Prospectus have been examined by
    Christopher G. Daniels, FSA, MAAA, Life Product Development and Pricing Vice
    President, as stated in the opinion filed as an exhibit to the registration
    statement.
- --------------------------------------------------------------------------------
 
YEAR 2000
 
    Like other investment funds, financial and business organizations and
    individuals around the world, the Variable Account could be adversely
    affected if the computer systems used by the Company and other service
    providers do not properly process and calculate date-related information and
    data from and after January 1, 2000. The Company has completed a
    comprehensive assessment of the Year 2000 issue and developed a plan to
    address the issue in a timely manner. The Company has and will utilize both
    internal and external resources to reprogram, or replace, and test the
    software for Year 2000
 
                                       43
<PAGE>
    modifications. The Company anticipates completing the Year 2000 project
    prior to any anticipated impact on its operating systems.
 
    The date on which the Company believes it will complete the Year 2000
    modifications is based on management's best estimates, which were derived
    utilizing numerous assumptions of future events. The Company also recognizes
    there are outside influences and dependencies relative to its Year 2000
    effort, over which it has little or no control. However, the Company is
    putting effort into ensuring these considerations will have minimal impact.
    These would include the continued availability of certain resources,
    third-party modification plans and many other factors. However, there can be
    no guarantee that these estimates will be achieved and actual results could
    differ from those anticipated.
- --------------------------------------------------------------------------------
 
OTHER INFORMATION
 
    A registration statement has been filed with the Securities and Exchange
    Commission under the Securities Act of 1933, as amended, with respect to the
    Policy offered hereby. This Prospectus does not contain all the information
    set forth in the registration statement and the amendments and exhibits to
    the registration statement, to all of which reference is made for further
    information concerning the Variable Account, the Company and the Policy
    offered hereby. Statements contained in this Prospectus as to the contents
    of the Policy and other legal instruments are summaries. For a complete
    statement of the terms thereof, reference is made to such instruments as
    filed.
 
- --------------------------------------------------------------------------------
 
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
 
   
    The statutory-basis balance sheets of the Company at December 31, 1998 and
    1997 and the related statutory-basis statements of operations, changes in
    net worth and cash flow for the years then ended, appearing herein, have
    been audited by Ernst & Young LLP, independent auditors, as set forth in
    their report thereon appearing elsewhere herein. At December 31, 1998, there
    are no policies outstanding; accordingly, no financial statements for the
    Variable Account are available or presented herein.
    
 
                                       44
<PAGE>
   
                         REPORT OF INDEPENDENT AUDITORS
    
 
   
The Board of Directors and Stockholder
EquiTrust Life Insurance Company
    
 
   
We have audited the accompanying statutory-basis balance sheets of EquiTrust
Life Insurance Company as of December 31, 1998 and 1997, and the related
statutory-basis statements of operations, changes in net worth, and cash flow
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
    
 
   
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
    
 
   
As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa, which practices differ from generally accepted accounting principles. The
variances between such practices and generally accepted accounting principles
and the effects on the accompanying financial statements are described in Note
1.
    
 
   
In our opinion, because of the effects of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of EquiTrust Life Insurance Company at December 31, 1998 or 1997, or the results
of its operations or its cash flow for the years then ended.
    
 
   
However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of EquiTrust Life
Insurance Company at December 31, 1998 and 1997, and the results of its
operations and its cash flow for the years then ended, in conformity with
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa.
    
 
   
                                          Ernst & Young LLP
    
   
Des Moines, Iowa
    
   
February 15, 1999
    
 
                                       45
<PAGE>
   
                        EQUITRUST LIFE INSURANCE COMPANY
                        BALANCE SHEETS--STATUTORY BASIS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
    
 
   
<TABLE>
<CAPTION>
                                    DECEMBER 31
                                --------------------
                                  1998       1997
<S>                             <C>        <C>
                                --------------------
ADMITTED ASSETS
Bonds:
  United States Government and
    agencies                    $  30,526  $   5,515
  State, municipal and other
    governments                     1,524         --
  Public utilities                  2,085         --
  Industrial and miscellaneous     15,570         --
                                --------------------
                                   49,705      5,515
 
Cash and short-term
  investments                      22,963      2,593
                                --------------------
Cash and invested assets           72,668      8,108
Premiums deferred and
  uncollected                          11         --
Investment income due and
  accrued                             361         54
Other assets                           98         --
Assets held in separate
  accounts                            503         --
                                --------------------
Total admitted assets           $  73,641  $   8,162
                                --------------------
                                --------------------
 
LIABILITIES AND NET WORTH
Liabilities:
  Life and annuity policy
    reserves                    $  21,668  $      --
  Policy and contract claims          476         --
  Interest maintenance reserve         40         57
  Payable to affiliates               102         --
  Payable for securities           19,154         --
  Federal income taxes payable        302          1
  Other liabilities                   390         --
  Asset valuation reserve              45         --
  Liabilities related to
    separate accounts                 503         --
                                --------------------
Total liabilities                  42,680         58
 
Commitments and contingencies
Net worth:
  Common stock, par value
    $1,500 per
    share--authorized 2,500
    shares;
    issued and outstanding
    2,000 shares                    3,000      3,000
  Additional paid-in capital       27,748      5,125
  Unassigned funds for the
    protection of
    policyholders                     213        (21)
                                --------------------
Total net worth                    30,961      8,104
                                --------------------
Total liabilities and net
  worth                         $  73,641  $   8,162
                                --------------------
                                --------------------
</TABLE>
    
 
   
SEE ACCOMPANYING NOTES.
    
 
                                       46
<PAGE>
   
                        EQUITRUST LIFE INSURANCE COMPANY
                   STATEMENTS OF OPERATIONS--STATUTORY BASIS
    
 
   
                             (DOLLARS IN THOUSANDS)
    
 
   
<TABLE>
<CAPTION>
                                  YEAR ENDED DECEMBER 31
                                   1998           1997
<S>                             <C>           <C>
                                           ---------------
Revenues:
  Life and annuity premiums     $    22,633   $         --
  Net investment income               1,409            476
  Other income                          150             --
                                           ---------------
Total revenues                       24,192            476
Benefits and expenses:
  Benefits paid or provided
    for:
    Annuity benefits                    478             --
    Increase in policy
      reserves                       21,668             --
                                           ---------------
                                     22,146             --
  Commissions                            79             --
  General expenses                      750             --
  Insurance taxes, licenses
    and fees                             76             --
  Net transfers to separate
    accounts                            423             --
  Other                                  99             --
                                           ---------------
Total benefits and expenses          23,573             --
                                           ---------------
Gain from operations before
  federal income taxes
  and net realized capital
  gains                                 619            476
Federal income taxes                    341            148
                                           ---------------
Net gain from operations
  before net realized capital
  gains                                 278            328
Net realized capital gains,
  less related federal income
  tax expense (benefit)
  [1998--$(6); 1997--$61] and
  amounts transferred to
  (from) interest maintenance
  reserve [1998--$(9);
  1997--$33]                              1             --
                                           ---------------
Net income                      $       279   $        328
                                           ---------------
                                           ---------------
</TABLE>
    
 
   
SEE ACCOMPANYING NOTES.
    
 
                                       47
<PAGE>
   
                        EQUITRUST LIFE INSURANCE COMPANY
              STATEMENTS OF CHANGES IN NET WORTH--STATUTORY BASIS
    
 
   
                             (DOLLARS IN THOUSANDS)
    
 
   
<TABLE>
<CAPTION>
                                                                                                 UNASSIGNED
                                                                                                 FUNDS FOR
                                                                                                    THE
                                                                                   ADDITIONAL    PROTECTION
                                                                        COMMON       PAID-IN         OF       TOTAL NET
                                                                         STOCK       CAPITAL    POLICYHOLDERS   WORTH
<S>                                                                   <C>          <C>          <C>           <C>
                                                                      --------------------------------------------------
Balance at January 1, 1997                                             $   3,000    $   7,510    $   22,847   $   33,357
  Net income for 1997                                                         --           --           328          328
  Transfer of assets to TMG Life
    Insurance Company under assumption
    reinsurance agreement                                                     --       (2,823)      (22,847)     (25,670)
  Increase in nonadmitted assets                                              --           --          (349)        (349)
  Other                                                                       --          438            --          438
                                                                      --------------------------------------------------
Balance at December 31, 1997                                               3,000        5,125           (21)       8,104
  Net income for 1998                                                         --           --           279          279
  Decrease in nonadmitted assets                                              --           --            38           38
  Increase in asset valuation reserve                                         --           --           (45)         (45)
  Capital contribution from parent                                            --       22,623            --       22,623
  Other                                                                       --           --           (38)         (38)
                                                                      --------------------------------------------------
Balance at December 31, 1998                                           $   3,000    $  27,748    $      213   $   30,961
                                                                      --------------------------------------------------
                                                                      --------------------------------------------------
</TABLE>
    
 
   
SEE ACCOMPANYING NOTES.
    
 
                                       48
<PAGE>
   
                        EQUITRUST LIFE INSURANCE COMPANY
                    STATEMENTS OF CASH FLOW--STATUTORY BASIS
    
 
   
                             (DOLLARS IN THOUSANDS)
    
 
   
<TABLE>
<CAPTION>
                                                                                               YEAR ENDED DECEMBER 31
                                                                                               ----------------------
                                                                                                  1998        1997
<S>                                                                                            <C>         <C>
                                                                                               ----------------------
CASH FROM OPERATIONS
Premiums and other considerations                                                              $   22,622  $       --
Net investment income                                                                               1,150         440
Other income                                                                                           52          --
                                                                                               ----------------------
                                                                                                   23,824         440
Annuity benefits                                                                                       (2)         --
Commissions, general insurance expenses and taxes                                                  (1,287)         --
Federal income taxes                                                                                  (40)       (180)
                                                                                               ----------------------
NET CASH FROM OPERATIONS                                                                           22,495         260
CASH FROM INVESTMENTS
Proceeds from bonds sold, matured or repaid                                                         2,298       5,793
Federal income taxes on capital gains and losses                                                        6          --
                                                                                               ----------------------
Total cash from investments                                                                         2,304       5,793
Cost of bonds acquired                                                                            (46,557)     (5,518)
                                                                                               ----------------------
Net cash from investments                                                                         (44,253)        275
 
CASH FROM FINANCING AND MISCELLANEOUS SOURCES
Capital and surplus paid in                                                                        22,623         438
Other cash provided                                                                                19,594          27
Other cash applied                                                                                    (89)    (16,333)
                                                                                               ----------------------
Net cash from financing and miscellaneous sources                                                  42,128     (15,868)
                                                                                               ----------------------
Net change in cash and short-term investments                                                      20,370     (15,333)
Cash and short-term investments at beginning of year                                                2,593      17,926
                                                                                               ----------------------
Cash and short-term investments at end of year                                                 $   22,963  $    2,593
                                                                                               ----------------------
                                                                                               ----------------------
</TABLE>
    
 
   
SEE ACCOMPANYING NOTES.
    
 
                                       49
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1998
 
   
1.SIGNIFICANT ACCOUNTING POLICIES
    
 
   
ORGANIZATION
    
 
   
EquiTrust Life Insurance Company (the Company), a wholly-owned subsidiary of
Farm Bureau Life Insurance Company which, in turn, is wholly-owned by FBL
Financial Group, Inc., operates predominantly in the life insurance industry.
The Company currently markets its products, which consist primarily of variable
universal life insurance policies and annuity contracts, to individuals in
thirty-eight states.
    
 
   
All in force policies, annuities and certificates of the Company were ceded to
TMG Life Insurance Company (TMG Life), formerly an affiliated company, through
an assumption reinsurance agreement as of January 1, 1997. At December 31, 1997,
the Company had no insurance in force. The Company was purchased by Farm Bureau
Life Insurance Company on December 30, 1997. The Company was previously owned by
TMG Life which is owned by The Mutual Group (U. S.), Inc. [TMG (U. S.)], which
itself is a wholly owned subsidiary of The Mutual Life Assurance Company of
Canada.
    
 
   
BASIS OF PRESENTATION
    
 
   
The accompanying financial statements have been prepared on the basis of
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa, which practices differ in some
respects from generally accepted accounting principles. The more significant of
these differences are as follows: (a) bonds are generally carried at amortized
cost rather than segregating the portfolio into held-to-maturity (carried at
amortized cost), available-for-sale (carried at fair value), and trading
(reported at fair value) classifications; (b) acquisition costs of acquiring new
business are charged to current operations as incurred rather than deferred and
amortized over the life of the policies; (c) policy reserves on certain
investment products use discounting methodologies utilizing statutory interest
rates rather than full account values; (d) deferred income taxes are not
provided for the difference between the financial statement and income tax bases
of assets and liabilities; (e) net realized gains or losses attributed to
changes in the level of interest rates in the market are deferred and amortized
over the remaining life of the bond or mortgage loan, rather than recognized as
gains or losses in the statement of operations when the sale is completed; (f)
declines in the estimated realizable value of investments are provided for
through the establishment of a formula-determined statutory investment reserve
(carried as a liability) changes to which are charged directly to net worth,
rather than through recognition in the statement of operations for declines in
value, when such declines are judged to be other than temporary; (g) certain
assets designated as "non-admitted assets" are charged to net worth rather than
being reported as assets; (h) revenues for investment products consist of
premiums received rather than policy charges for the cost of insurance policy
administration charges, amortization of policy initiation fees and surrender
charges assessed; and (i) pension income or expense is recognized in accordance
with rules and regulations permitted by the Employee Retirement Income Security
Act of 1974 rather than Statement of Financial Accounting Standards (SFAS) No.
87, EMPLOYERS' ACCOUNTING FOR PENSIONS.
    
