FARMERS VARIABLE LIFE SEPARATE ACCOUNT A, S-6/A, 1999-12-02

FARMERS VARIABLE LIFE SEPARATE ACCOUNT A
S-6/A, 1999-12-02

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<PAGE> 1

As filed with the Securities and Exchange Commission on December 2, 1999

Registration No. 333-84023

- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 1

REGISTRATION STATEMENT

FORM S-6

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

FARMERS VARIABLE LIFE SEPARATE ACCOUNT A
----------------------------------------
(Exact Name of Registrant)

FARMERS NEW WORLD LIFE INSURANCE COMPANY
----------------------------------------
(Name of Depositor)

3003 77th Avenue, S.E., Mercer Island, Washington 98040
-------------------------------------------------------
(Address of Depositor's Principal Executive Offices)

Depositor's Telephone Number, including Area Code:
(206) 232-8400

<TABLE>
<CAPTION>
Name and Address of Agent for Service: Copy to:
<S> <C>
John R. Patton, FLMI, FLHC, CLU, ChFC Stephen E. Roth, Esq.
Assistant Vice President -- Staff Operations Sutherland Asbill & Brennan LLP
Farmers New World Life Insurance Company 1275 Pennsylvania Avenue, N.W.
3003 77th Avenue, S.E. Washington, D.C. 20004-2415
Mercer Island, Washington 98040
</TABLE>

Approximate date of proposed public offering:
As soon as practicable after effectiveness of the Registration Statement.

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

Title of securities being registered:
Units of interest in a separate account under flexible premium variable
life insurance policies.

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

<PAGE> 2

PROSPECTUS ____________, 2000

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

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
FARMERS NEW WORLD LIFE INSURANCE COMPANY
THROUGH
FARMERS VARIABLE LIFE SEPARATE ACCOUNT A

HOME OFFICE: SERVICE CENTER:
----------- --------------
3003 - 77TH AVENUE, S.E. P.O. BOX 724208
MERCER ISLAND, WASHINGTON 98040 ATLANTA, GEORGIA 31139
(206) 232-8400 1-877-376-8008 (TOLL FREE)

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

This prospectus describes the Farmers flexible premium variable life insurance
policy (the "Policy") issued by Farmers New World Life Insurance Company. The
Policy provides life insurance and accumulates variable Contract Value. The
amount of life insurance may, and the Contract Value will, depend on the
investment experience of the subaccounts of the Farmers Variable Life Separate
Account A ("variable account") in which you invest.

You choose one of two death benefit options. The death benefit will be at least
the principal sum shown in the Policy Specifications, adjusted for any
increases or decreases in principal sum, and reduced by any outstanding
indebtedness.

This prospectus provides information that a prospective owner should know
before investing and you should keep this prospectus for future reference. You
should consider whether this Policy is suitable for you in light of your life
insurance needs.

You can allocate Contract Value to:

- the subaccounts of the variable account, which invest in the
portfolios of the mutual funds listed on this page; or

- a fixed account, which credits a specified rate of interest.

AN INVESTMENT IN THIS POLICY IS NOT A BANK DEPOSIT, AND THE POLICY IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.

PLEASE READ THE "RISK SUMMARY" SECTION OF THIS PROSPECTUS. IT DESCRIBES CERTAIN
RISKS ASSOCIATED WITH INVESTING IN THE POLICY.

The following portfolios of underlying mutual funds are currently available
under the Policy:

[ ] JANUS ASPEN SERIES
Capital Appreciation Portfolio

[ ] KEMPER VARIABLE SERIES
Kemper Government Securities Portfolio
Kemper High Yield Portfolio
Kemper Small Cap Growth Portfolio
Kemper-Dreman High Return Equity
Portfolio

[ ] PIMCO VARIABLE INSURANCE TRUST
PIMCO Low Duration Bond Portfolio
PIMCO Foreign Bond Portfolio

[ ] SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio (Class A Shares)
Growth and Income Portfolio (Class A
Shares)
International Portfolio (Class A Shares)
Bond Portfolio (Class A Shares)

[ ] TEMPLETON VARIABLE PRODUCTS SERIES FUND
Templeton Developing Markets Fund
(Class 2 Shares)

A prospectus for each of the portfolios available through the variable account
must accompany this prospectus. Please read these documents before investing
and save them for future reference.

- --------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THIS POLICY OR DETERMINED THAT
THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL
CRIME.
- --------------------------------------------------------------------------------

<PAGE> 3

TABLE OF CONTENTS
================================================================================

GLOSSARY..................................................................... 1

POLICY SUMMARY............................................................... 3

PREMIUMS................................................................. 3
INVESTMENT OPTIONS....................................................... 4
CONTRACT VALUE........................................................... 4
CHARGES AND DEDUCTIONS................................................... 5
PORTFOLIO EXPENSE TABLE.................................................. 6
SURRENDERS AND WITHDRAWALS............................................... 7
DEATH BENEFITS........................................................... 7
TRANSFERS................................................................ 8
LOANS.................................................................... 8

RISK SUMMARY................................................................. 9

INVESTMENT RISK.......................................................... 9
RISK OF LAPSE............................................................ 9
TAX RISKS................................................................10
LIMITS ON CASH WITHDRAWALS...............................................10
LOAN RISKS...............................................................10
EFFECTS OF SURRENDER CHARGES.............................................11
COMPARISON WITH OTHER INSURANCE POLICIES.................................11
ILLUSTRATIONS............................................................11

FARMERS NEW WORLD LIFE INSURANCE COMPANY AND THE FIXED ACCOUNT...............11

FARMERS NEW WORLD LIFE INSURANCE COMPANY.................................11
THE FIXED ACCOUNT........................................................12

THE VARIABLE ACCOUNT AND THE PORTFOLIOS......................................12

THE VARIABLE ACCOUNT.....................................................12
THE PORTFOLIOS...........................................................13
INVESTMENT OBJECTIVES OF THE PORTFOLIOS..............................14
YOUR RIGHT TO VOTE PORTFOLIO SHARES......................................15

THE POLICY...................................................................16

PURCHASING A POLICY......................................................16
WHEN INSURANCE COVERAGE TAKES EFFECT.....................................16
OWNERSHIP RIGHTS.........................................................17
CHANGING THE OWNER...................................................17
SELECTING AND CHANGING THE BENEFICIARY...............................17
ASSIGNING THE POLICY.................................................18
CANCELING A POLICY.......................................................18

PREMIUMS.....................................................................18

PREMIUM FLEXIBILITY......................................................18
MINIMUM PREMIUMS.........................................................19
PLANNED PREMIUMS.........................................................19
ALLOCATING PREMIUMS......................................................20

<PAGE> 4

CONTRACT VALUES..............................................................20

CONTRACT VALUE...........................................................20
SURRENDER VALUE..........................................................20
SUBACCOUNT VALUE.........................................................21
SUBACCOUNT UNIT VALUE....................................................21
FIXED ACCOUNT VALUE......................................................22

CHARGES AND DEDUCTIONS.......................................................23

PREMIUM DEDUCTIONS.......................................................23
MONTHLY DEDUCTION........................................................23
COST OF INSURANCE....................................................24
CHARGES FOR RIDERS...................................................24
MONTHLY ADMINISTRATION CHARGE........................................24
MONTHLY SPECIAL PREMIUM CLASS CHARGE.................................24
MONTHLY FLAT EXTRA CHARGE............................................25
MORTALITY AND EXPENSE RISK CHARGE........................................25
SURRENDER CHARGE.........................................................25
TRANSFER CHARGE..........................................................27
PORTFOLIO EXPENSES.......................................................27
OTHER CHARGES............................................................27

DEATH BENEFIT................................................................28

DEATH BENEFIT PROCEEDS...................................................28
DEATH BENEFIT OPTIONS....................................................28
CHANGING DEATH BENEFIT OPTIONS...........................................30
EFFECTS OF WITHDRAWALS ON THE DEATH BENEFIT..............................31
CHANGING THE PRINCIPAL SUM...............................................31
PAYMENT OPTIONS..........................................................32

SURRENDERS AND WITHDRAWALS...................................................34

SURRENDERS...............................................................34
PARTIAL WITHDRAWALS......................................................34

TRANSFERS....................................................................35

AUTOMATIC ASSET REBALANCING PROGRAM......................................36
ASSET ALLOCATION SERVICES................................................36
EXCESSIVE TRADING LIMITS.................................................36
DOLLAR COST AVERAGING PROGRAM............................................36
TELEPHONE TRANSFERS......................................................37

LOANS........................................................................38

LOANS CONDITIONS.........................................................38
EFFECT OF POLICY LOANS...................................................39

POLICY LAPSE.................................................................39

LAPSE....................................................................39
REINSTATEMENT............................................................40

FEDERAL TAX CONSIDERATIONS...................................................40

TAX STATUS OF THE POLICY.................................................40
TAX TREATMENT OF POLICY BENEFITS.........................................41

OTHER POLICY INFORMATION.....................................................43

<PAGE> 5

OUR RIGHT TO CONTEST THE POLICY..........................................43
SUICIDE EXCLUSION........................................................43
MISSTATEMENT OF AGE OR SEX...............................................43
MODIFYING THE POLICY.....................................................43
WHEN WE WILL MAKE PAYMENTS...............................................44
REPORTS TO OWNERS........................................................44
POLICY TERMINATION.......................................................44
SUPPLEMENTAL BENEFITS (RIDERS)...........................................45

PERFORMANCE DATA.............................................................45

HYPOTHETICAL ILLUSTRATIONS BASED ON ADJUSTED HISTORIC
PORTFOLIO PERFORMANCE....................................................45

ADDITIONAL INFORMATION.......................................................46

SALE OF THE POLICIES.....................................................46
LEGAL MATTERS............................................................46
LEGAL PROCEEDINGS........................................................46
YEAR 2000 MATTERS........................................................46
EXPERTS..................................................................47
FINANCIAL STATEMENTS.....................................................48
FARMERS' EXECUTIVE OFFICERS AND DIRECTORS................................48

ILLUSTRATIONS................................................................51

APPENDIX A - GUARANTEED MAXIMUM COST OF INSURANCE RATES...................... 1

APPENDIX B - TABLE OF SURRENDER CHARGE FACTORS............................... 1

APPENDIX C - FINANCIAL STATEMENTS............................................ 1

iii

<PAGE> 6

GLOSSARY

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

For your convenience, we are providing a glossary of the special terms
we use in this prospectus.

ACCUMULATION UNIT
An accounting unit we use to calculate subaccount values. It measures the net
investment results of each of the subaccounts.

ATTAINED AGE
The insured's age on the issue date plus the number of years completed since
the issue date.

BENEFICIARY
The person(s) you select to receive the death benefit from this Policy.

CASH VALUE
The Contract Value minus any applicable surrender charge.

COMPANY (WE, US, OUR, FARMERS, FNWL)
Farmers New World Life Insurance Company

CONTRACT VALUE
The sum of the values you have in the variable account and the fixed account.
If you have a loan outstanding, the Contract Value includes any amounts we hold
in the loan account to secure the loan.

CUMULATIVE MINIMUM PREMIUMS
The sum of all past monthly-mode minimum premiums due since the issue date. The
initial minimum premium is specified on the Policy specifications page. The
minimum premium will change if you increase or decrease the principal sum or if
certain other changes in the Policy occur.

DEATH BENEFIT PROCEEDS
The amount we will pay to the beneficiary when we receive proof of the
insured's death. We will reduce the proceeds by the amount of any outstanding
loans (including any interest you owe), and any due and unpaid monthly
deductions.

FIXED ACCOUNT
An option to which you can direct your Contract Value under the Policy. It
provides a guarantee of principal and interest. The assets supporting the fixed
account are held in our general account and are not part of, or dependent on,
the investment performance of the variable account.

FIXED ACCOUNT VALUE
The portion of your Contract Value allocated to the fixed account.

FUNDS
Investment companies that are registered with the SEC. This Policy allows you
to invest in the investment portfolios of the funds that are listed on the
front page of this prospectus.

GENERAL ACCOUNT
The account containing all of Farmers' assets, other than those held in its
separate accounts.

HOME OFFICE
The address of the Home Office is 3003-77th Avenue, S.E., Mercer Island,
Washington 98040.

INITIAL PREMIUM
The amount you must pay before insurance coverage begins under this Policy. The
initial premium is shown on your Policy's specification page.

INSURED
The person whose life is insured by this Policy.

ISSUE AGE
The insured's age as of the last birthday before the issue date.

ISSUE DATE
The date when life insurance coverage begins. We measure Policy months, Policy
years, and Policy anniversaries from the issue date. On the issue date, we
place your initial premium (times the percent of premium factor) in the fixed
account. The first monthly deduction occurs on the issue date. The entire
Contract Value remains allocated to the fixed account until the reallocation
date.

<PAGE> 7

LAPSE
When life insurance coverage ends because you do not have enough Contract Value
to pay the monthly deduction, the surrender charge and any outstanding loan
amount (including any interest you owe on the loan(s)), and you have not made a
sufficient payment by the end of a 61-day grace period.

LOAN AMOUNT
The total amount of all outstanding Policy loans, including both principal and
interest due. We deduct an amount equal to the loan amount from the subaccounts
and the fixed account and place it in the loan account as collateral for the
loans. The loan account is part of our general account.

MATURITY DATE
The Policy anniversary when the insured reaches age 110 and life insurance
coverage under this Policy ends. The maturity date is shown on the Policy
specifications page.

MONTHLY DEDUCTION
The amount we deduct from the Contract Value each month to pay for the
insurance coverage. The monthly deduction includes the cost of insurance
charge, the monthly administration charge, the cost of any riders, and any flat
extra charge for a special premium class.

MONTHLY DUE DATE
This is the day of each month when we determine Policy charges and deduct them
from Contract Value. It is the same date each month as the issue date. If there
is no Valuation Day that coincides with the issue date in the calendar month,
the monthly due date is the next Valuation Day.

PERCENT OF PREMIUM FACTOR
This is the factor (currently .965) by which we multiply each premium to
determine the amount of premium credited to the Contract Value. We retain the
balance of each premium to compensate us for certain expenses such as premium
taxes and selling expenses. The percent of premium factor is shown on your
Policy's specifications page.

PORTFOLIO
A separate investment portfolio of a fund. Each subaccount invests exclusively
in one portfolio of a fund.

PREMIUMS
All payments you make under the Policy other than loan repayments. When we use
the term "premium" in this prospectus, it has the same meaning as "net premium"
in the Policy, and means a premium multiplied by the premium factor.

PRINCIPAL SUM
The amount of the initial death benefit. The initial principal sum is set forth
on the specifications page. You may increase or decrease the principal sum
under certain conditions. Certain actions you take, such as changing the death
benefit option or taking a partial withdrawal, may also affect the amount of
the principal sum. The actual death benefit proceeds we pay under the Policy
may be more or less than the principal sum.

REALLOCATION DATE
The date we reallocate any premium (plus interest) held in the fixed account to
the subaccounts and fixed account as you directed in your application. The
reallocation date is the record date, plus the number of days in your state's
right to examine period, plus 10 days.

RECORD DATE
The date we record your Policy in our books as an in force policy.

RIGHT TO EXAMINE PERIOD
The period when you may return the Policy and receive a refund. The length of
the right to examine period varies by state. It will be at least 10 days from
the date you receive the Policy. The first page of your Policy shows the right
to examine period.

SERVICE CENTER
The address of the Service Center is P.O. Box 724208, Atlanta, GA 31139.
McCamish Systems, L.L.C. is the administrator of the Policy. You can call the
Service Center office toll-free at 1-877-376-8008.

SUBACCOUNT
A division of the variable account that invests exclusively in shares of a
single portfolio of a fund. The investment performance of each subaccount is
linked directly to the investment performance of the portfolio in which it
invests.

SURRENDER
To cancel the Policy by signed request from the owner.

<PAGE> 8

SURRENDER VALUE
The amount we will pay you if you surrender the Policy while it is in force.
The Surrender Value on the date you surrender is equal to: the Contract Value,
minus any surrender charge, and minus any outstanding loan amount (including
any interest you owe on the loan(s)).

TAX CODE
The Tax Code of 1986, as amended.

VALUATION DAY
Each day that the New York Stock Exchange ("NYSE") is open for trading. Farmers
New World Life Insurance Company is open to administer the Policy on each day
the NYSE is open.

VALUATION PERIOD
The period of time over which we determine the change in the value of the
subaccounts in order to price accumulation units. Each valuation period begins
at the close of normal trading on the NYSE (currently 4:00 p.m. Eastern time,
1:00 p.m. Pacific Time) on each Valuation Day and ends at the close of normal
trading on the NYSE on the next Valuation Day.

VARIABLE ACCOUNT
Farmers Variable Life Separate Account A. It is a separate investment account
that is divided into subaccounts, each of which invests in a corresponding
portfolio of a designated mutual fund.

VARIABLE ACCOUNT VALUE
The portion of your Contract Value that is allocated to the subaccounts of the
variable account.

WRITTEN NOTICE
The written notice you must sign and send us to request or exercise your rights
as owner under the Policy. To be complete, it must: (1) be in a form we accept,
(2) contain the information and documentation that we determine is necessary,
and (3) be received at our Service Center.

YOU (YOUR, OWNER)
The person entitled to exercise all rights as owner under the Policy.

POLICY SUMMARY

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

This policy summary provides only a brief overview of the more
important features of the Policy. More detailed information about the Policy
appears later in this prospectus. Please read the remainder of this prospectus
carefully.

PREMIUMS

- - You can select a premium plan. Within certain limits specified in your
Policy, you can vary the frequency and amount of premiums. You may be
able to skip premium payments under certain circumstances. However, you
greatly increase your risk of lapse if you do not regularly pay
premiums at least as large as the current minimum premium.

- - We will not accept any premiums after the insured reaches attained age
100.

- - After you make an initial premium, you can pay subsequent premiums
(minimum $25) at any time.

- - We multiply each premium by the percent of premium factor (currently
0.965) and credit the resulting amount to the Contract Value.

- - The initial minimum premium and payment mode are shown on your Policy
specification page. The minimum premium will change if you increase or
decrease the principal sum, if you change death benefit options, if you
change or add a rider, if you take a partial withdrawal and you have
chosen a level death benefit (Option B), or if the insured's premium
class changes.

- - PAYING THE CURRENT MINIMUM MONTHLY PREMIUM WILL NOT NECESSARILY KEEP
YOUR POLICY IN FORCE. Even if you pay the current

<PAGE> 9

minimum premium according to your payment plan, your Policy will lapse
if the Contract Value, less loans and interest owed (the "net Contract
Value") is not enough to cover a monthly deduction.

- - If you authorize electronic payments from your checking account, or ask
us to bill you, the premiums you pay each year must be $300 or more.

- - There will be a 61-day grace period before your Policy lapses. The
grace period begins when you are sent notice that the Surrender Value
(or net Contract Value) is insufficient to cover a monthly deduction.
If you fail to make a sufficient payment during the 61-day grace
period, your Policy will lapse and terminate without value. See "Risk
of Lapse"; and "Policy Lapse".

- - Once you receive your Policy, the RIGHT TO EXAMINE PERIOD begins. You
may return the Policy during this period and receive a refund. See
"Canceling a Policy".

- - New net premium(s) will be allocated to the subaccounts and the fixed
account in accordance with your instructions in the application, unless
you provide different instructions with your premiums. Any future net
premiums will be allocated in accordance with the new instructions,
unless we receive contrary instructions.

INVESTMENT OPTIONS

VARIABLE ACCOUNT:

- - You may direct the money in your Policy to any of the 12 subaccounts of
the variable account. WE DO NOT GUARANTEE ANY MONEY YOU PLACE IN THE
SUBACCOUNTS. THE VALUE OF EACH SUBACCOUNT WILL INCREASE OR DECREASE,
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE CORRESPONDING PORTFOLIO.
YOU COULD LOSE SOME OR ALL OF YOUR MONEY.

- - Each subaccount invests exclusively in one investment portfolio of a
mutual fund. The following mutual funds and portfolios are currently
available:

[ ] JANUS ASPEN SERIES
Capital Appreciation Portfolio

[ ] KEMPER VARIABLE FUND SERIES
Kemper Government Securities Portfolio
Kemper High Yield Portfolio
Kemper Small Cap Growth Portfolio
Kemper-Dreman High Return Equity Portfolio

[ ] PIMCO VARIABLE INSURANCE TRUST
PIMCO Low Duration Bond Portfolio
PIMCO Foreign Bond Portfolio

[ ] SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio (Class A Shares)
Growth and Income Portfolio (Class A Shares)
International Portfolio (Class A Shares)
Bond Portfolio (Class A Shares)

[ ] TEMPLETON VARIABLE PRODUCTS SERIES FUND
Templeton Developing Markets Fund (Class 2 Shares)

FIXED ACCOUNT:

- - You may place money in the fixed account where it earns interest at an
annual rate of at least 3.0%. We may declare higher rates of interest,
but are not obligated to do so.

CONTRACT VALUE

- - Contract Value is the sum of your amounts in the subaccounts
and the fixed account. Contract Value also includes amounts
we hold in the loan account to secure any outstanding loans.

- - Contract Value varies from day to day, depending on the investment
experience of the subaccounts you choose, the interest we

4
<PAGE> 10

credit to the fixed account, the charges we deduct, and any other
transactions (such as transfers, withdrawals, and loans).

- - Contract Value is the starting point for calculating important values
under the Policy, such as the Surrender Value and the death benefit.

- - We do not guarantee a minimum Contract Value. Your Policy may lapse if
you do not have sufficient Contract Value (minus any loan and interest
you owe) to pay the monthly deduction due. If you have not paid the
cumulative minimum premiums, we will look to the Surrender Value to
determine whether the Policy will lapse. (See "Minimum Premiums".)

- - From the issue date until the reallocation date (the record date, plus
the number of days in your state's right to examine period, plus 10
days), we hold your premium(s) in the fixed account. On the
reallocation date, we transfer the Contract Value in the fixed account
to other subaccounts and the fixed account in accordance with the
allocation percentages you provided in the application.

CHARGES AND DEDUCTIONS

$ Premium charge: We currently deduct 3.5% from each premium and credit
the remaining 96.5% to your Contract Value. This occurs when we apply
the percent of premium factor to each premium received. We may change
the charge for new owners in the future. This charge compensates us for
distribution expenses and state premium taxes.

$ Monthly Deduction. Each month we deduct:
- a cost of insurance charge for the Policy (varies by
issue age, sex, risk class and Policy duration);
- charges for any riders;
- a flat extra charge, if any, for a special premium
class;
- a special premium class rate, applied to both current
and guaranteed cost of insurance charges, for insured
in a special premium class; and
- a current monthly administration charge of $5,
guaranteed never to be higher than $8.

$ Surrender and withdrawal charges:
- surrender: We deduct a surrender charge when a full surrender
occurs during the first 14 Policy years. It consists of:
- a deferred sales charge component: calculated by
multiplying the sum of all premiums by a factor that
declines over the first 15 Policy years and is less for
issue ages 66 and older; and
- an administrative component: calculated by multiplying
the number of thousands of principal sum on the issue
date (minus any reductions in principal sum for which a
surrender charge has already been paid) by a factor that
varies by insured's issue age, sex and risk class, and
the number of years you held the Policy.

THE SURRENDER CHARGE MAY BE SIGNIFICANT. YOU MAY HAVE NO SURRENDER
VALUE IF YOU SURRENDER YOUR POLICY DURING THE FIRST 14 POLICY YEARS.

- The maximum surrender charge is the entire Contract Value. It
is more likely that you may have no Surrender Value if you pay
premiums below or not much higher than the current minimum
premium, and/or your investment performance is too low.

- withdrawal (partial surrender): We deduct a processing fee
equal to the lesser of $25 or 2% of the amount withdrawn, PLUS
a surrender charge if you elect a level death benefit (Option
B).

- decrease in principal sum: If you decrease the principal sum,
we may deduct a portion of the surrender charge.

$ Mortality and Expense Risk Charge: Deducted daily at an annual rate to
0.90% of your average daily net assets in the variable subaccounts.

<PAGE> 11

$ Transfer charge: $25 fee for the 13th and each additional transfer in
a Policy year.

$ Portfolio Expenses: You indirectly bear the annual operating expenses
of the portfolios in which the subaccounts invest. These may include
investment advisory fees, 12b-1 fees, and other expenses. These
charges vary by portfolio and range from .44% to 1.91% per year. (See
"Portfolio Expense Table," below.)

$ Other charges:
- A $5 fee for each additional annual report you request.
- A charge of $1.50 per $1,000 for each increase in principal sum
(maximum charge is $300).
- Any riders attached to the Policy will have their own charges.

PORTFOLIO EXPENSE TABLE

The following table shows the fees and expenses charged by the
portfolios. The purpose of the table is to assist you in understanding the
various costs and expenses that you will bear directly and indirectly. The
table reflects the actual charges and expenses for each portfolio for the
fiscal year ended December 31, 1998, unless the charges are annualized.
Expenses of the portfolios may be higher or lower in the future. For more
information on the fees and expenses described in this table, see the
prospectuses for the portfolios which accompany this prospectus.

ANNUAL PORTFOLIO OPERATING EXPENSES (as a percentage of average portfolio
assets after fee waivers and expense reimbursements)

<TABLE>
<CAPTION>
TOTAL ANNUAL
EXPENSES (AFTER
MANAGEMENT OTHER WAIVERS
FEES 12b-1 EXPENSES AND
NAME OF PORTFOLIO (AFTER WAIVERS) FEES (AFTER REIMBURSEMENT) REIMBURSEMENT)
<S> <C> <C> <C> <C>
Janus Aspen Series
- ------------------
Capital Appreciation Portfolio(1) .70% --- .22% .92%

Kemper Variable Series
- ----------------------
Kemper Government Securities Portfolio .55% --- .11% .66%
Kemper High Yield Portfolio .60% --- .05% .65%
Kemper Small Cap Growth Portfolio .65% --- .05% .70%
Kemper-Dreman High Return Equity Portfolio(2)(3) .42% --- .45% .87%

PIMCO Variable Insurance Trust
- ------------------------------
Low Duration Bond Portfolio(4) .63% --- .02% .65%
Foreign Bond Portfolio(4) .88% --- .02% .90%

Scudder VLIF
- ------------
Money Market Portfolio .37% --- .07% .44%
Growth and Income Portfolio (Class A Shares) .47% --- .09% .56%
International Portfolio (Class A Shares) .87% --- .18% 1.05%
Bond Portfolio (Class A Shares) .47% --- .09% .56%

Templeton Variable Products Series Fund
- ---------------------------------------
Templeton Developing Markets Fund (Class 2 Shares)(5) 1.25% .25% .41% 1.91%
</TABLE>

1/ The expense figures shown for the Janus Aspen Capital Appreciation Portfolio
are net of certain fee waivers or reductions from Janus Capital Corporation.
Without such waivers, the Management Fees, Other Expenses and Total Annual
Expenses for the Janus Aspen Capital Appreciation Portfolio for the fiscal year
ended December 31, 1998 would have been: .75%, .22% and .97%, respectively. See
the prospectus and Statement of Additional Information of Janus Aspen Series
for a description of these waivers.

<PAGE> 12

2/ The Kemper-Dreman High Return Equity Portfolio commenced operations on
5/4/98. As a result, "Other Expenses" for fiscal year 1998 have been
annualized.

3/ Pursuant to their respective agreements with Kemper Variable Series, the
investment manager and the accounting agent have agreed, for the one year
period ending May 1, 2000, to limit their respective fees and to reimburse
other operating expenses to the extent necessary to limit total operating
expenses of the Kemper-Dreman High Return Equity Portfolio to the levels set
forth in the table above. Without taking into effect these expense caps, for
the High Return Equity Portfolio, the Management Fees are estimated to be .75%;
Other Expenses are estimated to be .45%; and Total Annual Expenses are
estimated to be 1.20%.

4/ For the PIMCO Variable Insurance Trust portfolios, management fees include
fixed advisory and administrative fees. The administrative fee covers most of
the expenses of these portfolios. However, the portfolios are responsible for
bearing certain expenses associated with their operations that are not covered
by the administrative fee. While it is expected that these expenses generally
will not have a material effect on the portfolio expense ratios, they may have
a material effect in certain circumstances, such as when the average net assets
of a portfolio are lower than anticipated. Pacific Investment Management
Company has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that Total Annual Expenses would exceed,
due to organizational expenses and the payment by the portfolio of its pro rata
portion of the Trust's Trustees' fees, 0.65% of average daily net assets of the
PIMCO Low Duration Bond portfolio and 0.90% of average daily net assets of the
PIMCO Foreign Bond portfolio. "Other Expenses" are based on estimates for the
current fiscal year. Without such reductions, Management Fees, Other Expenses
and Total Annual Expenses for the fiscal year ended December 31, 1998 would
have been: for the PIMCO Low Duration Bond Portfolio, .65%, .02% and .67%,
respectively; and for the PIMCO Foreign Bond Portfolio, .90%, .02% and .92%,
respectively.

5/ Class 2 of the Templeton Developing Markets Portfolio has a distribution
plan or "Rule 12b-1 Plan" which is described in the portfolio's prospectus.

SURRENDERS AND WITHDRAWALS

- - FULL SURRENDER: At any time while the Policy is in force, you may make
a written request to surrender your Policy and receive the Surrender
Value (that is, the Contract Value minus any surrender charge, and
minus any outstanding loan amount including any accrued interest). A
surrender may have tax consequences. See "Federal Tax Considerations."

- - PARTIAL WITHDRAWALS: After the first Policy year, you may make a
written request to withdraw part of the Surrender Value, subject to the
following rules. Withdrawals may have tax consequences. See "Federal
Tax Considerations."

- - You may make only 1 withdrawal each calendar quarter.
- - You must request at least $500.
- - You may not request more than 75% of the Surrender Value.
- - Surrender charges apply to the withdrawal if you elect a level death
benefit (Option B).
- - For each withdrawal, we deduct a processing fee equal to the lesser of
$25 or 2% of the withdrawal.
- - If you select a level death benefit (Option B), the principal sum will
be reduced by the amount of the partial withdrawal (but not by any
surrender charges or the processing fee).

DEATH BENEFITS

- - As long as it remains in force, the Policy provides for a death benefit
payment upon the death of the insured.

<PAGE> 13

- - You must choose one of two death benefit options under the Policy.

- OPTION A is a variable death benefit through attained age 99
that is the greater of :

- the principal sum plus the Contract Value on the date of
death; or
- the Contract Value multiplied by the applicable death
benefit percentage.

- OPTION B is a level death benefit through attained age 99 that
is the greater of:

- the principal sum on the date of death; or
- the Contract Value multiplied by the applicable death
benefit percentage.