 
                                       50
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
1.SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    
   
A reconciliation of net income for the year ended December 31, 1998, and net
worth at December 31, 1998 and 1997, between amounts stated in conformity with
generally accepted accounting principles and amounts presented herein is as
follows:
    
   
<TABLE>
<CAPTION>
                                                                                                           NET WORTH
                                                                                         NET INCOME   --------------------
                                                                                            1998        1998       1997
<S>                                                                                      <C>          <C>        <C>
                                                                                         ---------------------------------
 
<CAPTION>
                                                                                              (DOLLARS IN THOUSANDS)
<S>                                                                                      <C>          <C>        <C>
Amounts stated in conformity with generally accepted
  accounting principles                                                                   $     358   $  32,780  $   9,694
Net unrealized appreciation on fixed maturity securities
  available for sale                                                                             --        (597)        --
Other adjustments to investments                                                                (56)        227         --
Deferred policy acquisition costs                                                               (61)        (61)        --
Goodwill                                                                                         72      (1,461)    (1,533)
Future policy benefits                                                                            8           8         --
Deferred income taxes                                                                          (152)         57         --
Interest maintenance reserve                                                                     17         (40)       (57)
Asset valuation reserve                                                                          --         (45)        --
Other                                                                                            93          93         --
                                                                                         ---------------------------------
As set forth herein                                                                       $     279   $  30,961  $   8,104
                                                                                         ---------------------------------
                                                                                         ---------------------------------
</TABLE>
    
 
   
Prior to December 31, 1997, separate financial statements prepared in conformity
with generally accepted principles were not maintained by the Company.
    
 
   
In 1998, the National Association of Insurance Commissioners (NAIC) adopted
codified statutory accounting principles ("Codification"). Codification will
likely change, to some extent, prescribed statutory accounting practices and may
result in changes to the accounting practices that the Company uses to prepare
its statutory-basis financial statements. Codification will require adoption by
the various states before it becomes the prescribed statutory basis of
accounting for insurance companies domesticated within those states.
Accordingly, before Codification becomes effective for the Company, the State of
Iowa must adopt Codification as the prescribed basis of accounting on which
domestic insurers must report their statutory-basis results to the Insurance
Division, Department of Commerce, of the State of Iowa. At this time, it is
unclear whether the State of Iowa will adopt Codification. Management has not
yet determined the impact of Codification to the Company's statutory-basis
financial statements.
    
 
   
The preparation of financial statements in conformity with accounting practices
prescribed or permitted by the Insurance Division, Department of Commerce, of
the State of Iowa requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the statutory-basis financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
    
 
   
PERMITTED PRACTICE
    
 
   
The statutory-basis financial statements are prepared in accordance with
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa. "Prescribed" statutory accounting
practices include regulations and general administrative rules, as well as a
variety of publications of the NAIC. "Permitted" statutory accounting practices
encompass all practices that are not prescribed, may differ from insurance
company to insurance company, and may change in the future.
    
 
                                       51
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
1.SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    
   
The Company received approval from the Insurance Division, Department of
Commerce, of the State of Iowa to account for the disposition of many of the
balance sheet items related to the assumption reinsurance agreement as a change
in net worth rather than reporting their effect in the statement of operations.
The majority of the assets and liabilities of the Company were transferred to
TMG Life effective January 1, 1997, leaving only that amount of invested assets,
capital and surplus required to maintain minimum capital. An analysis of these
transferred amounts follows (dollars in thousands):
    
 
   
<TABLE>
<S>                                                                  <C>
Assets:
  Bonds                                                              $ 295,713
  Common stocks                                                             82
  Mortgage loans                                                        31,697
  Real estate                                                            1,730
  Policy loans                                                          30,643
  Cash and short-term investments                                       16,333
  Other admitted assets                                                  8,297
                                                                     ---------
  Total assets                                                         384,495
  Less liabilities                                                    (358,825)
                                                                     ---------
  Net transferred                                                    $  25,670
                                                                     ---------
                                                                     ---------
Net worth has been reduced as follows:
  Additional paid-in capital                                         $   2,823
  Unassigned funds for the protection of policyholders                  22,847
                                                                     ---------
  Total                                                              $  25,670
                                                                     ---------
                                                                     ---------
</TABLE>
    
 
   
In connection with the assumption reinsurance agreement, TMG Life agreed to use
its best efforts to secure appropriate policyholder and regulatory approvals to
effectuate the transfer of risk from the Company to TMG Life. State rules and
regulations require different levels of approval with respect to such transfers.
The Company received approval from the Insurance Division, Department of
Commerce, of the State of Iowa to treat all reinsured policies pursuant to
assumption reinsurance during the year ended December 31, 1997, even though
certain policyholder and/or regulatory approvals had not been secured. However,
at December 31, 1998, TMG Life still had not received appropriate approvals with
respect to certain policies. As discussed in Note 5, these policies are treated
as being reinsured under indemnity reinsurance agreements during the year ended
December 31, 1998.
    
 
   
INVESTMENTS
    
 
   
Investments in bonds (except those to which the Securities Valuation Office of
the NAIC has ascribed a value) and short-term investments are reported at cost
adjusted for amortization of premiums and accrual of discounts. Amortization is
computed using methods which result in a level yield over the expected life of
the security. The Company reviews its prepayment assumptions on mortgage and
other asset-backed securities at regular intervals and adjusts amortization
rates retrospectively when such assumptions are changed due to experience and/or
expected future patterns.
    
 
   
Realized capital gains and losses are determined on the basis of specific
identification and are recorded net of related federal income taxes. The Asset
Valuation Reserve (AVR) is established by the Company to provide for anticipated
losses in the event of default by issuers of certain invested assets. These
amounts are determined using a formula prescribed by the NAIC and are reported
as a liability. The formula for the AVR provides for a corresponding adjustment
for realized and unrealized gains and losses, net of amounts attributed to
changes in the general level of interest rates. The Company defers, in the
Interest Maintenance Reserve, the portion of realized gains and losses on sales
of fixed income investments,
    
 
                                       52
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
1.SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    
   
principally bonds and mortgage loans, attributable to changes in the general
level of interest rates and amortizes those deferrals over the remaining period
to maturity of the security.
    
 
   
Interest income is recognized on an accrual basis. The Company does not accrue
income on bonds generally when there is evidence of default or another
indication that such amounts will not be collected. At December 31, 1998 and
1997, the Company excluded no amounts of investment income due and accrued with
respect to such practices.
    
 
   
CASH AND CASH EQUIVALENTS
    
 
   
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of twelve months or less to be
cash equivalents.
    
 
   
POLICY RESERVES
    
 
   
The reserves for life and annuity policies, all developed by actuarial methods,
are established and maintained on the basis of published mortality and morbidity
tables using assumed interest rates and valuation methods that will provide, in
the aggregate, reserves that are equal to or greater than the minimum valuation
required by law and guaranteed policy cash values.
    
 
   
RECOGNITION OF PREMIUM REVENUES AND COSTS
    
 
   
Premiums are recognized as revenues over the premium-paying period, whereas
commissions and other costs applicable to the acquisition of new business are
charged to operations as incurred.
    
 
   
SEPARATE ACCOUNTS
    
 
   
Assets and liabilities of the Company's separate accounts formed during 1998 are
disclosed in the aggregate in the balance sheets. The statements of operations
include the premiums, benefits and other items arising from the operations of
the separate accounts of the Company. Premiums totaling $473,000 were received
during the year ended December 31, 1998 related to separate accounts.
    
 
   
The separate accounts, which are not guaranteed as to interest, are carried at
market value. The excess of the market value of separate account assets over the
aggregate reserves has been recorded as a liability, which represents the amount
accrued for expense allowances recognized in the reserve. Aggregate reserves and
accrued expense allowances were $455,000 and $48,000 at December 31, 1998,
respectively.
    
 
   
DIVIDEND RESTRICTIONS
    
 
   
Prior approval of insurance regulatory authorities is required for payment of
dividends to the Company's stockholder which exceed an annual limitation. During
1999, the Company could pay dividends to its stockholder of approximately $2.8
million without prior approval of the Commissioner of the Insurance Division,
Department of Commerce, of the State of Iowa.
    
 
   
RECLASSIFICATIONS
    
 
   
Certain amounts in the 1997 financial statements have been reclassified to
conform with the 1998 presentation.
    
 
                                       53
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
2.INVESTMENT OPERATIONS
    
   
Components of net investment income are as follows:
    
   
<TABLE>
<CAPTION>
                                                                                                YEAR ENDED DECEMBER
                                                                                                         31
                                                                                                --------------------
                                                                                                  1998       1997
<S>                                                                                             <C>        <C>
                                                                                                --------------------
 
<CAPTION>
                                                                                                    (DOLLARS IN
                                                                                                     THOUSANDS)
<S>                                                                                             <C>        <C>
 
Bonds                                                                                           $   1,161  $     407
Short-term investments                                                                                194         70
Amortization of interest maintenance reserve                                                            8          3
Other                                                                                                  65         --
                                                                                                --------------------
                                                                                                    1,428        480
Less investment expenses                                                                              (19)        (4)
                                                                                                --------------------
Net investment income                                                                           $   1,409  $     476
                                                                                                --------------------
                                                                                                --------------------
</TABLE>
    
 
   
At December 31, 1998 and 1997, the carrying value and estimated market value of
the Company's bonds and short-term investments, which comprise its portfolio of
debt securities, are as follows:
    
   
<TABLE>
<CAPTION>
                                                                                       GROSS         GROSS
                                                                        CARRYING    UNREALIZED    UNREALIZED    ESTIMATED
                                                                          VALUE        GAINS        LOSSES     FAIR VALUE
<S>                                                                     <C>        <C>            <C>          <C>
                                                                        --------------------------------------------------
 
<CAPTION>
                                                                                      (DOLLARS IN THOUSANDS)
<S>                                                                     <C>        <C>            <C>          <C>
DECEMBER 31, 1998
Bonds:
  United States Government and agencies:
    Mortgage and asset-backed securities                                $  22,786    $      63     $      (4)   $  22,845
    Other                                                                   7,740           65            --        7,805
  State, municipal and other governments                                    1,524           41            --        1,565
  Public utilities                                                          2,085           34           (23)       2,096
  Industrial and miscellaneous:
    Mortgage and asset-backed securities                                    7,127          133           (23)       7,237
    Other                                                                   8,443          154           (72)       8,525
                                                                        --------------------------------------------------
                                                                           49,705          490          (122)      50,073
 
Short-term investments                                                     22,981           --            --       22,981
                                                                        --------------------------------------------------
                                                                        $  72,686    $     490     $    (122)   $  73,054
                                                                        --------------------------------------------------
                                                                        --------------------------------------------------
DECEMBER 31, 1997
United States Government and agencies bonds                             $   5,515    $      40     $      --    $   5,555
Short-term investments                                                      2,593           --            --        2,593
                                                                        --------------------------------------------------
                                                                        $   8,108    $      40     $      --    $   8,148
                                                                        --------------------------------------------------
                                                                        --------------------------------------------------
</TABLE>
    
 
                                       54
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
2.INVESTMENT OPERATIONS (CONTINUED)
    
   
The carrying value and estimated market value of the Company's portfolio of debt
securities at December 31, 1998, by contractual maturity are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
    
   
<TABLE>
<CAPTION>
                                                                                              CARRYING    ESTIMATED
                                                                                                VALUE    MARKET VALUE
<S>                                                                                           <C>        <C>
                                                                                              -----------------------
 
<CAPTION>
                                                                                              (DOLLARS IN THOUSANDS)
<S>                                                                                           <C>        <C>
 
Due in one year or less                                                                       $  28,486   $   28,518
Due after one year through five years                                                             5,404        5,449
Due after five years through ten years                                                            4,347        4,443
Due after ten years                                                                               4,536        4,562
                                                                                              -----------------------
                                                                                                 42,773       42,972
Mortgage and asset-backed securities                                                             29,913       30,082
                                                                                              -----------------------
                                                                                              $  72,686   $   73,054
                                                                                              -----------------------
                                                                                              -----------------------
</TABLE>
    
 
   
Proceeds from sales of investments (excluding maturity proceeds) in debt
securities were $1.1 million and $5.8 million for the years ended December 31,
1998 and 1997, respectively. Gross gains of $7,000 and $0.1 million were
realized in 1998 and 1997, respectively. Gross losses of $21,000 were realized
on those sales in 1998.
    
 
   
As described in Note 1, on January 1, 1997, bonds with an admitted asset value
of $295.7 million were transferred to TMG Life as part of the assumption
reinsurance agreement. No gain or loss was realized on the transfer.
    
 
   
During 1998, Farm Bureau Life Insurance Company transferred 28 securities with a
fair market value of $15.0 million to the Company in the form of a capital
contribution.
    
 
   
There were no investments which have been non-income producing for the twelve
months preceding December 31, 1998.
    
 
   
At December 31, 1998, affidavits of deposits covering bonds with a carrying
value of $30.6 million (1997-- $5.6 million), and short-term investments with a
carrying value of $22.9 million (1997--$2.5 million) were on deposit with state
agencies to meet regulatory requirements.
    
 
   
3.FAIR VALUES OF FINANCIAL INSTRUMENTS
    
   
SFAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires
disclosure of fair value information about financial instruments, whether or not
recognized in the statutory-basis balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in immediate
settlement of the instrument. SFAS No. 107 also excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements
and allows companies to forego the disclosures when those estimates can only be
made at excessive cost. Accordingly, the aggregate fair value amounts presented
herein are limited by each of these factors and do not purport to represent the
underlying value of the Company.
    
 
   
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments.
    
 
                                       55
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
3.FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
    
   
    BONDS:  Fair values for bonds are based on quoted market prices, where
    available. For bonds not actively traded, fair values are estimated using a
    matrix calculation assuming a spread (based on interest rates and a risk
    assessment of the bonds) over U. S. Treasury bonds.
    
 
   
    CASH AND SHORT-TERM INVESTMENTS:  The carrying amounts reported in the
    statutory-basis balance sheets for these instruments approximate their fair
    values.
    
 
   
    ASSETS AND LIABILITIES OF SEPARATE ACCOUNTS:  Separate account assets and
    liabilities are reported at estimated fair value in the Company's
    statutory-basis balance sheets.
    
 
   
    LIFE AND ANNUITY POLICY RESERVES:  Fair values of the Company's liabilities
    under contracts not involving significant mortality or morbidity risks
    (principally deferred annuities), are stated at the cost the Company would
    incur to extinguish the liability, i.e., the cash surrender value. The
    Company is not required to estimate the fair value of its liabilities under
    other contracts.
    