Any death benefit proceeds paid will be increased by any additional insurance
benefits you add by rider and will be reduced by the amount of any outstanding
loans, any interest due, and any due and unpaid monthly deductions.

- - You may increase or decrease the principal sum, and change death benefit
options. After the first Policy year, you may change the death benefit
option or change the principal sum (but not both unless done
simultaneously) once each Policy year.

- - You may not decrease the principal sum below the minimum principal sum
amount shown on your Policy specifications page.

TRANSFERS

- - Each Policy year, you may make:

- an unlimited number of transfers from the subaccounts; and
- one transfer from the fixed account.

- - Transfers from subaccounts must be a minimum of $250, or the
total value in the subaccount.

- - Transfers from the fixed account may not be for more than 25% of the
unloaned value in the fixed account, unless the balance after the
transfer is less than $250, in which case the entire amount will be
transferred.

- - We charge $25 for the 13th and each additional transfer
during a Policy year.

- - AUTOMATIC ASSET REBALANCING PROGRAM:
Under the automatic asset rebalancing program, we will automatically
transfer amounts among the subaccounts on a quarterly basis so that the
allocation of your Contract Value matches the percentages you specify.

- - DOLLAR COST AVERAGING PROGRAM:
The dollar cost averaging program permits you to systematically
transfer (on each monthly anniversary of the issue date) a set dollar
amount from the fixed account to up to 8 subaccounts. The minimum
transfer amount is $100.

LOANS

- - You may take a loan against the Policy for amounts up to the Surrender
Value minus loan interest to the next Policy anniversary date. Loans
may have tax consequences.

- - To secure the loan, we transfer an amount equal to the loan from the
subaccounts and fixed account to the loan account (part of our general
account). Unless you specify otherwise, the amount is withdrawn from
the subaccounts and the fixed account on a pro-rata basis.

- - Amounts in the loan account earn interest at the guaranteed minimum
rate of 3% per year.

- - During the first fourteen Policy years, we currently charge you
interest at 4.5% annually, with a maximum loan interest rate of 8% per
year on your loan. After the

<PAGE> 14

fourteenth Policy year, the maximum loan interest rate is 3%,
compounded annually. Interest is charged daily, and is due and payable
at the end of each Policy year, or on the date of any policy loan
increase or repayment, if earlier. Unpaid interest becomes part of the
outstanding loan and accrues interest.

- - You may repay all or part of your outstanding loans at any time. Loan
repayments must be at least $25, and must be clearly marked as "loan
repayments" or they will be credited as premiums.

- - We deduct any unpaid loans from the proceeds payable on the insured's
death.

- - A loan may have tax consequences. See "Federal Tax Consequences."

RISK SUMMARY
================================================================================

INVESTMENT RISK

If you instruct us to invest your Contract Value in one or more
subaccounts, you will be subject to the risk that investment performance will
be unfavorable and that the Contract Value will decrease. If you select the
fixed account, we credit your Contract Value with a declared rate of interest,
but you assume the risk that the rate may decrease, although it will never be
lower than a guaranteed minimum annual effective rate of 3.0%.

Because we continue to deduct charges from Contract Value, if loans,
withdrawals, and monthly deductions reduce your Surrender Value to too low an
amount, and/or if investment results are not sufficiently favorable, and/or if
interest rates are too low, and/or if you do not pay sufficient premiums, then
your Policy's Surrender Value (or Contract Value, if you have paid sufficient
premiums) may fall to zero. In that case, the Policy will lapse without value
and insurance coverage will no longer be in effect, unless you make an
additional payment sufficient to prevent a lapse during a 61-day grace period.
However, if investment experience is sufficiently favorable and you have kept
the Policy in force for a substantial time, you may be able to draw upon
Contract Value, through withdrawals and loans.

RISK OF LAPSE

Certain circumstances will cause your Policy to enter a grace period
during which you must make a sufficient payment to keep your Policy in force:

- If your Policy's Surrender Value becomes zero, and cumulative
premiums, minus withdrawals, are less than cumulative minimum
premiums, then the Policy will enter a 61-day grace period.

- If cumulative premiums minus withdrawals exceed cumulative
minimum premiums, then the Policy will enter a 61-day grace
period whenever the Contract Value (minus outstanding loans and
interest you owe on the loans) is too low to pay the entire
monthly deduction due.

Whenever your Policy enters the grace period, if you do not make a
sufficient payment before the grace period ends, your Policy will terminate
without value, insurance coverage will no longer be in effect, and you will
receive no benefits. The payment must be sufficient enough to cause either one
of the following conditions:

1. the Surrender Value exceeds zero, after deducting all due and
unpaid monthly deductions; OR

<PAGE> 15

2. cumulative premiums minus withdrawals exceed cumulative minimum
premiums; AND Contract Value minus any outstanding loan and
interest you owe exceeds zero, after deducting all due and
unpaid monthly deductions.

A Policy lapse will have adverse tax consequences. (See "Federal Tax
Considerations"; "Policy Loans.")

You may reinstate a lapsed Policy within three years after the Policy
enters the grace period, if the insured meets our insurability requirements and
you pay the amount we require. We will not reinstate a Policy that has been
surrendered for the Surrender Value.

TAX RISKS

Although there is limited guidance and some uncertainty, we believe
that the Policy should be deemed a life insurance contract under Federal tax
law, so that the death benefit paid to the beneficiary will not be subject to
Federal income tax. However, depending on the total amount of premiums you pay,
the Policy may be treated as a modified endowment contract ("MEC") under
Federal tax laws. If a Policy is treated as a MEC, then withdrawals, surrenders
and loans under a Policy will be taxable as ordinary income to the extent there
are earnings in the Policy. In addition, a 10% penalty tax may be imposed on
withdrawals, surrenders and loans taken before you reach age 59 1/2. You should
consult a qualified tax advisor for assistance in all tax matters involving
your Policy.

LIMITS ON CASH WITHDRAWALS

The Policy permits you to take only one partial withdrawal in any
calendar quarter, after the first Policy year has been completed. The amount
you may withdraw is limited to 75% of the Surrender Value.

A withdrawal reduces the Surrender Value and Contract Value, so it will
increase the risk that the Policy will lapse. A withdrawal also may have tax
consequences.

A withdrawal will reduce the death benefit. If you select a level death
benefit (Option B), a partial withdrawal will permanently reduce the principal
sum by the amount of the withdrawal (but not the surrender charge or the
processing fee). If a variable death benefit (Option A) is in effect when you
make a withdrawal, the death benefit also will be reduced because the Contract
Value is reduced.

LOAN RISKS

A Policy loan, whether or not repaid, will affect Contract Value over
time because we subtract the amount of the loan from the subaccounts and fixed
account as collateral. We then credit a fixed interest rate of 3.0% to the loan
collateral. As a result, the loan collateral does not participate in the
investment results of the subaccounts nor does it receive any higher current
interest rate credited to the fixed account. The longer the loan is
outstanding, the greater the effect is likely to be. Depending on the
investment results of the subaccounts and the interest rate credited to the
fixed account, the effect could be favorable or unfavorable.

A Policy loan affects the death benefit because a loan reduces the
death benefit proceeds by the amount of the outstanding loan, plus any interest
you owe on Policy loans.

A Policy loan could make it more likely that a Policy would terminate
without value. There is a risk if the loan reduces your Surrender Value (or
Contract Value, if applicable) to an amount that is insufficient to pay the
monthly deduction and investment results are unfavorable, that the Policy will
lapse, resulting in adverse tax consequences.

<PAGE> 16

EFFECTS OF SURRENDER CHARGES

The surrender charges under this Policy are significant, during the
first 14 Policy years. It is likely that you will receive no Surrender Value if
you surrender your Policy in the early Policy years. You should purchase this
Policy only if you have the financial ability to keep it in force at the
initial principal sum for a substantial period of time.

Even if you do not ask to surrender your Policy, surrender charges may
play a role in determining whether your Policy will lapse. If you have not paid
sufficient premiums, the Surrender Value is the measure we use to determine
whether your Policy will enter a grace period, and possibly lapse.

COMPARISON WITH OTHER INSURANCE POLICIES

Like fixed benefit life insurance, the Policy offers a minimum death
benefit and may provide a Contract Value, loan privileges and a Surrender
Value. However, the Policy differs from a fixed benefit policy because it
allows you to place your premiums in investment subaccounts. The amount and
duration of life insurance protection and of the Contract Value will vary with
the investment performance of the amounts you place in the subaccounts. In
addition, the Surrender Value will always vary with the investment results of
your selected subaccounts.

As you consider purchasing this Policy, keep in mind that it may not be
to your advantage to replace existing insurance with the Policy.

ILLUSTRATIONS

The Illustrations provided at the end of this prospectus illustrate
Contract Values, Surrender Values and Death Benefits. These illustrations are
based on hypothetical rates of return that are not guaranteed. The
Illustrations also assume costs of insurance for a hypothetical person. Your
rates of return and insurance charges may be higher or lower than those
illustrations.

FARMERS NEW WORLD LIFE INSURANCE COMPANY AND THE FIXED ACCOUNT
================================================================================

FARMERS NEW WORLD LIFE INSURANCE COMPANY

Farmers New World Life Insurance Company ("Farmers"), is the stock life
insurance company issuing the Policy. Farmers is located at 3003 - 77th Avenue,
S.E., Mercer Island, Washington 98040, and was incorporated under Washington
law on February 21, 1910. Farmers established the variable account to support
the investment options under this Policy and under other variable life
insurance policies Farmers may issue. Farmers' general account supports the
fixed account under the Policy.

Farmers is a direct wholly-owned subsidiary of Farmers Group, Inc.
("FGI"). FGI is a stock holding and management company. The ultimate
controlling parents of FGI are Allied Zurich p.l.c., a United Kingdom company
and Zurich Allied AG, a Swiss Company. Allied Zurich p.l.c. and Zurich Allied
AG are traded in certain European markets, but are not publicly traded in the
U.S.

<PAGE> 17

Farmers markets a broad line of individual life insurance products,
including universal life, term life and whole life insurance and annuity
products (predominately flexible premium deferred annuities). Farmers currently
is licensed to sell insurance in 38 states and the District of Columbia. The
states where Farmers is not licensed are Alaska, Connecticut, Florida, Hawaii,
Louisiana, Maine, Massachusetts, New Hampshire, New Jersey, New York, North
Carolina, and Vermont.

THE FIXED ACCOUNT

The fixed account is part of Farmers' general account. We use our
general assets to support our insurance and annuity obligations other than
those funded by the variable account. Subject to applicable law, Farmers has
sole discretion over investment of the fixed account's assets. Farmers bears
the full investment risk for all amounts contributed to the fixed account.
Farmers guarantees that the amounts allocated to the fixed account will be
credited interest daily at a net effective interest rate of at least 3%. We
will determine any interest rate credited in excess of the guaranteed rate at
our sole discretion.

Money you place in the fixed account will earn interest that is
compounded daily at the current interest rate in effect at the time of your
allocation. We intend to credit the fixed account with interest at current rates
in excess of the minimum guaranteed rate of 3%, but we are not obligated to do
so. We have no specific formula for determining current interest rates.

The fixed account value will not share in the investment performance of
our general account. Because we, in our sole discretion, anticipate changing
the current interest rate from time to time, different allocations you make to
the fixed account will be credited with different current interest rates. You
assume the risk that interest credited to amounts in the fixed account may not
exceed the minimum 3% guaranteed rate.

We reserve the right to change the method of crediting interest from
time to time, provided that such changes do not reduce the guaranteed rate of
interest below 3% per year or shorten the period for which the interest rate
applies to less than one calendar year (except for the year in which such
amount is received or transferred).

We allocate amounts from the fixed account for partial withdrawals,
transfers to the subaccounts, or charges for the monthly deduction on a last
in, first out basis ("LIFO") for the purpose of crediting interest.

THE FIXED ACCOUNT IS NOT REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.

THE VARIABLE ACCOUNT AND THE PORTFOLIOS
================================================================================

THE VARIABLE ACCOUNT

Farmers established the variable account as a separate investment
account under Washington law on April 6, 1999. Farmers owns the assets in the
variable account and is obligated to pay all benefits under the Policies.
Farmers may use the variable account to support other variable life insurance
policies Farmers issues. The variable account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940 and qualifies as a "separate account" within the meaning of the
Federal securities laws.

<PAGE> 18

The variable account is divided into 12 subaccounts, each of which
invests in shares of a specific portfolio of one of the following mutual funds:

[ ] Janus Aspen Series
[ ] Kemper Variable Series
[ ] PIMCO Variable Insurance Trust
[ ] Scudder Variable Life Investment Fund
[ ] Templeton Variable Products Series Fund

The subaccounts buy and sell portfolio shares at net asset value. Any dividends
and distributions from a portfolio are reinvested at net asset value in shares
of that portfolio.

Under Washington law, the assets in the variable account are the
property of Farmers. However, assets in the variable account that are
attributable to the Policy are not chargeable with liabilities arising out of
any other business we may conduct. Income, gains, and losses (realized and
unrealized), resulting from assets in the variable account are credited to or
charged against the variable account without regard to other income, gains or
losses of Farmers. Promises we make in the Policy are general corporate
obligations of Farmers and are not dependent on assets in the variable account.

The variable account may include other subaccounts that are not
available under the Policies and are not discussed in this prospectus. Where
permitted by applicable law, Farmers reserves the right to:

1. Create new variable accounts;
2. Combine separate accounts, including the variable account;
3. Remove, combine or add subaccounts and make the new subaccounts
available to you at our discretion;
4. Make new portfolios available under the variable account or remove
existing portfolios;
5. Substitute new portfolios for any existing portfolios if shares of
the portfolio are no longer available for investment or if Farmers
determines that investment in a portfolio is no longer appropriate
in light of the purposes of the variable account;
6. Deregister the variable account under the Investment Company Act of
1940 if such registration is no longer required;
7. Operate the variable account as a management investment company
under the Investment Company Act of 1940 or as any other form
permitted by law; and
8. Make any changes required by the Investment Company Act of 1940 or
any other law.

No such changes will be made without any necessary approval of the Securities
and Exchange Commission and applicable state insurance departments. We will
notify you of any changes.

THE PORTFOLIOS

Each subaccount of the variable account invests exclusively in shares
of a designated portfolio of a fund. Shares of each portfolio are purchased and
redeemed at net asset value, without a sales charge. Each fund available under
the Contract is registered with the SEC under the 1940 Act as an open-end,
management investment company. Such registration does not involve supervision
of the management or investment practices or policies of the funds by the
Securities and Exchange Commission.

The assets of each portfolio are separate from the assets of any other
portfolio, and each portfolio has separate investment objectives and policies.
As a result, each portfolio operates as a separate investment portfolio and the
income or losses of one portfolio has no effect on the investment performance
of any other portfolio.

<PAGE> 19

Each of the portfolios is managed by an investment adviser registered
with the SEC under the Investment Advisers Act of 1940, as amended. Each
investment adviser is responsible for the selection of the investments of the
portfolio. These investments must be consistent with the investment objective,
policies and restrictions of that portfolio.

Some of the portfolios have been established by investment advisers
that manage publicly traded mutual funds having similar names and investment
objectives to the portfolios available under the Contract. While some of the
portfolios may be similar to, and may in fact be modeled after, publicly traded
mutual funds, you should understand that the portfolios are not otherwise
directly related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any similarly named
portfolio may differ substantially from the portfolios available through this
Contract.

An investment in a subaccount, or in any portfolio, including the Money
Market Portfolio, is not insured or guaranteed by the U.S. Government and there
can be no assurance that the Money Market Portfolio will be able to maintain a
stable net asset value per share.

INVESTMENT OBJECTIVES OF THE PORTFOLIOS

The following table summarizes each portfolio's investment objective(s)
and policies. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS
STATED OBJECTIVE(S). You can find more detailed information about the
portfolios, including a description of risks, in the prospectuses for the
funds. You should read the funds' prospectuses carefully.

<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT OBJECTIVE AND INVESTMENT ADVISER
<S> <C>
JANUS ASPEN SERIES - CAPITAL Seeks long-term growth of capital. It is non-diversified.
APPRECIATION PORTFOLIO Investment adviser is Janus Capital Corporation.

KEMPER GOVERNMENT Seeks high current return consistent with preservation of
SECURITIES PORTFOLIO capital. Investment adviser is Scudder Kemper Investments, Inc.

KEMPER HIGH YIELD PORTFOLIO Seeks to provide a high level of current income. Investment
adviser is Scudder Kemper Investments, Inc.

KEMPER SMALL CAP GROWTH PORTFOLIO Seeks maximum appreciation of investors' capital. Investment
adviser is Scudder Kemper Investments, Inc.

KEMPER-DREMAN HIGH RETURN EQUITY Seeks to achieve a high rate of total return. Investment
PORTFOLIO adviser is Scudder Kemper Investments, Inc.; investment
sub-adviser is Dreman Value Management L.L.C.

PIMCO LOW DURATION BOND PORTFOLIO Seeks to maximize total return, consistent with preservation of
capital and prudent investment management. Investment adviser
is Pacific Investment Management Company.

PIMCO FOREIGN BOND PORTFOLIO Seeks to maximize total return, consistent with preservation of
capital and prudent investment management. Investment adviser is
Pacific Investment Management Company.

MONEY MARKET PORTFOLIO Seeks stability of capital and, consistent therewith, to maximize
(CLASS A SHARES) the liquidity of capital and to provide current income. Investment
adviser is Scudder Kemper Investments, Inc.
</TABLE>

<PAGE> 20

<TABLE>
<S> <C>
GROWTH AND INCOME PORTFOLIO Seeks long-term growth of capital, current income and growth of
(CLASS A SHARES) income. Investment adviser is Scudder Kemper Investments, Inc.

INTERNATIONAL PORTFOLIO Seeks long-term growth of capital primarily through diversified
(CLASS A SHARES) holdings of marketable foreign equity investments. Investment
adviser is Scudder Kemper Investments, Inc.

BOND PORTFOLIO Seeks a high level of income consistent with a high quality
(CLASS A SHARES) portfolio of debt securities. Investment adviser is Scudder
Kemper Investments, Inc.

TEMPLETON DEVELOPING MARKETS Seeks long-term capital appreciation. Investment adviser is
FUND (CLASS 2 SHARES) Templeton Asset Management Ltd.
</TABLE>

In addition to the variable account, the mutual funds may sell shares
to other separate investment accounts established by other insurance companies
to support variable annuity contracts and variable life insurance policies as
well as qualified plans. It is possible that, in the future, it may become
disadvantageous for variable life insurance separate accounts and variable
annuity separate accounts to invest in the mutual funds simultaneously.
Although neither Farmers nor the mutual funds currently foresee any such
disadvantages, either to variable life insurance policy owners or to variable
annuity contract owners, each fund's Board of Directors (Trustees) will monitor
events in order to identify any material conflicts between the interests of
such variable life insurance policy owners and variable annuity contract
owners, and will determine what action, if any, it should take. Such action
could include the sale of fund shares by one or more of the separate accounts,
which could have adverse consequences. Material conflicts could result from,
for example, (1) changes in state insurance laws, (2) changes in Federal income
tax laws, or (3) differences in voting instructions between those given by
variable life insurance policy owners and those given by variable annuity
contract owners.

If a fund's Board of Directors (or Trustees) were to conclude that
separate funds should be established for variable life insurance and variable
annuity separate accounts, Farmers will bear the attendant expenses, but
variable life insurance policy owners and variable annuity contract owners
would no longer have the economies of scale resulting from a larger combined
fund.

PLEASE READ THE ATTACHED MUTUAL FUND PROSPECTUSES TO OBTAIN MORE COMPLETE
INFORMATION REGARDING THE PORTFOLIOS.

YOUR RIGHT TO VOTE PORTFOLIO SHARES

Even though we are the legal owner of the portfolio shares held in the
subaccounts, and have the right to vote on all matters submitted to
shareholders of the portfolios, we will vote our shares only as Policy owners
instruct, so long as such action is required by law.

Before a vote of a portfolio's shareholders occurs, you will receive
voting materials from us. We will ask you to instruct us on how to vote and to
return your proxy to us in a timely manner. You will have the right to instruct
us on the number of portfolio shares that corresponds to the amount of Contract
Value you have in that portfolio (as of a date set by the portfolio).

If we do not receive voting instructions on time from some owners, we
will vote those shares in the same proportion as the timely voting instructions
we receive. Should Federal securities laws, regulations and interpretations
change, we may elect to vote portfolio shares in our own right. If required by
state insurance officials, or if permitted under Federal regulation, we may
disregard certain owner voting instructions. If we ever disregard voting
instructions, we will send you a summary in the next annual report to Policy
owners advising you of the action and the reasons we took such action.

<PAGE> 21

THE POLICY
================================================================================

PURCHASING A POLICY

To purchase a Policy, you must send the application and initial premium
to us through any licensed Farmers insurance agent who is also a registered
representative of a broker-dealer having a selling agreement with the principal
underwriter for the Policy, Investors Brokerage Services, Inc. Acceptance of an
application is subject to our insurance underwriting, and we reserve the right
to decline an application for any reasons subject to the requirements imposed
by law in the jurisdiction where the requested insurance Policy was to be
issued and delivered.

We determine the minimum principal sum (death benefit) for a Policy
based on the attained age of the insured when we issue the Policy. The minimum
principal sum for the preferred risk class is $150,000, and $50,000 for all
others. The maximum issue age for owners in the preferred underwriting class is
age 75, and for all other risk classes is age 80. We base the minimum initial
premium for your Policy on a number of factors including the age, sex and risk
class of the insured and the amount of the principal sum. We currently require
a minimum initial premium as shown on the Policy's specifications page.

We use different underwriting standards in relation to the Policy. We
can provide you with details as to these underwriting standards when you apply
for a Policy. We must receive evidence of insurability that satisfies our
underwriting standards before we will issue a Policy. We reserve the right to
reject an application for any reason permitted by law.

WHEN INSURANCE COVERAGE TAKES EFFECT

TEMPORARY INSURANCE COVERAGE. If the insured meets our eligibility
requirements for temporary insurance coverage, then we will provide the insured
with temporary insurance coverage in the amount applied for, or $50,000,
whichever is less. The conditions and eligibility requirements for temporary
insurance coverage are detailed in the Temporary Insurance Agreement included
with the Policy application.

Temporary insurance coverage terminates automatically, and without
notice, on the earliest of:

- The date full insurance coverage becomes effective; or
- The date the proposed insured receives notice that
their application has been declined, and in no event
later than 12:01 a.m. Pacific Standard Time of the
fifth day after Farmers has mailed a letter giving such
notice; or
- The date the proposed insured or the owner signs a
request to cancel the application or rejects the policy
if issued other than as applied for.

If the application is declined or canceled, the full amount paid with the
application will be refunded.

FULL INSURANCE COVERAGE. If we issue the Policy as applied for, full
insurance coverage under the Policy will take effect on the issue date. If we
issue a Policy other than as applied for, full insurance coverage will take
effect either upon the completion of all underwriting and Policyowner
acceptance of the Policy, or on the issue date, whichever is later.

Generally, we will issue the Policy if we determine that the insured
meets our underwriting requirements and we accept the original application. On
the issue date, we will begin to deduct monthly

<PAGE> 22

deductions from your net premium and we will allocate your premium (multiplied
by the percent of premium factor, and minus the monthly deduction(s)) to the
fixed account until the reallocation date. (See "Allocating Premiums.")

OWNERSHIP RIGHTS

The Policy belongs to the owner named in the application. The owner may
exercise all of the rights and options described in the Policy. The owner is
the insured unless the application specifies a different person as the insured.
If the owner dies before the insured and no successor owner is named, then
ownership of the Policy will pass to the insured's estate. The owner may
exercise certain rights described below.

<TABLE>
<S> <C>
CHANGING THE OWNER - You may change the owner by providing a written request to us at
any time while the insured is alive.
- The change takes effect on the date that the written request is
signed.
- We are not liable for any actions we may have taken before we
received the written request.
- Changing the owner does not automatically change the beneficiary.
- Changing the owner may have tax consequences. You should consult
a tax adviser before changing the owner.

SELECTING AND - You designate the beneficiary (the person to receive the death
CHANGING THE benefit when the insured dies) in the application.
BENEFICIARY - If you designate more than one beneficiary, then each beneficiary
shares equally in any death benefit proceeds unless the
beneficiary designation states otherwise.
- If the beneficiary dies before the insured, then any contingent
beneficiary becomes the beneficiary.
- If both the beneficiary and contingent beneficiary die before the
insured, then we will pay the death benefit to the owner or the
owner's estate once the insured dies.
- You can request a delay clause which provides that if the
beneficiary dies within a specified number of days (maximum 180
days) following the insured's death, then the death benefit
proceeds will be paid as if the beneficiary had died first.
- You can change the beneficiary by providing us with a written
request while the insured is living.
- The change in beneficiary is effective as of the date you sign
the written request.
- We are not liable for any actions we may have taken before we
received the written request.
</TABLE>

<PAGE> 23

<TABLE>
<S> <C>
ASSIGNING - You may assign Policy rights while the insured is alive.
THE POLICY - The owner retains any ownership rights that are not assigned.
- Assignee may not change the owner or the beneficiary, and may not
elect or change an optional method of payment. We will pay any
amount payable to the assignee in a lump sum.
- Claims under any assignment are subject to proof of interest and
the extent of the assignment.
- We are not:
- bound by any assignment unless we receive a written notice
of the assignment.
- responsible for the validity of any assignment.
- liable for any payment we made before we received written
notice of the assignment.
- Assigning the Policy may have tax consequences. See "Federal
Tax Considerations."
</TABLE>

CANCELING A POLICY

You may cancel a Policy during the "right-to-examine period" by
returning it to our Home Office. In most states, the right-to-examine period
expires 10 days after you receive the Policy. This period will be longer if
required by state law. If you decide to cancel the Policy during the
right-to-examine period, we will treat the Policy as if we never issued it.
Within seven calendar days after we receive the returned Policy, we will refund
an amount equal to the greater of Contract Value at the end of the Valuation
Date on which we receive the returned Policy at our Home Office or the sum of
all premiums paid for the Policy.

PREMIUMS
================================================================================

PREMIUM FLEXIBILITY

You have flexibility to determine the frequency and the amount of the
premiums you pay. You do not have to pay premiums according to any schedule.
However, you greatly increase your risk of lapse if you do not regularly pay
premiums at least as large as the current minimum premium.

Before we issue a Policy, we will require you to pay the premium
indicated on your Policy's specification page. Thereafter, you may pay premiums
($25 minimum) at any time. You must make all premiums to our Service Center. We
reserve the right to limit the number and amount of any unscheduled premiums.
You may not pay any premiums after the insured reaches attained age 100.

We multiply each premium by the percent of premium factor (currently
0.965) and credit the resulting value to the Contract Value. We retain the
balance of each premium to compensate us for certain expenses such as premium
taxes and selling expenses.

WE WILL TREAT ANY PAYMENT YOU MAKE AS A PREMIUM UNLESS YOU CLEARLY MARK
IT AS A LOAN REPAYMENT. We have the right to limit or refund any premium, if
the premium would disqualify the Policy as a life insurance contract under the
Internal Revenue Code, or if the payment would increase the death benefit by
more than the amount of the premium. Your Policy's specifications page will
show the maximum premium amount. If we return a portion of your premium based
on the maximum premium amount, we will not allow you to make additional
premiums until they are allowed by the maximum premium limitations.

<PAGE> 24

ELECTRONIC PAYMENTS OR BILLING. If you authorize electronic payment of
your premiums from your bank account, or if you ask to be billed for your
premiums, the total amount of premiums being debited, or billed, must be at
least $300 per year. You can be billed, or make electronic payments, on an
annual, semi-annual, quarterly or monthly basis for the applicable fraction of
$300, but the total for the year must add up to at least $300.

You can stop paying premiums at any time and your Policy will continue
in force until the earlier of the maturity date (when the insured reaches
attained age 110), or the date when either (1) the insured dies, or (2) the
grace period ends after the Surrender Value has been exhausted, or (3) we
receive your signed request to surrender the Policy.

MINIMUM PREMIUMS

The full initial premium is the only premium required to be paid under
the Policy. However, you greatly increase your risk of lapse if you do not
regularly pay premiums at least as large as the current minimum premium. PAYING
THE CURRENT MONTHLY MINIMUM PREMIUM WILL NOT NECESSARILY KEEP YOUR POLICY IN
FORCE. Additional premiums may be necessary to keep the Policy in force.

The initial minimum premium and payment mode (annual and monthly) are
shown on your Policy's specifications page, and depends on a number of factors
including the age, sex, and risk class of the proposed insured, and the
principal sum requested.

The minimum premium will change if:

- you increase or decrease the principal sum;
- you change the death benefit option;
- you change or add a rider;
- you take a partial withdrawal when you have elected the
level death benefit option (Option B); or
- the insured's class changes (for example, from smoker to
non-smoker, or from standard to substandard).

If your Surrender Value (Contract Value, minus any surrender charge,
and minus any outstanding loan amount and interest owed) becomes zero or less,
so that you cannot pay the monthly deduction, and if the cumulative premiums you
have paid, less withdrawals, are less than the cumulative minimum premiums
required under your Policy (that is, the sum of all past monthly-mode minimum
premiums due since the issue date), then your Policy will enter a 61 day grace
period during which you must make a sufficient payment to keep the Policy in
force. But if the cumulative premiums you have paid, less withdrawals, are
greater than the cumulative minimum premiums required under your Policy, then
your Policy will enter a grace period only if your Contract Value, minus any
outstanding loans and interest owed, is insufficient to pay the entire monthly
deduction.

PLANNED PREMIUMS

You may determine a planned premium schedule which allows you to pay
level premiums at fixed intervals over a specified period of time. You are not
required to pay premiums according to this schedule. You may change the amount,
frequency, and the time period over which you make your planned premiums by
sending us a written request. We have the right to limit the amount of any
increase in planned premiums. Even if you make your planned premiums on
schedule, your Policy may lapse if your Surrender Value (or Contract Value, if
applicable) is insufficient to pay the monthly deduction. See "Risk Summary",
"Policy Lapse".

19
<PAGE> 25

ALLOCATING PREMIUMS

When you apply for a Policy, you must instruct us to allocate your
premium to one or more subaccounts of the variable account and to the fixed
account according to the following rules:

- you must put at least 1% of each premium in any subaccount or
the fixed account you select;
- allocation percentages must be in whole numbers and the sum of
the percentages must equal 100.

You can change the allocation instructions for additional premiums without
charge at any time by providing us with written notification (or any other
notification we deem satisfactory). Any allocation change will be effective on
the date we record the change. Any future net premiums will be allocated in
accordance with the new allocation, unless we receive contrary written
instructions. We reserve the right to limit the number of premium allocation
changes. We also reserve the right to limit the number of subaccount allocations
in effect at any one time.