 
   
The following sets forth a comparison of the fair values and carrying values of
the Company's financial instruments subject to the provisions of SFAS No. 107:
    
   
<TABLE>
<CAPTION>
                                                                                         DECEMBER 31
                                                                       ------------------------------------------------
                                                                                1998                     1997
                                                                       ----------------------  ------------------------
<S>                                                                    <C>        <C>          <C>          <C>
                                                                       CARRYING                 CARRYING
                                                                         VALUE    FAIR VALUE      VALUE     FAIR VALUE
                                                                       ------------------------------------------------
 
<CAPTION>
                                                                                    (DOLLARS IN THOUSANDS)
<S>                                                                    <C>        <C>          <C>          <C>
ADMITTED ASSETS
Bonds (NOTE 2)                                                         $  49,705   $  50,073    $   5,515    $   5,555
Cash and short-term investments                                           22,963      22,963        2,593        2,593
Assets held in separate accounts                                             503         503           --           --
LIABILITIES
Life and annuity policy reserves (NOTE 4)                                 21,663      21,654           --           --
Liabilities related to separate accounts                                     503         503           --           --
</TABLE>
    
 
   
4.POLICY AND CONTRACT ATTRIBUTES
    
   
A portion of the Company's policy reserves and other policyholders' funds relate
to liabilities established on a variety of the Company's products that are not
subject to significant mortality or morbidity risk; however, there may be
certain restrictions placed upon the amount of funds that can be withdrawn
without penalty. The carrying value and related cash surrender value (which the
Company has established as fair value) on these products by withdrawal
characteristics, are summarized as follows at December 31, 1998:
    
   
<TABLE>
<CAPTION>
                                                                                                 CARRYING    ESTIMATED
                                                                                                   VALUE    FAIR VALUE
<S>                                                                                              <C>        <C>
                                                                                                 ----------------------
 
<CAPTION>
                                                                                                 (DOLLARS IN THOUSANDS)
<S>                                                                                              <C>        <C>
Subject to discretionary withdrawal at book value less
 surrender charge of 5% or more                                                                  $     382   $     373
Subject to discretionary withdrawal at book value without adjustment
 [minimal (less than 5%) or no charge or adjustment]                                                29,584      29,584
                                                                                                 ----------------------
                                                                                                    29,966      29,957
Reinsurance ceded                                                                                   (7,921)     (7,921)
                                                                                                 ----------------------
Total net annuity reserves and deposit fund liabilities                                          $  22,045   $  22,036
                                                                                                 ----------------------
                                                                                                 ----------------------
</TABLE>
    
 
                                       56
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
4.POLICY AND CONTRACT ATTRIBUTES (CONTINUED)
    
   
The above amounts include separate account liabilities related to the Company's
variable annuity product aggregating $0.4 million at December 31, 1998. There
were no annuity reserves or deposit fund liabilities as of December 31, 1997.
    
 
   
A reconciliation of the amounts transferred to and from the separate accounts
during the year ended December 31, 1998 is as follows (dollars in thousands):
    
 
   
<TABLE>
<S>                                                                     <C>
Transfers as reported in the summary of operations of the separate
 accounts statement:
  Transfers to separate accounts                                         $     473
  Transfers from separate accounts                                              49
                                                                             -----
Net transfers to separate accounts                                             424
Reconciling adjustments:
  Fees associated with charges for investment management,
    administration
    and contract guarantees                                                     (1)
                                                                             -----
  Transfers as reported in the statement of operations herein            $     423
                                                                             -----
                                                                             -----
</TABLE>
    
 
   
As of December 31, 1998, the Company had no insurance in force for which the
gross premiums are less than the net premiums according to the standard
valuation law of the State of Iowa.
    
 
   
The Company monitors the level of its contract liabilities, the level of
interest rates credited to its interest sensitive products and the assumed rate
of return provided within the pricing structure of its other products. These
amounts are taken into consideration in the Company's overall management of
interest rate risk, which minimizes exposure to changing interest rates.
    
 
   
5.REINSURANCE
    
   
As discussed in Note 1, certain business reinsured to TMG Life during 1997 has
not received appropriate policyholder and/or regulatory approval to novate the
risk under assumption reinsurance. As a result, this business has been treated
as being reinsured under indemnity reinsurance arrangements for the year ended
December 31, 1998.
    
 
   
In that regard, policy reserves, premiums and expenses are stated net of amounts
related to reinsurance agreements. Life and annuity policy reserves have been
reduced by $18.2 million at December 31, 1998 for reinsurance ceded to TMG Life.
To the extent that TMG Life is later unable to meet its obligations under
reinsurance agreements, the Company would be liable. Life and annuity premiums
have likewise been reduced (1998--$4.7 million) for amounts paid under the
cession agreement. In addition, during the year ended December 31, 1998,
insurance benefits paid or provided have been reduced by $3.9 million, for
amounts received under the cession agreement.
    
 
   
Reinsurance coverages for life insurance vary according to the age of the
insured and risk classification with retention limits ranging up to $.1 million
of coverage per individual life. At December 31, 1998, life insurance in force
ceded to TMG Life amounted to $599.2 million or approximately 99.32% of total
life insurance in force.
    
 
   
6.FEDERAL INCOME TAXES
    
 
   
The Company files a consolidated federal income tax return with FBL Financial
Group, Inc. and a majority of its subsidiaries. FBL Financial Group, Inc. and
its direct and indirect subsidiaries included in the consolidated return each
report current income tax expense as allocated under a consolidated tax
allocation agreement. Generally, this allocation results in profitable companies
recognizing a tax provision
    
 
                                       57
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
6.FEDERAL INCOME TAXES (CONTINUED)
    
   
as if the individual company filed a separate return and loss companies
recognizing benefits to the extent their losses contribute to reduce
consolidated taxes.
    
 
   
The effective tax rate on net gain from operations before federal income taxes
and net realized capital gains is different from the prevailing federal income
tax rate as follows:
    
   
<TABLE>
<CAPTION>
                                                                                  YEAR ENDED
                                                                                 DECEMBER 31
                                                                             --------------------
                                                                               1998       1997
<S>                                                                          <C>        <C>
                                                                             --------------------
 
<CAPTION>
                                                                                 (DOLLARS IN
                                                                                  THOUSANDS)
<S>                                                                          <C>        <C>
 
Income tax at federal statutory rate (35%)                                   $     217  $     167
Tax effect (decrease) of:
  External expenditures related to strategic alliances                              95         --
  Goodwill amortization                                                            (36)        --
  Deferred policy acquisition costs                                                 62         --
  Other, net                                                                         3        (19)
                                                                             --------------------
  Federal income taxes                                                       $     341  $     148
                                                                             --------------------
                                                                             --------------------
</TABLE>
    
 
   
7.RETIREMENT AND COMPENSATION PLANS
    
   
The Company participates with several affiliates in various defined benefit
plans sponsored by the Iowa Farm Bureau Federation. The plans are
noncontributory and cover substantially all employees. Benefits are based on
years of service and the employee's average compensation during the 36
consecutive month period for which the highest average compensation was paid.
The funding policy is to make at least the minimum annual contribution required
by applicable regulations, including amortization of unfunded prior service
cost. The affiliated group's accumulated benefit obligations as of December 31,
1998 based on a 6.75% discount rate totaled $146.1 million. The vested benefit
obligation and fair value of plan assets as of December 31, 1998 totaled $110.6
million and $115.7 million, respectively.
    
 
   
The Company is charged for its allocable share of expense for the
above-mentioned plans generally based on each employee's time allocated to the
Company. Pension expense for these defined benefit plans recorded by the Company
in its statements of operations for the year ended December 31, 1998 was $5,000.
The Company incurred no expense related to these plans during 1997.
    
 
   
The Company participates with several affiliates in a 401(k) defined
contribution plan which covers substantially all employees. Beginning in 1998,
the Company contributes FBL Financial Group, Inc. stock in amounts equal to 50
percent of employee contributions up to four percent of the annual salary
contributed by the employees. Costs are allocated among the affiliates on a
basis of time incurred by the respective employees for each employer. Related
expense totaled $1,000 for 1998.
    
 
   
In addition to benefits offered under the aforementioned benefit plans, the
Company and several other affiliates sponsor a plan that provides group term
life insurance benefits to retired full-time employees who have worked ten years
and attained age 55 while in service with the Company. Postretirement benefit
expense is allocated in a manner consistent with pension expense discussed
above. Such allocations are reviewed annually. For 1998 and 1997, no costs were
recognized by the Company related to these benefits.
    
 
   
8.MANAGEMENT AND SERVICES AGREEMENTS
    
   
The Company shares certain office facilities and services with the Iowa Farm
Bureau Federation and its affiliated companies. These expenses are allocated by
the Company on the basis of cost and time studies that are updated annually and
consist primarily of salaries and related expenses, travel, and occupancy costs.
    
 
                                       58
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
8.MANAGEMENT AND SERVICES AGREEMENTS (CONTINUED)
    
   
Beginning in 1998, the Company participates in a management agreement with FBL
Financial Group, Inc., under which FBL Financial Group, Inc. provides general
business, administration and management services to the Company. In addition,
Farm Bureau Management Corporation, a wholly-owned subsidiary of the Iowa Farm
Bureau Federation, provides certain management services to the Company under a
separate arrangement. During 1998, the Company incurred related expenses
totaling $7,000.
    
 
   
EquiTrust Investment Management Services, Inc., a wholly-owned subsidiary of FBL
Financial Group, Inc., provides investment advisory services to the Company. The
related fees are based in increments upon the level of assets under management,
plus certain out-of-pocket expenses. The Company incurred expenses totaling
$19,000 during 1998 related to this agreement. Prior to 1998, similar services
were provided by TMG (U. S.). During 1997, the Company paid $4,000 with respect
to these services.
    
 
   
9.COMMITMENTS AND CONTINGENCIES
    
   
In the normal course of business, the Company may be involved in litigation for
which amounts are alleged that are substantially in excess of contractual policy
benefits or certain other agreements. At December 31, 1998, management is not
aware of any claims for which a material loss is reasonably possible. TMG Life,
as a part of the sale agreement, has assumed all accrued, absolute and
contingent liabilities that may arise out of or related to the business of the
Company prior to December 30, 1997.
    
 
   
Assessments are, from time to time, levied on the Company by life and health
guaranty associations in most states in which the Company is licensed to cover
losses of policyholders of insolvent or rehabilitated companies. In some states,
these assessments can be partially recovered through a reduction in future
premium taxes. The Company's policy is to accrue for such assessments only when
notice of such assessment is received from a state guaranty fund; accordingly,
no amounts have been provided for in the accompanying financial statements for
estimated future assessments. Assessments paid by the Company amounted to
$10,000 in 1998.
    
 
   
10. IMPACT OF YEAR 2000 (UNAUDITED)
    
   
The Company relies on Farm Bureau Life Insurance Company (Farm Bureau) to
provide computer services necessary to conduct day-to-day operations. Many of
Farm Bureau's computer programs were originally written using two digits rather
than four to define a particular year. As a result, these computer programs have
time-sensitive software that may recognize a date using "00" as the year 1900
rather than the year 2000. This could cause a system failure or miscalculations
causing disruptions to operations, including, but not limited to, a temporary
inability to process transactions, send premium notices and calculate policy
reserves and accruals. To a lesser extent, the Company is dependent on various
non-information technology systems, such as telephone switches. The Year 2000
could also cause these systems to fail or malfunction.
    
 
   
During 1997, Farm Bureau completed a comprehensive assessment of the Year 2000
issue and developed a plan to address the issue in a timely manner. The plan
consists of the following four phases: (1) identification of all information
technology and non-information technology systems that have time-sensitive
software; (2) modification or replacement of the software/systems; (3) testing
the modified or new software/systems; and (4) development of a contingency plan
to address any critical system that may malfunction. In addition, Farm Bureau
has ongoing formal communications with all of its significant vendors to keep
abreast of the extent to which Farm Bureau's interface systems are vulnerable to
those third parties' failure to remediate their own Year 2000 issues.
    
 
   
Farm Bureau has and will utilize both internal and external resources to
reprogram, or replace, and test the software for Year 2000 modifications. With
only a few exceptions, the Year 2000 modifications and
    
 
                                       59
<PAGE>
                        EQUITRUST LIFE INSURANCE COMPANY
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
   
10. IMPACT OF YEAR 2000 (UNAUDITED) (CONTINUED)
    
   
testing have been completed. The exceptions are limited to a few third-party
software packages for which the Year 2000 compliant version will become
available in the first quarter of 1999. It is anticipated that Farm Bureau will
complete its system modifications and testing prior to any material impact on
its operating systems. Non-information technology systems that are not Year 2000
compliant have been replaced or have been identified and will be replaced by
December 31, 1999.
    
 
   
Despite Farm Bureau's extensive efforts to modify or replace computer programs
and information systems that are time-sensitive, Farm Bureau could experience a
disruption to its operations as a result of the Year 2000. Farm Bureau has a
detailed contingency plan to address any critical system that may malfunction
despite the testing being performed. The contingency plan provides for the
availability of staff, defines and prioritizes tasks and outlines procedures to
fix any systems that are malfunctioning.
    
 
                                       60
<PAGE>
- --------------------------------------------------------------------------------
 
APPENDIX A
- --------------------------------------------------------------------------------
 
   
ILLUSTRATIONS OF DEATH BENEFITS AND ACCUMULATED VALUE
    
 
   
    The following tables illustrate how the death benefits, Accumulated Values
    and Surrender Values of a Policy may vary over an extended period of time at
    certain ages, assuming hypothetical gross rates of investment return for the
    Investment Options equivalent to constant gross annual rates of 0%, 4%, 8%
    and 12%. The hypothetical rates of investment return are for purposes of
    illustration only and should not be deemed a representation of past or
    future rates of investment return. Actual rates of return for a particular
    Policy may be more or less than the hypothetical investment rates of return
    and will depend on a number of factors including the investment allocations
    made by a Policyowner. Also, values would be different from those shown if
    the gross annual investment returns averaged 0%, 4%, 8% and 12% over a
    period of years but fluctuated above and below those averages for individual
    Policy Years.
    