Investment returns from amounts allocated to the subaccounts will vary
with the investment experience of these subaccounts and will be reduced by
Policy charges. YOU BEAR THE ENTIRE INVESTMENT RISK FOR AMOUNTS YOU ALLOCATE TO
THE SUBACCOUNTS.

On the issue date, we will allocate your premium(s), times the percent
of premium factor, minus the monthly deduction(s) to the fixed account. We also
allocate any premiums we receive from the issue date to the reallocation date
(the record date, plus the number of days in your state's right to examine
period, plus 10 days) to the fixed account. While held in the fixed account,
premium(s) will be credited with interest at the current fixed account rate. On
the reallocation date, we will reallocate the Contract Value in the fixed
account to the other subaccounts (at the unit value next determined) and the
fixed account in accordance with the allocation percentages provided in the
application.

We invest all premiums paid after the reallocation date on the
Valuation Day they are received in our Service Center. We credit these premiums
to the subaccounts at the unit value next determined after we receive your
payment.

CONTRACT VALUES
================================================================================

CONTRACT VALUE

CONTRACT - serves as the starting point for calculating values
VALUE under a Policy
- equals the sum of all values in each subaccount and
the fixed account
- is determined on the issue date and on each Valuation
Day
- on the issue date, equals the initial premium times the
percent of premium factor, less the monthly
deduction
- has no guaranteed minimum amount and may be more or
less than premiums paid

SURRENDER VALUE

The Surrender Value is the amount we pay when you surrender your
Policy. We determine the Surrender Value at the end of the Valuation Period when
we receive your written surrender request.

20
<PAGE> 26

SURRENDER - the Contract Value as of such date; MINUS
VALUE ON ANY - any surrender charge as of such date; MINUS
VALUATION - any outstanding Policy loans; MINUS
DAY EQUALS: - any interest you owe on the Policy loans.

SUBACCOUNT VALUE

Each subaccount's value is the Contract Value in that subaccount. At
the end of any Valuation Period, the subaccount's value is equal to the number
of units that the Policy has in the subaccount, multiplied by the unit value of
that subaccount.

THE NUMBER - the initial units purchased at the unit value on
OF UNITS IN the issue date; PLUS
ANY - units purchased with additional premiums net of
SUBACCOUNT the percent of premium factor; PLUS
ON ANY - units purchased via transfers from another
VALUATION subaccount or the fixed account; MINUS
DAY EQUALS: - units redeemed to pay a pro-rata share of the
monthly deductions; MINUS
- units redeemed to pay for withdrawals, and any
applicable surrender charges; MINUS
- units redeemed as part of a transfer to another
subaccount or the fixed account.

Every time you allocate or transfer money to or from a subaccount, we
convert that dollar amount into units. We determine the number of units we
credit to, or subtract from, your Policy by dividing the dollar amount of the
allocation, transfer, or withdrawal, by the unit value for that subaccount at
the end of the Valuation Period.

SUBACCOUNT UNIT VALUE

The value (or price) of each subaccount will reflect the investment
performance of the portfolio in which the subaccount invests. Unit values will
vary among subaccounts. The unit value of each subaccount was originally
established at $10 per unit. The unit value may increase or decrease from one
Valuation Period to the next.

The unit value of any subaccount at the end of a Valuation Period is
calculated as:

A x B, where:

"A" is the subaccount's unit value for the end of the immediately
preceding Valuation Day; and
"B" is the net investment factor for the most current Valuation Day.

The net investment factor is an index we use to measure the investment
performance of a subaccount from one Valuation Period to the next. Each
subaccount has a net investment factor for each Valuation Period that may be
greater or less than one. Therefore, the value of a unit (and the value of a
subaccount) may increase or decrease. We determine the net investment factor for
any subaccount for any Valuation Period by the following formula:

X Z
--- -
Y

"X" equals:

21
<PAGE> 27

1. the net asset value per portfolio share held in the subaccount
at the end of the current Valuation Day; PLUS

2. the per share amount of any dividend or capital gain
distribution on shares held in the subaccount during the
current Valuation Day; LESS

3. the per share amount of any capital loss distribution on
shares held in the subaccount during the current Valuation
Day; LESS

4. the per share amount of any taxes or any amount set aside
during the Valuation Day as a reserve for taxes.

"Y" equals the net asset value per portfolio share held in the subaccount as of
the end of the immediately preceding Valuation Day.

"Z" equals the mortality and expense risk charge.

FIXED ACCOUNT VALUE

On the issue date, the fixed account value is equal to the premiums
allocated to the fixed account, less the portion of the first monthly deduction
taken from the fixed account.

THE FIXED - "A" is the fixed account value on the preceding
ACCOUNT VALUE Valuation Day plus interest from the preceding
AT THE END OF Valuation Day to the date of calculation; PLUS
ANY VALUATION
PERIOD IS - "B" is the portion of the premium(s), multiplied
EQUAL TO by the percent of premium factor, allocated to
A+B+C-D-E-F: the fixed account since the preceding Valuation
Day, plus interest from the date such premiums
were received to the date of calculation; PLUS

- "C" any amounts transferred to the fixed account
since the preceding Valuation Day, plus interest
from the effective date of such transfers to the
date of calculation; MINUS

- "D" is the amount of any transfer from the fixed
account to the subaccounts since the preceding
Valuation Day, plus interest from the effective
date of such transfers to the date of
calculation; MINUS

- "E" is the amount of any withdrawals (partial
surrenders) and any applicable surrender charges
deducted from the fixed account since the
preceding Valuation Day, plus interest on those
surrendered amounts from the effective date of
each withdrawal to the date of calculation; MINUS

- "F" is zero, except on the monthly due date, when
it is a pro-rata share of the monthly deduction
for the month beginning on that monthly due date.

Your Policy's guaranteed minimum fixed account value will not be less
than the minimum values required by the state where we deliver your Policy.

22
<PAGE> 28

CHARGES AND DEDUCTIONS
================================================================================

This section describes the charges and deductions that we make under
the Policy to compensate for: (1) the services and benefits we provide; (2) the
costs and expenses we incur; and (3) the risks we assume.

SERVICES AND - the death benefit (principal sum), surrender
BENEFITS WE and loan benefits under the Policy
PROVIDE: - investment options, including premium allocations
- administration of elective options
- the distribution of reports to owners

COSTS AND - costs associated with processing and underwriting
EXPENSES WE applications, issuing and administering the Policy
INCUR: (including any 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 - that the cost of insurance charges we may deduct
ASSUME: 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

PREMIUM DEDUCTIONS

When you make a premium payment, we apply a percent of premium factor
currently equal to 0.965 to the premium to determine the amount that we will
allocate to the subaccounts and the fixed account according to your
instructions. The 3.5% of each premium we retain compensates us for distribution
expenses and state premium taxes. We may change the percent of premium factor
for new Policies in the future.

MONTHLY DEDUCTION

We take a monthly deduction from the Contract Value on the issue date
and on each monthly due date (the same day of each succeeding month as the issue
date, or, if there is no comparable Valuation Day, the next Valuation Day). We
will make deductions from each subaccount and the fixed account in accordance
with the current premium allocation instructions. If the value of any subaccount
or the fixed account is insufficient to pay that subaccount or fixed account's
portion of the monthly deduction, we will take the monthly deduction on a
pro-rata basis from all accounts (i.e., in the same proportion that the value in
each subaccount and the fixed account bears to the total Contract Value on the
monthly due date). Because portions of the monthly deduction can vary from
month-to-month, the monthly deduction will also vary.

The monthly deduction is equal to:

--> The cost of insurance charge for the Policy; PLUS
--> The charges for any riders; PLUS
--> The monthly administration charge; PLUS
--> The special premium factor applied to the cost of insurance
for a special premium class, if any; PLUS

23
<PAGE> 29

--> The flat extra charge for a special premium class, if any.

COST OF INSURANCE. We assess a monthly cost of insurance charge to
compensate us for underwriting the death benefit (i.e., the anticipated cost of
paying a death benefit that exceeds your Contract Value). The charge depends on
a number of variables (Contract Value and the insured's issue age, sex, and risk
class, and the number of months since the issue date) that would cause it to
vary from Policy to Policy and from monthly due date to monthly due date.

The cost of insurance charge is equal to the cost of insurance rate at
the insured's attained age, times the number of thousands of Risk Insurance
Amount.

The Risk Insurance Amount is:

1. The current death benefit; MINUS
2. The Contract Value at the end of the Valuation Day
preceding the monthly due date; PLUS
3. The monthly administrative charge for the month that
begins on the monthly due date; PLUS
4. Any charges for riders for the month that begins on the monthly due
date.

The Risk Insurance Amount may increase, or decrease, depending on
investment experience, the payment of additional premiums, Policy riders, and
the application of the death benefit percentage formula. Therefore, the cost of
insurance charges can increase or decrease over time.

Cost of insurance rates are based on the sex, attained age, and risk
class of the insured. The cost of insurance rates are generally higher for male
insureds than for female insureds of the same age and risk class, and ordinarily
increase with age. Cost of insurance rates may never exceed the guaranteed
maximum cost of insurance rates shown in Appendix A.

The risk class of the insured will affect the cost of insurance rates.
We currently place insureds into standard rate classes and premium classes
involving higher mortality risks. The cost of insurance rates for classes
involving higher mortality risks are multiples of the standard rates. If the
insured is in a special premium class, the guaranteed maximum monthly cost of
insurance rate will be the rate shown in the table in Appendix A times the
special premium class rating factor shown on your Policy's specification page.
The charge for any attached rider is a separate calculation.

We calculate the cost of insurance separately for the initial principal
sum and for any increase in principal sum. If you request and we approve an
increase in your Policy's principal sum, then a different risk class (and a
different cost of insurance) may apply to the increase, based on the insured's
circumstances at the time of the increase.

The Policies are based on mortality tables that distinguish between men
and women. As a result, the Policy may pay different benefits to men and women
of the same age and risk class. We also offer Policies based on unisex mortality
tables if required by state law.

CHARGES FOR RIDERS. The monthly deduction includes charges for any
optional insurance benefits you add to your Policy by rider.

MONTHLY ADMINISTRATION CHARGE. We deduct this charge to compensate us
for administrative expenses such as recordkeeping, processing death benefit
claims and Policy changes, and overhead costs. The monthly administration charge
currently equals $5, guaranteed never to be higher than $8.

MONTHLY SPECIAL PREMIUM CLASS CHARGE. If the insured is in a special
premium class, the guaranteed maximum monthly cost of insurance rate will be the
rate shown in the Policy times the special premium rate factor shown on the
Policy's specifications page. This factor is applied to both current and
guaranteed cost of insurance rate. This charge compensates us for additional
costs associated with claims from the

24
<PAGE> 30

insureds in the special premium class. If applicable to you, your Policy's
specifications page will show the amount of this charge.

MONTHLY FLAT EXTRA CHARGE. We deduct a flat extra charge if the insured
is in a special premium class. This compensates us for the additional costs
associated with the special premium class. The charge, if any, will be shown on
your Policy's specifications page.

MORTALITY AND EXPENSE RISK CHARGE

We deduct a daily charge from your Contract Value in each subaccount to
compensate us for certain mortality and expense risks we assume. The mortality
risk is that an insured will live for a shorter time than we project. The
expense risk is that the expenses that we incur will exceed the administrative
charge limits we set in the Policy. This charge is equal to:

- your Contract Value in each subaccount MULTIPLIED BY

- the daily pro rata portion of the annual mortality and
expense risk charge rate of 0.90%.

If this charge does not cover our actual costs, we absorb the loss.
Conversely, if the charge more than covers actual costs, the excess is added to
our surplus. We expect to profit from this charge. We may use any profits for
any lawful purpose including covering distribution costs.

SURRENDER CHARGE

We deduct a surrender charge if, during the first 14 Policy years, you:

- fully surrender the Policy, or
- take a partial withdrawal from your Policy, if you have
elected a level death benefit (Option B), or
- you decrease the principal sum that was in effect at the
time of issue.

In the case of a full surrender, we pay the remaining Contract Value
(less any surrender charge and any outstanding loan amount) to you. The payment
you receive is called the Surrender Value.

If you take a partial withdrawal, we will reduce the Contract Value on
a pro-rata basis from the subaccounts and the fixed account (unless you instruct
us otherwise) by the amount of the partial withdrawal, the processing fee, and
any surrender charge.

THE SURRENDER CHARGE MAY BE SIGNIFICANT. YOU SHOULD CAREFULLY CALCULATE
THIS CHARGE BEFORE YOU REQUEST A SURRENDER. Under some circumstances the level
of surrender charges might result in no Contract Value available if you
surrender your Policy during the period when surrender charges apply. This will
depend on a number of factors, but is more likely if:

1. you pay premiums equal to or not much higher than the
minimum premium shown in your Policy, or
2. investment performance is too low.

The surrender charge is equal to the sum of the Deferred Sales Charge
Component and the Administrative Component.

The Deferred Sales Charge Component is calculated by:

25
<PAGE> 31

1. find the sum of all premiums that have been paid to the
Policy (do not deduct amounts withdrawn or the percent
of premium factor);
2. multiply this sum by 0.075 if the insured's issue age was 65
or younger, or by 0.050 if the insured's issue age was 66 or
older;
3. multiply the result by the appropriate number on this table:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Policy Year: 1-3 4 5 6 7 8 9 10 11 12 13 14 15 or
more
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issue ages 1.00 1.00 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00
0-65
- -------------------------------------------------------------------------------------------------------------------------
Issue ages 66 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.15 0.10 0.05 0.00
and older
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Administrative Component is calculated by:

1. the appropriate surrender charge factor from the tables in
Appendix B for the insured's age on the issue date and the
number of full Policy years since the issue date (regardless
of whether the Policy has lapsed and been reinstated) (the
tables vary by sex and risk class); MULTIPLIED BY

2. the number of thousands of principal sum on the issue date,
MINUS any reductions in principal sum for which a surrender
charge has already been imposed.

DECREASE IN PRINCIPAL SUM. If you decrease the principal sum that was
in effect on the issue date, we will assess the administrative component of the
surrender charge. To determine the surrender charge for a decrease in principal
sum: multiply the appropriate surrender charge factor from the tables in
Appendix B by the number of thousands of principal sum at the time of issue that
are now being decreased. Only a reduction in the original principal sum amount
(as of the issue date) incurs a surrender charge.

AN EXAMPLE OF CALCULATING THE SURRENDER CHARGE FOLLOWS:

This example is for a Policy that is in its seventh Policy year. The principal
sum is $200,000 and the issue age is 35. A premium of $1,000 has been paid at
the beginning of each year and the total cumulative premium payments are $7,000.

The total surrender charge is the sum of a Deferred Sales Charge
Component and an Administrative Component.

The Deferred Sales Charge Component is calculated by multiplying the cumulative
premium by 0.075, then multiplying the result by the appropriate number from the
table. For this example the appropriate number is 0.80. The result is
(7,000)(0.075)(0.80) = $420.

The Administrative Component is calculated by multiplying the number of
thousands of principal sum by the appropriate factor from the surrender charge
table. In this example the factor is 4.94. The result is (200)(4.94) = $988.

The total surrender charge is the sum of the Deferred Sales Charge Component and
the Administrative Component. The total surrender charge is therefore 420 + 988
= $1,408.

PARTIAL WITHDRAWAL PROCESSING FEE. We deduct a processing fee equal to
the lesser of $25 or 2% of the amount withdrawn.

26
<PAGE> 32

TRANSFER CHARGE

- We currently allow you to make 12 transfers each Policy year free
from charge. Any unused free transfers do not carry over to the
next Policy year.

- We charge $25 for each additional transfer. We will not
increase this charge.

- For purposes of assessing the transfer charge, each written or
telephone request is considered to be one transfer, regardless of
the number of subaccounts (or fixed account) affected by the
transfer.

- We deduct the transfer charge from the amount being transferred,
or from the remaining Contract Value, according to your
instructions.

- Transfers we effect on the reallocation date, and transfers due to
loans, automatic asset rebalancing, and dollar cost averaging, do
NOT count as transfers for the purpose of assessing this charge.

PORTFOLIO EXPENSES

The value of the net assets of each subaccount reflects the investment
advisory fees, 12b-1 fees in some cases, and other expenses incurred by the
corresponding portfolio in which the subaccount invests. See the Portfolio
Expense Table in this prospectus, and the mutual funds' prospectuses for further
information on these fees and expenses.

We may receive compensation from the investment advisers,
administrators, distributors (and/or an affiliate thereof) of the portfolios in
connection with administrative, distribution, or other services and cost savings
experienced by the investment advisers, administrators or distributors. It is
anticipated that such compensation will be based on assets of the particular
portfolios attributable to the Policy. Some advisers, administrators or
distributors may pay us more than others.

OTHER CHARGES

- We charge $5 for each additional annual report you request.
- We charge $1.50 per $1,000 for each increase in principal
sum (this charge cannot exceed $300).
- Any riders attached to the Policy will have their own
charges.

27
<PAGE> 33
DEATH BENEFIT

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

DEATH BENEFIT PROCEEDS

As long as the Policy is in force, we will pay the death benefit
proceeds once we receive satisfactory proof of the insured's death at our Home
Office. We may require return of the Policy. We will pay the death benefit
proceeds to the primary beneficiary or a contingent beneficiary. If the
beneficiary dies before the insured and there is no contingent beneficiary, we
will pay the death benefit proceeds to the owner or the owner's estate. We will
pay the death benefit proceeds into an interest paying checking account or under
a payment option. See "Payment Options".

DEATH BENEFIT
PROCEEDS EQUAL:

- the death benefit (described below); MINUS
- any past due monthly deductions; MINUS
- any outstanding Policy loan on the date of death; MINUS
- any interest you owe on the Policy loan(s); PLUS
- any additional insurance provided by rider.

If all or part of the death benefit proceeds are paid in one sum, we
will pay interest on this sum as required by applicable state law from the date
we receive due proof of the insured's death to the date we make payment.

We may further adjust the amount of the death benefit proceeds under
certain circumstances. See "Our Right to Contest the Policy"; "Misstatement of
Age or Sex"; and "Suicide Exclusion".

DEATH BENEFIT OPTIONS

In your application, you tell us how much life insurance coverage you
want on the life of the insured. We call this the "principal sum" of insurance.
You also chose whether the death benefit we will pay is Option A (variable death
benefit through attained age 99), or Option B (level death benefit through
attained age 99). For attained ages after age 99, the death benefit equals the
Contract Value. You may change the death benefit option after the first Policy
year.

THE VARIABLE - the principal sum PLUS the Contract Value (determined as
DEATH BENEFIT of the end of the Valuation Period during which the
UNDER OPTION insured dies); OR
A IS THE - the death benefit required by the Tax Code (Contract Value
GREATER OF: on the date of death multiplied by the applicable death
benefit percentage).

Under Option A, the death benefit varies with the Contract Value.

THE LEVEL - the principal sum on the date of death; OR
DEATH BENEFIT - the death benefit required by the Tax Code (Contract Value
UNDER OPTION on the date of death multiplied by the applicable death
B IS THE benefit percentage).
GREATER OF:

Under Option B, your death benefit generally equals the principal amount
and will remain level, unless the death benefit is determined as required by the
Tax Code (Contract Value times the applicable death benefit percentage).

28
<PAGE> 34

Under Option A, your death benefit will tend to be higher than under
Option B. However, the monthly insurance charges we deduct will also be higher
to compensate us for our additional risk. Because of this, your Contract Value
will tend to be higher under Option B than under Option A.

In order for the Policy to qualify as life insurance, Federal tax law
requires that your death benefit be at least as much as your Contract Value
multiplied by the applicable death benefit percentage. The death benefit
percentage is based on the insured person's attained age. For example, the death
benefit percentage is 250% for an insured at age 40 or under, and it declines
for older insureds. The following table indicates the applicable death benefit
percentages for different attained ages:

<TABLE>
<CAPTION>
ATTAINED AGE DEATH BENEFIT PERCENTAGE
<S> <C>
40 and under 250%

41 to 45 250% minus 7% for each age
over age 40

46 to 50 209% minus 6% for each age
over age 45

51 to 55 178% minus 7% for each age
over age 50

56 to 60 146% minus 4% for each age
over age 55

61 to 65 128% minus 2% for each age
over age 60

66 to 70 119% minus 1% for each age
over age 65

71 to 74 113% minus 2% for each age
over age 70

75 to 90 105%

91 to 94 104% minus 1% for each age
over age 90

95 and above 100%
</TABLE>

If the Tax Code requires us to increase the death benefit by reference
to the death benefit percentages, that increase in the death benefit will
increase our risk, and will result in a higher monthly cost of insurance.

OPTION A EXAMPLE. Assume that the insured's attained age is under 40,
that there have been no decreases in the principal sum, and that there are no
outstanding loans. Under Option A, a Policy with a principal sum of $50,000 will
pay a death benefit equal to the greater of $50,000 plus Contract Value or 250%
of the Contract Value. Thus, a Policy with a Contract Value of $10,000 will have
a death benefit of $60,000 (that is, the greater of $60,000 ($50,000 + $10,000)
or $25,000 (250% of $10,000)).

However, once the Contract Value exceeds $33,334, the death benefit
determined by reference to the death benefit percentage ($33,333 X 250% =
$83,335) will be greater than the principal sum plus Contract Value ($50,000 +
$33,334 = $83,334). Each additional dollar of Contract Value above $33,334 will
increase the death benefit by $2.50.

Similarly, under this scenario, any time Contract Value exceeds $33,334,
each dollar taken out of Contract Value will reduce the death benefit by $2.50.

OPTION B EXAMPLE. Assume that the insured's attained age is under 40,
there have been no withdrawals or decreases in principal sum, and that there are
no outstanding loans. Under Option B, a Policy with a $50,000 principal sum will
generally pay $50,000 in death benefits. However, because the death benefit must
be equal to or be greater than 250% of Contract Value, any time the Contract
Value exceeds $20,000, the death benefit will be determined as required by the
Tax Code (Contract Value X 250%) and will exceed the principal sum of $50,000.
Each additional dollar added to the Contract Value above $20,000 will increase
the death benefit by $2.50.

29
<PAGE> 35

Similarly, so long as the Contract Value exceeds $20,000, each dollar
taken out of the Contract Value will reduce the death benefit by $2.50.

CHANGING DEATH BENEFIT OPTIONS

- After the first Policy year, you may change death benefit options
or change the principal sum (but not both, unless done
simultaneously) once each Policy year.

- You must make your request in writing.

- We may require evidence of insurability.

- The effective date of the change will be the monthly due date on or
following the date when we approve your request for a change.

- We will send you a Policy endorsement with the change to attach to
your Policy.

- Changing the death benefit option may have tax consequences. You
should consult a tax adviser before changing the death benefit
option.

FROM OPTION A (VARIABLE DEATH BENEFIT) TO OPTION B (LEVEL DEATH BENEFIT)

- We do not require evidence of insurability.

- The principal sum will change. The new Option B principal sum will
equal the Option A principal sum plus the Contract Value on the
effective date of the change.

- The minimum premium will increase.

- The change in option affects the determination of the death benefit
since Contract Value is no longer added to the principal sum. The
death benefit will equal the new principal sum (or, if higher, the
Contract Value times the applicable death benefit percentage).

FROM OPTION B (LEVEL DEATH BENEFIT) TO OPTION A (VARIABLE DEATH BENEFIT)

- You must provide satisfactory evidence of insurability.

- The principal sum will change. The new Option A principal sum will
equal the Option B principal sum less the Contract Value
immediately before the change, but the new principal sum will not
be less than the minimum principal sum shown on your Policy's
specifications page. WE WILL NOT IMPOSE ANY SURRENDER CHARGE SOLELY
AS A RESULT OF THIS CHANGE IN PRINCIPAL SUM.

- The minimum premium will decrease.

- The change in death benefit option affects the determination of the
death benefit since Contract Value will be added to the new
principal sum, and the death benefit will then vary with the
Contract Value.

A change in death benefit option may affect the future monthly cost of
insurance charge, which varies with the Risk Insurance Amount. Generally, the
Risk Insurance Amount is the amount by which the death benefit exceeds the
Contract Value. (See " Charges and Deductions -- Monthly Deduction -- Cost of
Insurance.") If the death benefit does not equal Contract Value times the death
benefit percentage

30
<PAGE> 36

under either Options A or B, changing from Option A (variable death benefit) to
Option B (level death benefit) will generally decrease the future Risk Insurance
Amount. This would decrease the future cost of insurance charges. Changing from
Option B (level death benefit) to Option A (variable death benefit) generally
results in a Risk Insurance Amount that remains level. Such a change, however,
results in an increase in cost of insurance charges over time, since the cost of
insurance rates increase with the insured's age.

After any change in death benefit option, the total surrender charge for
the Policy will continue to be based on the principal sum on the issue date on
which surrender charges have not already been imposed.

EFFECTS OF WITHDRAWALS ON THE DEATH BENEFIT

If you have selected the variable death benefit (Option A), a withdrawal
will not affect the principal sum. But if you have selected the level death
benefit (Option B), a withdrawal (partial surrender) will reduce the principal
sum by the amount of the withdrawal (not including surrender charges or the
processing fee). The reduction in principal sum will be subject to the terms of
the Changing the Principal Sum section below.

CHANGING THE PRINCIPAL SUM

When you apply for the Policy, you tell us how much life insurance
coverage you want on the life of the insured. We call this the principal sum.
After the first Policy year, you may change the principal sum subject to the
conditions described below. YOU MAY EITHER CHANGE THE PRINCIPAL SUM OR CHANGE
THE DEATH BENEFIT OPTION (BUT NOT BOTH, UNLESS DONE SIMULTANEOUSLY) NO MORE THAN
ONCE PER POLICY YEAR. We will send you a Policy endorsement with the change to
attach to your Policy.

Increasing the principal sum could increase the death benefit.
Decreasing the principal sum could decrease the death benefit. The amount of
change in the death benefit will depend, among other things, upon the selected
death benefit option and the degree to which the death benefit exceeds the
principal sum prior to the change. Changing the principal sum could affect the
subsequent level of death benefit and Policy values. An increase in the
principal sum may increase the Risk Insurance Amount, thereby increasing your
cost of insurance charge. Conversely, a decrease in the principal sum may
decrease the Risk Insurance Amount, thereby decreasing your cost of insurance
charge.

We will not permit any change that would result in your Policy being
disqualified as a life insurance contract under Section 7702 of the Internal
Revenue Code. However, changing the principal sum may have other tax
consequences. You should consult a tax adviser before changing the principal
sum.

INCREASES

- You may increase the principal sum by submitting a written request
and providing evidence of insurability satisfactory to us. The
increase will be effective on the monthly due date following our
approval of your request.

- You can only increase the principal sum before the insured's
attained age 80.

- The minimum increase is $10,000.

- We deduct a processing fee from the Contract Value equal to $1.50
per $1,000 of increase. The fee cannot exceed $300. The processing
fee will be deducted from the subaccounts and the fixed account
on a pro-rata basis, unless you give us different instructions.

- If the amount of the Contract Value is insufficient to cover the
processing fee, you must add sufficient additional premiums before
the increase in principal sum will become effective.

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<PAGE> 37

- Increasing the principal sum will increase your Policy's minimum
premium.

DECREASES

- You may decrease the principal sum, but not below the minimum
principal sum amount shown on your Policy specifications page.

- You must submit a written request to decrease the principal sum.
Evidence of insurability is not required.

- Any decrease will be effective on the monthly due date following
our approval of your request.

- Any decrease will first be used to:

1. reduce the most recent increase; then
2. the next most recent increases in succession; and then
3. the original principal sum on the issue date (subject to a
surrender charge).

- If you decrease the principal sum that was in effect on the issue
date, we will assess the Administrative Component of the surrender
charge. To determine the surrender charge for a decrease in
principal sum, multiply the appropriate surrender charge factor
from the tables in Appendix B by the number of thousands of
principal sum at the time of issue that are now being decreased.
Only a reduction in the original principal sum amount (as of the
issue date) incurs a surrender charge. Surrender charges will be
deducted from the subaccounts and the fixed account on a pro-rata
basis, unless you give us different instructions.

- A decrease in principal sum may require that a portion of a
Policy's Surrender Value be distributed as a partial surrender in
order to maintain federal tax compliance.

- Decreasing the principal sum will reduce your Policy's minimum
premium.

PAYMENT OPTIONS

There are several ways of receiving proceeds under the death benefit and
surrender provisions of the Policy, other than in a lump sum. Below is
information concerning settlement options described in your Policy. None of
these options vary with the investment performance of a variable account.

SETTLEMENT OPTIONS. If you surrender the Policy, or if the Policy matures, you
may elect to receive the net surrender value in either a lump sum or as a series
of regular income payments under one of five fixed settlement options described
below. In either event, life insurance coverage ends. Also, when the insured
dies, the beneficiary may apply the lump sum death benefit proceeds to one of
the same settlement options. The proceeds under any settlement option must be at
least $2,500, and each payment must be at least $25, or we will instead pay the
proceeds in one lump sum. We may make other settlement options available in the
future.

Once we begin making payments under a settlement option, you or the
beneficiary will no longer have any value in the subaccounts or the fixed
account. Instead, the only entitlement will be the amount of the regular payment
for the period selected under the terms of the settlement option chosen.
Depending upon the circumstances, the effective date of a settlement option is
the surrender date, the maturity date or the insured's date of death.

32
<PAGE> 38

Under any settlement option, the dollar amount of each payment will
depend on three things:

- the amount of the surrender or death benefit proceeds on the
surrender date, maturity date or insured's date of death;

- the interest rate we credit on those amounts (we guarantee a
minimum interest rate); and

- the specific option(s) you choose. The amount you would receive
may depend on your adjusted age and sex.

OPTION 1 -- - Your proceeds will earn interest at a rate of
INTEREST 2.5% per year compounded annually.
ACCUMULATION: - We may not keep the funds under this option for
longer than five years, unless the beneficiary is
a minor, in which case we may hold the funds
until the beneficiary attains the age of
majority.

OPTION 2 -- - You will receive income of at least $25 annually,
INTEREST INCOME: $12.42 semi-annually, $6.19 quarterly, or $2.05
monthly for each $1,000 of proceeds.
- Unless you direct otherwise, the payee may
withdraw the proceeds at any time.
- After the first year, we may defer such
withdrawal for up to six months.

OPTION 3 -- - We will pay installments for a specified period.
INCOME - PERIOD - The amount of each installment will not be less
CERTAIN: than the amounts shown in the table in your
Policy.
- If the payee dies before the end of the specified
period, we will pay the installments to the
contingent payee for the remainder of the
specified period.