 
   
    The amounts shown are as of the end of each Policy Year. The tables assume
    that the assets in the Investment Options are subject to an annual expense
    ratio of 0.75% of the average daily net assets. This annual expense ratio is
    based on the average of the expense ratios of each of the Investment Options
    available under the Policy for the last fiscal year and takes into account
    current expense reimbursement arrangements. The fees and expenses of each
    Investment Option vary, and in 1998 the total fees and expenses ranged from
    an annual rate of 0.30% to an annual rate of 1.05% of average daily net
    assets. For information on Investment Option expenses, see "SUMMARY AND
    DIAGRAM OF THE POLICY" and the prospectuses for the Investment Options.
    
 
    The tables reflect deduction of the premium expense charge, the monthly
    Policy expenses charge, the first-year monthly administrative charge, the
    first-year monthly expense charge, the daily charge for the Company's
    assumption of mortality and expense risks, and cost of insurance charges for
    the hypothetical Insured. The surrender values illustrated in the tables
    also reflect deduction of applicable surrender charges. The current charges
    and the higher guaranteed maximum charges the Company may charge are
    reflected in separate tables on each of the following pages.
 
   
    Applying the current charges and the average Investment Option fees and
    expenses of 0.75% of average net assets, the gross annual rates of
    investment return of 0%, 4%, 8% and 12% would produce net annual rates of
    return of -1.80%, 2.20%, 6.20% and 10.20%, respectively, on a guaranteed
    basis, and -1.65%, 2.35%, 6.35% and 10.35%, respectively, on a current
    basis.
    
 
   
    The hypothetical values shown in the tables do not reflect any charges for
    federal income taxes against the Variable Account since the Company is not
    currently making such charges. However, such charges may be made in the
    future and, in that event, the gross annual investment rate of return would
    have to exceed 0%, 4%, 8% or 12% by an amount sufficient to cover tax
    charges in order to produce the death benefits and Accumulated Values
    illustrated. (See "FEDERAL TAX MATTERS-- Taxation of the Company.")
    
 
    The tables illustrate the Policy values that would result based upon the
    hypothetical investment rates of return if premiums are paid as indicated,
    if all Net Premiums are allocated to the Variable Account and if no Policy
    Loans have been made. The tables are also based on the assumptions that the
    Policyowner has not requested an increase or decrease in Specified Amount,
    and that no partial surrenders or transfers have been made.
 
    For comparative purposes, the second column of each table shows the amount
    to which the premiums would accumulate if an amount equal to those premiums
    were invested to earn interest at 5% compounded annually.
 
                                      *  *  *
 
    Upon request, the Company will provide a comparable illustration based upon
    the proposed insured's age, sex and premium class, the Specified Amount or
    premium requested, and the proposed frequency of premium payments.
 
                                      A-1
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                         FEMALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION A
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $553
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                                                                             ASSUMING
                                               ASSUMING                            0% HYPOTHETICAL GROSS RETURN,
                                     0% HYPOTHETICAL GROSS RETURN,           NON-GUARANTEED CURRENT COST OF INSURANCE
                             GUARANTEED MAXIMUM COST OF INSURANCE CHARGES,      CHARGES, AND NON-GUARANTEED CURRENT
                                AND GUARANTEED MAXIMUM EXPENSE CHARGES                    EXPENSE CHARGES
                PREMIUMS    -----------------------------------------------  -----------------------------------------
              ACCUMULATED     END OF YEAR       END OF YEAR     END OF YEAR   END OF YEAR    END OF YEAR   END OF YEAR
   END OF        AT 5%        ACCUMULATED        SURRENDER         DEATH      ACCUMULATED     SURRENDER       DEATH
POLICY YEAR     PER YEAR         VALUE             VALUE          BENEFIT        VALUE          VALUE        BENEFIT
- ------------  ------------  ---------------  -----------------  -----------  -------------  -------------  -----------
<S>           <C>           <C>              <C>                <C>          <C>            <C>            <C>
      1.....   $      581      $     106         $       0       $ 100,106     $     228      $       0     $ 100,228
      2.....        1,190            368                 0         100,368           564              0       100,564
      3.....        1,831            612                 0         100,612           886              0       100,886
      4.....        2,503              *                 *               *         1,195            219       101,195
      5.....        3,209              *                 *               *         1,489            513       101,489
      6.....        3,950              *                 *               *         1,768            932       101,768
      7.....        4,728              *                 *               *         2,029          1,376       102,029
      8.....        5,545              *                 *               *         2,275          1,797       102,275
      9.....        6,403              *                 *               *         2,505          2,194       102,505
     10.....        7,304              *                 *               *         2,718          2,566       102,718
     15.....       12,530              *                 *               *         3,488          3,488       103,488
     20.....       19,200              *                 *               *         3,621          3,621       103,621
     25.....       27,713              *                 *               *         2,989          2,989       102,989
     30.....       38,578              *                 *               *         1,343          1,343       101,343
     35.....            *              *                 *               *             *              *             *
     40.....            *              *                 *               *             *              *             *
     45.....            *              *                 *               *             *              *             *
     50.....            *              *                 *               *             *              *             *
     55.....            *              *                 *               *             *              *             *
     60.....            *              *                 *               *             *              *             *
     65.....            *              *                 *               *             *              *             *
     70.....            *              *                 *               *             *              *             *
     75.....            *              *                 *               *             *              *             *
     80.....            *              *                 *               *             *              *             *
 Age 65.....       38,578              *                 *               *         1,343          1,343       101,343
 Age 70.....            *              *                 *               *             *              *             *
Age 115.....            *              *                 *               *             *              *             *
</TABLE>
 
- --------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 0% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF -1.80% ON A GUARANTEED BASIS AND -1.65% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-2
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                         FEMALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION A
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $553
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                                                                             ASSUMING
                                                                                   4% HYPOTHETICAL GROSS RETURN,
                                               ASSUMING                      NON-GUARANTEED CURRENT COST OF INSURANCE
                                     4% HYPOTHETICAL GROSS RETURN,                           CHARGES,
                             GUARANTEED MAXIMUM COST OF INSURANCE CHARGES,      AND NON-GUARANTEED CURRENT EXPENSE
                                AND GUARANTEED MAXIMUM EXPENSE CHARGES                        CHARGES
                PREMIUMS    -----------------------------------------------  -----------------------------------------
              ACCUMULATED     END OF YEAR       END OF YEAR     END OF YEAR   END OF YEAR    END OF YEAR   END OF YEAR
   END OF        AT 5%        ACCUMULATED        SURRENDER         DEATH      ACCUMULATED     SURRENDER       DEATH
POLICY YEAR     PER YEAR         VALUE             VALUE          BENEFIT        VALUE          VALUE        BENEFIT
- ------------  ------------  ---------------  -----------------  -----------  -------------  -------------  -----------
<S>           <C>           <C>              <C>                <C>          <C>            <C>            <C>
      1.....   $      581      $     118         $       0       $ 100,118     $     242      $       0     $ 100,242
      2.....        1,190            399                 0         100,399           605              0       100,605
      3.....        1,831            674                 0         100,674           967              0       100,967
      4.....        2,503              *                 *               *         1,330            354       101,330
      5.....        3,209              *                 *               *         1,692            716       101,692
      6.....        3,950              *                 *               *         2,051          1,215       102,051
      7.....        4,728              *                 *               *         2,406          1,753       102,406
      8.....        5,545              *                 *               *         2,757          2,279       102,757
      9.....        6,403              *                 *               *         3,104          2,793       103,104
     10.....        7,304              *                 *               *         3,447          3,295       103,447
     15.....       12,530              *                 *               *         5,022          5,022       105,022
     20.....       19,200              *                 *               *         6,157          6,157       106,157
     25.....       27,713              *                 *               *         6,600          6,600       106,600
     30.....       38,578              *                 *               *         5,931          5,931       105,931
     35.....       52,445              *                 *               *         3,211          3,211       103,211
     40.....            *              *                 *               *             *              *             *
     45.....            *              *                 *               *             *              *             *
     50.....            *              *                 *               *             *              *             *
     55.....            *              *                 *               *             *              *             *
     60.....            *              *                 *               *             *              *             *
     65.....            *              *                 *               *             *              *             *
     70.....            *              *                 *               *             *              *             *
     75.....            *              *                 *               *             *              *             *
     80.....            *              *                 *               *             *              *             *
 Age 65.....       38,578              *                 *               *         5,931          5,931       105,931
 Age 70.....       52,445              *                 *               *         3,211          3,211       103,211
Age 115.....            *              *                 *               *             *              *             *
</TABLE>
 
- --------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 4% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 2.20% ON A GUARANTEED BASIS AND 2.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 4%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-3
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                         FEMALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION A
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $553
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                                                                      ASSUMING
                                            ASSUMING                       8% HYPOTHETICAL GROSS RETURN,
                                  8% HYPOTHETICAL GROSS RETURN,            NON-GUARANTEED CURRENT COST OF
                              GUARANTEED MAXIMUM COST OF INSURANCE               INSURANCE CHARGES,
                                            CHARGES,                     AND NON-GUARANTEED CURRENT EXPENSE
                             AND GUARANTEED MAXIMUM EXPENSE CHARGES                   CHARGES
                PREMIUMS    -----------------------------------------  --------------------------------------
              ACCUMULATED    END OF YEAR    END OF YEAR   END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%       ACCUMULATED     SURRENDER       DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR        VALUE          VALUE        BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  -------------  -------------  -----------  ------------  -----------  -----------
<S>           <C>           <C>            <C>            <C>          <C>           <C>          <C>
      1.....   $      581     $     130      $       0     $ 100,130    $      257    $       0    $ 100,257
      2.....        1,190           432              0       100,432           647            0      100,647
      3.....        1,831           740              0       100,740         1,053           77      101,053
      4.....        2,503         1,054             78       101,054         1,477          501      101,477
      5.....        3,209         1,372            396       101,372         1,917          941      101,917
      6.....        3,950         1,693            857       101,693         2,374        1,538      102,374
      7.....        4,728         2,016          1,363       102,016         2,848        2,195      102,848
      8.....        5,545         2,339          1,861       102,339         3,339        2,861      103,339
      9.....        6,403         2,665          2,354       102,665         3,849        3,538      103,849
     10.....        7,304         2,992          2,840       102,992         4,379        4,227      104,379
     15.....       12,530         4,590          4,590       104,590         7,292        7,292      107,292
     20.....       19,200         5,863          5,863       105,863        10,558       10,558      110,558
     25.....       27,713         6,306          6,306       106,306        14,084       14,084      114,084
     30.....       38,578         4,959          4,959       104,959        17,602       17,602      117,602
     35.....       52,445             *              *             *        20,221       20,221      120,221
     40.....       70,143             *              *             *        20,475       20,475      120,475
     45.....       92,730             *              *             *        14,494       14,494      114,494
     50.....            *             *              *             *             *            *            *
     55.....            *             *              *             *             *            *            *
     60.....            *             *              *             *             *            *            *
     65.....            *             *              *             *             *            *            *
     70.....            *             *              *             *             *            *            *
     75.....            *             *              *             *             *            *            *
     80.....            *             *              *             *             *            *            *
 Age 65.....       38,578         4,959          4,959       104,959        17,602       17,602      117,602
 Age 70.....       52,445             *              *             *        20,221       20,221      120,221
Age 115.....            *             *              *             *             *            *            *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 8% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 6.20% ON A GUARANTEED BASIS AND 6.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 8%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-4
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                         FEMALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION A
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $553
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                           ASSUMING                                ASSUMING
                                12% HYPOTHETICAL GROSS RETURN,          12% HYPOTHETICAL GROSS RETURN,
                             GUARANTEED MAXIMUM COST OF INSURANCE       NON-GUARANTEED CURRENT COST OF
                               CHARGES, AND GUARANTEED MAXIMUM      INSURANCE CHARGES, AND NON-GUARANTEED
                                       EXPENSE CHARGES                     CURRENT EXPENSE CHARGES
                PREMIUMS    --------------------------------------  --------------------------------------
              ACCUMULATED   END OF YEAR   END OF YEAR  END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%      ACCUMULATED    SURRENDER      DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR       VALUE         VALUE       BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  ------------  -----------  -----------  ------------  -----------  -----------
<S>           <C>           <C>           <C>          <C>          <C>           <C>          <C>
      1.....   $      581    $      142    $       0    $ 100,142    $      271    $       0    $ 100,271
      2.....        1,190           466            0      100,466           690            0      100,690
      3.....        1,831           810            0      100,810         1,144          168      101,144
      4.....        2,503         1,175          199      101,175         1,636          660      101,636
      5.....        3,209         1,563          587      101,563         2,168        1,192      102,168
      6.....        3,950         1,972        1,136      101,972         2,744        1,908      102,744
      7.....        4,728         2,405        1,752      102,405         3,367        2,714      103,367
      8.....        5,545         2,862        2,384      102,862         4,041        3,563      104,041
      9.....        6,403         3,348        3,037      103,348         4,773        4,462      104,773
     10.....        7,304         3,863        3,711      103,863         5,568        5,416      105,568
     15.....       12,530         6,954        6,954      106,954        10,653       10,653      110,653
     20.....       19,200        11,004       11,004      111,004        18,207       18,207      118,207
     25.....       27,713        16,180       16,180      116,180        29,555       29,555      129,555
     30.....       38,578        22,467       22,467      122,467        46,725       46,725      146,725
     35.....       52,445        28,535       28,535      128,535        72,435       72,435      172,435
     40.....       70,143        31,534       31,534      131,534       110,886      110,886      210,886
     45.....       92,730        22,390       22,390      122,390       166,855      166,855      266,855
     50.....      121,558             *            *            *       247,850      247,850      347,850
     55.....      158,351             *            *            *       364,305      364,305      464,305
     60.....      205,309             *            *            *       531,629      531,629      631,629
     65.....      265,240             *            *            *       715,336      715,336      815,336
     70.....      341,730             *            *            *       920,901      920,901    1,020,901
     75.....      439,352             *            *            *     1,226,185    1,226,185    1,326,185
     80.....      563,945             *            *            *     1,705,537    1,705,537    1,805,537
 Age 65.....       38,578        22,467       22,467      122,467        46,725       46,725      146,725
 Age 70.....       52,445        28,535       28,535      128,535        72,435       72,435      172,435
Age 115.....      563,945             *            *            *     1,705,537    1,705,537    1,805,537
</TABLE>
 