OPTION 4 -- - We will pay installments of a specified amount
INCOME - AMOUNT until the proceeds together with interest are
CERTAIN: paid in full.
- We will credit interest at a rate of 2.5%
compounded annually.

OPTION 5 -- - We will pay installments for the payee's
INCOME - LIFE: lifetime.
- We will make payments for at least a specified
guaranteed period.
- If the payee dies before the end of the
guaranteed period, we will continue to pay
proceeds to a contingent payee for the remainder
of the guaranteed period.
- The amount of each installment will depend on the
adjusted age and sex of the payee at the time
the first payment is due.
- We determine the adjusted age by calculating the
age at the payee's nearest birthday on the date
of the first payment and subtracting a number
that depends on the year in which the first
payment begins:

<TABLE>
<CAPTION>
First Payment Date Adjusted Age is Age Minus
------------------ -------------------------
<S> <C> <C>
Before 2001 0
2001 to 2010 1
2011 to 2020 2
2021 to 2030 3
2031 to 2040 4
</TABLE>

33
<PAGE> 39

<TABLE>
<S> <C> <C>
After 2040 5
</TABLE>

SURRENDERS AND WITHDRAWALS
===============================================================================

SURRENDERS

- You may make a written request to surrender your Policy for its
Surrender Value as calculated at the end of the Valuation Day when
we receive your request. You should send your written request to
the Service Center. A surrender may have tax consequences.

- The insured must be alive and the Policy must be in force when you
make your written request. A surrender is effective as of the date
when we receive your written request.

- You will incur a surrender charge if you surrender the Policy
during the first 14 Policy years. See "Charges and Deductions".

- Once you surrender your Policy, all coverage and other benefits
under it cease and cannot be reinstated.

- We will pay you the Surrender Value in a lump sum within seven days
unless you request other arrangements.

- Surrendering the Policy may have tax consequences. See "Federal
Tax Consequences."

PARTIAL WITHDRAWALS

After the first Policy Year, you may request a withdrawal of a portion
of your Contract Value subject to certain conditions. Partial withdrawals may
have tax consequences. See "Federal Tax Consequences."

WITHDRAWAL - You must make your partial withdrawal request to us in
CONDITIONS: writing.

- You should send your written request to the Service
Center.

- You may make only one partial withdrawal each calendar
quarter.
- You must request at least $500.
- You cannot withdraw more than 75% of the Surrender Value
without surrendering the Policy.
- You can specify the subaccount(s) and fixed account from
which to make the withdrawal, otherwise we will deduct the
amount from the subaccounts and the fixed account on a
pro-rata basis (that is, according to the percentage of
Contract Value contained in each subaccount and the fixed
account).
- We will process the withdrawal at the unit values next
determined after we receive your request.
- We generally will pay a withdrawal request within seven
days after the Valuation Day when we receive the request.

Whenever you take a withdrawal, we deduct a processing fee (on a pro
rata basis) from the Contract Value equal to the lesser of $25 or 2% of the
amount withdrawn.

In addition, if you make a partial withdrawal during the first 14 years
from the issue date and you have elected the level death benefit (Option B), we
will deduct a surrender charge from your Contract Value. The surrender charge on
a withdrawal is equal to the appropriate surrender charge factor from the

34
<PAGE> 40

table in Appendix B, multiplied by the number of thousands in principal sum on
the issue date, minus any reductions in principal sum for which we have already
imposed a surrender charge. We will cancel units equal to the amount of the
withdrawal, processing fee, and any surrender charge from the subaccounts and
the fixed account according to your instructions, or on a pro-rata basis if you
provide no instructions.

If the level death benefit (Option B) is in effect at the time of a
withdrawal, we will reduce the principal sum by the amount of the withdrawal
(but not by any surrender charges or the processing fee). See "Changing the
Principal Sum -- Decreases". We will not allow any withdrawal to reduce the
principal sum below the minimum principal sum set forth in the Policy.

TRANSFERS
===============================================================================
You may make transfers from the subaccounts or from the fixed account.
We determine the amount you have available for transfers at the end of the
Valuation Period when we receive your transfer request. WE MAY MODIFY OR REVOKE
THE TRANSFER PRIVILEGE AT ANY TIME. The following features apply to transfers
under the Policy:

- You may make an unlimited number of transfers in a Policy year from
the subaccounts.

- You may only make one transfer a Policy year from the fixed account
(unless you choose dollar cost averaging).

- You may request transfers in writing (in a form we accept), or by
telephone. You should send your written requests to the Service
Center.

- For SUBACCOUNT TRANSFERS, you must transfer the lesser of $250, or
the total value in the subaccount.

- For FIXED ACCOUNT TRANSFERS, you may not transfer more than 25% of
the unloaned value in the fixed account, unless the balance after
the transfer is less than $250, in which case the entire amount
will be transferred.

- We deduct a $25 charge from the amount transferred or from the
remaining Contract Value (your choice) for the 13th and each
additional transfer in a Policy year. Any unused free transfers do
not carry over to the next Policy year. Transfers we effect on the
reallocation date and transfers resulting from loans are NOT
treated as transfers for the purpose of the transfer charge.

- We consider each written or telephone request to be a single
transfer, regardless of the number of subaccounts (or fixed
account) involved.

- We process transfers based on unit values determined at the end of
the Valuation Day when we receive your transfer request.

35
<PAGE> 41

AUTOMATIC ASSET REBALANCING PROGRAM

The automatic asset rebalancing program permits you to maintain the
percentage of the Contract Value allocated to each subaccount at a pre-set
level. Under the program, automatic transfers are made among the subaccounts on
a quarterly basis so that your Contract Value is reallocated to match the
percentages you specify. Asset rebalancing is consistent with maintaining your
allocation of investments among market segments, although it is accomplished by
reducing your Contract Value allocated to the better performing segments.

Transfers under this program are not subject to the $250 minimum
transfer limitation. We will not charge a transfer fee for asset rebalancing.
You may not include the fixed account in the asset rebalancing program. We may
change, terminate, limit or suspend automatic asset rebalancing at any time.

You may elect automatic asset rebalancing on your application or you may
enroll in automatic asset rebalancing at any time by completing a form and
return it to the Service Center. You may cancel your participation in the
program at any time.

ASSET ALLOCATION SERVICES

If you authorize a third party to transact transfers on your behalf, we
will reallocate your Contract Value pursuant to the authorized asset allocation
program. However, we do not offer or participate in any asset allocation program
and we take no responsibility for any third party asset allocation program. We
may suspend or cancel acceptance of a third party's instructions at any time and
may restrict the investment options available for transfer under third party
authorizations.

EXCESSIVE TRADING LIMITS

We reserve the right to limit transfers in any Policy year, or to refuse
any transfer request for an owner if:

- - we believe, in our sole discretion, that excessive trading by the owner,
or a specific transfer request, or a group of transfer requests, may
have a detrimental effect on the accumulation unit values of any
subaccount or the share prices of any portfolio or would be detrimental
to other owners; or

- - we are informed by one or more portfolios that they intend to restrict
the purchase of portfolio shares because of excessive trading or because
they believe that a specific transfer or group of transfers would have a
detrimental effect on the price of portfolio shares.

We may apply the restrictions in any manner reasonably designed to prevent
transfer that we consider disadvantageous to other owners.

DOLLAR COST AVERAGING PROGRAM

Under the dollar cost averaging program, you may authorize us to
transfer a fixed dollar amount at monthly intervals from the fixed account to
one or more subaccounts. You may designate up to eight subaccounts to receive
the transfers. The fixed dollar amount will purchase more accumulation units of
a subaccount when their value is lower and fewer units when their value is
higher. Over time, the cost per unit averages out to be less than if all
purchases of units had been made at the highest value and greater

36
<PAGE> 42

than if all purchases had been made at the lowest value. The dollar cost
averaging method of investment reduces the risk of making purchases only when
the price of accumulation units is high. It does not assure a profit or protect
against a loss in declining markets.

You may cancel your participation in the program at any time.

You may enroll in the dollar cost averaging program at any time by
completing our dollar cost averaging form and sending it to the Service Center.
We make transfers on the same day of every month as your issue date. We must
receive the form at least 5 valuation days before the transfer date, for your
transfers to begin on that date. When you enroll in the dollar cost averaging
program, your total Contract Value in an account must be at least equal to the
amount you designate to be transferred on each transfer date. Transfers from the
fixed account must be at least $100.

TELEPHONE TRANSFERS

Your Policy, as applied for and issued, will automatically receive
telephone transfer privileges unless you provide other instructions. The
telephone transfer privileges allow you to give authority to the registered
representative or agent of record for your Policy to make telephone transfers
and to change the allocation of future payments among the subaccounts and the
fixed account on your behalf according to your instructions. To make a telephone
transfer, you may call the Service Center toll-free at 1-877-376-8008.

Please note the following regarding telephone transfers:

- We are not liable for any loss, damage, cost or expense
from complying with telephone instructions we reasonably
believe to be authentic. You bear the risk of any such
loss.

- We will employ reasonable procedures to confirm that
telephone instructions are genuine.

- Such procedures may include requiring forms of personal
identification prior to acting upon telephone instructions,
providing written confirmation of transactions to you,
and/or tape recording telephone instructions received from
you.

- If we do not employ reasonable confirmation procedures, we
may be liable for losses due to unauthorized or fraudulent
instructions.

The corresponding portfolio of any subaccount determines its net asset
value per each share once daily, as of the close of the regular business session
of the New York Stock Exchange ("NYSE") (usually 4:00 p.m. Eastern time, 1:00
p.m. Pacific time), which coincides with the end of each Valuation Period.
Therefore, we will process any transfer request we receive after the close of
the regular business session of the NYSE, on any day the NYSE is open, using the
net asset value for each share of the applicable portfolio determined as of the
close of the next regular business session of the NYSE.

If a Policy owner authorizes a third party to transact transfers on the
Policy owner's behalf, we will reallocation the Contract Value, pursuant to the
authorized asset allocation program. We do not offer or participate in any asset
allocation program and we take no responsibility for any third party asset
allocation program. We may suspend or cancel acceptance of a third party's
instructions at any time and may restrict the investment options available for
transfer under third party authorizations.

37
<PAGE> 43

LOANS

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

While the Policy is in force, you may borrow money from us using the
Policy as the only security for the loan. A loan that is taken from, or secured
by, a Policy may have tax consequences. See "Federal Tax Consequences."

LOANS - You may take a loan against the Policy for amounts up to
CONDITIONS: the Surrender Value minus loan interest you would have to
pay to the next Policy anniversary date.

- To secure the loan, we transfer an amount equal to the loan
from the variable account and fixed account to the loan
account, which is a part of the general account. If your
loan application does not specify any allocation
instructions, we will transfer the loan from the
subaccounts and the fixed account on a pro-rata basis
(that is, according to the percentage of Contract Value
contained in each subaccount and the fixed account).

- Amounts in the loan account earn interest at the guaranteed
minimum rate of 3% per year, compounded annually. We may
credit the loan account with an interest rate different
than the fixed account.

- We normally pay the amount of the loan within seven days
after we receive a proper loan request at the Service
Center. We may postpone payment of loans under certain
conditions. See "When We Make Payments".

- We charge you interest on your loan. During the first
fourteen policy years, the current loan interest rate is
4.5%, with a maximum loan interest rate of 8% per year,
compounded annually, on your loan. After the fourteenth
Policy year, the maximum loan interest rate is 3%,
compounded annually. We may change the interest rate, but
we will notify you of any increase in loan interest at
least 30 days before the new rate becomes effective.
Interest is due and payable at the end of each Policy year,
or, if earlier, on the date of any loan increase or
repayment. Unpaid interest becomes part of the outstanding
loan and accrues interest accordingly.

- You may repay all or part of your outstanding loans at any
time by sending the repayment to the Service Center. LOAN
REPAYMENTS MUST BE AT LEAST $25, AND MUST BE CLEARLY
MARKED AS "LOAN REPAYMENTS" OR THEY WILL BE CREDITED AS
PREMIUMS.

- Upon each loan repayment, we will transfer an amount equal
to the loan repayment from the loan account to the fixed
and/or variable account according to your current premium
allocation schedule.

- We deduct any unpaid loans from the Surrender Value and
death benefit proceeds payable on the insured's death.

- If any unpaid loan, including interest you owe, equals or
exceeds the Contract Value, causing the Surrender Value to
become zero, then your Policy will enter a 61-day grace
period. See "Policy Lapse".

38
<PAGE> 44

EFFECTS OF POLICY LOANS

A Policy loan affects the Policy, because we reduce the death benefit
proceeds and Surrender Value under the Policy by the amount of any outstanding
loan plus interest you owe on the loans. Repaying the loan causes the death
benefit proceeds and Surrender Value to increase by the amount of the repayment.
As long as a loan is outstanding, we hold an amount equal to the loan in the
loan account. This amount is not affected by the variable account's investment
performance and may not be credited with the same interest rates currently
accruing on the fixed account. Amounts transferred from the variable account to
the loan account will affect the value in the variable account because we credit
such amounts with an interest rate we declare rather than a rate of return
reflecting the investment results of the variable account.

There are risks involved in taking a Policy loan, a few of which include
an increased potential for the Policy to lapse if projected earnings, taking
into account outstanding loans, are not achieved. A Policy loan may also have
possible adverse tax consequences that could occur if your Policy lapses with
loans outstanding. See "Federal Income Tax Considerations." In addition, the tax
consequences of a Policy loan after the fourteenth Policy year are uncertain.
You should consult a tax adviser before taking out a Policy loan.

We will notify you (and any assignee of record) if the sum of your loans
plus any interest you owe on the loans is more than the Surrender Value. If you
do not submit a sufficient payment within 61 days from the date of the notice,
your Policy may lapse.

POLICY LAPSE

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

LAPSE

Certain circumstances will cause your Policy to enter a grace period
during which you must make a sufficient payment to keep your Policy in force:

- If your Policy's Surrender Value becomes zero, and cumulative
premiums you have paid, minus withdrawals, are less than the
cumulative minimum premiums required under the Policy, then the
Policy will enter a 61-day grace period.

- If cumulative premiums you paid, less withdrawals, are greater than
the cumulative minimum premiums, then the Policy will enter a
61-day grace period only if the Contract Value (minus outstanding
loans and interest you owe) is too low to pay the entire monthly
deduction due.

1. the Surrender Value exceeds zero, after deducting all due and
unpaid monthly deductions; OR

2. cumulative premiums less withdrawals exceed cumulative
minimum premiums; AND Contract Value minus any outstanding
loan and interest you owe exceeds zero, after deducting all
due and unpaid monthly deductions.

If your Policy meets the circumstances where it would enter into a grace
period, we will mail a notice to your last known address and any assignee of
record. The 61-day grace period begins on the date we

39
<PAGE> 45

mail the notice. The notice will specify the minimum payment required and the
final date by which we must receive the payment to keep the Policy from lapsing.
If we do not receive the specified minimum payment by the end of the grace
period, all coverage under the Policy will terminate.

REINSTATEMENT

We will reinstate a lapsed Policy within three years after the Policy
enters a grace period that ends with a lapse (and prior to the maturity date).
To reinstate the Policy you must:

- provide evidence of insurability satisfactory to us;
- make a payment of the unpaid monthly deductions due during the last
expired grace period;
- make a payment of a minimum premium sufficient to keep the Policy
in force for three months; and
- repay the entire Policy loan which existed at the date of
termination of coverage.

We will not reinstate any indebtedness. Your Contract Value on the reinstatement
date will equal the net premiums you pay at reinstatement, minus all unpaid
monthly deductions due during the last expired grace period, minus an additional
monthly deduction due at the time of reinstatement. The surrender charges will
still apply and will be calculated as of the original issue date of the Policy.
The reinstatement date for your Policy will be the monthly due date on or
following the date we approve your application for reinstatement. We will apply
the suicide and incontestability provisions from the reinstatement date. We may
decline a request for reinstatement. We will not reinstate a Policy that has
been surrendered for the surrender value.

FEDERAL TAX CONSIDERATIONS

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

The following summary provides a general description of the Federal
income tax considerations associated with a Policy and does not purport to be
complete or to cover all situations. THIS DISCUSSION IS NOT INTENDED AS TAX
ADVICE. Please consult counsel or other qualified tax advisors for more complete
information. We base this discussion on our understanding of the present Federal
income tax laws as they are currently interpreted by the Internal Revenue
Service (the "IRS"). Federal income tax laws and the current interpretations by
the IRS may change.

TAX STATUS OF THE POLICY

A Policy must satisfy certain requirements set forth in the Internal
Revenue Code (Code) 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. There is limited guidance as to how
these requirements are to be applied. Nevertheless, we believe that a Policy
should satisfy the applicable Code requirements. Because of the absence of
pertinent interpretations of the Code requirements, there is, however, some
uncertainty about the application of such requirements to the Policy,
particularly if the Policy is issued on a special premium class basis. 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 restrict Policy transactions
in order to do so.

In certain circumstances, owners of variable life insurance contracts
have been considered for Federal income tax purposes to be the owners of the
assets of the variable account supporting their contracts due to their ability
to exercise investment control over those assets. Where this is the case, the
contract owners have been currently taxed on income and gains attributable to
the separate account assets. There is little guidance in this area, and some
features of the Policies, such as the your flexibility to allocate premiums

40
<PAGE> 46

and Contract Values, have not been explicitly addressed in published rulings.
While we believe that the Policy does not give you investment control over
variable account assets, we reserve the right to modify the Policy as necessary
to prevent you from being treated as the owner of the variable account assets
supporting the Policy.

In addition, the Code requires that the investments of the variable
account be "adequately diversified" in order to treat the Policy as a life
insurance contract for Federal income tax purposes. We intend that the variable
account, through the portfolios, 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. We believe that the death benefit under a Policy should be
excludible from the beneficiary's gross income. Federal, state and local
transfer, and other tax consequences of ownership or receipt of Policy proceeds
depend on your circumstances and the beneficiary's circumstances. You should
consult a tax advisor on these consequences.

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

MODIFIED ENDOWMENT CONTRACTS. Under the Code, certain life insurance
policies are classified as "Modified Endowment Contracts" ("MECs") and receive
less favorable tax treatment than other life insurance contracts. Due to the
Policy's flexibility, each Policy's circumstances will determine whether the
Policy is classified as a MEC. The rules are too complex to be summarized here,
but generally depend on the amount of premiums paid during the first seven
Policy years. Certain changes in a Policy after it is issued (including a
reduction in benefits at any time after issuance) could also cause it to be
classified as a MEC. If you do not want your Policy to be classified as a MEC,
you should consult a tax advisor to determine the circumstances, if any, under
which your Policy would not be classified as a MEC.

Upon issue of your Policy, we will notify you if your Policy is
classified as a MEC based on the initial premium we receive. If any future
payment we receive would cause your Policy to become a MEC, you will be
notified. We will not invest that premium in the Policy until you notify us that
you want to continue your Policy as a MEC.

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

- All distributions other than death benefits from a MEC, 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 Policy owner's investment in the Policy only after
all gain has been distributed.

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

- A 10% additional income tax is imposed on the amount included in
income except where the distribution or loan is made when you have
attained age 59 1/2 or are disabled, or where the distribution is
part of a series of substantially equal periodic payments for your
life (or life expectancy) or the joint lives (or joint life
expectancies) of you, the beneficiary.

- If a Policy becomes a MEC, distributions that occur during the
Policy year will be taxed as distributions from a MEC. In addition,
distributions from a Policy within two years before it becomes a
MEC will be taxed in this manner. This means that a distribution
from a Policy that is not a MEC at the time when the distribution
is made could later become taxable as a distribution from a MEC.

41
<PAGE> 47

DISTRIBUTIONS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS.
Distributions from a Policy that is not a MEC are generally treated first as a
recovery of your investment in the Policy, and as taxable income after the
recovery of all investment in the Policy. 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 MEC are generally not
treated as distributions. However, the tax consequences associated with Policy
loans that are outstanding after the first Policy year is less clear; you should
consult a tax advisor about such loans.

Finally, neither distributions from nor loans from or secured by a
Policy that is not a MEC are subject to the 10% additional 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 LOANS. If a loan from a Policy that is not a MEC is outstanding
when the Policy is cancelled or lapses, the amount of the outstanding
indebtedness will be added to the amount distributed and will be taxed
accordingly. In general, interest you pay on a loan from a Policy will not be
deductible. Before taking out a Policy loan, you should consult a tax advisor as
to the tax consequences.

MULTIPLE POLICIES. All MECs that we issue (or that our affiliates issue)
to the same owner during any calendar year are treated as one MEC for purposes
of determining the amount includible in the owner's income when a taxable
distribution occurs.

OTHER POLICY OWNER TAX MATTERS. The tax consequences of continuing the
Policy beyond the insured's 100th year are unclear. You should consult a tax
advisor if you intend to keep the Policy in-force beyond the insured's 100th
year.

BUSINESS USES OF THE POLICY. The Policy may be used in various
arrangements, including nonqualified deferred compensation or salary continuance
plans, split dollar insurance plans, executive bonus plans, retiree medical
benefit plans and others. The tax consequences of such plans and business uses
of the Policy may vary depending on the particular facts and circumstances of
each individual arrangement and business uses of the Policy. Therefore, if you
are contemplating using the Policy in any arrangement the value of which depends
in part on its tax consequences, you should be sure to consult a tax advisor as
to tax attributes of the arrangement.

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

POSSIBLE CHARGES FOR OUR TAXES. At the present time, we make no charge
for any Federal, state or local taxes (other than the charge for state premium
taxes) that may be attributable to the subaccounts or to the Policy. We reserve
the right to impose charges for any future taxes or economic burden we may
incur.

42
<PAGE> 48

OTHER POLICY INFORMATION

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

OUR RIGHT TO CONTEST THE POLICY

In issuing this Policy, we rely on all statements made by or for the
insured in the application or in a supplemental application. Therefore, if you
make any material misrepresentation of a fact in the application (or any
supplemental application), then we may contest the Policy's validity or may
resist a claim under the Policy.

In the absence of fraud, we cannot bring any legal action to contest the
validity of the Policy after the Policy has been in force during the insured's
lifetime for two years from the issue date, or if reinstated, for two years from
the date of reinstatement. We will not contest any increase in principal sum
after the increase has been in force for two years during the insured's
lifetime. This provision also applies to any riders.

SUICIDE EXCLUSION

If the insured commits suicide, while sane or insane, within two years
of the issue date, the Policy will terminate and our liability is limited to an
amount equal to the premiums paid, LESS any loans, and LESS any withdrawals
previously paid. A new two-year period will apply from the effective date of any
reinstatement and to each increase in principal sum starting on the effective
date of each increase. During this two-year period, the death benefit proceeds
paid that are associated with an increase in principal sum will be limited to
the monthly cost of insurance charges for the increase.

MISSTATEMENT OF AGE OR SEX

If the insured's age or sex was stated incorrectly in the application or
any supplemental application, we will adjust the death benefit to the amount
that would have been payable at the correct age and sex based on the most recent
deduction for cost insurance. If the insured's age has been overstated or
understated, we will calculate future monthly deductions using the cost of
insurance based on the insured's correct age and sex.

MODIFYING THE POLICY

Only one of our officers may modify this Policy or waive any of our
rights or requirements under this Policy. Any modification or waiver must be in
writing. No agent may bind us by making any promise not contained in this
Policy.

Upon notice to you, we may modify the Policy to:

- conform the Policy, our operations, or the variable
account's operations to the requirements of any law (or
regulation issued by a government agency) to which the
Policy, our company or the variable account is subject;

- assure continued qualification of the Policy as a life
insurance contract under the Federal tax laws; or

- reflect a change in the variable account's operation.

43
<PAGE> 49
If we modify the Policy, we will make appropriate endorsements to the
Policy. If any provision of the Policy conflicts with the laws of a jurisdiction
that govern the Policy, we will amend the provision to conform with such laws.

WHEN WE WILL MAKE PAYMENTS

We usually pay the amounts of any surrender, withdrawal, death benefit
proceeds, loans, or settlement options within seven business days after we
receive all applicable written notices and/or due proofs of death. However, we
can postpone such payments if:

- the NYSE is closed, other than customary weekend and
holiday closing, or trading on the NYSE is restricted as
determined by the Securities and Exchange Commission
(SEC); OR

- the SEC permits, by an order, the postponement for the
protection of owners; OR

- the SEC determines that an emergency exists that would
make the disposal of securities held in the variable
account or the determination of their value not
reasonably practicable.

If you have submitted a recent check or draft, we have the right to
defer payment of surrenders, withdrawals, death benefit proceeds, or payments
under a payment option until such check or draft has been honored.

We have the right to defer payment of any surrender, withdrawal, death
benefit proceeds, loans or settlement options from the fixed account for up to
six months from the date we receive your written request.

REPORTS TO OWNERS

At least once each year, or more often as required by law, we will mail
to owners at their last known address a report showing at least the following
information as of the end of the report period:

<TABLE>
<S> <C>
- the current principal sum - any loans since the last report
- the current death benefit - premiums paid since the last report
- the Contract Value - all deductions since the last report
- the Surrender Value - the amount of any outstanding loans
</TABLE>

You may request additional copies of reports for a $5 fee. We will
maintain all records relating to the variable account and the fixed account.

POLICY TERMINATION

Your Policy will terminate on the earliest of:

<TABLE>
<S> <C>
- the maturity date (insured's - the end of the grace period without
attained age 110) a sufficient payment

- the date the insured dies - the date you surrender the Policy
</TABLE>

44
<PAGE> 50

SUPPLEMENTAL BENEFITS (RIDERS)

The following supplemental benefits (riders) are available and may be
added to a Policy. The cost of these benefits is added to the monthly deduction.
The riders available with the Policies provide fixed benefits that do not vary
with the investment experience of the variable account.

- waiver of monthly deductions due to insured's total disability

- term insurance on the insured's dependent children

- payment of an accidental death benefit if the insured's
death was caused by accidental bodily injury

- term insurance on additional insureds

- automatic increase in principal sum

- accelerated payment of a portion of the death benefit in
the event the insured develops a terminal illness

- payment of a monthly disability benefit to the fixed
account if the insured is totally disabled. This rider is
designed to ensure the Policy remains in force even during
periods when the policyowner is disabled and cannot pay normal
premium. Surrender charges would be assessed and normal
withdrawal limits (See "Surrender Charge") would apply if you
withdrew the monthly disability benefit.

The benefits and restrictions are described in each rider. We will
provide samples of these provisions upon request.

PERFORMANCE DATA
================================================================================

HYPOTHETICAL ILLUSTRATIONS BASED ON ADJUSTED HISTORIC PORTFOLIO PERFORMANCE

In order to demonstrate how the actual investment experience of the
portfolios could have affected the death benefit, Contract Value and Surrender
Value of the Policy, we may provide hypothetical illustrations using the actual
investment experience of each portfolio since its inception. THESE HYPOTHETICAL
ILLUSTRATIONS ARE DESIGNED TO SHOW THE PERFORMANCE THAT COULD HAVE RESULTED IF
THE POLICY HAD BEEN IN EXISTENCE DURING THE PERIOD ILLUSTRATED.

The values we may illustrate for death benefit, Contract Value and
Surrender Value would take into account all charges and deductions from the
Policy, the variable account and the portfolios. We would not deduct premium
taxes or charges for any riders.

45
<PAGE> 51

ADDITIONAL INFORMATION
================================================================================

SALE OF THE POLICIES

The Policy will be sold by individuals who are licensed as our life
insurance agents and who are also registered representatives of broker-dealers
having written sales agreements for the Policy with Investors Brokerage
Services, Inc. ("IBS"), the principal underwriter of the Policy. IBS is located
at 1 Kemper Drive, Long Grove, IL 60049-0001, is registered with the SEC 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 Farmers' agents who are registered representatives is 50% of
premiums paid up to a target premium set by Farmers and 2.6% of premium in
excess of the target premium in the first year. The commission is 4.0% of
premiums up to the target premium and 2.6% of excess premium in renewal years
two through ten. After year 10 the commission is 0.15% of the Policy's Contract
Value each year. In addition, certain production, persistency and managerial
bonuses may be paid.

LEGAL MATTERS

Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice
on certain legal matters relating to the Policy under the Federal securities
laws. All matters of Washington law pertaining to the Policy have been passed
upon by M. Douglas Close, Vice President and General Counsel, Farmers New World
Life Insurance Company.

LEGAL PROCEEDINGS

Like other life insurance companies, we are involved in lawsuits. These
actions are in various stages of discovery and development, and some seek
punitive as well as compensatory damages. While it is not possible to predict
the outcome of such matters with absolute certainty, we believe that the
ultimate disposition of these proceedings should not have a material adverse
effect on the financial position for Farmers New World Life. In addition, we
are, from time to time, involved as a party to various governmental and
administrative proceedings. There are no pending or threatened lawsuits that
will materially impact the variable account.

YEAR 2000 MATTERS

YEAR 2000 ISSUE

In 1995, Farmers Group, Inc. ("FGI"), our parent company, initiated the
"Year 2000 Project" in order to prepare for the information processing problems
presented by the approach of the new millennium. Significant efforts have been
expended to gain a complete understanding of Year 2000 implications and to
develop a strategy to make FGI's and our systems Year 2000 compliant. As of
September 30, 1999, FGI has completed its remediation plans related to the Year
2000 Project. Although these plans have been completed, FGI continues to monitor
its preparedness for unforeseen Year 2000 issues that may impact FGI. The costs
associated with the Year 2000 Project were expensed as incurred, and, through
September 30, 1999, the cumulative costs totaled $23.0 million, of which $2.0
million was allocated to Farmers. Total costs of the project are expected to be
approximately $23.3 million, of which approximately $2.2 million is expected to
be allocated to Farmers.

To remedy the Year 2000 issue, FGI devised a three-phase plan:

46
<PAGE> 52

Phase I -- "Awareness and Initial Impact Assessment". This phase was
completed in May 1996. During this phase, Year 2000 "Impact Assessment" was
performed using a mainframe analysis tool to determine which areas were at risk.

Phase II -- "Year 2000 Workpackage and Development Blueprint Project".
This phase was completed in November 1996 and consisted of creating a
comprehensive master plan which included establishing and prioritizing clusters
(groups of similar computer programs) and agreeing upon a definition of what
would be acceptable Year 2000 compliance. In addition, a timeframe was
established for the conversion, compliance testing and the implementation of
Year 2000 compliant programs into production.

Phase III -- "Year 2000 Conversion and Implementation". This phase was
completed in July 1999. During this phase the process of converting,
implementing and testing these Year 2000 conversion programs were performed.

In addition, FGI evaluated its relationships with third parties with
which FGI has a direct and material relationship to determine whether they are
Year 2000 compliant. FGI sent out questionnaires and warranty requests to all
third party vendors and performed compliance testing with all vendors to
validate the vendors' claims regarding Year 2000 compliance. All compliance
testing related to third party relationships has been completed. However, it is
not possible to state with certainty that the operations of third parties will
not be materially impacted in turn by other parties with whom they themselves
have a relationship.

The Year 2000 issue may not only affect FGI's information technology
("IT") systems but also its non-IT systems. FGI has assessed the readiness of
its non-IT systems and, in the event of an interruption of these systems,
contingency plans have been established such that no major disruptions will
occur.

FGI's Year 2000 contingency plans were completed in June 1999. These
plans include contingency measures which will be followed in the event that
certain key vendors experience difficulties related to the Year 2000 issue. As
new information becomes available, the contingency plans will be reviewed to
determine whether they are adequate or if they need to be further enhanced. The
operations of FGI are such that in the event all electronic communications are
down, FGI could continue to operate until an alternative communication source is
acquired.

EXPERTS

Deloitte & Touche LLP, 1700 Fifth Avenue, Suite 4500, Seattle,
Washington 98104-5044, independent auditors, have audited the balance sheets of
Farmers New World Life Insurance Company as of December 31, 1998 and 1997 and
the related statements of income, comprehensive income, stockholder's equity and
cash flows for each of the three years in the period ended December 31, 1998,
appearing in this prospectus. These are set forth in their reports thereon
appearing elsewhere herein, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.

Actuarial matters included in this prospectus have been examined by
Joel D. Kuni as stated in the opinion filed as an exhibit to this registration
statement.

47
<PAGE> 53

FINANCIAL STATEMENTS

Farmers' financial statements appear in Appendix C and should be
considered only as bearing upon our ability to meet our obligations under the
Policies.

There are no financial statements available for the variable account,
because the variable account has not commenced operations as of the date of this
prospectus.

FARMERS' EXECUTIVE OFFICERS AND DIRECTORS

Farmers is governed by a board of directors. The following table sets
forth the name, address and principal occupation during the past five years of
each of Farmers' executive officers and directors.

BOARD OF DIRECTORS

48
<PAGE> 54

The following table gives the name, address and principal occupation during the
past five years of the senior officers of Farmers (other than officers listed
above as directors).

SENIOR OFFICERS

49
<PAGE> 55

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
POSITION WITH
NAME AND ADDRESS FARMERS PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Gerald E. Faulwell Vice President Senior Vice President & Chief Financial
4680 Wilshire Blvd. Officer, FGI since 1988.
Los Angeles, CA
- --------------------------------------------------------------------------------------------------------------------------
Doren Hohl Assistant Secretary Secretary & Senior Corporate Counsel, FGI
4680 Wilshire Blvd. since 3/92.
Los Angeles, CA
- --------------------------------------------------------------------------------------------------------------------------
Paul F. Hott Assistant Vice Assistant Vice President MIS, FNWL since
3003 77th Ave. S.E. President 3/95; Computer Operations Manager from
Mercer Island, WA 4/93 to 3/95.
- --------------------------------------------------------------------------------------------------------------------------
Kathleen D. Katovich Assistant Secretary Senior Corporate Counsel, FGI since 2/96;
4680 Wilshire Blvd. Assistant General Counsel, California
Los Angeles, CA Institute of Technology from 1992 to 1996.
- --------------------------------------------------------------------------------------------------------------------------
Hubert L. Mountz Assistant Treasurer Vice President, Taxes & Assistant Treasurer,
4680 Wilshire Blvd. FGI since 3/90.
Los Angeles, CA
- --------------------------------------------------------------------------------------------------------------------------
Link R. Murphy, M.D. Assistant Medical Assistant Medical Director, FNWL since 1983;
2500 Farmers Way Director private practice from 1983 to 1999.
Columbus, OH
- --------------------------------------------------------------------------------------------------------------------------
C. Paul Patsis President President, FNWL since 5/98; President,
3003 77th Ave. S.E. Marketing One from 1989 to 5/98.
Mercer Island, WA
- --------------------------------------------------------------------------------------------------------------------------
John R. Patton Assistant Vice Assistant Vice President & Secretary, FNWL
3003 77th Ave. S.E. President & Secretary since 11/98; Life Claims Manager, FNWL
Mercer Island, WA from 3/85 to 11/98.
- --------------------------------------------------------------------------------------------------------------------------
Christopher R. Pflug Assistant Secretary Corporate Counsel & Assistant Secretary,
4680 Wilshire Blvd. FGI since 12/95.
Los Angeles, CA
- --------------------------------------------------------------------------------------------------------------------------
James I. Randolph Vice President & Vice President Insurance Operations &
3003 77th Ave. S.E. Assistant Secretary Assistant Secretary, FNWL since 9/91.
Mercer Island, WA
- --------------------------------------------------------------------------------------------------------------------------
Paul Secord Vice President Senior Vice President Investment
4680 Wilshire Blvd. Operations & Chief Investment Officer, FGI
Los Angeles, CA since 9/98; Senior Vice President, Asset
Management, FGI from 12/95 to 9/98; Senior
Vice President, Equity of Penn Mutual from
1993 to 1995.
- --------------------------------------------------------------------------------------------------------------------------
Maryann M. Seltzer Assistant Secretary Senior Corporate Counsel, FGI since 1973.
4680 Wilshire Blvd.
Los Angeles, CA
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

50
<PAGE> 56

Farmers holds the assets of the variable account physically segregated
and apart from the general account. Farmers maintains records of all purchases
and sales of portfolio shares by each of the subaccounts. Additional protection
for the assets of the variable account is provided by a blanket fidelity bond
issued by Federal Insurance Company to Farmers Group, Inc. providing aggregate
coverage of $30,000,000 (subject to a $500,000 deductible) for all officers and
employees of Farmers Group, Inc.

ILLUSTRATIONS
================================================================================

The following illustrations have been prepared to help show how certain
values under the Policy change with different rates of investment performance
over an extended period of time. The illustrations show Contract Value and
Surrender Value as well as death benefits. The tables illustrate how Contract
Values and Surrender Values, which reflect all applicable charges and
deductions, and death benefits of the Policy at the illustrated issue age, would
vary over time if the return on the assets of the portfolios was a uniform,
gross, after-tax, annual rate of 0%, 6% or 12%. The tables assume that an annual
premium of $1,000 was paid on the first day of each Policy year. The tables also
show how the Policy would operate if premiums accumulated at 5% interest.

The Contract Values, Surrender Values and Death Benefits shown in the
tables reflect the fact that the net rate of return for each subaccount is lower
than the gross rate of return on the portfolios as a result of expenses and fees
incurred by the portfolios and the variable account. The illustrations assume
that the assets in the portfolios are subject to an annual expense ratio of
0.8225% of the average daily net assets. This annual expense ratio assumes an
equal allocation of values between all subaccounts and is based on the
arithmetic average of the expense ratios of each of the portfolios for the last
fiscal year and takes into account current expense reimbursement arrangements.
The illustrations reflect the fee waivers and expense reimbursements in effect
during fiscal year 1998 for the Janus Aspen Capital Appreciation Portfolio, the
Kemper-Dreman High Return Equity Portfolio, the PIMCO Low Duration Bond
Portfolio, and the PIMCO Foreign Bond Portfolio. Without these waivers and
reimbursements, total annual expenses for these portfolios would have been
0.97%, 1.20%, 0.67% and 0.92%, respectively, and the illustrations would have
assumed that the assets in the portfolios were subject to an annual expense
ratio of 0.8575%. For information on portfolio expenses, see the portfolios'
prospectuses.

The illustrations also take into account the daily charge for assuming
mortality and expense risks assets against each subaccounts. This charge is
equivalent to an annual charge of 0.90% of the average daily net assets in the
subaccounts. The illustrations also take into account the percent of premium
factor, the monthly cost of insurance charge, the monthly administration charge,
and the surrender charges where applicable.

Taking into consideration the assumed annual average portfolio expenses
of 0.8225% and the 0.90% annual charge for mortality and expense risks, the
gross annual rates of return of 0%, 6% and 12% correspond to approximate net
annual rates of return of -1.71%, 4.24% and 10.19%.

The tables illustrating Policy values are based on the assumptions that
you pay the premiums indicated, you do not increase your principal sum, and you
do not make any withdrawals or Policy loans. The values under the Policy will be
different from those shown even if the portfolio returns average 0%, 6% or 12%,
but fluctuate over and under those averages throughout the years shown.

THE HYPOTHETICAL INVESTMENT RETURNS ARE PROVIDED ONLY TO ILLUSTRATE THE
MECHANICS OF A HYPOTHETICAL POLICY AND DO NOT REPRESENT PAST OR FUTURE
INVESTMENT RATES OF RETURN. Actual rates of return for a particular Policy may
be more or less than the hypothetical investment rates of return. The actual
return on your Contract Value will depend on factors such as the amounts you
allocate to particular portfolios, the amounts deducted for the Policy's monthly
charges, the portfolios' expense ratios, your Policy loan and withdrawal
history, and rates of inflation.

51
<PAGE> 57

Separate illustrations on each of the following pages reflect our
current cost of insurance and administration charges and the higher guaranteed
maximum cost of insurance and administration charges that we have the
contractual right to charge. The illustrations assume no charges for Federal or
state taxes or charges for supplemental benefits.

These illustrations assume the level death benefit option (Option B) is
chosen. The illustrated death benefits increase in certain years, reflecting
current Internal Revenue Code requirements.

Zero values in the illustration indicate the Policy lapses unless
premiums higher than those illustrated are paid.

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

52
<PAGE> 58

Flexible Premium Variable Life Insurance Policy
Male Standard Non-Nicotine, Annual Premium, Issue Age 35
$100,000 Initial Death Benefit
(Level Death Benefit (Option B) Selected)
Hypothetical Values Based on Current Cost of Insurance and Current
Administration Charge

<TABLE>
<CAPTION>
Premiums 0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Paid Plus Investment Return Investment Return Investment Return
Policy Interest Contract Surrender Death Contract Surrender Death Contract Surrender Death
Year at 5% Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,050 725 32 100,000 775 82 100,000 825 132 100,000
2 2,153 1,432 664 100,000 1,577 809 100,000 1,729 961 100,000
3 3,310 2,117 1,274 100,000 2,404 1,561 100,000 2,715 1,872 100,000
4 4,526 2,780 1,862 100,000 3,255 2,337 100,000 3,791 2,873 100,000
5 5,802 3,422 2,429 100,000 4,132 3,139 100,000 4,967 3,974 100,000
6 7,142 4,036 3,075 100,000 5,031 4,070 100,000 6,248 5,287 100,000
7 8,549 4,625 3,711 100,000 5,953 5,039 100,000 7,645 6,731 100,000
8 10,027 5,188 4,335 100,000 6,899 6,046 100,000 9,170 8,317 100,000
9 11,578 5,727 4,951 100,000 7,871 7,095 100,000 10,839 10,063 100,000
10 13,207 6,257 5,573 100,000 8,886 8,202 100,000 12,682 11,998 100,000
11 14,917 6,778 6,201 100,000 9,947 9,370 100,000 14,717 14,140 100,000
12 16,713 7,293 6,838 100,000 11,056 10,601 100,000 16,967 16,512 100,000
13 18,599 7,801 7,482 100,000 12,215 11,896 100,000 19,453 19,134 100,000
14 20,579 8,300 8,133 100,000 13,427 13,260 100,000 22,200 22,033 100,000
15 22,657 8,793 8,793 100,000 14,694 14,694 100,000 25,235 25,235 100,000
16 24,840 9,279 9,279 100,000 16,018 16,018 100,000 28,589 28,589 100,000
17 27,132 9,758 9,758 100,000 17,402 17,402 100,000 32,295 32,295 100,000
18 29,539 10,230 10,230 100,000 18,849 18,849 100,000 36,389 36,389 100,000
19 32,066 10,695 10,695 100,000 20,362 20,362 100,000 40,914 40,914 100,000
20 34,719 11,154 11,154 100,000 21,943 21,943 100,000 45,914 45,914 100,000
25 50,113 11,116 11,116 100,000 28,853 28,853 100,000 78,701 78,701 105,459
30 69,761 8,852 8,852 100,000 35,789 35,789 100,000 131,752 131,752 160,737
35 94,836 2,577 2,577 100,000 41,880 41,880 100,000 215,905 215,905 250,450
40 126,840 0 0 0 45,574 45,574 100,000 350,039 350,039 374,541
45 167,685 0 0 0 43,158 43,158 100,000 566,102 566,102 594,407
</TABLE>

<PAGE> 59

Flexible Premium Variable Life Insurance Policy
Male Standard Non-Nicotine, Annual Premium, Issue Age 35
$100,000 Initial Death Benefit
(Level Death Benefit (Option B) Selected)
Hypothetical Values Based on Maximum Cost of Insurance and Maximum
Administration Charge

<TABLE>
<CAPTION>
Premiums 0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Paid Plus Investment Return Investment Return Investment Return
Policy Interest Contract Surrender Death Contract Surrender Death Contract Surrender Death
Year at 5% Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,050 684 0 100,000 733 40 100,000 782 89 100,000
2 2,153 1,349 581 100,000 1,489 721 100,000 1,636 868 100,000
3 3,310 1,992 1,149 100,000 2,267 1,424 100,000 2,566 1,723 100,000
4 4,526 2,612 1,694 100,000 3,066 2,148 100,000 3,579 2,661 100,000
5 5,802 3,210 2,217 100,000 3,888 2,895 100,000 4,684 3,691 100,000
6 7,142 3,783 2,822 100,000 4,729 3,768 100,000 5,888 4,927 100,000
7 8,549 4,331 3,417 100,000 5,591 4,677 100,000 7,199 6,285 100,000
8 10,027 4,853 4,000 100,000 6,474 5,621 100,000 8,630 7,777 100,000
9 11,578 5,347 4,571 100,000 7,376 6,600 100,000 10,190 9,414 100,000
10 13,207 5,813 5,129 100,000 8,299 7,615 100,000 11,894 11,210 100,000
11 14,917 6,249 5,672 100,000 9,239 8,662 100,000 13,753 13,176 100,000
12 16,713 6,653 6,198 100,000 10,197 9,742 100,000 15,783 15,328 100,000
13 18,599 7,024 6,705 100,000 11,172 10,853 100,000 18,003 17,684 100,000
14 20,579 7,360 7,193 100,000 12,163 11,996 100,000 20,430 20,263 100,000
15 22,657 7,659 7,659 100,000 13,168 13,168 100,000 23,087 23,087 100,000
16 24,840 7,917 7,917 100,000 14,185 14,185 100,000 25,996 25,996 100,000
17 27,132 8,130 8,130 100,000 15,210 15,210 100,000 29,181 29,181 100,000
18 29,539 8,291 8,291 100,000 16,237 16,237 100,000 32,672 32,672 100,000
19 32,066 8,394 8,394 100,000 17,263 17,263 100,000 36,500 36,500 100,000
20 34,719 8,434 8,434 100,000 18,282 18,282 100,000 40,701 40,701 100,000
25 50,113 7,468 7,468 100,000 23,089 23,089 100,000 69,076 69,076 100,000
30 69,761 3,578 3,578 100,000 26,616 26,616 100,000 115,568 115,568 140,993
35 94,836 0 0 0 26,792 26,792 100,000 188,997 188,997 219,236
40 126,840 0 0 0 18,952 18,952 100,000 305,489 305,489 326,873
45 167,685 0 0 0 0 0 0 492,759 492,759 517,396
</TABLE>

54
<PAGE> 60

APPENDIX A - GUARANTEED MAXIMUM COST OF INSURANCE RATES

GUARANTEED MAXIMUM MONTHLY

COST OF INSURANCE RATES FOR A MALE NON-SMOKER (ISSUE AGES 21-80)*

Per $1000 of Risk Insurance Amount

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Cost of Cost of Cost of
Attained Insurance Attained Insurance Attained Insurance
Age Rate Age Rate Age Rate
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
21 0.13788 35 0.14370 49 0.39205
22 0.13539 36 0.15117 50 0.42611
23 0.13207 37 0.16114 51 0.46514
24 0.12875 38 0.17194 52 0.51000
25 0.12459 39 0.18357 53 0.56150
26 0.12210 40 0.19769 54 0.61881
27 0.12044 41 0.21264 55 0.68276
28 0.11961 42 0.22842 56 0.75254
29 0.11961 43 0.24586 57 0.82646
30 0.12044 44 0.26497 58 0.90869
31 0.12293 45 0.28656 59 1.00089
32 0.12625 46 0.30982 60 1.10389
33 0.13124 47 0.33474 61 1.21851
34 0.13705 48 0.36215
- --------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Cost of Cost of Cost of
Attained Insurance Attained Insurance Attained Insurance
Age Rate Age Rate Age Rate
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
62 1.35058 75 5.13652 88 16.39051
63 1.50009 76 5.66811 89 17.59988
64 1.66621 77 6.22379 90 18.85909
65 1.84812 78 6.80688 91 20.19721
66 2.04497 79 7.43566 92 21.66408
67 2.25096 80 8.13005 93 23.40255
68 2.48520 81 8.90834 94 25.73492
69 2.73937 82 9.78630 95 29.22599
70 3.02676 83 10.75978 96 34.96802
71 3.35485 84 11.80967 97 44.93622
72 3.73361 85 12.91190 98 61.89321
73 4.16221 86 14.05233 99 83.06141
74 4.63317 87 15.21353 100-109 0.00000

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

* Different rates apply for male smoker, all females, and all juveniles (issue
ages 0-20).

If the insured is in a special premium class, the guaranteed maximum
monthly cost of insurance rate will be the rate shown in the table times the
special premium class rating factor shown on the Policy Specifications page.

A-1
<PAGE> 61

APPENDIX B - TABLE OF SURRENDER CHARGE FACTORS

MALE NONSMOKERS (PREFERRED & STANDARD)

<TABLE>
<CAPTION>
Number of Full Policy Years Completed Since the Issue Date
Issue 0 1 2 3 4 5 6 7
Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
21 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
22 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
23 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
24 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
25 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
26 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
27 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
28 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
29 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
30 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
31 5.91 5.91 5.91 5.91 5.91 5.32 4.73 4.14
32 5.98 5.98 5.98 5.98 5.98 5.38 4.78 4.19
33 6.01 6.01 6.01 6.01 6.01 5.41 4.81 4.21
34 6.11 6.11 6.11 6.11 6.11 5.50 4.89 4.28
35 6.18 6.18 6.18 6.18 6.18 5.56 4.94 4.33
36 6.28 6.28 6.28 6.28 6.28 5.66 5.03 4.40
37 6.32 6.32 6.32 6.32 6.32 5.68 5.05 4.42
38 6.42 6.42 6.42 6.42 6.42 5.78 5.13 4.49
39 6.52 6.52 6.52 6.52 6.52 5.87 5.22 4.56
40 6.62 6.62 6.62 6.62 6.62 5.96 5.30 4.63
41 6.76 6.76 6.76 6.76 6.76 6.08 5.40 4.73
42 6.82 6.82 6.82 6.82 6.82 6.14 5.46 4.78
43 6.99 6.99 6.99 6.99 6.99 6.29 5.59 4.89
44 7.13 7.13 7.13 7.13 7.13 6.41 5.70 4.99
45 7.30 7.30 7.30 7.30 7.30 6.57 5.84 5.11
46 7.46 7.46 7.46 7.46 7.46 6.72 5.97 5.23
47 7.67 7.67 7.67 7.67 7.67 6.90 6.13 5.37
48 7.87 7.87 7.87 7.87 7.87 7.08 6.30 5.51
49 8.14 8.14 8.14 8.14 8.14 7.33 6.51 5.70
50 8.38 8.38 8.38 8.38 8.38 7.54 6.70 5.86
51 8.65 8.65 8.65 8.65 8.65 7.78 6.92 6.05
52 8.95 8.95 8.95 8.95 8.95 8.05 7.16 6.26
53 9.29 9.29 9.29 9.29 9.29 8.36 7.43 6.50
54 9.62 9.62 9.62 9.62 9.62 8.66 7.70 6.74
55 10.06 10.06 10.06 10.06 10.06 9.06 8.05 7.04
56 10.47 10.47 10.47 10.47 10.47 9.42 8.37 7.33
57 10.91 10.91 10.91 10.91 10.91 9.82 8.72 7.63
58 11.41 11.41 11.41 11.41 11.41 10.27 9.13 7.99
59 11.99 11.99 11.99 11.99 11.99 10.79 9.59 8.39
60 12.56 12.56 12.56 12.56 12.56 11.30 10.05 8.79
61 13.17 13.17 13.17 13.17 13.17 11.85 10.53 9.22
62 13.88 13.88 13.88 13.88 13.88 12.49 11.10 9.71
63 14.62 14.62 14.62 14.62 14.62 13.16 11.70 10.23
64 15.43 15.43 15.43 15.43 15.43 13.89 12.34 10.80
65 16.25 16.25 16.25 16.25 16.25 14.63 13.00 11.38
66 17.50 17.50 17.50 15.75 14.00 12.25 10.50 8.75
67 17.50 17.50 17.50 15.75 14.00 12.25 10.50 8.75
68 17.50 17.50 17.50 15.75 14.00 12.25 10.50 8.75
</TABLE>

<TABLE>
<CAPTION>
Number of Full Policy Years Completed Since the Issue Date
Issue 8 9 10 11 12 13 14 15 or
Age more
<S> <C> <C> <C> <C> <C> <C> <C> <C>
21 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
22 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
23 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
24 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
25 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
26 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
27 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
28 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
29 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
30 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
31 3.55 2.96 2.36 1.77 1.18 0.59 0.00 0.00
32 3.59 2.99 2.39 1.79 1.20 0.60 0.00 0.00
33 3.61 3.01 2.41 1.80 1.20 0.60 0.00 0.00
34 3.67 3.06 2.45 1.83 1.22 0.61 0.00 0.00
35 3.71 3.09 2.47 1.85 1.24 0.62 0.00 0.00
36 3.77 3.14 2.51 1.89 1.26 0.63 0.00 0.00
37 3.79 3.16 2.53 1.89 1.26 0.63 0.00 0.00
38 3.85 3.21 2.57 1.93 1.28 0.64 0.00 0.00
39 3.91 3.26 2.61 1.96 1.30 0.65 0.00 0.00
40 3.97 3.31 2.65 1.99 1.32 0.66 0.00 0.00
41 4.05 3.38 2.70 2.03 1.35 0.68 0.00 0.00
42 4.09 3.41 2.73 2.05 1.36 0.68 0.00 0.00
43 4.19 3.50 2.80 2.10 1.40 0.70 0.00 0.00
44 4.28 3.56 2.85 2.14 1.43 0.71 0.00 0.00
45 4.38 3.65 2.92 2.19 1.46 0.73 0.00 0.00
46 4.48 3.73 2.99 2.24 1.49 0.75 0.00 0.00
47 4.60 3.83 3.07 2.30 1.53 0.77 0.00 0.00
48 4.72 3.93 3.15 2.36 1.57 0.79 0.00 0.00
49 4.88 4.07 3.26 2.44 1.63 0.81 0.00 0.00
50 5.03 4.19 3.35 2.51 1.68 0.84 0.00 0.00
51 5.19 4.32 3.46 2.59 1.73 0.86 0.00 0.00
52 5.37 4.47 3.58 2.68 1.79 0.89 0.00 0.00
53 5.57 4.64 3.71 2.79 1.86 0.93 0.00 0.00
54 5.77 4.81 3.85 2.89 1.92 0.96 0.00 0.00
55 6.04 5.03 4.03 3.02 2.01 1.01 0.00 0.00
56 6.28 5.23 4.19 3.14 2.09 1.05 0.00 0.00
57 6.54 5.45 4.36 3.27 2.18 1.09 0.00 0.00
58 6.85 5.71 4.57 3.42 2.28 1.14 0.00 0.00
59 7.19 5.99 4.79 3.60 2.40 1.20 0.00 0.00
60 7.54 6.28 5.02 3.77 2.51 1.26 0.00 0.00
61 7.90 6.58 5.27 3.95 2.63 1.32 0.00 0.00
62 8.33 6.94 5.55 4.16 2.78 1.39 0.00 0.00
63 8.77 7.31 5.85 4.39 2.92 1.46 0.00 0.00
64 9.26 7.71 6.17 4.63 3.09 1.54 0.00 0.00
65 9.75 8.13 6.50 4.88 3.25 1.63 0.00 0.00
66 7.00 5.25 3.50 2.63 1.75 0.88 0.00 0.00
67 7.00 5.25 3.50 2.63 1.75 0.88 0.00 0.00
68 7.00 5.25 3.50 2.63 1.75 0.88 0.00 0.00
</TABLE>

B-1
<PAGE> 62

FEMALE NONSMOKERS (PREFERRED & STANDARD)

<TABLE>
<CAPTION>
Number of Full Policy Years Completed Since the Issue Date
Issue 0 1 2 3 4 5 6 7
Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
21 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
22 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
23 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
24 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
25 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
26 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
27 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
28 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
29 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
30 5.74 5.74 5.74 5.74 5.74 5.17 4.59 4.02
31 5.78 5.78 5.78 5.78 5.78 5.20 4.62 4.04
32 5.81 5.81 5.81 5.81 5.81 5.23 4.65 4.07
33 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
34 5.91 5.91 5.91 5.91 5.91 5.32 4.73 4.14
35 5.95 5.95 5.95 5.95 5.95 5.35 4.76 4.16
36 5.98 5.98 5.98 5.98 5.98 5.38 4.78 4.19
37 6.08 6.08 6.08 6.08 6.08 5.47 4.86 4.26
38 6.11 6.11 6.11 6.11 6.11 5.50 4.89 4.28
39 6.18 6.18 6.18 6.18 6.18 5.56 4.94 4.33
40 6.28 6.28 6.28 6.28 6.28 5.66 5.03 4.40
41 6.35 6.35 6.35 6.35 6.35 5.72 5.08 4.45
42 6.42 6.42 6.42 6.42 6.42 5.78 5.13 4.49
43 6.49 6.49 6.49 6.49 6.49 5.84 5.19 4.54
44 6.62 6.62 6.62 6.62 6.62 5.96 5.30 4.63
45 6.69 6.69 6.69 6.69 6.69 6.02 5.35 4.68
46 6.82 6.82 6.82 6.82 6.82 6.14 5.46 4.78
47 6.92 6.92 6.92 6.92 6.92 6.23 5.54 4.85
48 7.09 7.09 7.09 7.09 7.09 6.38 5.67 4.97
49 7.19 7.19 7.19 7.19 7.19 6.47 5.76 5.04
50 7.36 7.36 7.36 7.36 7.36 6.63 5.89 5.15
51 7.53 7.53 7.53 7.53 7.53 6.78 6.02 5.27
52 7.70 7.70 7.70 7.70 7.70 6.93 6.16 5.39
53 7.90 7.90 7.90 7.90 7.90 7.11 6.32 5.53
54 8.14 8.14 8.14 8.14 8.14 7.33 6.51 5.70
55 8.38 8.38 8.38 8.38 8.38 7.54 6.70 5.86
56 8.58 8.58 8.58 8.58 8.58 7.72 6.86 6.01
57 8.88 8.88 8.88 8.88 8.88 7.99 7.10 6.22
58 9.12 9.12 9.12 9.12 9.12 8.21 7.29 6.38
59 9.46 9.46 9.46 9.46 9.46 8.51 7.56 6.62
60 9.79 9.79 9.79 9.79 9.79 8.81 7.83 6.86
61 10.10 10.10 10.10 10.10 10.10 9.09 8.08 7.07
</TABLE>

<TABLE>
<CAPTION>
Number of Full Policy Years Completed Since the Issue Date
Issue 8 9 10 11 12 13 14 15 or
Age more
<S> <C> <C> <C> <C> <C> <C> <C> <C>
21 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
22 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
23 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
24 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
25 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
26 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
27 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
28 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
29 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
30 3.45 2.87 2.30 1.72 1.15 0.57 0.00 0.00
31 3.47 2.89 2.31 1.73 1.16 0.58 0.00 0.00
32 3.49 2.91 2.32 1.74 1.16 0.58 0.00 0.00
33 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
34 3.55 2.96 2.36 1.77 1.18 0.59 0.00 0.00
35 3.57 2.97 2.38 1.78 1.19 0.59 0.00 0.00
36 3.59 2.99 2.39 1.79 1.20 0.60 0.00 0.00
37 3.65 3.04 2.43 1.82 1.22 0.61 0.00 0.00
38 3.67 3.06 2.45 1.83 1.22 0.61 0.00 0.00
39 3.71 3.09 2.47 1.85 1.24 0.62 0.00 0.00
40 3.77 3.14 2.51 1.89 1.26 0.63 0.00 0.00
41 3.81 3.18 2.54 1.91 1.27 0.64 0.00 0.00
42 3.85 3.21 2.57 1.93 1.28 0.64 0.00 0.00
43 3.89 3.24 2.59 1.95 1.30 0.65 0.00 0.00
44 3.97 3.31 2.65 1.99 1.32 0.66 0.00 0.00
45 4.01 3.34 2.68 2.01 1.34 0.67 0.00 0.00
46 4.09 3.41 2.73 2.05 1.36 0.68 0.00 0.00
47 4.15 3.46 2.77 2.08 1.38 0.69 0.00 0.00
48 4.26 3.55 2.84 2.13 1.42 0.71 0.00 0.00
49 4.32 3.60 2.88 2.16 1.44 0.72 0.00 0.00
50 4.42 3.68 2.95 2.21 1.47 0.74 0.00 0.00
51 4.52 3.77 3.01 2.26 1.51 0.75 0.00 0.00
52 4.62 3.85 3.08 2.31 1.54 0.77 0.00 0.00
53 4.74 3.95 3.16 2.37 1.58 0.79 0.00 0.00
54 4.88 4.07 3.26 2.44 1.63 0.81 0.00 0.00
55 5.03 4.19 3.35 2.51 1.68 0.84 0.00 0.00
56 5.15 4.29 3.43 2.57 1.72 0.86 0.00 0.00
57 5.33 4.44 3.55 2.66 1.78 0.89 0.00 0.00
58 5.47 4.56 3.65 2.74 1.82 0.91 0.00 0.00
59 5.67 4.73 3.78 2.84 1.89 0.95 0.00 0.00
60 5.88 4.90 3.92 2.94 1.96 0.98 0.00 0.00
61 6.06 5.05 4.04 3.03 2.02 1.01 0.00 0.00
</TABLE>