- --------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 12% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 10.20% ON A GUARANTEED BASIS AND 10.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-5
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                         FEMALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION B
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $553
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                             ASSUMING                                    ASSUMING
                                   0% HYPOTHETICAL GROSS RETURN,               0% HYPOTHETICAL GROSS RETURN,
                               GUARANTEED MAXIMUM COST OF INSURANCE      NON-GUARANTEED CURRENT COST OF INSURANCE
                              CHARGES, AND GUARANTEED MAXIMUM EXPENSE       CHARGES, AND NON-GUARANTEED CURRENT
                                              CHARGES                                 EXPENSE CHARGES
                PREMIUMS    -------------------------------------------  -----------------------------------------
              ACCUMULATED     END OF YEAR     END OF YEAR   END OF YEAR   END OF YEAR    END OF YEAR   END OF YEAR
   END OF        AT 5%        ACCUMULATED      SURRENDER       DEATH      ACCUMULATED     SURRENDER       DEATH
POLICY YEAR     PER YEAR         VALUE           VALUE        BENEFIT        VALUE          VALUE        BENEFIT
- ------------  ------------  ---------------  -------------  -----------  -------------  -------------  -----------
<S>           <C>           <C>              <C>            <C>          <C>            <C>            <C>
      1.....   $      581      $     107       $       0     $ 100,000     $     228      $       0     $ 100,000
      2.....        1,190            369               0       100,000           565              0       100,000
      3.....        1,831            614               0       100,000           888              0       100,000
      4.....        2,503              *               *             *         1,199            223       100,000
      5.....        3,208              *               *             *         1,495            519       100,000
      6.....        3,950              *               *             *         1,776            940       100,000
      7.....        4,728              *               *             *         2,041          1,388       100,000
      8.....        5,545              *               *             *         2,291          1,813       100,000
      9.....        6,403              *               *             *         2,525          2,214       100,000
     10.....        7,303              *               *             *         2,744          2,592       100,000
     15.....       12,530              *               *             *         3,553          3,553       100,000
     20.....       19,200              *               *             *         3,750          3,750       100,000
     25.....       27,713              *               *             *         3,203          3,203       100,000
     30.....       38,578              *               *             *         1,639          1,639       100,000
     35.....            *              *               *             *             *              *             *
     40.....            *              *               *             *             *              *             *
     45.....            *              *               *             *             *              *             *
     50.....            *              *               *             *             *              *             *
     55.....            *              *               *             *             *              *             *
     60.....            *              *               *             *             *              *             *
     65.....            *              *               *             *             *              *             *
     70.....            *              *               *             *             *              *             *
     75.....            *              *               *             *             *              *             *
     80.....            *              *               *             *             *              *             *
 Age 65.....       38,578              *               *             *         1,639          1,639       100,000
 Age 70.....            *              *               *             *             *              *             *
Age 115.....            *              *               *             *             *              *             *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 0% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF -1.80% ON A GUARANTEED BASIS AND -1.65% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-6
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                         FEMALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION B
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $553
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                                                                             ASSUMING
                                               ASSUMING                            4% HYPOTHETICAL GROSS RETURN,
                                     4% HYPOTHETICAL GROSS RETURN,           NON-GUARANTEED CURRENT COST OF INSURANCE
                             GUARANTEED MAXIMUM COST OF INSURANCE CHARGES,      CHARGES, AND NON-GUARANTEED CURRENT
                                AND GUARANTEED MAXIMUM EXPENSE CHARGES                    EXPENSE CHARGES
                PREMIUMS    -----------------------------------------------  -----------------------------------------
              ACCUMULATED     END OF YEAR                       END OF YEAR   END OF YEAR    END OF YEAR   END OF YEAR
   END OF      AT 5% PER      ACCUMULATED       END OF YEAR        DEATH      ACCUMULATED     SURRENDER       DEATH
POLICY YEAR       YEAR           VALUE        SURRENDER VALUE     BENEFIT        VALUE          VALUE        BENEFIT
- ------------  ------------  ---------------  -----------------  -----------  -------------  -------------  -----------
<S>           <C>           <C>              <C>                <C>          <C>            <C>            <C>
      1.....   $      581      $     119         $       0       $ 100,000     $     242      $       0     $ 100,000
      2.....        1,190            401                 0         100,000           606              0       100,000
      3.....        1,831            677                 0         100,000           970              0       100,000
      4.....        2,503              *                 *               *         1,334            358       100,000
      5.....        3,208              *                 *               *         1,699            723       100,000
      6.....        3,950              *                 *               *         2,061          1,225       100,000
      7.....        4,728              *                 *               *         2,420          1,767       100,000
      8.....        5,545              *                 *               *         2,776          2,298       100,000
      9.....        6,403              *                 *               *         3,130          2,819       100,000
     10.....        7,303              *                 *               *         3,481          3,329       100,000
     15.....       12,530              *                 *               *         5,120          5,120       100,000
     20.....       19,200              *                 *               *         6,384          6,384       100,000
     25.....       27,713              *                 *               *         7,050          7,050       100,000
     30.....       38,578              *                 *               *         6,722          6,722       100,000
     35.....       52,445              *                 *               *         4,456          4,456       100,000
     40.....            *              *                 *               *             *              *             *
     45.....            *              *                 *               *             *              *             *
     50.....            *              *                 *               *             *              *             *
     55.....            *              *                 *               *             *              *             *
     60.....            *              *                 *               *             *              *             *
     65.....            *              *                 *               *             *              *             *
     70.....            *              *                 *               *             *              *             *
     75.....            *              *                 *               *             *              *             *
     80.....            *              *                 *               *             *              *             *
 Age 65.....       38,578              *                 *               *         6,722          6,722       100,000
 Age 70.....       52,445              *                 *               *         4,456          4,456       100,000
Age 115.....            *              *                 *               *             *              *             *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 4% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 2.20% ON A GUARANTEED BASIS AND 2.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 4%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-7
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                         FEMALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION B
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $553
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                            ASSUMING                                 ASSUMING
                                 8% HYPOTHETICAL GROSS RETURN,            8% HYPOTHETICAL GROSS RETURN,
                              GUARANTEED MAXIMUM COST OF INSURANCE        NON-GUARANTEED CURRENT COST OF
                            CHARGES, AND GUARANTEED MAXIMUM EXPENSE   INSURANCE CHARGES, AND NON-GUARANTEED
                                            CHARGES                          CURRENT EXPENSE CHARGES
                PREMIUMS    ----------------------------------------  --------------------------------------
              ACCUMULATED   END OF YEAR    END OF YEAR   END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%      ACCUMULATED     SURRENDER       DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR       VALUE          VALUE        BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  ------------  -------------  -----------  ------------  -----------  -----------
<S>           <C>           <C>           <C>            <C>          <C>           <C>          <C>
      1.....   $      581    $      131     $       0     $ 100,000    $      257    $       0    $ 100,000
      2.....        1,190           433             0       100,000           648            0      100,000
      3.....        1,831           743             0       100,000         1,056           80      100,000
      4.....        2,503         1,059            83       100,000         1,482          506      100,000
      5.....        3,208         1,381           405       100,000         1,925          949      100,000
      6.....        3,950         1,707           871       100,000         2,386        1,550      100,000
      7.....        4,728         2,035         1,382       100,000         2,865        2,212      100,000
      8.....        5,545         2,366         1,888       100,000         3,363        2,885      100,000
      9.....        6,403         2,701         2,390       100,000         3,882        3,571      100,000
      0.....        7,303         3,040         2,888       100,000         4,423        4,271      100,000
     15.....       12,530         4,741         4,741       100,000         7,440        7,440      100,000
     20.....       19,200         6,237         6,237       100,000        10,959       10,959      100,000
     25.....       27,713         7,108         7,108       100,000        15,031       15,031      100,000
     30.....       38,578         6,493         6,493       100,000        19,651       19,651      100,000
     35.....       52,445         1,927         1,927       100,000        24,457       24,457      100,000
     40.....       70,143             *             *             *        28,898       28,898      100,000
     45.....       92,730             *             *             *        30,878       30,878      100,000
     50.....      121,558             *             *             *        26,709       26,709      100,000
     55.....            *             *             *             *         6,361        6,361      100,000
     60.....            *             *             *             *             *            *            *
     65.....            *             *             *             *             *            *            *
     70.....            *             *             *             *             *            *            *
     75.....            *             *             *             *             *            *            *
     80.....            *             *             *             *             *            *            *
 Age 65.....       38,578         6,493         6,493       100,000        19,651       19,651      100,000
 Age 70.....       52,445         1,927         1,927       100,000        24,457       24,457      100,000
Age 115.....            *             *             *             *             *            *            *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 8% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 6.20% ON A GUARANTEED BASIS AND 6.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 8%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-8
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                         FEMALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION B
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $553
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                           ASSUMING                                ASSUMING
                                12% HYPOTHETICAL GROSS RETURN,          12% HYPOTHETICAL GROSS RETURN,
                             GUARANTEED MAXIMUM COST OF INSURANCE       NON-GUARANTEED CURRENT COST OF
                               CHARGES, AND GUARANTEED MAXIMUM      INSURANCE CHARGES, AND NON-GUARANTEED
                                       EXPENSE CHARGES                     CURRENT EXPENSE CHARGES
                PREMIUMS    --------------------------------------  --------------------------------------
              ACCUMULATED   END OF YEAR   END OF YEAR  END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%      ACCUMULATED    SURRENDER      DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR       VALUE         VALUE       BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  ------------  -----------  -----------  ------------  -----------  -----------
<S>           <C>           <C>           <C>          <C>          <C>           <C>          <C>
      1.....   $      581    $      143    $       0    $ 100,000    $      272    $       0    $ 100,000
      2.....        1,190           467            0      100,000           691            0      100,000
      3.....        1,831           813            0      100,000         1,147          171      100,000
      4.....        2,503         1,181          205      100,000         1,641          665      100,000
      5.....        3,208         1,573          597      100,000         2,177        1,201      100,000
      6.....        3,950         1,988        1,152      100,000         2,758        1,922      100,000
      7.....        4,728         2,428        1,775      100,000         3,388        2,735      100,000
      8.....        5,545         2,896        2,418      100,000         4,072        3,594      100,000
      9.....        6,403         3,394        3,083      100,000         4,815        4,504      100,000
     10.....        7,303         3,927        3,775      100,000         5,626        5,474      100,000
     15.....       12,530         7,186        7,186      100,000        10,877       10,877      100,000
     20.....       19,200        11,689       11,689      100,000        18,917       18,917      100,000
     25.....       27,713        17,980       17,980      100,000        31,544       31,544      100,000
     30.....       38,578        26,911       26,911      100,000        51,921       51,921      100,000
     35.....       52,445        39,355       39,355      100,000        85,719       85,719      100,000
     40.....       70,143        57,703       57,703      100,000       142,094      142,094      152,041
     45.....       92,730        87,667       87,667      100,000       233,985      233,985      245,684
     50.....      121,558       141,908      141,908      149,003       381,715      381,715      400,801
     55.....      158,351       224,886      224,886      236,131       616,910      616,910      647,755
     60.....      205,309       355,945      355,945      359,504       997,621      997,621    1,007,597
     65.....      265,240       563,031      563,031      568,661     1,614,862    1,614,862    1,631,010
     70.....      341,730       869,427      869,427      878,121     2,594,185    2,594,185    2,620,127
     75.....      439,352     1,341,022    1,341,022    1,354,432     4,155,744    4,155,744    4,197,302
     80.....      563,945     2,066,885    2,066,885    2,087,553     6,645,282    6,645,282    6,711,735
 Age 65.....       38,578        26,911       26,911      100,000        51,921       51,921      100,000
 Age 70.....       52,445        39,355       39,355      100,000        85,719       85,719      100,000
Age 115.....      563,945     2,066,885    2,066,885    2,087,553     6,645,282    6,645,282    6,711,735
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 12% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 10.20% ON A GUARANTEED BASIS AND 10.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-9
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                          MALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION A
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $709
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                            ASSUMING                                   ASSUMING
                                  0% HYPOTHETICAL GROSS RETURN,              0% HYPOTHETICAL GROSS RETURN,
                              GUARANTEED MAXIMUM COST OF INSURANCE     NON-GUARANTEED CURRENT COST OF INSURANCE
                             CHARGES, AND GUARANTEED MAXIMUM EXPENSE      CHARGES, AND NON-GUARANTEED CURRENT
                                             CHARGES                                EXPENSE CHARGES
                PREMIUMS    -----------------------------------------  -----------------------------------------
              ACCUMULATED    END OF YEAR    END OF YEAR   END OF YEAR   END OF YEAR    END OF YEAR   END OF YEAR
   END OF        AT 5%       ACCUMULATED     SURRENDER       DEATH      ACCUMULATED     SURRENDER       DEATH
POLICY YEAR     PER YEAR        VALUE          VALUE        BENEFIT        VALUE          VALUE        BENEFIT
- ------------  ------------  -------------  -------------  -----------  -------------  -------------  -----------
<S>           <C>           <C>            <C>            <C>          <C>            <C>            <C>
      1.....   $      744     $     227      $       0     $ 100,227     $     356      $       0     $ 100,356
      2.....        1,526           608              0       100,608           819              0       100,819
      3.....        2,347           970              0       100,970         1,266              0       101,266
      4.....        3,209         1,312             24       101,312         1,697            409       101,697
      5.....        4,114         1,635            504       101,635         2,112            981       102,112
      6.....        5,064         1,935          1,015       101,935         2,509          1,589       102,509
      7.....        6,061         2,211          1,493       102,211         2,887          2,169       102,887
      8.....        7,109         2,464          1,938       102,464         3,246          2,720       103,246
      9.....        8,209         2,692          2,350       102,692         3,586          3,244       103,586
     10.....        9,364         2,893          2,726       102,893         3,905          3,738       103,905
     15.....       16,064         3,426          3,426       103,426         5,100          5,100       105,100
     20.....       24,616         2,879          2,879       102,879         5,404          5,404       105,404
     25.....       35,530           549            549       100,549         4,366          4,366       104,366
     30.....       49,460             *              *             *         1,364          1,364       101,364
     35.....            *             *              *             *             *              *             *
     40.....            *             *              *             *             *              *             *
     45.....            *             *              *             *             *              *             *
     50.....            *             *              *             *             *              *             *
     55.....            *             *              *             *             *              *             *
     60.....            *             *              *             *             *              *             *
     65.....            *             *              *             *             *              *             *
     70.....            *             *              *             *             *              *             *
     75.....            *             *              *             *             *              *             *
     80.....            *             *              *             *             *              *             *
 Age 65.....       49,460             *              *             *         1,364          1,364       101,364
 Age 70.....            *             *              *             *             *              *             *
Age 115.....            *             *              *             *             *              *             *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 0% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF -1.80% ON A GUARANTEED BASIS AND -1.65% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-10
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                          MALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION A
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $709
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                            ASSUMING                                   ASSUMING
                                  4% HYPOTHETICAL GROSS RETURN,              4% HYPOTHETICAL GROSS RETURN,
                              GUARANTEED MAXIMUM COST OF INSURANCE     NON-GUARANTEED CURRENT COST OF INSURANCE
                                            CHARGES,                      CHARGES, AND NON-GUARANTEED CURRENT
                             AND GUARANTEED MAXIMUM EXPENSE CHARGES                 EXPENSE CHARGES
                PREMIUMS    -----------------------------------------  -----------------------------------------
              ACCUMULATED    END OF YEAR    END OF YEAR   END OF YEAR   END OF YEAR    END OF YEAR   END OF YEAR
   END OF        AT 5%       ACCUMULATED     SURRENDER       DEATH      ACCUMULATED     SURRENDER       DEATH
POLICY YEAR     PER YEAR        VALUE          VALUE        BENEFIT        VALUE          VALUE        BENEFIT
- ------------  ------------  -------------  -------------  -----------  -------------  -------------  -----------
<S>           <C>           <C>            <C>            <C>          <C>            <C>            <C>
      1.....   $      744     $     244      $       0     $ 100,244     $     376      $       0     $ 100,376
      2.....        1,526           655              0       100,655           876              0       100,876
      3.....        2,347         1,063              0       101,063         1,379             91       101,379
      4.....        3,209         1,466            178       101,466         1,886            598       101,886
      5.....        4,114         1,864            733       101,864         2,395          1,264       102,395
      6.....        5,064         2,254          1,334       102,254         2,904          1,984       102,904
      7.....        6,061         2,634          1,916       102,634         3,414          2,696       103,414
      8.....        7,109         3,004          2,478       103,004         3,922          3,396       103,922
      9.....        8,209         3,360          3,018       103,360         4,428          4,086       104,428
     10.....        9,364         3,701          3,534       103,701         4,931          4,764       104,931
     15.....       16,064         5,071          5,071       105,071         7,281          7,281       107,281
     20.....       24,616         5,467          5,467       105,467         9,047          9,047       109,047
     25.....       35,530         3,897          3,897       103,897         9,582          9,582       109,582
     30.....       49,460             *              *             *         7,932          7,932       107,932
     35.....       67,239             *              *             *         2,748          2,748       102,748
     40.....            *             *              *             *             *              *             *
     45.....            *             *              *             *             *              *             *
     50.....            *             *              *             *             *              *             *
     55.....            *             *              *             *             *              *             *
     60.....            *             *              *             *             *              *             *
     65.....            *             *              *             *             *              *             *
     70.....            *             *              *             *             *              *             *
     75.....            *             *              *             *             *              *             *
     80.....            *             *              *             *             *              *             *
 Age 65.....       49,460             *              *             *         7,932          7,932       107,932
 Age 70.....       67,239             *              *             *         2,748          2,748       102,748
Age 115.....            *             *              *             *             *              *             *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 4% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 2.20% ON A GUARANTEED BASIS AND 2.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 4%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-11
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                          MALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION A
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $709
 
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                           ASSUMING                                ASSUMING
                                8% HYPOTHETICAL GROSS RETURN,           8% HYPOTHETICAL GROSS RETURN,
                             GUARANTEED MAXIMUM COST OF INSURANCE       NON-GUARANTEED CURRENT COST OF
                                           CHARGES,                 INSURANCE CHARGES, AND NON-GUARANTEED
                            AND GUARANTEED MAXIMUM EXPENSE CHARGES         CURRENT EXPENSE CHARGES
                PREMIUMS    --------------------------------------  --------------------------------------
              ACCUMULATED   END OF YEAR   END OF YEAR  END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%      ACCUMULATED    SURRENDER      DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR       VALUE         VALUE       BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  ------------  -----------  -----------  ------------  -----------  -----------
<S>           <C>           <C>           <C>          <C>          <C>           <C>          <C>
      1.....   $      744    $      262    $       0    $ 100,262    $      396    $       0    $ 100,396
      2.....        1,526           704            0      100,704           934            0      100,934
      3.....        2,347         1,161            0      101,161         1,499          211      101,499
      4.....        3,209         1,633          345      101,633         2,091          803      102,091
      5.....        4,114         2,120          989      102,120         2,710        1,579      102,710
      6.....        5,064         2,620        1,700      102,620         3,357        2,437      103,357
      7.....        6,061         3,132        2,414      103,132         4,033        3,315      104,033
      8.....        7,109         3,657        3,131      103,657         4,738        4,212      104,738
      9.....        8,209         4,192        3,850      104,192         5,474        5,132      105,474
     10.....        9,364         4,737        4,570      104,737         6,241        6,074      106,241
     15.....       16,064         7,527        7,527      107,527        10,499       10,499      110,499
     20.....       24,616        10,055       10,055      110,055        15,331       15,331      115,331
     25.....       35,530        11,263       11,263      111,263        20,317       20,317      120,317
     30.....       49,460         9,193        9,193      109,193        24,625       24,625      124,625
     35.....       67,239            78           78      100,078        26,822       26,822      126,822
     40.....       89,929             *            *            *        24,239       24,239      124,239
     45.....      118,889             *            *            *        12,317       12,317      112,317
     50.....            *             *            *            *             *            *            *
     55.....            *             *            *            *             *            *            *
     60.....            *             *            *            *             *            *            *
     65.....            *             *            *            *             *            *            *
     70.....            *             *            *            *             *            *            *
     75.....            *             *            *            *             *            *            *
     80.....            *             *            *            *             *            *            *
 Age 65.....       49,460         9,193        9,193      109,193        24,625       24,625      124,625
 Age 70.....       67,239            78           78      100,078        26,822       26,822      126,822
Age 115.....            *             *            *            *             *            *            *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 8% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 6.20% ON A GUARANTEED BASIS AND 6.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 8%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-12
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                          MALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION A
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $709
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                           ASSUMING                                ASSUMING
                                12% HYPOTHETICAL GROSS RETURN,          12% HYPOTHETICAL GROSS RETURN,
                             GUARANTEED MAXIMUM COST OF INSURANCE       NON-GUARANTEED CURRENT COST OF
                                           CHARGES,                 INSURANCE CHARGES, AND NON-GUARANTEED
                            AND GUARANTEED MAXIMUM EXPENSE CHARGES         CURRENT EXPENSE CHARGES
                PREMIUMS    --------------------------------------  --------------------------------------
              ACCUMULATED   END OF YEAR   END OF YEAR  END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%      ACCUMULATED    SURRENDER      DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR       VALUE         VALUE       BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  ------------  -----------  -----------  ------------  -----------  -----------
<S>           <C>           <C>           <C>          <C>          <C>           <C>          <C>
      1.....   $      744    $      279    $       0    $ 100,279    $      416    $       0    $ 100,416
      2.....        1,526           754            0      100,754           995            0      100,995
      3.....        2,347         1,265            0      101,265         1,626          338      101,626
      4.....        3,209         1,815          527      101,815         2,313        1,025      102,313
      5.....        4,114         2,406        1,275      102,406         3,061        1,930      103,061
      6.....        5,064         3,039        2,119      103,039         3,874        2,954      103,874
      7.....        6,061         3,718        3,000      103,718         4,759        4,041      104,759
      8.....        7,109         4,446        3,920      104,446         5,722        5,196      105,722
      9.....        8,209         5,226        4,884      105,226         6,770        6,428      106,770
     10.....        9,364         6,062        5,895      106,062         7,911        7,744      107,911
     15.....       16,064        11,187       11,187      111,187        15,250       15,250      115,250
     20.....       24,616        18,158       18,158      118,158        26,205       26,205      126,205
     25.....       35,530        27,065       27,065      127,065        42,387       42,387      142,387
     30.....       49,460        37,484       37,484      137,484        66,148       66,148      166,148
     35.....       67,239        47,481       47,481      147,481       101,000      101,000      201,000
     40.....       89,929        52,236       52,236      152,236       151,917      151,917      251,917
     45.....      118,889        40,857       40,857      140,857       225,973      225,973      325,973
     50.....      155,849             *            *            *       335,185      335,185      435,185
     55.....      203,020             *            *            *       498,053      498,053      598,053
     60.....      263,225             *            *            *       744,915      744,915      844,915
     65.....      340,062             *            *            *     1,063,725    1,063,725    1,163,725
     70.....      438,129             *            *            *     1,491,521    1,491,521    1,591,521
     75.....      563,290             *            *            *     2,160,384    2,160,384    2,260,384
     80.....      723,030             *            *            *     3,234,624    3,234,624    3,334,624
 Age 65.....       49,460        37,484       37,484      137,484        66,148       66,148      166,148
 Age 70.....       67,239        47,481       47,481      147,481       101,000      101,000      201,000
Age 115.....      723,030             *            *            *     3,234,624    3,234,624    3,334,624
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 12% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 10.20% ON A GUARANTEED BASIS AND 10.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-13
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                          MALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION B
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $709
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                            ASSUMING                                   ASSUMING
                                  0% HYPOTHETICAL GROSS RETURN,              0% HYPOTHETICAL GROSS RETURN,
                              GUARANTEED MAXIMUM COST OF INSURANCE     NON-GUARANTEED CURRENT COST OF INSURANCE
                             CHARGES, AND GUARANTEED MAXIMUM EXPENSE      CHARGES, AND NON-GUARANTEED CURRENT
                                             CHARGES                                EXPENSE CHARGES
                PREMIUMS    -----------------------------------------  -----------------------------------------
              ACCUMULATED    END OF YEAR    END OF YEAR   END OF YEAR   END OF YEAR    END OF YEAR   END OF YEAR
   END OF        AT 5%       ACCUMULATED     SURRENDER       DEATH      ACCUMULATED     SURRENDER       DEATH
POLICY YEAR     PER YEAR        VALUE          VALUE        BENEFIT        VALUE          VALUE        BENEFIT
- ------------  ------------  -------------  -------------  -----------  -------------  -------------  -----------
<S>           <C>           <C>            <C>            <C>          <C>            <C>            <C>
      1.....   $      744     $     228      $       0     $ 100,000     $     356      $       0     $ 100,000
      2.....        1,526           610              0       100,000           820              0       100,000
      3.....        2,347           974              0       100,000         1,269              0       100,000
      4.....        3,209         1,319             31       100,000         1,703            415       100,000
      5.....        4,114         1,646            515       100,000         2,121            990       100,000
      6.....        5,064         1,951          1,031       100,000         2,522          1,602       100,000
      7.....        6,061         2,233          1,515       100,000         2,905          2,187       100,000
      8.....        7,109         2,493          1,967       100,000         3,270          2,744       100,000
      9.....        8,209         2,729          2,387       100,000         3,617          3,275       100,000
     10.....        9,364         2,940          2,773       100,000         3,944          3,777       100,000
     15.....       16,064         3,540          3,540       100,000         5,204          5,204       100,000
     20.....       24,616         3,096          3,096       100,000         5,626          5,626       100,000
     25.....       35,530           864            864       100,000         4,765          4,765       100,000
     30.....       49,460             *              *             *         1,942          1,942       100,000
     35.....            *             *              *             *             *              *             *
     40.....            *             *              *             *             *              *             *
     45.....            *             *              *             *             *              *             *
     50.....            *             *              *             *             *              *             *
     55.....            *             *              *             *             *              *             *
     60.....            *             *              *             *             *              *             *
     65.....            *             *              *             *             *              *             *
     70.....            *             *              *             *             *              *             *
     75.....            *             *              *             *             *              *             *
     80.....            *             *              *             *             *              *             *
 Age 65.....       49,460             *              *             *         1,942          1,942       100,000
 Age 70.....            *             *              *             *             *              *             *
Age 115.....            *             *              *             *             *              *             *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 0% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF -1.80% ON A GUARANTEED BASIS AND -1.65% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-14
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                          MALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION B
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $709
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                            ASSUMING                                  ASSUMING
                                  4% HYPOTHETICAL GROSS RETURN,            4% HYPOTHETICAL GROSS RETURN,
                              GUARANTEED MAXIMUM COST OF INSURANCE         NON-GUARANTEED CURRENT COST OF
                             CHARGES, AND GUARANTEED MAXIMUM EXPENSE   INSURANCE CHARGES, AND NON-GUARANTEED
                                             CHARGES                          CURRENT EXPENSE CHARGES
                PREMIUMS    -----------------------------------------  --------------------------------------
              ACCUMULATED    END OF YEAR    END OF YEAR   END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%       ACCUMULATED     SURRENDER       DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR        VALUE          VALUE        BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  -------------  -------------  -----------  ------------  -----------  -----------
<S>           <C>           <C>            <C>            <C>          <C>           <C>          <C>
      1.....   $      744     $     245      $       0     $ 100,000    $      376    $       0    $ 100,000
      2.....        1,526           657              0       100,000           877            0      100,000
      3.....        2,347         1,067              0       100,000         1,383           95      100,000
      4.....        3,209         1,474            186       100,000         1,892          604      100,000
      5.....        4,114         1,877            746       100,000         2,405        1,274      100,000
      6.....        5,064         2,273          1,353       100,000         2,920        2,000      100,000
      7.....        6,061         2,661          1,943       100,000         3,436        2,718      100,000
      8.....        7,109         3,040          2,514       100,000         3,952        3,426      100,000
      9.....        8,209         3,408          3,066       100,000         4,468        4,126      100,000
     10.....        9,364         3,762          3,595       100,000         4,983        4,816      100,000
     15.....       16,064         5,245          5,245       100,000         7,437        7,437      100,000
     20.....       24,616         5,858          5,858       100,000         9,432        9,432      100,000
     25.....       35,530         4,639          4,639       100,000        10,411       10,411      100,000
     30.....       49,460             *              *             *         9,501        9,501      100,000
     35.....       67,239             *              *             *         5,265        5,265      100,000
     40.....            *             *              *             *             *            *            *
     45.....            *             *              *             *             *            *            *
     50.....            *             *              *             *             *            *            *
     55.....            *             *              *             *             *            *            *
     60.....            *             *              *             *             *            *            *
     65.....            *             *              *             *             *            *            *
     70.....            *             *              *             *             *            *            *
     75.....            *             *              *             *             *            *            *
     80.....            *             *              *             *             *            *            *
 Age 65.....       49,460             *              *             *         9,501        9,501      100,000
 Age 70.....       67,239             *              *             *         5,265        5,265      100,000
Age 115.....            *             *              *             *             *            *            *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 4% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 2.20% ON A GUARANTEED BASIS AND 2.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 4%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-15
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                          MALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION B
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $709
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                           ASSUMING                                ASSUMING
                                8% HYPOTHETICAL GROSS RETURN,           8% HYPOTHETICAL GROSS RETURN,
                             GUARANTEED MAXIMUM COST OF INSURANCE       NON-GUARANTEED CURRENT COST OF
                               CHARGES, AND GUARANTEED MAXIMUM      INSURANCE CHARGES, AND NON-GUARANTEED
                                       EXPENSE CHARGES                     CURRENT EXPENSE CHARGES
                PREMIUMS    --------------------------------------  --------------------------------------
              ACCUMULATED   END OF YEAR   END OF YEAR  END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%      ACCUMULATED    SURRENDER      DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR       VALUE         VALUE       BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  ------------  -----------  -----------  ------------  -----------  -----------
<S>           <C>           <C>           <C>          <C>          <C>           <C>          <C>
      1.....   $      744    $      263    $       0    $ 100,000    $      396    $       0    $ 100,000
      2.....        1,526           706            0      100,000           936            0      100,000
      3.....        2,347         1,166            0      100,000         1,503          215      100,000
      4.....        3,209         1,643          355      100,000         2,098          810      100,000
      5.....        4,114         2,135        1,004      100,000         2,722        1,591      100,000
      6.....        5,064         2,643        1,723      100,000         3,376        2,456      100,000
      7.....        6,061         3,165        2,447      100,000         4,060        3,342      100,000
      8.....        7,109         3,702        3,176      100,000         4,776        4,250      100,000
      9.....        8,209         4,253        3,911      100,000         5,525        5,183      100,000
     10.....        9,364         4,818        4,651      100,000         6,309        6,142      100,000
     15.....       16,064         7,793        7,793      100,000        10,734       10,734      100,000
     20.....       24,616        10,762       10,762      100,000        16,006       16,006      100,000
     25.....       35,530        12,934       12,934      100,000        22,045       22,045      100,000
     30.....       49,460        12,737       12,737      100,000        28,689       28,689      100,000
     35.....       67,239         6,560        6,560      100,000        35,715       35,715      100,000
     40.....       89,929             *            *            *        42,647       42,647      100,000
     45.....      118,889             *            *            *        48,580       48,580      100,000
     50.....      155,849             *            *            *        52,607       52,607      100,000
     55.....      203,020             *            *            *        52,121       52,121      100,000
     60.....      263,225             *            *            *        39,646       39,646      100,000
     65.....            *             *            *            *             *            *            *
     70.....            *             *            *            *             *            *            *
     75.....            *             *            *            *             *            *            *
     80.....            *             *            *            *             *            *            *
 Age 65.....       49,460        12,737       12,737      100,000        28,689       28,689      100,000
 Age 70.....       67,239         6,560        6,560      100,000        35,715       35,715      100,000
Age 115.....            *             *            *            *             *            *            *
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 8% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 6.20% ON A GUARANTEED BASIS AND 6.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 8%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-16
<PAGE>
                FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
 