B-2
<PAGE> 63

MALE SMOKERS

<TABLE>
<CAPTION>
Number of Full Policy Years Completed Since the Issue Date
Issue 0 1 2 3 4 5 6 7
Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
1 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
2 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
3 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
4 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
5 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
6 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
7 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
8 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
9 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
10 5.36 5.36 5.36 5.36 5.36 4.82 4.29 3.75
11 5.38 5.38 5.38 5.38 5.38 4.85 4.31 3.77
12 5.43 5.43 5.43 5.43 5.43 4.89 4.34 3.80
13 5.50 5.50 5.50 5.50 5.50 4.95 4.40 3.85
14 5.56 5.56 5.56 5.56 5.56 5.01 4.45 3.89
15 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09
16 5.88 5.88 5.88 5.88 5.88 5.29 4.70 4.12
17 5.90 5.90 5.90 5.90 5.90 5.31 4.72 4.13
18 5.93 5.93 5.93 5.93 5.93 5.34 4.75 4.15
19 5.96 5.96 5.96 5.96 5.96 5.36 4.76 4.17
20 5.99 5.99 5.99 5.99 5.99 5.39 4.79 4.19
21 6.01 6.01 6.01 6.01 6.01 5.41 4.81 4.21
22 6.05 6.05 6.05 6.05 6.05 5.44 4.84 4.23
23 6.07 6.07 6.07 6.07 6.07 5.46 4.86 4.25
24 6.10 6.10 6.10 6.10 6.10 5.49 4.88 4.27
25 6.13 6.13 6.13 6.13 6.13 5.51 4.90 4.29
26 6.15 6.15 6.15 6.15 6.15 5.53 4.92 4.30
27 6.18 6.18 6.18 6.18 6.18 5.56 4.94 4.33
28 6.20 6.20 6.20 6.20 6.20 5.58 4.96 4.34
29 6.24 6.24 6.24 6.24 6.24 5.61 4.99 4.37
30 6.26 6.26 6.26 6.26 6.26 5.63 5.01 4.38
31 6.40 6.40 6.40 6.40 6.40 5.76 5.12 4.48
32 6.53 6.53 6.53 6.53 6.53 5.88 5.22 4.57
33 6.62 6.62 6.62 6.62 6.62 5.96 5.30 4.63
</TABLE>

<TABLE>
<CAPTION>
Number of Full Policy Years Completed Since the Issue Date
Issue 8 9 10 11 12 13 14 15 or
Age more
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
1 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
2 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
3 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
4 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
5 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
6 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
7 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
8 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
9 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
10 3.22 2.68 2.14 1.61 1.07 0.54 0.00 0.00
11 3.23 2.69 2.15 1.62 1.08 0.54 0.00 0.00
12 3.26 2.71 2.17 1.63 1.09 0.54 0.00 0.00
13 3.30 2.75 2.20 1.65 1.10 0.55 0.00 0.00
14 3.34 2.78 2.23 1.67 1.11 0.56 0.00 0.00
15 3.51 2.92 2.34 1.75 1.17 0.58 0.00 0.00
16 3.53 2.94 2.35 1.76 1.18 0.59 0.00 0.00
17 3.54 2.95 2.36 1.77 1.18 0.59 0.00 0.00
18 3.56 2.97 2.37 1.78 1.19 0.59 0.00 0.00
19 3.57 2.98 2.38 1.79 1.19 0.60 0.00 0.00
20 3.59 3.00 2.40 1.80 1.20 0.60 0.00 0.00
21 3.61 3.01 2.41 1.80 1.20 0.60 0.00 0.00
22 3.63 3.02 2.42 1.81 1.21 0.60 0.00 0.00
23 3.64 3.03 2.43 1.82 1.21 0.61 0.00 0.00
24 3.66 3.05 2.44 1.83 1.22 0.61 0.00 0.00
25 3.68 3.06 2.45 1.84 1.23 0.61 0.00 0.00
26 3.69 3.07 2.46 1.84 1.23 0.61 0.00 0.00
27 3.71 3.09 2.47 1.85 1.24 0.62 0.00 0.00
28 3.72 3.10 2.48 1.86 1.24 0.62 0.00 0.00
29 3.74 3.12 2.50 1.87 1.25 0.62 0.00 0.00
30 3.76 3.13 2.50 1.88 1.25 0.63 0.00 0.00
31 3.84 3.20 2.56 1.92 1.28 0.64 0.00 0.00
32 3.92 3.27 2.61 1.96 1.31 0.65 0.00 0.00
33 3.97 3.31 2.65 1.99 1.32 0.66 0.00 0.00
</TABLE>

B-3
<PAGE> 64

FEMALE SMOKERS

<TABLE>
<CAPTION>
Number of Full Policy Years Completed Since the Issue Date
Issue 0 1 2 3 4 5 6 7
Age
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 5.32 5.32 5.32 5.32 5.32 4.78 4.25 3.72
1 5.32 5.32 5.32 5.32 5.32 4.78 4.25 3.72
2 5.32 5.32 5.32 5.32 5.32 4.78 4.25 3.72
3 5.32 5.32 5.32 5.32 5.32 4.78 4.25 3.72
4 5.32 5.32 5.32 5.32 5.32 4.78 4.25 3.72
5 5.32 5.32 5.32 5.32 5.32 4.78 4.25 3.72
</TABLE>

<TABLE>
<CAPTION>
Number of Full Policy Years Completed Since the Issue Date
Issue 8 9 10 11 12 13 14 15 or
Age more
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 3.19 2.66 2.13 1.59 1.06 0.53 0.00 0.00
1 3.19 2.66 2.13 1.59 1.06 0.53 0.00 0.00
2 3.19 2.66 2.13 1.59 1.06 0.53 0.00 0.00
3 3.19 2.66 2.13 1.59 1.06 0.53 0.00 0.00
4 3.19 2.66 2.13 1.59 1.06 0.53 0.00 0.00
5 3.19 2.66 2.13 1.59 1.06 0.53 0.00 0.00
</TABLE>

B-4
<PAGE> 65

B-5
<PAGE> 66

B-6
<PAGE> 67

APPENDIX C - FINANCIAL
STATEMENTS

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

FARMERS NEW WORLD LIFE INSURANCE COMPANY

C-1
<PAGE> 68

FARMERS NEW WORLD LIFE
INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)
- -------------------------------------------------------------------------------
FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND
INDEPENDENT AUDITORS' REPORT

<PAGE> 69

INDEPENDENT AUDITORS' REPORT

Board of Directors Farmers New World Life Insurance Company Mercer Island,
Washington

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

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and 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.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of Farmers New World Life Insurance Company at
December 31, 1998 and 1997, and the results of its operations, and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.

February 3, 1999

Seattle, Washington

<PAGE> 70

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

BALANCE SHEETS (in thousands)
DECEMBER 31, 1998 AND 1997
================================================================================

<TABLE>
<CAPTION>
ASSETS 1998 1997
- ------ ---- ----
<S> <C> <C>
INVESTMENTS (Notes 2 and 3):
Fixed maturities available-for-sale:
Bonds, at fair value (cost: $3,510,846 and $3,298,645) $3,674,223 $3,444,333
Redeemable preferred stocks, at fair value
(cost: $82,090 and $109,781) 86,662 110,815
Equity securities available-for-sale:
Non-redeemable preferred stocks, at fair value
(cost: $1,153 and $1,153) 1,270 1,227
Common stocks, at fair value (cost: $41 and $-0-) 3 120
Mortgage loans on real estate, net of allowance for losses 52,879 89,903
Investment real estate, net of accumulated depreciation
and allowance for losses (Note 1) 59,047 67,214
Surplus note of the Exchanges (Note 4) 119,000 0
Policy loans 185,211 165,894
Joint ventures 8,456 11,566
S&P 500 call options, at fair value (cost: $11,305 and $3,450) 14,817 3,299
---------- ----------

Total investments 4,201,568 3,894,371

CASH AND CASH EQUIVALENTS 63,784 9,980

ACCRUED INVESTMENT INCOME 53,263 51,971

OTHER RECEIVABLES 17,558 18,937

INCOME TAXES RECOVERABLE 0 23,366

DEFERRED POLICY ACQUISITION COSTS (Note 1) 467,248 439,579

VALUE OF BUSINESS ACQUIRED (Notes 1 & 5) 334,442 359,146

PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $7,411 and $6,824 14,379 14,401

OTHER ASSETS:
Securities lending collateral (Note 6) 461,801 544,580
Other assets 2,298 2,380
---------- ----------
464,099 546,960

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

TOTAL $5,616,341 $5,358,711
========== ==========
</TABLE>

<PAGE> 71
================================================================================

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY 1998 1997
- ------------------------------------ ---- ----
<S> <C> <C>
POLICY LIABILITIES AND ACCRUALS:
Future policy benefits $3,184,248 $3,010,162
Policy claims (Note 7) 26,177 22,156
---------- ----------

3,210,425 3,032,318

OTHER POLICYHOLDER FUNDS & DIVIDENDS 57,358 60,072

ACCRUED EXPENSES AND OTHER LIABILITIES:
Securities lending liability (Note 6) 461,801 544,580
Death benefit liability 37,024 29,087
Other liabilities 63,736 60,047
---------- ----------
562,561 633,714

INCOME TAXES (Note 8):
Current 4,180 0
Deferred 161,184 153,006
---------- ----------

165,364 153,006

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

Total liabilities 3,995,708 3,879,110

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDER'S EQUITY:
Common stock, $1 par value - Authorized, 25,000,000 shares;
issued and outstanding, 6,600,000 shares 6,600 6,600
Additional paid-in capital 994,246 994,246
Accumulated other comprehensive income, net of deferred
taxes of $41,518 and $35,902 77,105 66,675
Retained earnings (Note 10) 542,682 412,080
---------- ----------

Total stockholder's equity 1,620,633 1,479,601
---------- ----------

TOTAL $5,616,341 $5,358,711
========== ==========
</TABLE>
- --------------------------------------------------------------------------------

See notes to financials statements. 2

<PAGE> 72

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF INCOME (in thousands)
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
================================================================================

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Net premiums earned (Note 11) $173,229 $151,134 $136,142
Universal life and annuity policy charges 206,393 200,857 188,355
Net investment income (Note 2) 293,770 275,760 257,852
Net realized investment gains (losses) (Note 2) (13,473) 10,063 30,182
Other income 707 784 764
-------- -------- --------

Total revenues 660,626 638,598 613,295

BENEFITS AND EXPENSES:
Death and other benefits (Note 7) 133,984 112,370 110,853
Future policy benefits 23,711 15,713 11,383
Interest credited to policyholders 150,618 146,376 138,033
Underwriting, acquisition and insurance expenses:
Amortization of deferred policy acquisition costs 68,997 70,855 62,178
Amortization of value of business acquired 23,897 21,305 20,411
Commissions 18,972 17,344 18,317
General insurance expenses and taxes 38,659 42,986 38,699
-------- -------- --------

Total benefits and expenses 458,838 426,949 399,874
-------- -------- --------

Income before provision for income taxes 201,788 211,649 213,421
-------- -------- --------
PROVISION (BENEFIT) FOR INCOME TAXES (Note 8):
Current 70,690 80,889 82,556
Deferred 496 (7,027) (11,417)
-------- -------- --------

Total provision for income taxes 71,186 73,862 71,139
-------- -------- --------

NET INCOME $130,602 $137,787 $142,282
======== ======== ========
</TABLE>

See notes to financials statements. 3

<PAGE> 73

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF COMPREHENSIVE INCOME (in thousands)
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
================================================================================

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
NET INCOME $130,602 $137,787 $142,282
-------- -------- --------
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized holding gains (losses) on securities:
Unrealized holding gains (losses) on securities,
net of tax of $(7,921) 14,711
Less: reclassification adjustment for gains
included in net income, net of tax of $(357) (662)
-------- -------- --------
Net unrealized holding gains on securities, net of tax of
$7,565, $28,968, and $13,218 14,049 53,797 24,547

Change in effect of unrealized gains (losses) on other
insurance accounts, net of tax of $(1,949), $(7,387), and $3,664 (3,619) (13,718) 6,805
-------- -------- --------

COMPREHENSIVE INCOME $141,032 $177,866 $173,634
======== ======== ========
</TABLE>

See notes to financials statements. 4

<PAGE> 74

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF STOCKHOLDER'S EQUITY (in thousands)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
================================================================================

<TABLE>
<CAPTION>
Accumulated
Additional other Total stock-
Common paid-in comprehensive Retained holder's
stock capital income earnings equity
------ ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 $6,600 $994,246 $(4,756) $ 506,927 $1,503,017

Dividend in-kind to stockholder $(374,916) (374,916)

Net income 142,282 142,282

Change in other comprehensive
income, net of tax of $16,882 31,352 31,352
------ -------- ------- --------- ----------

BALANCE, December 31, 1996 6,600 994,246 26,596 274,293 1,301,735

Net income 137,787 137,787

Change in other comprehensive
income, net of tax of $21,581 40,079 40,079
------ -------- ------- --------- ----------

BALANCE, December 31, 1997 6,600 994,246 66,675 412,080 1,479,601

Net income 130,602 130,602

Unrealized gains on available for
sale investments arising during
the period, net of tax of $7,921 14,711 14,711

Reclassification adjustment for
gains included in net income,
net of tax of $(357) (662) (662)

Change in effect of unrealized
losses on other insurance
accounts, net of tax of $(1,949) (3,619) (3,619)
------ -------- ------- --------- ----------

BALANCE, December 31, 1998 $6,600 $994,246 $77,105 $ 542,682 $1,620,633
====== ======== ======= ========= ==========
</TABLE>

See notes to financials statements. 5

<PAGE> 75

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF CASH FLOWS (in thousands)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 130,602 $ 137,787 $ 142,282
Adjustments to reconcile net income to net cash provided by
operating activities:
Universal life type contracts:
Deposits received 299,007 295,747 288,745
Withdrawals (241,765) (232,728) (210,182)
Interest credited 67,585 62,247 56,216
Realized investment losses (gains) 13,473 (10,063) (30,182)
Amortization of deferred policy acquisition costs and VOBA 92,894 92,160 82,589
Deferred income tax expense (benefit) 496 (7,027) (11,417)
Depreciation 2,544 2,462 1,970
Cash provided (used) by changes in operating assets and liabilities:
Federal income taxes payable 4,180 (22,822) 21,016
Deferred policy acquisition costs (93,047) (70,913) (112,362)
Life insurance policy liabilities 27,802 14,588 13,521
Other policyholder funds (2,714) (2,894) (3,097)
Other 31,758 (37,212) (262)
--------- --------- ---------

Net cash provided by operating activities 332,815 221,332 238,837

INVESTING ACTIVITIES:
Purchase of bonds and stocks available-for-sale (660,918) (735,325) (948,418)
Proceeds from sales or maturities of bonds and stocks available-for-sale 458,364 450,760 549,600
Purchase of mortgage loans 0 (32,623) 0
Mortgage loan collections 36,839 30,448 18,287
Purchase of investment real estate (908) (23,568) (168)
Proceeds from sale of investments in real estate 8,557 2,327 5,349
Increase in policy loans (19,317) (17,836) (18,592)
Purchase of property and equipment (572) (1,685) (72)
Purchase of surplus note of the Exchanges (119,000) 0 0
Other (7,535) (10,782) 139
--------- --------- ---------

Net cash used by investing activities (304,490) (338,284) (393,875)

FINANCING ACTIVITIES:
Annuity contracts:
Deposits received 144,793 131,651 141,046
Withdrawals (202,244) (161,150) (121,836)
Interest credited 82,930 80,280 78,177
--------- --------- ---------
Net cash provided by financing activities 25,479 50,781 97,387
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS,
carried forward 53,804 (66,171) (57,651)
</TABLE>

See notes to financials statements. 6

<PAGE> 76

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF CASH FLOWS (in thousands) (continued)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
================================================================================

<TABLE>
<CAPTION>
1998 1997 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, ---- ---- ----
<S> <C> <C> <C>
brought forward $53,804 $(66,171) $(57,651)

CASH AND CASH EQUIVALENTS:
Beginning of year 9,980 76,151 133,802
------- -------- ---------
End of year $63,784 $ 9,980 $ 76,151
======= ======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during year for:
Income taxes $41,250 $122,787 $ 83,538
Interest paid 945 0 1,777

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Dividend in-kind to stockholder 0 0 374,916
</TABLE>

See notes to financial statements. 7

<PAGE> 77

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997, and 1996
================================================================================

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY: The accompanying financial statements include the accounts of
Farmers New World Life Insurance Company ("the Company"), a wholly owned
subsidiary of Farmers Group, Inc. ("FGI") whose ultimate parent is Zurich
Financial Services Group. FGI, a management services insurance holding
company, is attorney in fact for three inter-insurance exchanges and their
subsidiaries ("the Exchanges") and owns a reinsurance company Farmers Re.

In December 1988, BATUS Inc. ("BATUS"), a subsidiary of B.A.T Industries
p.l.c. ("B.A.T"), acquired 100% ownership of FGI and its subsidiaries for
$5,212,619,000 in cash, including related expenses, through its wholly
owned subsidiary BATUS Financial Services. Immediately thereafter, BATUS
Financial Services was merged into FGI. The acquisition was accounted for
as a purchase and, accordingly, the acquired assets and liabilities were
recorded in the Company's balance sheet based on their estimated fair
values at December 31, 1988.

At the time of purchase, a portion of the purchase price, $530,076,000,
was assigned to the Company's "Value of Business Acquired" ("VOBA"), which
represented an actuarial determination of the expected profits from the
business in force at the date of B.A.T's acquisition of FGI. The amount so
assigned is being amortized over its actuarially determined useful life
with the unamortized amount included in "Value of Business Acquired" in
the accompanying balance sheets.

On December 22, 1997, a definitive agreement was reached to merge B.A.T's
Financial Services Businesses, which included FGI and its subsidiaries,
with Zurich Insurance Company ("Zurich"). In June 1998, the merger was
approved by the shareholders of B.A.T and Zurich. In September 1998, this
merger was completed and the businesses of Zurich and B.A.T's Financial
Services Businesses were transferred to Zurich Financial Services ("ZFS"),
a new Swiss company with headquarters in Zurich. This merger was accounted
for by ZFS as a pooling of interests and, therefore, no purchase
accounting adjustments were made to FGI's assets and liabilities.

NATURE OF OPERATIONS: The Company concentrates its activities in the
individual life insurance and annuity markets. Principal lines of business
include traditional and universal whole life products as well as term life
insurance. Additionally, the Company issues flexible and single premium
deferred annuities, single premium immediate annuities and equity indexed
annuities.

The Company and the Exchanges operate using common trade names and logos,
including Farmers Insurance Group of Companies(R), Farmers Insurance
Group(R) and Farmers(R). In addition, the Company and the Exchanges
distribute their respective insurance products through a common network of
direct writing agents and district managers. As of December 31, 1998, this
network consisted of 14,743 direct writing agents and 499 district
managers, each of whom is an independent contractor. The size, efficiency
and scope of this agency force have made it a major factor in the
Exchanges' and the Company's growth. Each agent is required to first submit
business to the insurers in the Farmers Insurance Group of Companies within
the classes and lines of business written by such insurers. To the extent
that such insurers decline such business or do not underwrite it, the
agents may offer business to other insurers.

<PAGE> 78

The Company is currently licensed in 37 states, primarily in the western,
midwestern, and southwestern regions of the United States.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The
preparation of financial statements in conformity with generally accepted
accounting principles 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
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

REVENUE RECOGNITION: Premiums for traditional life and accident and health
insurance products are recognized as revenues when due from policyholders.
Policy withdrawal, maintenance, and other charges are recognized as income
when earned.

Revenues associated with universal life products consist of policy charges
for the cost of insurance, policy administration fees, surrender charges,
and investment income on assets allocated to support policyholder account
balances on deposit. Revenues for deferred annuity products consist of
surrender charges, investment income on assets allocated to support
policyholder account balances on deposit and administrative charges for
equity-indexed annuities. Consideration received for interest-sensitive
insurance and annuity products is recorded as a liability when received.

INVESTMENTS: The Company has classified all investments in fixed
maturities and equity securities as available-for-sale and reports them on
the balance sheet at fair value with unrealized gains and losses, net of
tax, excluded from earnings and reported as a component of stockholder's
equity in accordance with the application of Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments
in Debt and Equity Securities". As of December 31, 1998 and 1997, there
were no securities designated as held-to-maturity or trading.

Realized gains (losses) on sales, redemptions and write-downs of
investments are determined based on the net book value of individual
investments.

Investment real estate consists of properties purchased for investment and
properties acquired through foreclosure, and is carried at the lower of
cost less accumulated depreciation of $28,366,000 in 1998 and $27,714,000
in 1997, or market. Depreciation is provided on a straight-line basis over
45 years, the estimated life of the properties.

The Company follows the provisions of SFAS No. 118 (amending SFAS No.
114), "Accounting by Creditors for Impairment of a Loan", which requires
that impaired loans be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate or, as
a practical expedient, at the loan's observable market price or the fair
value of the collateral, if the loan is collateral dependent. No material
amounts were recognized in the periods presented.

DEFERRED POLICY ACQUISITION COSTS: The costs of acquiring new traditional
life business, principally first year commissions and other expenses for
policy underwriting and issuance (which are primarily related to and vary
with the production of new business), are deferred and amortized
proportionately over the estimated period during which the related
premiums will be recognized as income, based on the same assumptions that
are used for computing the liabilities for future policy benefits.

<PAGE> 79
Policy acquisition costs for universal life and deferred annuity products
are deferred and amortized in relation to the present value of expected
gross profits on the policies. Deferred Policy Acquisition Costs ("DAC")
include amounts associated with the unrealized gains and losses recorded
as a component of stockholder's equity. Accordingly, DAC is increased or
decreased for the impact of estimated future gross profits as if net
unrealized gains or losses on securities had been realized at the balance
sheet date. Net unrealized gains or losses on securities within
stockholder's equity also reflect this impact.

VALUE OF BUSINESS ACQUIRED: The present value of the business acquired in
the 1998 merger with B.A.T is being amortized as the life insurance
business in-force at the time of the merger declines.

PROPERTY AND EQUIPMENT: Depreciation of property and equipment has been
provided using the straight-line method with estimated useful lives of
ten to 45 years for buildings and improvements and five years for
furniture and equipment.

LONG-LIVED ASSETS: In accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of", long-lived assets and certain identifiable intangibles to be held and
used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. No such impairments have occurred.

POLICY LIABILITIES AND ACCRUALS: Liabilities for future policy benefits
for traditional life policies are computed principally on a net level
premium method reflecting estimated future investment yields, mortality,
morbidity, and withdrawals. Interest rate assumptions range from 2.25% to
9.00% depending upon the year of issue. Mortality is calculated
principally on select and ultimate tables in common usage in the industry,
modified for Company experience, and withdrawals are estimated based
primarily on experience.

Liabilities for future policy benefits on universal life and deferred
annuity products are determined under the retrospective deposit method and
consist principally of policy values before any surrender charges.

Unpaid policy claims include claims in course of settlement and a
provision for claims incurred but not reported, based on past experience.

LIFE SALES MANAGEMENT SERVICES: Fees charged to the Company by FGI for
sales and marketing services were $21,187,000 in 1998, $20,862,000 in
1997, and $20,885,000 in 1996, and are accounted for as deferred policy
acquisition costs except for advertising expenses, which are expensed as
incurred, of $1,336,000, $1,590,000, and $1,512,000, in 1998, 1997, and
1996, respectively.

STATEMENT OF CASH FLOWS: For purposes of reporting cash flows, the
Company considers short-term investments purchased with an initial
maturity of three months or less to be cash equivalents.

ACCOUNTING PRONOUNCEMENTS: In March 1998, The American Institute of
Certified Public Accountants ("AICPA") issued Statement of Position
("SOP") No. 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use". This SOP, effective for financial
statements issued for periods beginning after December 15, 1998, applies
to all nongovernmental entities and establishes the rules for capitalizing
or expensing internally developed software.

<PAGE> 80

In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income". This Statement, effective for fiscal periods beginning after
December 15, 1997 established standards for reporting and displaying
comprehensive income and its components. This Statement mandated that all
items that are required to be recognized under accounting standards, as
components of comprehensive income be reported in a financial statement
with the same prominence as other financial statements. As a result of
adopting this Statement, the components of comprehensive income are now
stated in the statements of comprehensive income.

In 1998, the FASB released SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This Statement, effective for
financial statements of public and nonpublic entities issued for fiscal
year beginning after June 15, 1999 and deferred until June 15, 2000 by
SFAS No. 137, "Deferral of Effective Date of FASB Statement No. 133",
establishes accounting and reporting standards for derivative instruments
(including certain derivative instruments embedded in other contracts) and
for hedging activities. SFAS No. 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at market value. The Company does
not expect the adoption of this Statement to have a material impact on its
financial statements.

NOTE 2: INVESTMENTS

INVESTMENT INCOME: The sources of investment income for the years ended
December 31 are (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Bonds $257,422 $236,405 $212,944
Common and preferred stocks 8,123 11,747 20,874
Other 41,883 40,370 33,990
-------- -------- --------

Gross investment income 307,428 288,522 267,808

Less investment expenses 13,658 12,762 9,956
-------- -------- --------

Net investment income $293,770 $275,760 $257,852
======== ======== ========
</TABLE>

The Company's investment expenses included approximately $1,143,000, $2,063,000
and $1,931,000 in 1998, 1997, and 1996, respectively, that were paid to its
parent company, FGI.

In June 1998, the Company's investment management was transferred to Scudder
Kemper Investments, Inc. ("SKI"), an indirect subsidiary of Zurich Financial
Services. In 1998, approximately $704,000 of the Company's investment expenses
were paid to SKI.

<PAGE> 81

REALIZED GAINS (LOSSES): Realized investment gains (losses) for the years
ended December 31 are (in thousands):

<TABLE>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Bonds $(15,126) $ 8,613 $ (660)
Redeemable preferred stocks 25 1,304 1,674
Non-redeemable preferred stocks 0 71 (3,063)
Common stocks 117 61 32,373
Investment real estate 1,393 3 1,008
Other 118 11 (1,150)
--------- ------- -------

$(13,473) $10,063 $30,182
========= ======= =======
</TABLE>

Properties acquired through foreclosure were $25,677,000 and $28,050,000 at
December 31, 1998 and 1997. During 1998, the Company recorded $768,000 in
realized gains and $587,000 in realized losses on the sale of real estate
acquired through foreclosure. During 1997, the Company recorded no gain or loss
on the sale of real estate acquired through foreclosure. In 1996, the Company
recorded a loss of $179,000 and a gain of $1,000,000 on the sale of real estate
acquired through foreclosure. The Company maintained an allowance for losses of
$3,263,000 and $4,295,000 at December 31, 1998 and 1997, respectively.

UNREALIZED GAINS (LOSSES) ON EQUITY SECURITIES: Gross unrealized gains
(losses), pertaining to non-redeemable preferred stocks and common stocks
stated at fair value as of December 31 are (in thousands):

<TABLE>
<CAPTION>
Gains Losses Net
<S> <C> <C> <C>
1998:
Non-redeemable preferred stocks $165 $(48) $117
Common stocks 0 (38) (38)
---- ---- ----

$165 $(86) 79
==== ====
Less deferred federal income taxes (28)
----

$ 51
====
1997:
Non-redeemable preferred stocks $111 $(37) $ 74
Common stocks 120 0 120
---- ---- ----

$231 $(37) 194
==== ====
Less deferred federal income taxes (68)
----

$126
====
</TABLE>

<PAGE> 82

UNREALIZED GAINS (LOSSES) ON FIXED MATURITIES: Amortized cost, gross unrealized
gains, gross unrealized losses, and estimated fair values of fixed maturities as
of December 31 are as follows (in thousands):

<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
<S> <C> <C> <C> <C>
1998:
Fixed maturities available-for-sale:
U.S. Treasury securities and
obligations of U.S.
Government corporations
and agencies $ 408,742 $ 42,515 $ (124) $ 451,133
Obligations of states and
political subdivisions 334,242 25,784 (5) 360,021
Debt securities issued by foreign
governments 88,672 2,410 (15,032) 76,050
Corporate securities 914,465 58,161 (5,938) 966,688
Mortgage-backed securities 1,764,725 65,546 (9,940) 1,820,331
---------- -------- --------- ----------
3,510,846 194,416 (31,039) 3,674,223
Redeemable preferred stock 82,090 4,747 (175) 86,662
---------- -------- --------- ----------
$3,592,936 $199,163 $(31,214) $3,760,885
========== ======== ========= ==========
1997:
Fixed maturities available-for-sale:
U.S. Treasury securities and
obligations of U.S.
Government corporations
and agencies $ 393,538 $ 24,174 $ (104) $ 417,608
Obligations of states and
political subdivisions 270,502 13,346 (58) 283,790
Debt securities issued by foreign
governments 136,127 15,686 (5,113) 146,700
Corporate securities 842,838 48,429 (1,578) 889,689
Mortgage-backed securities 1,655,640 56,282 (5,376) 1,706,546
---------- -------- --------- ----------
3,298,645 157,917 (12,229) 3,444,333
Redeemable preferred stock 109,781 3,589 (2,555) 110,815
---------- -------- --------- ----------
$3,408,426 $161,506 $(14,784) $3,555,148
========== ======== ========= ==========
</TABLE>

<PAGE> 83

MATURITIES OF FIXED MATURITIES: The amortized cost and estimated fair
value of fixed maturities classified as available-for-sale by contractual
maturity at December 31 are shown below (in thousands). Expected
maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.

<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
---- -----
<S> <C> <C>
1998:
Fixed maturities available-for-sale:
Due in one year or less $ 23,445 $ 23,813
Due after one year through five years 502,229 516,838
Due after five years through ten years 540,794 569,572
Due after ten years 679,653 743,669
---------- ----------
1,746,121 1,853,892
Mortgage-backed securities 1,764,725 1,820,331
Preferred stock with characteristics of debt securities 82,090 86,662
---------- ----------
$3,592,936 $3,760,885
========== ==========
</TABLE>

In determining estimated fair value, management obtains quotations from
independent sources who make markets in similar securities, generally
broker/dealers. Unless representative trades of securities actually
occurred at December 31, 1998, these quotes are generally estimates of
market value based on an evaluation of appropriate factors such as trading
in similar securities, yields, credit quality, coupon rate, maturity, type
of issue, and other market data.

SALE AND IMPAIRMENT OF DEBT SECURITIES: The gross gains (losses) and
proceeds from sales and writedowns of debt securities are as follows (in
thousands):

<TABLE>
<CAPTION>
Gross Gross Write-
gains losses Proceeds downs
----- ------ -------- ------
<S> <C> <C> <C> <C>
1998 $11,742 $ (468) $ 458,247 $(26,356)
1997 12,111 (2,194) 446,202 0
1996 10,891 (7,377) 376,989 (2,500)
</TABLE>

14
<PAGE> 84

NOTE 3: FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of financial instruments disclosed have been
determined using available market information and appropriate valuation
methodologies. However, considerable judgment is required to interpret market
data to develop the estimates of fair value. Accordingly, the estimates
presented may not be indicative of the amounts the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies could have a significant effect on the estimated fair
value amounts. The carrying value and estimated fair value of assets and
liabilities as of December 31 are as follows (in thousands):

<TABLE>
<CAPTION>
Estimated
Carrying fair
1998: value value
----- -----
<S> <C> <C>
Assets:
Cash and cash equivalents $ 63,784 $ 63,784
Fixed maturities available-for-sale 3,760,885 3,760,885
Non-redeemable preferred stock available-for-sale 1,270 1,270
Common stock available-for-sale 3 3
Mortgage loans 52,879 67,615
Surplus note of the Exchanges 119,000 119,000
Policy loans 185,211 192,620
Joint ventures 8,456 6,668
S&P call options 14,817 14,817

Liabilities:
Future Policy Benefits-deferred annuities 1,492,032 1,433,494

1997:
Assets:
Cash and cash equivalents $ 9,980 $ 9,980
Fixed maturities available-for-sale 3,555,148 3,555,148
Non-redeemable preferred stock available-for-sale 1,227 1,227
Common stock available-for-sale 120 120
Mortgage loans 89,903 105,235
Policy loans 165,894 172,115
Joint ventures 11,566 10,037
S&P call options 3,299 3,299

Liabilities:
Future Policy Benefits-deferred annuities 1,473,578 1,403,455
</TABLE>

The following methods and assumptions were used to estimate the fair value of
financial instruments as of December 31, 1998 and 1997:

CASH AND CASH EQUIVALENTS: The carrying amounts of these items are a
reasonable estimate of their fair value.

FIXED MATURITIES, REDEEMABLE AND NON-REDEEMABLE PREFERRED STOCK, AND
COMMON STOCK: The estimated fair values of bonds, redeemable and
non-redeemable preferred stock and common stock are based upon quoted
market prices, dealer quotes, and prices obtained from independent pricing
services.

<PAGE> 85

MORTGAGE LOANS: The estimated fair value of the mortgage loan portfolio is
determined by discounting the estimated future cash flows, using a
year-end market rate which is applicable to the yield, credit quality and
average maturity of the composite portfolio.

POLICY LOANS: The estimated fair value of policy loans is determined by
discounting future cash flows using the current rates at which similar
loans would be made.

SURPLUS NOTE OF THE EXCHANGES: The carrying amount of this item is a
reasonable estimate of its fair market value.

JOINT VENTURES: The estimated fair value of the joint ventures is based on
quoted market prices, current appraisals, and independent pricing
services.

S&P 500 CALL OPTIONS: S&P 500 call options are purchased as hedges against
the interest liabilities generated on the equity-indexed annuity products.
These call options are carried at an estimated fair value based on stock
price, strike price, time to expiration, interest rates, dividends, and
volatility per the methodology of the Black-Scholes Option Pricing
Formula.

FUTURE POLICY BENEFITS-DEFERRED ANNUITIES: The estimated fair values are
based on the currently available cash surrender value, similar to the
demand deposit liabilities of depository institutions.

NOTE 4: SURPLUS NOTE

In September 1998, the Company purchased a $119,000,000 surplus note of the
Exchanges which bears interest at 6.10% annually and is payable in full no
later than October 2001. Conditions governing repayment of the amount are
outlined in the surplus note. Generally, repayment may be made only when the
surplus balance of the issuer reaches a specified level, and then, only after
approval is granted by the issuer's governing Board and the appropriate
Department of Insurance.

The Company recognized interest income of $2,279,000 on this note during 1998.

NOTE 5: VALUE OF BUSINESS ACQUIRED

The changes in VOBA were as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of year $ 359,146 $ 383,951 $408,362
Amortization related to operations (53,598) (56,371) (57,156)
Interest accrued 29,701 35,066 36,745
Amortization related to net unrealized losses (807) (3,500) (4,000)
--------- ---------- --------
Balance, end of year $ 334,442 $ 359,146 $383,951
========= ========= ========
</TABLE>

Based on current conditions and assumptions as to future events, the Company
expects to amortize the December 31, 1998 balance as follows: approximately
3.5% in 1999, 3.7% in 2000, 3.9% in 2001, 4.2% in 2002 and 4.3% in 2003. The
discount rate used to determine the amortization rate of the VOBA ranged from
12.5% to 7.5%.

<PAGE> 86

NOTE 6: SECURITY LENDING ARRANGEMENT

The Company has entered into a security lending agreement with a financial
institution. The agreement authorizes the institution to lend securities held
in the Company's portfolio to a list of authorized borrowers. Concurrent with
delivery of the securities, the borrower provides the Company with cash
collateral equal to at least 102% of the market value of domestic securities
and 105% of the market value of international securities subject to the loan.

The securities are marked-to-market on a daily basis and the collateral is
adjusted on the next business day. The collateral is invested in highly liquid,
fixed income assets with a maturity of less than one year. Income earned from
the security lending arrangement is shared 40% and 60% between the institution
and the Company, respectively. Income earned by the Company was $899,000,
$816,000 and $383,000 in 1998, 1997, and 1996, respectively. As of December 31,
1998 and 1997, the Company recorded $461,801,000 and $544,580,000,
respectively, of collateral in other assets and in accrued expenses and other
liabilities.

NOTE 7: LIABILITY FOR POLICY CLAIMS

Activity in the liability for policy claims is summarized as follows (in
thousands):

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Balance, January 1 $ 22,156 $ 24,487
Less reinsurance recoverables 270 141
--------- ----------

Net balance, January 1 21,886 24,346
--------- ----------
Incurred related to:
Current year 121,015 106,659
Prior years 12,968 5,698
--------- ----------

Total incurred 133,983 112,357

Paid related to:
Current year 105,251 85,899
Prior years 24,457 28,919
--------- ----------

Total paid 129,708 114,818
--------- ----------

Net balance, December 31 26,161 21,885
Plus reinsurance recoverables 16 271
--------- ----------

Balance, December 31 $ 26,177 $ 22,156
========= ==========
</TABLE>

The liability for policy claims at December 31, 1998 and 1997, was increased by
$12,968,000 and $5,698,000, respectively, due to higher than anticipated
severity of previously reported claims. The liability for policy claims is
primarily comprised of pending claims known to the Company at the end of the
year as well as estimates for incurred claims not yet reported to the Company.
Because estimates are utilized in the statement process, incurred expenses
exist in the current year that relate to insured events from the prior year.
The Company monitors these levels to ensure that current liabilities adequately
reflect proper levels for both current and prior periods.

<PAGE> 87

NOTE 8: INCOME TAXES

The Company uses the asset and liability method of accounting for income taxes
under FASB Statement No. 109, "Accounting for Income Taxes". Under this method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years the differences are expected
to be recovered or settled.

The components of the provision for income taxes are as follows (in thousands):

1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $69,601 $ 79,185 $ 82,556
State 1,089 1,704 0
------- -------- ---------

70,690 80,889 82,556
Deferred:
Federal 496 (7,027) (11,417)
------- -------- ---------

Total $71,186 $ 73,862 $ 71,139
======= ======== =========
</TABLE>

The table below reconciles the provision for income taxes computed at the U.S.
statutory income tax rate of 35% to the Company's provision for income taxes
(in thousands):

1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Expected tax expense $ 70,626 $ 73,938 $ 74,697
Tax-exempt investment income (1,705) (2,233) (3,356)
State taxes 1,089 1,704 0
Other, net 1,176 453 (202)
-------- -------- --------

Reported income tax expense $ 71,186 $ 73,862 $ 71,139
======== ======== ========
</TABLE>

The tax effects of temporary differences that give rise to significant portions
of the net deferred tax liabilities as of December 31, 1998 and 1997, are
presented in the following table (in thousands):

Deferred policy acquisition costs $ 251,626 $ 243,270
Future policy benefits (135,215) (145,733)
Investments (10,842) (5,323)
Valuation of investments in securities 41,518 43,320
Depreciable assets 5,520 6,425
Other 8,577 11,047
---------- ----------

Net deferred tax liabilities $ 161,184 $ 153,006
========== ==========
</TABLE>

There was no valuation allowance recognized for deferred tax assets in 1998 or
1997.

<PAGE> 88

NOTE 9: COMMITMENTS AND CONTINGENCIES

The Company is a party to lawsuits arising from its normal business activities.
These actions are in various stages of discovery and development, and some seek
punitive as well as compensatory damages. In the opinion of management, the
Company has not engaged in any conduct which should warrant the award of any
material punitive or compensatory damages. Acting on the advice of counsel, the
Company intends to defend vigorously its position in each case, and management
believes that, while it is not possible to predict the outcome of such matters
with absolute certainty, ultimate disposition of these proceedings should not
have a material adverse effect on the Company's financial position or results
of operations.

NOTE 10: REGULATORY MATTERS

The Company, domiciled in Washington state, prepares its statutory financial
statements in accordance with accounting practices prescribed by the State of
Washington Department of Insurance. Prescribed statutory accounting practices
include a variety of publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations, and general
administrative rules.

Statutory stockholders' equity was $888,644,000 and $787,637,000 as of December
31, 1998 and 1997, respectively. Statutory net income for the year ended
December 31, 1998, 1997, and 1996, was $98,796,000, $122,863,000, and
$160,957,000, respectively.

Statutory unassigned surplus of $878,845,000 and $777,838,000 included in
retained earnings at December 31, 1998 and 1997, respectively, is the amount
held for the benefit of the stockholder. The entire amount in 1998 and 1997 is
designated as stockholders' surplus for tax purposes and would not subject the
Company to taxation if paid as a cash dividend.

The maximum amount of dividends that can be paid to stockholders by state of
Washington insurance companies without prior approval of the Insurance
Commissioner is subject to restrictions relating to statutory surplus. The
maximum dividend payout which could be made without prior approval is
$98,796,000 in 1999 and $122,863,000 in 1998.

Dividends are determined by the Board of Directors. In 1996, upon approval of
the State of Washington Department of Insurance, the Company paid a
$374,916,000 in-kind dividend to its parent company, FGI.

As of December 31, 1998 and 1997, the Company's statutory surplus exceeded the
NAIC risk-based capital requirements.

NOTE 11: REINSURANCE

The Company has ceded business under both yearly renewable term contracts and
coinsurance contracts. The policy benefit liabilities and unpaid claim amounts
attributable to such business are stated as other receivables on the balance
sheets. The carrying value of reinsurance receivables included in other
receivables totalled approximately $8,500,000 and $8,600,000 at December 31,
1998 and 1997, respectively. None of the reinsurance receivables were with
reinsurers that resulted in any concentration of material credit risk.

<PAGE> 89
Effective September 5, 1997, the Company raised the retention limit for
automatic reinsurance ceded. The primary change was to increase the maximum
retention on new issues from $800,000 per life to $2,000,000 per life for the
Farmers Flexible Universal Life policy and from $800,000 per life to $1,500,000
per life for all Traditional policies except Farmers Yearly Renewable Term. The
maximum retention on new issues remains at $800,000 per life for Farmers Yearly
Renewable Term. The excess risk is reinsured with an outside reinsurer and is
not material. Increases in policy benefit liabilities and claims expense are
stated net of increases in future policy benefit liabilities and claims
expenses applicable to reinsurance ceded. Death and other benefits expense is
reduced by $4,074,000, $2,047,000 and $707,000 in 1998, 1997, and 1996,
respectively, of reinsurance recoveries. The Company is contingently liable
with respect to reinsurance ceded in the event that a reinsurer is unable to
meet its obligations under existing reinsurance agreements.

The effect of reinsurance on premiums and amounts earned for the years ended
December 31 is as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Direct premiums $ 168,159 $ 145,073 $ 128,303
Reinsurance assumed 8,798 10,297 11,834
Reinsurance ceded (3,728) (4,236) (3,995)
--------- --------- ---------

Net premiums earned $ 173,229 $ 151,134 $ 136,142
========= ========= =========
</TABLE>

Premiums assumed from unaffiliated companies approximated $8,798,000,
$10,297,000, and $8,028,000 in 1998, 1997, and 1996, respectively, which
represents 5.1%, 6.8%, and 5.8% of the net premiums earned in 1998, 1997, and
1996, respectively. Claims paid to unaffiliated companies on assumed
reinsurance were approximately $7,998,000, $8,240,000, and $8,140,000 in 1998,
1997, and 1996, respectively.

NOTE 12: EMPLOYEES' RETIREMENT PLANS

The Company participates in FGI's two noncontributory defined benefit pension
plans (the Regular Plan and the Restoration Plan). The Regular Plan covers
substantially all employees of FGI, its subsidiaries and the Exchanges who have
reached age 21 and have rendered one year of service. Benefits are based on
years of service and the employee's compensation during the last five years of
employment. The Restoration Plan provides supplemental retirement benefits for
certain key employees of FGI, its subsidiaries, and the Exchanges.

FGI's policy is to fund the amount determined under the aggregate cost method,
provided it does not exceed funding limitations. There has been no change in
funding policy from prior years.

Assets of the Regular Plan are held by an independent trustee. Assets held are
primarily in fixed maturity and equity investments. The principal liability is
for annuity benefit payments of current and future retirees. Assets of the
Restoration Plan are considered corporate assets of FGI and are held in a
grantor trust.

<PAGE> 90

Information regarding the Regular Plan's and the Restoration Plan's funded
status is not developed separately for FGI, its subsidiaries including the
Company and the Exchanges. The funded status of both plans as of December 1,
1998 and 1997 (the latest date for which information is available) is as
follows (in thousands):

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Change in benefit obligation:
Net benefit obligation at beginning of the year $ 747,069 $ 695,346
Service cost 26,423 26,229
Interest cost 54,998 51,890
Plan amendments 0 7,722
Actuarial (gains)/losses 54,218 (5,213)
Benefits paid (29,534) (28,905)
------------ ------------
$ 853,174 $ 747,069
============ ============

Change in plan assets:
Fair value of plan assets at beginning of the year $ 817,552 $ 744,340
Actual return on plan assets 135,313 101,303
Benefits paid (28,564) (28,091)
------------ ------------
Fair value of plan assets at end of the year $ 924,301 $ 817,552
============ ============

Funded status at end of the year $ 71,127 $ 70,483
Unrecognized net actuarial gain (140,910) (136,691)
Unrecognized prior service cost 31,255 34,555
Unrecognized net transition asset (26,186) (30,862)
------------ ------------
Net amount recognized at end of the year $ (64,714) $ (62,515)
============ ============
</TABLE>

Upon B.A.T's purchase of FGI and its subsidiaries in 1998, FGI allocated part
of the purchase price to its portion of the Regular Plan assets in excess of
the projected benefit obligation at the date of acquisition. The asset is being
amortized for the difference between FGI's net pension cost and amounts
contributed to the Plan. The unamortized balance as of December 31, 1998 and
1997 was $20,622,000 and $24,304,000, respectively.

Components of net periodic pension expense for FGI and its subsidiaries are as
follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service costs $ 13,240 $ 14,238 $ 15,275
Interest costs 27,810 28,362 27,409
Return on plan assets (35,817) (35,116) (35,671)
Amortization of:
Transition obligation 1,365 1,229 1,264
Prior service cost 1,986 2,298 1,359
Actuarial gain (2,447) (1,248) (624)
------------- ----------- ---------
Net periodic pension expense $ 6,137 $ 9,763 $ 9,012
============= =========== =========
</TABLE>

The Company's share of pension expense was $452,000, $510,000, and $565,000 in
1998, 1997, and 1996, respectively.

<PAGE> 91

FGI uses the projected unit credit cost actuarial method for attribution of
expense for financial reporting purposes. The interest cost and the actuarial
present value of benefit obligations were computed using a weighted average
interest rate of 6.75% in 1998 and 7.25% in 1997 and 1996, while the expected
return on plan assets was computed using a weighted average interest rate of
9.25% in 1998 and 9.00% in 1997 and 1996. The weighted average rate of increase
in future compensation levels used in determining the actuarial present value
of the projected benefit obligation was 4.50% in 1998 and 5.00% in 1997 and
1996.

FGI and its subsidiaries' postretirement benefits plan is a contributory
defined benefit plan for employees who were retired or who were eligible for
early retirement on January 1, 1995, and is a contributory defined dollar plan
for all other employees retiring after January 1, 1995. Health benefits are
provided for all employees who participated in the Company's group medical
benefits plan for 15 years prior to retirement at age 55 or later. A life
insurance benefit of $5,000 is provided at no cost to retirees who maintained
group life insurance coverage for 15 years prior to retirement at age 55 or
later.

There are no assets separated and allocated to this plan.

The funded status of the entire plan, which includes FGI, its subsidiaries and
the Exchanges, at December 1, 1998 and 1997 (the latest date for which
information is available) was as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Change in benefit obligation:
Net benefit obligation at beginning of the year $ 70,758 $ 75,142
Service cost 1,280 1,395
Interest cost 5,080 5,402
Plan participations' contributions 1,297 1,216
Actuarial (gain)/loss 6,936 (8,205)
Benefits paid (4,984) (4,192)
------------ -------------
$ 80,367 $ 70,758
============ =============

Fair value of plan assets at end of year $ 0 $ 0
============ =============

Funded status at end of the year $ (80,367) $ (70,758)
Unrecognized net actuarial (gain) (8,193) (15,976)
Unrecognized net transition obligation 18,354 19,665
------------ -------------
Accrued postretirement benefit cost $ (70,206) $ (67,069)
============ =============
</TABLE>

FGI and its subsidiaries' share of the accrued postretirement benefit cost was
approximately $53,206,000 in 1998 and $51,930,000 in 1997. The unrecognized net
transition obligation of $18,354,000 in 1998 and $19,665,000 in 1997 represents
the remaining transition obligation of the Exchanges.

Components of postretirement benefits expense for FGI and its subsidiaries are
as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service costs $ 636 $ 753 $ 1,016
Interest costs $ 2,527 $ 2,918 $ 3,018
Amortization of actuarial (gain)/loss (435) (13) 0
-------------- -------------- -------------
Net periodic expense $ 2,728 $ 3,658 $ 4,034
============== ============== =============
</TABLE>

<PAGE> 92

The Company's share of this amount was approximately $205,000, $253,000, and
$264,000 in 1998, 1997, and 1996, respectively.

The weighted average interest rate used in the above benefit computations was
6.75% in 1998 and 7.25% in 1997 and 1996. Beginning in 1996, the initial
medical inflation rate was 7.5% to be graded over a three-year period to 6.0%
and level thereafter, and contribution levels from retirees were the same as
applicable medical cost increases where defined benefits exist. The weighted
average rate of increase in future compensation levels used in determining the
actuarial present value of the accumulated benefit obligation was 4.50% in 1998
and 5.00% in 1997 and 1996.

A 1.0% increase or decrease in the medical inflation rate assumption would have
resulted in the following (in thousands):

<TABLE>
<CAPTION
1% 1%
increase decrease
-------- --------
<S> <C> <C>
Effect on 1998 service and interest components of net periodic cost $ 64 $ (59)
Effect on accumulated postretirement benefit obligation
at December 31, 1998 772 (710)
</TABLE>

NOTE 13: EMPLOYEES' PROFIT SHARING PLANS

FGI and its subsidiaries have two profit sharing plans providing for cash
payments to all eligible employees. The two plans, Cash Profit Sharing Plan
(consisting of Cash and Quest for Gold in 1998 and Cash and Cash Plus in 1997
and 1996) and Deferred Profit Sharing Plan, provide for a maximum aggregate
expense of 16.25% of FGI and its subsidiaries' consolidated annual pretax
earnings, as adjusted. The Deferred Profit Sharing Plan, limited to 10% of
pretax earnings, as adjusted, or 15% of the salary or wage paid or accrued to
the eligible employee, provides for an annual contribution by FGI and its
subsidiaries to a trust for eventual payment to employees as provided in the
Plan. The Cash Profit Sharing Plan and Quest for Gold Program provide for
annual cash distributions to eligible employees. The Cash Profit Sharing Plan
is limited to 5% of pretax earnings, as adjusted, or 5% of eligible employee
salaries or wages paid or accrued. The Quest for Gold Program is limited to
1.25% of pretax earnings, as adjusted, or 6% of eligible employee salaries or
wages paid or accrued. The Cash Plus Plan was limited to 1.25% of pretax
earnings, as adjusted.

The Company's share of expense under these plans was $4,069,000, $3,850,000 and
$3,918,000 in 1998, 1997, and 1996, respectively.

NOTE 14: EQUITY-INDEXED ANNUITIES

During 1997, the Company began selling an equity-indexed annuity product. At
the end of its seven-year term, this product credits interest to the annuity
participant at a rate based on a specified portion of the change in the value
of the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index),
subject to a guaranteed annual minimum return. In order to hedge the interest
liability generated on the annuities as the index rises, the Company purchases
call options on the S&P 500 Index. The Company considers such call options to
be held as a hedge. As of December 31, 1998 and 1997, the Company had call
options with contract values of $40,229,000 and $13,180,000 respectively, and
carrying values of $14,817,000 and $3,299,000, respectively.

<PAGE> 93

Hedge accounting is used to account for the call options as the Company
believes that the options reduce the risk associated with increases in the
account value of the annuities that result from increases in the S&P 500 Index.
The call options effectively hedge the annuity contracts since they are both
purchased and sold with identical parameters. Periodically, the value of the
assets (S&P 500 call options) are matched to the potential liability (annuity
contracts) to ensure the hedge has remained effective. The annuities were
written based on a seven year investment term, absent early termination by
participants. Therefore, the anticipated hedge transaction (i.e., payment of
interest to the policyholder at the end of the investment term and maturity of
the call option) for each annuity is generally expected to occur in seven years
or less. For the years ended December 31, 1998 and 1997, the amount of
unrealized hedging gains (losses) deferred was $3,511,000 and $(151,000),
respectively.

The call options are carried at estimated fair value. Unrealized gains and
losses resulting from changes in the estimated fair value of the call options
are recorded as an adjustment to the interest liability credited to
policyholders. In addition, realized gains and losses from maturity or
termination of the call options are offset against the interest credited to
policyholders during the period incurred. Premiums paid on call options are
amortized to net investment income over the term of the contracts. There were
no early terminations by annuity participants that led to maturities or sales
of the S&P 500 call options during 1998 or 1997.

The cash requirement of the call options consists of the initial premium paid
to purchase the call options. Should a liability exist to the annuity
participant at maturity of the annuity policy, the termination or maturity of
the option contracts will generate positive cash flow to the Company. The
appropriate amount of cash will then be remitted to the annuity participant
based on the respective participation rate. The call options are generally
expected to be held for a seven-year term, but can be terminated at any time.

There are certain risks associated with the call options, primarily with
respect to significant movements in the United States stock market and
counterparty nonperformance. The Company believes that the counterparties to
its call option agreements are financially responsible and that the
counterparty risk associated with these transactions is minimal.

NOTE 15: PARTICIPATING POLICIES

Participating business, which consists of group business, comprised
approximately 8.6% of total insurance in-force as of December 31, 1998 and 8.8%
of its total insurance in-force as of December 31, 1997. In addition,
participating business represented 2.1% and 2.2% of premium income for the
years ended December 31, 1998 and December 31, 1997 and 2.2% of premium income
for the year ended December 31, 1996.

The amount of dividends paid on participating business is determined by the
Farmers Life Board of Directors and is paid annually on the policyholder's
anniversary date. Amounts allocable to participating policyholders are based on
published dividend projections or expected dividend scales.

NOTE 16: OPERATING SEGMENTS

The Company concentrates its activities in the individual life insurance and
annuity markets. These activities are managed separately as each offers a
unique set of product services. As a result, the Company is comprised of the
following two reportable operating segments as defined in SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information": the life
insurance segment and the annuity segment.

<PAGE> 94

The life insurance segment provides individual life insurance products,
including universal life, term life, and whole life. The annuity segment
provides flexible and single premium deferred annuities, single premium
immediate annuities, and equity-indexed annuity products.

The basis of accounting used by the Company's management in evaluating segment
performance and determining how resources should be allocated is referred to as
the Company's GAAP historical basis, which excludes the effects of the purchase
accounting ("PGAAP") adjustments related to the acquisition of FGI and the
Company by B.A.T in December 1988 (See Note 1).

The Company accounts for intersegment transactions as if they were to third
parties and, as such, records the transactions at current market prices. There
were no intersegment revenues among the Company's two reportable operating
segments for the years 1998, 1997, and 1996.

The Company operates in 37 states, primarily in the western, midwestern, and
southwestern regions of the United States and does not earn revenues or hold
assets in any foreign countries.

Information regarding the Company's reportable operating segments follows (in
thousands):

<TABLE>
<CAPTION
Year ended December 31, 1998
-------------------------------------------------------------------------------------
GAAP Historical Basis PGAAP Adjustments Total
------------------------------------------------------------------------------------- PGAAP
Life Annuities Total Life Annuities Total Basis
---- --------- ----- ---- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 544,390 $ 116,029 $ 660,419 (a) $ 171 $ 36 $ 207 $ 660,626
Investment income 190,197 117,024 307,221 128 79 207 307,428
Investment expenses (8,457) (5,201) (13,658) 0 0 0 (13,658)
Net realized losses (13,473) 0 (13,473) 0 0 0 (13,473)
Income before
provision for taxes 173,576 26,033 199,609 1,895 284 2,179 201,788
Provision for income
taxes 61,803 9,269 71,072 99 15 114 71,186
Assets 3,593,311 1,844,266 5,437,577 118,310 60,454 178,764 (b) 5,616,341
Capital expenditures 572 0 572 0 0 0 572
Depreciation &
amortization 88,146 8,572 96,718 (c) (1,129) (151) (1,280) (d) 95,438
</TABLE>

(a) Revenues for the insurance operating segments include net investment income
and net realized gains(losses).

(b) Amount includes PGAAP adjustments related to the DAC ($168.3 million
decrease) and VOBA ($334.4 million increase) assets.

(d) Amount includes PGAAP adjustments related to the amortization of the DAC
($26.2 million decrease) and VOBA ($23.9 million increase) assets.

<PAGE> 95

<TABLE>
<CAPTION>
Year ended December 31, 1997
-------------------------------------------------------------------------------------
GAAP Historical Basis PGAAP Adjustments Total
------------------------------------------------------------------------------------- PGAAP
Life Annuities Total Life Annuities Total Basis
---- --------- ----- ---- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 522,983 $ 114,899 $ 637,882 (a) $ 588 $ 128 $ 716 $ 638,598
Investment income 171,979 115,827 287,806 428 288 716 288,522
Investment expenses (7,626) (5,136) (12,762) 0 0 0 (12,762)
Net realized gains 10,063 0 10,063 0 0 0 10,063
Income before
provision for taxes 190,418 24,677 215,095 (3,050) (396) (3,446) 211,649
Provision for income
taxes 67,022 8,685 75,707 (1,633) (212) (1,845) 73,862
Assets 3,311,007 1,870,445 5,181,452 116,805 60,454 177,259 (b) 5,358,711
Capital expenditures 1,696 0 1,696 0 0 0 1,696
Depreciation &
amortization 82,849 7,210 90,059 (c) 4,025 538 $ 4,563 (d) 94,622
</TABLE>

(a) Revenues for the insurance operating segments include net investment income
and net realized gains(losses).

(b) Amount includes PGAAP adjustments related to the DAC ($195.2 million
decrease) and VOBA ($359.1 million increase) assets.

(d) Amount includes PGAAP adjustments related to the amortization of the DAC
($18.5 million decrease) and VOBA ($21.3 million increase) assets.

<TABLE>
<CAPTION>
Year ended December 31, 1996
-------------------------------------------------------------------------------------
GAAP Historical Basis PGAAP Adjustments Total
------------------------------------------------------------------------------------- PGAAP
Life Annuities Total Life Annuities Total Basis
---- --------- ----- ---- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 502,941 $ 110,344 $ 613,285 (a) $ 8 $ 2 $ 10 $ 613,295
Investment income 157,138 110,660 267,798 6 4 10 267,808
Investment expenses (5,842) (4,114) (9,956) 0 0 0 (9,956)
Net realized gains 30,182 0 30,182 0 0 0 30,182
Income before
provision for taxes 194,416 22,554 216,970 (3,266) (283) (3,549) 213,421
Provision for income
taxes 78,246 9,077 87,323 (14,893) (1,291) (16,184) 71,139
Assets 3,356,559 1,898,740 5,255,299 118,557 61,348 179,905 (b) 5,435,204
Capital expenditures 132 0 132 132
Depreciation &
amortization 75,166 5,624 80,790 (c) 3,490 279 $ 3,769 (d) 84,559
</TABLE>

(a) Revenues for the insurance operating segments include net investment income
and net realized gains(losses).

(b) Amount includes PGAAP adjustments related to the DAC ($217.3 million
decrease) and VOBA ($383.9 million increase) assets.

(d) Amount includes PGAAP adjustments related to the amortization of the DAC
($20.6 million decrease) and VOBA ($20.5 million increase) assets.