                          MALE AGE 35 AT LAST BIRTHDAY
 
                             DEATH BENEFIT OPTION B
 
           INITIAL SPECIFIED AMOUNT $100,000--ANNUAL PREMIUM OF $709
                           NON-TOBACCO PREMIUM CLASS
 
<TABLE>
<CAPTION>
                                           ASSUMING                                ASSUMING
                                12% HYPOTHETICAL GROSS RETURN,          12% HYPOTHETICAL GROSS RETURN,
                             GUARANTEED MAXIMUM COST OF INSURANCE       NON-GUARANTEED CURRENT COST OF
                               CHARGES, AND GUARANTEED MAXIMUM      INSURANCE CHARGES, AND NON-GUARANTEED
                                       EXPENSE CHARGES                     CURRENT EXPENSE CHARGES
                PREMIUMS    --------------------------------------  --------------------------------------
              ACCUMULATED   END OF YEAR   END OF YEAR  END OF YEAR  END OF YEAR   END OF YEAR  END OF YEAR
   END OF        AT 5%      ACCUMULATED    SURRENDER      DEATH     ACCUMULATED    SURRENDER      DEATH
POLICY YEAR     PER YEAR       VALUE         VALUE       BENEFIT       VALUE         VALUE       BENEFIT
- ------------  ------------  ------------  -----------  -----------  ------------  -----------  -----------
<S>           <C>           <C>           <C>          <C>          <C>           <C>          <C>
      1.....   $      744    $      280    $       0    $ 100,000    $      417    $       0    $ 100,000
      2.....        1,526           757            0      100,000           997            0      100,000
      3.....        2,347         1,271            0      100,000         1,630          342      100,000
      4.....        3,209         1,825          537      100,000         2,321        1,033      100,000
      5.....        4,114         2,423        1,292      100,000         3,074        1,943      100,000
      6.....        5,064         3,066        2,146      100,000         3,896        2,976      100,000
      7.....        6,061         3,757        3,039      100,000         4,791        4,073      100,000
      8.....        7,109         4,503        3,977      100,000         5,769        5,243      100,000
      9.....        8,209         5,305        4,963      100,000         6,836        6,494      100,000
     10.....        9,364         6,169        6,002      100,000         8,000        7,833      100,000
     15.....       16,064        11,594       11,594      100,000        15,606       15,606      100,000
     20.....       24,616        19,433       19,433      100,000        27,394       27,394      100,000
     25.....       35,530        30,728       30,728      100,000        45,991       45,991      100,000
     30.....       49,460        47,488       47,488      100,000        76,425       76,425      100,000
     35.....       67,239        74,142       74,142      100,000       127,056      127,056      147,385
     40.....       89,929       120,731      120,731      129,182       208,946      208,946      223,572
     45.....      118,889       196,402      196,402      206,222       342,401      342,401      359,521
     50.....      155,849       313,608      313,608      329,289       555,902      555,902      583,697
     55.....      203,020       490,340      490,340      514,857       894,527      894,527      939,254
     60.....      263,225       770,759      770,759      778,466     1,443,812    1,443,812    1,458,251
     65.....      340,062     1,216,508    1,216,508    1,228,673     2,336,459    2,336,459    2,359,824
     70.....      438,129     1,876,184    1,876,184    1,894,945     3,752,871    3,752,871    3,790,399
     75.....      563,290     2,891,535    2,891,535    2,920,450     6,011,275    6,011,275    6,071,388
     80.....      723,030     4,454,330    4,454,330    4,498,873     9,611,605    9,611,605    9,707,721
 Age 65.....       49,460        47,488       47,488      100,000        76,425       76,425      100,000
 Age 70.....       67,239        74,142       74,142      100,000       127,056      127,056      147,385
Age 115.....      723,030     4,454,330    4,454,330    4,498,873     9,611,605    9,611,605    9,707,721
</TABLE>
 
- ------------------------------
* In the absence of an additional premium, the Policy would lapse.
 
The values illustrated assume the premium is paid at the beginning of the Policy
Year. Values would be different if premiums are paid with a different frequency
or in different amounts.
 
The values and benefits are as of the Policy Year shown. They assume that no
Policy Loans or partial withdrawals have been made. Excessive Policy Loans or
partial withdrawals may cause this Policy to lapse because of insufficient Net
Accumulated Value.
 
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST, OR A
PREDICTION OF FUTURE, INVESTMENT RATES OF RETURN. THE ACTUAL INVESTMENT RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF INFLATION AND THE
ALLOCATIONS MADE BY A POLICYOWNER AMONG THE SUBACCOUNTS. THE GROSS HYPOTHETICAL
ANNUAL INVESTMENT RATES OF RETURN OF 12% SHOWN ABOVE CORRESPOND TO NET ANNUAL
RATES OF RETURN OF 10.20% ON A GUARANTEED BASIS AND 10.35% ON A CURRENT BASIS,
RESPECTIVELY. THE DEATH BENEFIT AND ACCUMULATED VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.
 
                                      A-17
<PAGE>
- --------------------------------------------------------------------------------
 
APPENDIX B
- --------------------------------------------------------------------------------
 
DEATH BENEFIT OPTIONS
 
        OPTION A EXAMPLE.  For purposes of this example, assume that the
    Insured's Attained Age is between 0 and 40 and that there is no outstanding
    Policy Debt. Under Option A, a Policy with a Specified Amount of $50,000
    will generally provide a death benefit of $50,000 plus Cash Value. Thus, for
    example, a Policy with a Cash Value of $5,000 will have a death benefit of
    $55,000 ($50,000 + $5,000); a Cash Value of $10,000 will provide a death
    benefit of $60,000 ($50,000 + $10,000). The death benefit, however, must be
    at least 2.50 multiplied by the Cash Value. As a result, if the Cash Value
    of the Policy exceeds $33,333, the death benefit will be greater than the
    Specified Amount plus Cash Value. Each additional dollar of Cash Value above
    $33,333 will increase the death benefit by $2.50. A Policy with a Specified
    Amount of $50,000 and a Cash Value of $40,000 will provide a death benefit
    of $100,000 ($40,000 x 2.50); a Cash Value of $60,000 will provide a death
    benefit of $150,000 ($60,000 x 2.50).
 
    Similarly, any time Cash Value exceeds $33,333, each dollar taken out of
    Cash Value will reduce the death benefit by $2.50. If, for example, the Cash
    Value is reduced from $40,000 to $35,000 because of partial surrenders,
    charges, or negative investment performance, the death benefit will be
    reduced from $100,000 to $87,500. If at any time, however, Cash Value
    multiplied by the specified amount factor is less than the Specified Amount
    plus the Cash Value, then the death benefit will be the current Specified
    Amount plus Cash Value of the Policy.
 
    The specified amount factor becomes lower as the Insured's Attained Age
    increases. If the Attained Age of the Insured in the example above were, for
    example, 50 (rather than under 40), the specified amount factor would be
    1.85. The amount of the death benefit would be the sum of the Cash Value
    plus $50,000 unless the Cash Value exceeded $58,824 (rather than $33,333),
    and each dollar then added to or taken from the Cash Value would change the
    death benefit by $1.85 (rather than $2.50).
 
        OPTION B EXAMPLE.  For purposes of this example, assume that the
    Insured's Attained Age is between 0 and 40 and that there is no outstanding
    Policy Debt. Under Option B, a Policy with a $50,000 Specified Amount will
    generally pay $50,000 in death benefits. However, because the death benefit
    must be equal to or be greater than 2.50 multiplied by the Cash Value, any
    time the Cash Value of the Policy exceeds $20,000, the death benefit will
    exceed the $50,000 Specified Amount. Each additional dollar added to Cash
    Value above $20,000 will increase the death benefit by $2.50. A Policy with
    a $50,000 Specified Amount and a Cash Value of $30,000 will provide death
    proceeds of $75,000 ($30,000 x 2.50); a Cash Value of $40,000 will provide a
    death benefit of $100,000 ($40,000 x 2.50); a Cash Value of $50,000 will
    provide a death benefit of $125,000 ($50,000 x 2.50).
 
    Similarly, so long as Cash Value exceeds $20,000, each dollar taken out of
    Cash Value will reduce the death benefit by $2.50. If, for example, the Cash
    Value is reduced from $25,000 to $20,000 because of partial surrenders,
    charges, or negative investment performance, the death benefit will be
    reduced from $62,500 to $50,000. If at any time, however, the Cash Value
    multiplied by the specified amount factor is less than the Specified Amount,
    the death benefit will equal the current Specified Amount of the Policy.
 
    The specified amount factor becomes lower as the Insured's Attained Age
    increases. If the Attained Age of the Insured in the example above were, for
    example, 50 (rather than between 0 and 40), the specified amount factor
    would be 1.85. The death proceeds would not exceed the $50,000 Specified
    Amount unless the Cash Value exceeded approximately $27,028 (rather than
    $20,000), and each
 
                                      B-1
<PAGE>
    dollar then added to or taken from the Cash Value would change the life
    insurance proceeds by $1.85 (rather than $2.50).
 
   
<TABLE>
<CAPTION>
 
                      SPECIFIED AMOUNT
ATTAINED AGE               FACTOR
<S>                 <C>
40 or younger                  2.50
41                             2.43
42                             2.36
43                             2.29
44                             2.22
45                             2.15
46                             2.09
47                             2.03
48                             1.97
49                             1.91
50                             1.85
51                             1.78
52                             1.71
53                             1.64
54                             1.57
55                             1.50
56                             1.46
57                             1.42
58                             1.38
59                             1.34
60                             1.30
61                             1.28
62                             1.26
63                             1.24
64                             1.22
65                             1.20
66                             1.19
67                             1.18
68                             1.17
69                             1.16
70                             1.15
71                             1.13
72                             1.11
73                             1.09
74                             1.07
75 to 90                       1.05
91                             1.04
92                             1.03
93                             1.02
94 to 114                      1.01
115                            1.00
</TABLE>
    
 
                                      B-2
<PAGE>
- --------------------------------------------------------------------------------
 
   
APPENDIX C
    
- --------------------------------------------------------------------------------
 
   
MAXIMUM SURRENDER CHARGES
    
 
   
    The chart below reflects the maximum surrender charge per $1,000 of
    Specified Amount for selected issue ages as policy years increase.
    
   
                    Male, Non-Tobacco
    
   
<TABLE>
<CAPTION>
                                                                                 POLICY YEAR
                         ISSUE AGE               1          2          3          4          5          6          7+
- -----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>        <C>
                         10                           3.30       2.75       2.20       1.65       1.10       0.55       0.00
                         20                           4.48       3.73       2.98       2.24       1.49       0.65       0.00
                         30                           6.29       5.24       4.19       3.14       1.97       0.80       0.00
                         40                           9.65       8.04       6.43       4.74       2.64       1.08       0.00
                         50                          15.44      12.87      10.30       6.86       3.81       1.55       0.00
                         60                          33.71      24.44      16.79      10.64       5.87       2.36       0.00
                         70                          34.49      24.52      16.50      10.23       5.51       2.16       0.00
                         80                          34.49      23.18      14.70       8.56       4.32       1.58       0.00
                    Male, Tobacco
 
<CAPTION>
                                                                                 POLICY YEAR
                         ISSUE AGE               1          2          3          4          5          6          7+
- -----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>        <C>
                         10                            N/A        N/A        N/A        N/A        N/A        N/A        N/A
                         20                           7.20       6.00       4.80       3.27       1.82       0.74       0.00
                         30                          10.49       8.74       6.54       4.19       2.33       0.95       0.00
                         40                          16.64      13.17       9.12       5.83       3.24       1.32       0.00
                         50                          26.80      19.59      13.50       8.59       4.75       1.92       0.00
                         60                          34.49      24.80      16.90      10.62       5.80       2.31       0.00
                         70                          34.49      24.14      15.99       9.75       5.17       1.99       0.00
                         80                          34.49      22.65      14.05       8.00       3.96       1.42       0.00
                    Female, Non-Tobacco
<CAPTION>
                                                                                 POLICY YEAR
                         ISSUE AGE               1          2          3          4          5          6          7+
- -----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>        <C>
                         10                           3.18       2.65       2.12       1.59       1.06       0.52       0.00
                         20                           3.40       2.83       2.26       1.70       1.13       0.57       0.00
                         30                           4.82       4.02       3.22       2.41       1.61       0.74       0.00
                         40                           7.19       5.99       4.79       3.59       2.37       0.96       0.00
                         50                          10.78       8.98       7.18       5.39       3.29       1.33       0.00
                         60                          26.16      20.13      13.89       8.84       4.90       1.98       0.00
                         70                          34.49      24.81      16.90      10.61       5.80       2.31       0.00
                         80                          34.49      23.76      15.45       9.23       4.78       1.80       0.00
                    Female, Tobacco
<CAPTION>
                                                                                 POLICY YEAR
                         ISSUE AGE               1          2          3          4          5          6          7+
- -----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>        <C>
                         10                            N/A        N/A        N/A        N/A        N/A        N/A        N/A
                         20                           4.66       3.88       3.10       2.33       1.55       0.65       0.00
                         30                           6.84       5.70       4.56       3.42       1.99       0.81       0.00
                         40                          10.40       8.67       6.94       4.77       2.66       1.08       0.00
                         50                          15.49      12.91      10.33       6.66       3.70       1.50       0.00
                         60                          31.09      22.52      15.49       9.83       5.43       2.19       0.00
                         70                          34.49      24.68      16.72      10.45       5.67       2.24       0.00
                         80                          34.49      23.55      15.19       9.00       4.62       1.72       0.00
                    Unisex, Non-Tobacco
<CAPTION>
                                                                                 POLICY YEAR
                         ISSUE AGE               1          2          3          4          5          6          7+
- -----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>        <C>
                         10                           3.30       2.75       2.20       1.65       1.10       0.54       0.00
                         20                           4.26       3.55       2.84       2.13       1.42       0.64       0.00
                         30                           5.99       4.99       3.99       2.99       1.94       0.79       0.00
                         40                           9.14       7.62       6.10       4.57       2.59       1.05       0.00
                         50                          14.50      12.08       9.66       6.66       9.70       1.50       0.00
                         60                          32.38      23.49      16.15      10.25       5.66       2.28       0.00
                         70                          34.49      24.59      16.59      10.32       5.58       2.20       0.00
                         80                          34.49      23.34      14.90       8.75       4.45       1.64       0.00
                    Unisex, Tobacco
<CAPTION>
                                                                                 POLICY YEAR
                         ISSUE AGE               1          2          3          4          5          6          7+
- -----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>        <C>
                         10                            N/A        N/A        N/A        N/A        N/A        N/A        N/A
                         20                           6.68       5.57       4.46       3.18       1.78       0.72       0.00
                         30                           9.76       8.13       6.34       4.06       2.26       0.92       0.00
                         40                          15.36      12.66       8.77       5.60       3.12       1.27       0.00
                         50                          24.41      18.59      12.82       8.16       4.52       1.83       0.00
                         60                          34.49      24.65      16.97      10.69       5.86       2.34       0.00
                         70                          34.49      24.28      16.18       9.94       5.30       2.06       0.00
                         80                          34.49      22.98      14.46       8.36       4.20       1.53       0.00
</TABLE>
    
 
                                      C-1
<PAGE>
                                    PART II
                          UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore, or hereafter duly adopted pursuant to authority conferred
in that section.
                              RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
                REPRESENTATIONS PURSUANT TO SECTION 26(e)(2)(A)
The Company represents that the aggregate charges under the Contracts are
reasonable in relation to the services rendered, the expenses to be incurred and
the risks assumed by the Company.
 
                                      II-1
<PAGE>
                       CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
 
The facing sheet.
 
A reconciliation and tie-in of information shown in the Prospectus with the
  items of Form N-8B-2.
 
   
The Prospectus consisting of 81 pages.
    
 
The undertaking to file reports.
 
The undertaking pursuant to Rule 484.
 
Representations pursuant to Section 26(a)(2)(A).
 
The signatures.
 
Written consents of the following persons:
 
 Stephen M. Morain, Esquire.
 Messrs. Sutherland, Asbill & Brennan LLP
 Ernst & Young LLP, Independent Auditors.
 Christopher G. Daniels, FSA, MSAA, Life Product Development and Pricing Vice
 President.
 
The following exhibits:
 
   
<TABLE>
     <S>   <C>    <C>
     1.A.  1.     Certified Resolution of the Board of
                    Directors of the Company establishing
                    the Variable Account. (1)
           2.     None.
           3.     (a) Form of Principal Underwriting
                    Agreement. (1)
                  (b) Form of Sales Agreement. (1)
                  (c) Form of Wholesaling Agreement. (1)
           4.     None.
           5.     (a) Policy Form. (1)
                  (b) Application Form. (1)
           6.     (a) Articles of Incorporation of the
                    Company. (1)
                  (b) By-Laws of the Company. (1)
           7.     None.
           8.     None.
           9.     (a) Participation Agreement relating to
                    EquiTrust Variable Insurance Series
                    Fund. (1)
                  (b) Participation Agreement relating to
                    Dreyfus Variable Investment Fund. (1)
                  (c) Participation Agreement relating to
                    T. Rowe Price Equity Series, Inc. and
                    T. Rowe Price International Series,
                    Inc. (1)
           10.    Form of Application (see Exhibit
                    1.A.(5)(c) above.)
     2.    * Opinion and Consent of Stephen M. Morain,
             Esquire.
     3.    None.
     4.    Not applicable.
     5.    Not applicable.
     6.    *Opinion and Consent of Christopher G. Daniels,
             FSA, MSAA, Life Product Development and
             Pricing Vice President.
     7.    *(a) Consent of Ernst & Young LLP.
           *(b) Consent of Messrs. Sutherland, Asbill &
             Brennan LLP.
     8.    Memorandum describing the Company's conversion
             procedure (included in Exhibit 9 hereto). (1)
     9.    Memorandum describing the Company's issuance,
             transfer and redemption procedures for the
             Policy. (1)
     10.   Powers of Attorney. (1)
</TABLE>
    
 
- ------------------------
 
*   Attached as an exhibit.
 
   
(1) Incorporated herein by reference to the initial filing of this Registration
    Statement (File No. 333-62221) on August 25, 1998.
    
 
                                      II-2
<PAGE>
                                   SIGNATURES
 
   
    Pursuant to the requirements of the Securities Act of 1933, the Registrant,
EquiTrust Life Variable Account II, certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of West Des Moines, State of Iowa, on the 22nd day of
April, 1999.
    
 
                                          EquiTrust Life Insurance Company
                                          EquiTrust Life Variable Account II
 
                                          By:      /s/ EDWARD M. WIEDERSTEIN
 
                                             -----------------------------------
                                                    Edward M. Wiederstein
                                                         PRESIDENT
                                              EquiTrust Life Insurance Company
 
                                          Attest:      /s/ RICHARD D. HARRIS
 
                                               ---------------------------------
                                                       Richard D. Harris
                                                  SENIOR VICE PRESIDENT AND
                                                       SECRETARY-TREASURER
                                               EquiTrust Life Insurance Company
 
    Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates set forth below.
 
   
<TABLE>
<CAPTION>
          SIGNATURE                       TITLE                    DATE
- ------------------------------  --------------------------  -------------------
 
<C>                             <S>                         <C>
  /s/ EDWARD M. WIEDERSTEIN     President and Director
- ------------------------------   [Principal Executive         April 22, 1999
    Edward M. Wiederstein        Officer]
 
                                Senior Vice President and
    /s/ RICHARD D. HARRIS        Secretary-Treasurer
- ------------------------------   [Principal Financial         April 22, 1999
      Richard D. Harris          Officer]
 
      /s/ JAMES W. NOYCE        Chief Financial Officer
- ------------------------------   [Principal Accounting        April 22, 1999
        James W. Noyce           Officer]
 
- ------------------------------  Vice President and            April 22, 1999
      Thomas R. Gibson*          Director
 
- ------------------------------  Director                      April 22, 1999
     Timothy J. Hoffman*
 
- ------------------------------  Director                      April 22, 1999
      Stephen M. Morain*
 
- ------------------------------  Director                      April 22, 1999
       William J. Oddy*
 
 *By:          /s/ STEPHEN M.
            MORAIN
- ------------------------------
      Stephen M. Morain
      ATTORNEY-IN-FACT,
pursuant to Power of Attorney
</TABLE>
    

<PAGE>



                                 April 28, 1999



Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549

Gentlemen,

With reference to the Registration Statement on Form S-6 filed by EquiTrust Life
Insurance Company ("Company") and its EquiTrust Life Variable Account II with 
the Securities and Exchange Commission covering certain variable universal life
insurance policies, I have examined such documents and such law as I considered
necessary and appropriate, and on the basis of such examinations, it is my
opinion that:

(1)  Company is duly organized and validly existing under the laws of the State
     of Iowa.

(2)  The variable universal life policies, when issued as contemplated by the
     said Form S-6 Registration Statement will constitute legal, validly issued
     and binding obligations of EquiTrust Life Insurance Company.

I hereby consent to the filing of this opinion as an exhibit to the said Form
S-6 Registration Statement and to the reference to my name under the caption
"Legal Matters" in the Prospectus contained in the said Registration Statement.
In giving this consent, I am not admitting that I am in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.

                              Very truly yours,

                              /s/ Stephen M. Morain

                              Stephen M. Morain
                              Senior Vice President
                                   & General Counsel

<PAGE>


                                April 28, 1999



EquiTrust Life Insurance Company
5400 University Avenue
West Des Moines, Iowa 50266

Gentlemen:

This opinion is furnished in connection with the registration by EquiTrust 
Life Insurance Company of a flexible premium variable life insurance policy 
("Policy") under the Securities Act of 1933, as amended.  The prospectus 
included in Post-Effective Amendment No. 1 to the Registration Statement on 
Form S-6 (File No. 333-62221) describes the Policy.  I have provided 
actuarial advice concerning the preparation of the policy form described in 
the Registration Statement, and I am familiar with the Registration Statement 
and exhibits thereto.

It is my professional opinion that:

(1)  The illustrations of death benefits and cash values included in Appendix A
     of the Prospectus, based on the assumptions stated in the illustrations,
     are consistent with the provisions of the Policy. The rate structure of the
     Policy has not been designed so as to make the relationship between
     premiums and benefits, as shown in the illustrations, appear more favorable
     for policyowners at the ages illustrated than for policyowners at other
     ages.

(2)  The information contained in the examples set forth in Appendix B of the
     Prospectus, based on the assumptions stated in the examples, is consistent
     with the provisions of the Policy.

(3)  The fees and charges deducted under the Policy, in the aggregate, are
     reasonable in relation to the services rendered, the expenses expected to
     be incurred and the risks assumed by the insurance company.

I hereby consent to the use of this opinion as an exhibit to Post-Effective 
Amendment No. 1 to the Registration Statement and to the reference to my name 
under the heading "Experts" in the Prospectus.

                                        Sincerely,

                                        /s/ Christopher G. Daniels

                                        Christopher G. Daniels, FSA, MAAA
                                        Life Product Development and Price Vice
                                        President
                                        EquiTrust Life Insurance Company


<PAGE>

                        Consent of Independent Auditors


We consent to the reference to our firm under the captions "Experts" and 
"Financial Statements" and to the use of our report dated February 15, 1999 
with respect to the statutory-basis financial statements of EquiTrust Life 
Insurance Company, in Post-Effective Amendment No. 1 to the Registration 
Statement (Form S-6 No. 333-62221) and related Prospectus of EquiTrust Life 
Variable Account II dated May 1, 1999.

                              /s/ Ernst &Young LLP

Des Moines, Iowa
April 26, 1999

<PAGE>

[Sutherland, Asbill & Brennan LLP letterhead]



                                   April 26, 1999


EquiTrust Life Insurance Company
5400 University Avenue
West Des Moines, Iowa 50266

Gentlemen:

     We hereby consent to the reference to our name under the caption "Legal 
Matters" in the prospectus filed as part of the registration statement on 
Form S-6 for EquiTrust Life Variable Account II.  In giving this consent, we 
do not admit that we are in the category of persons whose consent is required 
under Section 7 of the Securities Act of 1933.

                                   Sincerely,

                                   SUTHERLAND ASBILL & BRENNAN LLP

                                   By:  /s/ Stephen E. Roth

                                          Stephen E. Roth, Esq.


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