<PAGE> 96
FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

BALANCE SHEETS (in thousands)
(Unaudited)
================================================================================

<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
- ------ -------------- --------------
<S> <C> <C>
INVESTMENTS:
Fixed maturities available for sale:
Bonds, at fair value (cost: $3,746,937 and $3,510,846) $ 3,699,789 $ 3,674,223
Redeemable preferred stocks, at fair value
(cost: $67,206 and $82,090) 68,845 86,662
Equity securities available for sale:
Nonredeemable preferred stocks, at fair value
(cost: $1,153 and $1,153) 1,205 1,270
Common stocks, at fair value (cost: $58,987 and $41) 55,748 3
Mortgage loans on real estate, net of allowance for losses 37,009 52,879
Investment real estate, net of accumulated depreciation
and allowance for losses 51,297 59,047
Surplus note of the Exchanges 119,000 119,000
Policy loans 196,802 185,211
Joint ventures 7,899 8,456
S&P 500 call options, at fair value (cost: $17,376 and $11,305) 23,498 14,817
-------------- --------------

Total investments 4,261,092 4,201,568

CASH AND CASH EQUIVALENTS 51,034 63,784

ACCRUED INVESTMENT INCOME 58,686 53,263

NOTE RECEIVABLE OF AFFILIATE 50,000 0

OTHER RECEIVABLE 27,471 17,558

DEFERRED POLICY ACQUISITION COSTS 530,629 467,248

VALUE OF BUSINESS ACQUIRED 329,379 334,442

PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $7,802 and $7,411 14,314 14,379

OTHER ASSETS:
Securities lending collateral 262,126 461,801
Other assets 1,687 2,298
-------------- --------------
263,813 464,099

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

TOTAL $ 5,586,418 $ 5,616,341
============== ==============
</TABLE>
<PAGE> 97

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

BALANCE SHEETS (in thousands)
(Unaudited)
================================================================================

<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1999 1998
- ------------------------------------ ------------- -------------
<S> <C> <C>
POLICY LIABILITIES AND ACCRUALS:
Future policy benefits $ 3,348,597 $ 3,184,248
Policy claims 31,013 26,177
------------- -------------

3,379,610 3,210,425

OTHER POLICYHOLDER FUNDS & DIVIDENDS 77,239 57,358

ACCRUED EXPENSES AND OTHER LIABILITIES:
Securities lending liability 262,126 461,801
Death benefit liability 44,483 37,024
Other liabilities 76,279 63,736
------------- -------------
382,888 562,561

INCOME TAXES:
Current 9,890 4,180
Deferred 102,699 161,184
------------- -------------
112,589 165,364

Total liabilities 3,952,326 3,995,708

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S EQUITY:
Common stock, $1 par value - Authorized, 25,000,000 shares;
issued and outstanding, 6,600,000 shares 6,600 6,600
Additional paid-in capital 994,246 994,246
Accumulated other comprehensive income - net of deferred
taxes of $(11,979) and $41,518 (22,246) 77,105
Retained earnings 655,492 542,682
------------- -------------

Total stockholder's equity 1,634,092 1,620,633

TOTAL $ 5,586,418 $ 5,616,341
============ ============
</TABLE>
2
<PAGE> 98

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF INCOME (in thousands)
(Unaudited)
================================================================================

<TABLE>
<CAPTION>
Nine month period
ended September 30,
-----------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
REVENUES:
Net premiums earned $ 154,821 $ 128,696
Universal life and annuity policy charges 157,731 154,643
Net investment income 228,617 220,008
Net realized investment gains 12,160 9,869
Other income 621 529
------------- ------------

Total revenues 553,950 513,745

BENEFITS AND EXPENSES:
Death and other benefits 102,805 99,212
Future policy benefits 38,270 16,715
Interest credited to policyholders 117,540 112,371
Underwriting, acquisition and insurance expenses:
Amortization of deferred policy acquisition costs 62,297 48,307
Amortization of value of business acquired 15,903 19,452
Commissions 11,818 14,083
General insurance expenses and taxes 32,248 31,813
------------- ------------

Total benefits and expenses 380,881 341,953
------------- ------------

Income before provision for income taxes 173,069 171,792
------------- ------------
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 66,081 23,496
Deferred (5,822) 37,679
------------- ------------

Total provision for income taxes 60,259 61,175
------------- ------------

NET INCOME $ 112,810 $ 110,617
============= ============
</TABLE>
3
<PAGE> 99

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF COMPREHENSIVE INCOME (in thousands)
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Nine month period
ended September 30,
------------------------------------
1999 1998
----------------- --------------
<S> <C> <C>
NET INCOME $ 112,810 $ 110,617
----------------- --------------
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized holding gains/losses on securities:
Unrealized holding gains/(losses) on securities net of tax (144,945) 18,357
of $(78,047) and $9,885
Less: reclassification adjustment for gains included in net income,
net of tax of $2,364 and $ (268) 4,390 (497)
----------------- --------------
Net unrealized holding gains on securities, net of tax of
$(75,683) and $9,617 (140,555) 17,860

Change in effect of unrealized gains (losses) on other insurance
accounts, net of tax of $22,187 and $(2,612) 41,204 (4,850)
----------------- --------------

COMPREHENSIVE INCOME $ 13,459 $ 123,627
----------------- --------------
</TABLE>

<PAGE> 100

FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF STOCKHOLDER'S EQUITY (in thousands)
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Accumulated
Additional other Total stock-
Common paid-in comprehensive Retained holder's
stock capital income earnings equity
----- ------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 $ 6,600 $ 994,246 $ 77,105 $ 542,682 $ 1,620,633

Net income 112,810 112,810

Unrealized gains (losses) on
available for sale investments
arising during the period, net
of tax of $(78,047) (144,945) (144,945)

Reclassification adjustment for
gains included in net income,
net of tax of $2,364 4,390 4,390

Change in effect of unrealized
gains (losses) on other insurance
accounts, net of tax of $22,187 41,204 41,204
--------- ------------ ------------- ----------- -------------

BALANCE, September 30, 1999 $ 6,600 $ 994,246 $ (22,246) $ 655,492 $ 1,634,092
========= ============ ============= =========== =============
</TABLE>

5
<PAGE> 101
FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF STOCKHOLDER'S EQUITY (in thousands)
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Accumulated
Additional other Total stock-
Common paid-in comprehensive Retained holder's
stock capital income earnings equity
----- ------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 $ 6,600 $ 994,246 $ 66,675 $ 412,080 $ 1,479,601

Net income 110,617 110,617

Unrealized gains (losses) on
available for sale investments
arising during the period, net
of tax of $9,885 18,357 18,357

Reclassification adjustment for
gains included in net income,
net of tax of $(268) (497) (497)

Change in effect of unrealized
gains (losses) on other insurance
accounts net of tax of $(2,612) (4,850) (4,850)
---------- ----------- ----------- ---------- -----------

BALANCE, September 30, 1998 $ 6,600 $ 994,246 $ 79,685 $ 522,697 $ 1,603,228
========== =========== =========== ========== ===========
</TABLE>

6
<PAGE> 102
FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF CASH FLOWS (in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine month period
ended September 30,
---------------------------------
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 112,810 $ 110,617
Adjustments to reconcile net income to net cash provided by
operating activities:
Universal life type contracts:
Deposits received 226,359 223,394
Withdrawals (189,591) (180,274)
Interest credited 53,167 50,285
Realized investment losses (gains) (12,160) (9,869)
Amortization of deferred policy acquisition costs and VOBA 78,200 67,759
Deferred income tax expense (benefit) (5,822) 37,679
Depreciation 1,948 1,921
Cash provided (used) by changes in operating assets and liabilities:
Federal income taxes payable 5,710 14,875
Deferred policy acquisition costs (136,515) (64,284)
Life insurance policy liabilities 43,572 23,779
Other policyholder funds 19,882 (2,466)
Other 72,707 (17,420)
--------- ---------
Net cash provided by operating activities 270,267 255,996
INVESTING ACTIVITIES:
Purchase of bonds and stocks available-for-sale (890,540) (446,970)
Proceeds from sales or maturities of bonds and stocks available-for-sale 617,121 348,489
Purchase of mortgage loans 0 0
Mortgage loan collections 17,044 24,025
Purchase of investment real estate (617) (878)
Proceeds from sale of investments in real estate 6,368 4,302
Increase in policy loans (11,591) (14,847)
Purchase of property and equipment (409) (445)
Purchase of surplus note of the Exchanges 0 (119,000)
Purchase of note receivable from affiliate (50,000) 0
Other (6,071) (6,101)
--------- ---------
Net cash used by investing activities (318,695) (211,425)

FINANCING ACTIVITIES:
Annuity contracts:
Deposits received 121,572 107,341
Withdrawals (149,600) (164,283)
Interest credited 63,706 58,577
--------- ---------
Net cash provided by financing activities 35,678 1,635
--------- ---------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS,
carried forward (12,750) 46,206

</TABLE>
7
<PAGE> 103
FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

STATEMENTS OF CASH FLOWS (in thousands) (continued)
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Nine month period
ended September 30,
------------------------------------
1999 1998
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS,
brought forward $ (12,750) $ 46,206

CASH AND CASH EQUIVALENTS:
Beginning of year 63,784 9,980
------------ ------------
End of year $ 51,034 $ 56,186
============ ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during year for:
Income taxes $ 59,878 $ 22,199
Interest paid (125) 945
</TABLE>

8
<PAGE> 104
FARMERS NEW WORLD LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Farmers Group, Inc.)

NOTES TO INTERIM FINANCIAL STATEMENTS
(Unaudited)
- -------------------------------------------------------------------------------

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying balance sheet of Farmers New World Life Insurance Company
("the Company") as of September 30, 1999, the related statements of income,
comprehensive income, stockholders' equity and cash flows for the nine
month periods ended September 30, 1999 and September 30, 1998, have been
prepared in accordance with generally accepted accounting principles
("GAAP") for interim periods and are unaudited. However, in management's
opinion, the financial statements include all adjustments (consisting of
only recurring adjustments) necessary for a fair presentation of results
for such interim periods. These statements do not include all of the
information and footnotes required by GAAP for complete financial
statements and should be read in conjunction with the balance sheets of the
Company as of December 31, 1998 and 1997, and the related statements of
income, comprehensive income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1998.

2. MATERIAL CONTINGENCIES

The Company is a party to numerous lawsuits arising from its normal
business activities. These actions are in various stages of discovery and
development, and some seek punitive as well as compensatory damages. In the
opinion of management, the Company has not engaged in any conduct which
should warrant the award of any material punitive or compensatory damages.
The Company intends to vigorously defend its position in each case, and
management believes that, while it is not possible to predict the outcome
of such matters with absolute certainty, ultimate disposition of these
proceedings should not have a material adverse effect on the Company's
results of operations or financial position.
9

<PAGE> 105

Part II

<PAGE> 106

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.

STATEMENT WITH RESPECT TO INDEMNIFICATION

Under its By-laws, Farmers, to the full extent permitted by the Washington
Business Corporation Act, will indemnify any person who was or is a party to
any proceeding by reason of the fact that he or she is or was a director of
Farmers, as provided below.

By-laws of Farmers New World Life Insurance Company (as amended October 24,
1995)

INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES

SECTION 47. (a) RIGHT OF INDEMNITY. Each person who acts as a Director, officer
or employee of the corporation shall be indemnified by the corporation for all
sums which he becomes obligated to pay, (including counsel fees, expenses and
court costs actually and necessarily incurred by him) in connection with any
action, suit or proceeding in which he is made a party by reason of his being,
or having been a Director, officer, or employee of the corporation, except in
relation to matters as to which he shall be adjudged in such action, suit or
proceeding to be liable for bad faith or misconduct in the performance of his
duties as such Director, officer or employee, and except any sum paid to the
corporation in settlement of an action, suit or proceeding based upon bad faith
or misconduct in the performance of his duties.

(b) SCOPE OF INDEMNITY. The right of indemnification in this
article provided shall inure to each Director, officer and employee of the
corporation, whether or not he is such Director, officer or employee at the
time he shall become obligated to pay such sums, and whether or not the claim
asserted against him is based on matters which antedate the adoption of this
article; and in the event of his death shall extend to his legal
representatives. Each person who shall act as a Director, officer or employee
of the corporation shall be deemed to be doing so in reliance upon such right
of indemnification; and such right shall not be deemed exclusive of any other
right to which any such person may be entitled, under any by-law, agreement,
vote of stockholders, or otherwise.

(c) DETERMINATION OF CLAIMS FOR INDEMNITY. The Board of Directors
of the corporation, acting at a meeting at which a majority of the quorum is
unaffected by self-interest (notwithstanding that other members of the quorum
present but not voting may be so affected), shall determine the propriety and
reasonableness of any indemnity claimed under this article, and such
determination shall be final and conclusive. If, however, a majority of a
quorum of the Board which is unaffected by self-interest and willing to act is
not obtainable, the Board in its discretion may appoint from among the
stockholders who are not Directors or officers or employees of the corporation,
a committee of two or more persons to consider and determine any such question,
and the determination

<PAGE> 107

of such committee shall be final and conclusive.

RULE 484 UNDERTAKING

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

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

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

<PAGE> 108

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

The facing sheet.
The prospectus consisting of 104 pages.
Undertaking to file reports.
Statement with respect to indemnification.
Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.

Written consents of the following persons: Joel Kuni, M. Douglas
Close, Deloitte & Touche LLP, and Sutherland Asbill & Brennan LLP
The following exhibits, corresponding to those required by paragraph A
of the instructions as to exhibits in Form N-8B-2:

A.
(1) Resolution of the Board of Directors of Farmers New
World Life Insurance Company establishing Farmers
Variable Life Separate Account A(1)
(2) Not Applicable
(3) (a) Form of Distribution Agreement(2)
(b) Form of Investors Brokerage Services, Inc.
Registered Representative Agreement(2)
(4) Not applicable
(5) (a) Revised Specimen Flexible Premium Variable
Life Insurance Policy(3)
(b) Revised Monthly Disability Benefit Rider(3)
(c) Revised Waiver of Deduction Benefit Rider(3)
(d) Revised Accidental Death Benefit Rider(3)
(e) Revised Additional Insured Term Insurance
Rider(3)
(f) Revised Children's Term Insurance Rider(3)
(g) Automatic Increase Benefit Rider(3)
(h) Accelerated Benefit Rider(3)
(6) (a) Articles of Incorporation of Farmers New
World Life Insurance Company(1)
(b) By-laws of Farmers New World Life Insurance
Company(1)
(7) Not applicable
(8) (a) Form of Participation Agreement between
Kemper Variable Series and Farmers New
World Life Insurance Company(2)
(b) Form of Participation Agreement between
Scudder Variable Life Investment Fund and
Farmers New World Life Insurance Company(2)
(c) Form of Participation Agreement between
Janus Aspen Series and Farmers New World
Life Insurance Company(2)

<PAGE> 109

(d) Form of Participation Agreement between
PIMCO Variable Insurance Trust and Farmers
New World Life Insurance Company(2)
(e) Form of Participation Agreement between
Templeton Variable Products Series Fund and
Farmers New World Life Insurance Company(2)
(f) Form of Consulting Services Agreement
between McCamish Systems, L.L.C. and
Farmers New World Life Insurance Company(2)
(g) Form of Master Administration Agreement
between McCamish Systems, L.L.C. and
Farmers New World Life Insurance Company(2)
(9) Not applicable
(10) (a) Form of Application for Flexible Premium
Life Insurance(3)
(b) Form of Variable Policy Application
Supplement(2)

(11) Description of issuance, transfer and redemption
procedures(3)

B. Not applicable
C. Not applicable

2. Opinion and consent of M. Douglas Close, Esq. as to the
legality of the securities being registered(3)

3. Not applicable

4. Not applicable

5. Not applicable

6. Opinion and consent of Joel Kuni, as to actuarial matters
pertaining to the securities being registered(3)

7. (a) Consent of Deloitte & Touche LLP(3)
(b) Consent of Sutherland Asbill & Brennan LLP(3)

8. Powers of Attorney(1)

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

(1) Incorporated herein by reference to the initial registration statement
on Form S-6 for Farmers Variable Life Separate Account A filed with
the SEC via EDGARLINK on July 29, 1999 (File No. 333-84023).

(2) Incorporated herein by reference to Pre-Effective Amendment No. 1 to
the registration statement on Form N-4 for Farmers Annuity Separate
Account A filed with the SEC via EDGARLINK on November 15, 1999 (File
No. 333-85183).

(3) Filed herewith.

<PAGE> 110

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant,
Farmers Variable Life Separate Account A, has duly caused this Pre-Effective
Amendment No. 1 to the registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Mercer Island the State of Washington, on this
30th day of November, 1999.

Farmers Variable Life Separate Account A
(SEAL) (Registrant)

By: Farmers New World Life Insurance Company
(Depositor)

Attest: /s/ John R. Patton By: /s/ C. Paul Patsis
------------------------------- -------------------------------
John R. Patton C. Paul Patsis
Assistant Vice President President
and Secretary Farmers New World Life
Farmers New World Life Insurance Company
Insurance Company
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, Farmers New World
Life Insurance Company has duly caused this Pre-Effective Amendment No. 1 to
the registration statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and attested,
all in the City of Mercer Island and the State of Washington, on the 30th day of
November, 1999.

<TABLE>
<S> <C>
Farmers New World Life Insurance Company

(SEAL)

Attest: /s/ John R. Patton By: /s/ C. Paul Patsis
------------------------------- -------------------------------
John R. Patton C. Paul Patsis
Assistant Vice President and Secretary President
Farmers New World Life Farmers New World Life
Insurance Company Insurance Company
</TABLE>

<PAGE> 111

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

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ C. Paul Patsis President and Director November 30, 1999
- ---------------------------------- (Principal Executive Officer)
C. Paul Patsis

/s/ David A. Demmon Assistant Vice President and November 30, 1999
- ---------------------------------- Treasurer (Principal Accounting
David A. Demmon*/ Officer and Principal Financial
Officer)

/s/ Richard E. Bangert Director November 30, 1999
- ----------------------------------
Richard E. Bangert*/

/s/ Donald J. Covey Director November 30, 1999
- ----------------------------------
Donald J. Covey*/

/s/ Martin D. Feinstein Director November 30, 1999
- ----------------------------------
Martin D. Feinstein*/

/s/ Paul N. Hopkins Director November 30, 1999
- ----------------------------------
Paul N. Hopkins*/

/s/ Dennis I. Okamoto Director November 30, 1999
- ----------------------------------
Dennis I. Okamoto*/

/s/ Keitha T. Schofield Director November 30, 1999
- ----------------------------------
Keitha T. Schofield*/

/s/ Gary R. Severson Director November 30, 1999
- ----------------------------------
Gary R. Severson*/

/s/ John F. Sullivan, Jr. Director November 30, 1999
- ----------------------------------
John F. Sullivan, Jr.*/
</TABLE>

*/ By C. Paul Patsis, pursuant to powers of attorney filed herewith.

<PAGE> 112

<TABLE>
<CAPTION>
Exhibit Index
<S> <C>
1.A.(5)(a) Revised Specimen Flexible Premium Variable Life Insurance Policy

1.A.(5)(b) Revised Monthly Disability Benefit Rider

1.A.(5)(c) Revised Waiver of Deduction Benefit Rider

1.A.(5)(d) Revised Accidental Death Benefit Rider

1.A.(5)(e) Revised Additional Insured Term Insurance Rider

1.A.(5)(f) Revised Children's Term Insurance Rider

1.A.(5)(g) Automatic Increase Benefit Rider

1.A.(5)(h) Accelerated Benefit Rider

1.A.(10)(a) Form of Application for Flexible Premium Life Insurance

1.A.(11) Description of issuance, transfer and redemption procedures

2. Opinion and consent of M. Douglas Close, Esq. as to the legality of the securities
being registered

6. Opinion and consent of Joel Kuni, as to actuarial matters pertaining to the securities
being registered

7.(a) Consent of Deloitte & Touche LLP

7.(b) Consent of Sutherland Asbill & Brennan LLP
</TABLE>

<PAGE> 1
EXHIBIT 1.A.(5)(a)

Home Office: 3003 - 77th Avenue, S.E., Mercer Island, Washington 98040 /
(206)232-8400

A STOCK COMPANY

Insured JOHN A DOE 001234567 Policy Number

INDIVIDUAL FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE POLICY

In this policy the owner will be referred to as "you" or "the owner" and Farmers
New World Life Insurance Company will be referred to as "us" or "we."

In consideration of the application and payment of premiums we insure the person
named above in accordance with the provisions of all the pages of this policy.

Your benefits under this policy, the amount of the premium, the premium due
dates, and other policy data are shown as the Policy Specifications on the last
page of this policy. We will pay the proceeds in the manner provided in the
section titled Payment of Proceeds.

The amount and duration of the death benefit may increase or decrease as
described in this policy, depending on the investment experience of the
subaccounts.

The contract value of this policy may increase or decrease daily depending on
the investment experience of the subaccounts. There is no guaranteed minimum
contract value.

NOTICE OF YOUR RIGHT TO RETURN THIS POLICY

RIGHT TO EXAMINE PERIOD: YOU MAY CANCEL THIS POLICY AT ANY TIME WITHIN 10 DAYS
AFTER YOU RECEIVE IT BY DELIVERING OR MAILING IT TO OUR HOME OFFICE AT MERCER
ISLAND, WASHINGTON. THIS SHALL VOID THE POLICY FROM THE BEGINNING AND THE
PARTIES SHALL BE IN THE SAME POSITION AS IF NO POLICY HAD BEEN ISSUED. WE WILL
REFUND THE GREATER OF ALL PREMIUMS YOU PAID FOR THE POLICY OR THE CONTRACT VALUE
ON THE DATE WE RECEIVE THE RETURNED POLICY AT OUR HOME OFFICE.

<PAGE> 2

This policy is a legal contract between you and us. READ YOUR POLICY CAREFULLY.
This LIFE INSURANCE policy provides death protection for as long as the insured
lives during the period of coverage. That period, the premium payment details,
and other policy data, are shown in the Policy Specifications on the last page
of this policy.

ALPHABETIC GUIDE TO YOUR POLICY

PAGE

Accumulation Unit Value.............................................11
Annual Report.......................................................13
Assignments..........................................................6
Beneficiary..........................................................6
Cash Value..........................................................12
Conformity to State Laws.............................................5
Continuation of Coverage.............................................8
Contract Value.......................................................9
Cost of Insurance Charge.............................................12
Death Benefit Options................................................7
Death Benefit Proceeds...............................................7
Decrease in Principal Sum...........................................15
Fixed Account.......................................................9
General Provisions...................................................5
Grace Period.........................................................8
Incontestability.....................................................5
Increase in Principal Sum...........................................15
Maturity............................................................13
Minimum Premium......................................................7
Monthly Deduction...................................................11
Ownership...........................................................6
Payment of Proceeds.................................................7
Policy Changes.....................................................14
Policy Loans.......................................................14
Policy Specifications...................................Last Page of Policy
Policy Values.......................................................12
Premium Payments....................................................7
Reinstatement.......................................................8
Settlement Privileges..............................................17
Subaccounts........................................................10
Suicide.............................................................5
Surrender Charge Table.............................................16
Surrender Value....................................................12
Surrender Value Options............................................13
Transfer Privilege.................................................17
Variable Account...................................................9

Page 2

<PAGE> 3

ADDITIONAL BENEFITS

The additional benefits, if any, shown on the Policy Specifications page are
described in the additional benefit agreements that follow the Settlement
Privileges.

<TABLE>
<CAPTION>
DEFINITIONS

<S> <C>
ACCUMULATION UNIT An accounting unit used to calculate the variable account
value. It is a measure of the net investment results of each
of the variable subaccounts.

ATTAINED AGE The sum of the insured's age on the issue date plus the
number of years completed since the policy was issued.

CASH VALUE The contract value minus any applicable surrender charge.

CONTRACT VALUE The sum of the values you have in the variable account plus
the fixed account and the loan account.

COST OF INSURANCE The portion of the monthly deduction that pays for
CHARGE the cost of providing this policy's death benefit.

EVIDENCE OF INSURABILITY Information about a person that we use to approve or
reinstate the policy, or increase the principal sum or other
benefits of the policy.

FIXED ACCOUNT An account that is part of our general account, and is not
part of or dependent on the investment performance of the
variable account.

FIXED ACCOUNT VALUE The portion of the contract value allocated to the fixed
account.

IN FORCE In effect. A life insurance policy that is in force will
provide a death benefit if the insured loss occurs. If the
policy is not in force there will be no death benefit.

ISSUE AGE A person's age as of last birthday on the date the policy
was issued.

ISSUE DATE The effective date for coverage. Policy months, years, and
anniversaries are measured from the issue date. The initial
premium (times the percent of premium factor) is allocated
to the fixed account on the issue date. The first monthly
deduction occurs on the issue date. The entire contract
value remains allocated to the fixed account until the
reallocation date.

LOAN ACCOUNT An account that is part of our general account. On the date
any loan is made, an amount equal to the loan is transferred
from the subaccounts and the fixed account to the loan
account.

MINIMUM PREMIUM The lowest amount that must be paid if the surrender value
is zero.

MONTHLY ADMINISTRATION A deduction from the contract value that covers the cost of
CHARGE managing the policy. The monthly administration charge is
shown on the Policy Specifications page.

MONTHLY DEDUCTION The amount deducted from the contract value each month to
pay for the insurance coverage. This includes the monthly
cost of insurance charge and any monthly administration
charge. The monthly deduction for the policy and the riders
are separate deductions. The first monthly deduction occurs
on the issue date.
</TABLE>

Page 3

<PAGE> 4

<TABLE>
<S> <C>
MONTHLY DUE DATE The day of each month on which policy charges are determined
and deducted. The monthly due date is shown on the Policy
Specifications page.

MORTALITY AND EXPENSE A charge deducted from the subaccounts on each valuation day
RISK CHARGE that compensates us for providing the mortality and expense
guarantees and assuming the risks under this policy.

NET INVESTMENT FACTOR The ratio of the subaccount value at the end of the current
valuation day to its value at the end of the immediately
preceding valuation day. The subaccount value reflects gains
and losses in the subaccounts, dividends paid, any capital
gains and losses, any taxes paid, and the deduction of the
mortality and expense risk charge.

PERCENT OF PREMIUM The factor multiplied by all premium payments to determine
FACTOR the amount of premium credited to the contract value. This
factor is shown on the Policy Specifications page.

PREMIUM CLASS A classification that affects the cost of insurance rate and
the premium required to insure an individual.

PRINCIPAL SUM The amount of initial death benefit shown on the Policy
Specifications page. You may increase or decrease the
principal sum, subject to certain conditions. The actual
death benefit proceeds paid may be more or less than the
principal sum.

REALLOCATION DATE The date the contract value in the fixed account is
allocated to the subaccounts and to the fixed account based
on the premium payment allocation percentages specified in
the application. The reallocation date is the record date
plus the number of days in your state's right to examine
period, plus 10 days.

RECORD DATE The date we record your policy on our books as an in force
policy.

SEC The United States Securities and Exchange Commission.

SUBACCOUNT A division of the variable account. The assets of each
subaccount are invested in a corresponding portfolio of a
designated mutual fund.

SURRENDER To cancel the policy by signed request from the owner.

SURRENDER VALUE The cash value minus any outstanding policy loan and accrued
loan interest.

TERMINATE When the benefits and insurance end under the terms of the
policy.

VALUATION DAY Each day on which the New York Stock Exchange is open for
business. Farmers New World Life is open to administer the
policy on each day that the New York Stock Exchange is open.

VALUATION PERIOD The interval of time commencing at the close of normal
trading on the New York Stock Exchange on one valuation day
and ending at the close of normal trading on the New York
Stock Exchange on the next succeeding valuation day.

VARIABLE ACCOUNT The variable account is named on the Policy Specifications
page. The variable account is not part of our general
account. The variable account has subaccounts, each of which
is invested in a corresponding portfolio of a designated
mutual fund.

VARIABLE ACCOUNT VALUE The portion of the contract value that is allocated to the
subaccounts of the variable account.
</TABLE>

Page 4

<PAGE> 5

<TABLE>
<CAPTION>
GENERAL PROVISIONS
<S> <C>
CONTRACT The entire contract is:
1. this policy;
2. the application attached at issue;
3. any attached amendments and supplements to the application;
4. any attached riders and endorsements; and
5. any attached application for reinstatement, increase in
principal sum, or change in death benefit option.

In the absence of fraud, we will consider all statements in the
application to be representations and not warranties. No statement
will be used by us to contest a claim unless that statement is in
an attached application or in an amendment or supplement to the
application attached to this policy.

CHANGE OF Any change in the terms of this policy must be in writing and signed
POLICY by one of our officers. A copy of the change will be attached
to this policy. No agent has the authority to change any terms or
conditions of this policy.

INCONTESTABILITY We will not contest this policy after it has been in force for two years
during the insured's lifetime. We will not contest any increase in
principal sum after the increase has been in force for two years during
the insured's lifetime. This provision does not apply to any
additional benefits for disability or accidental death, or to riders that
provide term insurance on any person(s) other than the insured.

If this policy is reinstated, we will not contest any statements on the
reinstatement application after the policy has been in force for two years
from its date of reinstatement during the insured's lifetime.

SUICIDE If, within two years from the issue date, the insured dies by suicide, while
sane or insane, we will limit the proceeds to:
1. the premiums paid; less
2. any policy loans; less
3. any partial surrender amounts previously paid.

A new two-year period will apply to each increase in principal sum starting on
the effective date of each increase. During this two-year period the proceeds
paid due to an increase in principal sum will be limited to the monthly cost of
insurance charges for the increase.

MISSTATEMENT If the insured's age or sex has been misstated, we will adjust the death
OF AGE OR SEX benefit. The adjusted death benefit will be that which would have been
purchased by the most recent monthly deduction based on the correct age or
sex.

You may file proof of age or sex at any time. Once the insured's age or sex
is established to our satisfaction we will use this age or sex in any settlement.

CONFORMITY TO This policy is subject to the laws of the state in which it is delivered.
STATE LAWS Any terms that are in conflict with these laws are amended to conform.

NONPARTICIPATING This policy is nonparticipating. It does not share in our surplus earnings.
</TABLE>

Page 5

<PAGE> 6

<TABLE>
<CAPTION>
OWNERSHIP
<S> <C>
OWNER The insured is the owner of this policy unless:
1. another person is named as owner in the application; or
2. a new person is named as provided in the Change of Owner
section below.

During the insured's lifetime, the owner may exercise all the
rights and benefits provided by this policy.

SUCCESSOR The successor owner becomes owner at the death of the owner.
OWNER If the owner and successor owner die before the insured
dies, the insured will become the owner of this policy.

CHANGE OF The owner may name a new owner by notifying us in writing
OWNER while the insured is alive. When we receive acceptable
signed notice, the change will take effect on the date the
notice was signed. The change is subject to any action we
may have taken before receiving the notice.

ASSIGNMENTS The owner may assign this policy. We are not bound by an
assignment unless duplicate signed forms are filed with us.
We are not responsible for the validity of an assignment.
The rights of the owner and the beneficiary are subject to
the rights of the assignee.

BENEFICIARY

BENEFICIARY The beneficiary is the person or persons named to receive
DESIGNATION the proceeds at the insured's death. The beneficiary is as
named in the application or as changed by the owner's signed
request while the insured is living.

If no beneficiary is living when the insured dies, we will
pay the proceeds to the owner or to the owner's estate.

CHANGE OF The beneficiary may be changed at any time before the
BENEFICIARY insured dies. The change must be signed by the owner and
sent to us. The change will take effect on the date it was
signed, subject to any action taken by us before we receive
the request.

DELAY CLAUSE A delay clause may be requested by the owner in the
application or in any acceptable signed request filed with
us while the insured is living. This clause provides that if
the beneficiary dies within the specified number of days
following the insured's death (not including the date of
death), the proceeds will be paid as if the beneficiary had
died first. The number of days specified cannot exceed 180
days.

FUTURE CHILDREN CLAUSE A clause including future children as beneficiaries may be
requested by the owner in any acceptable signed request
filed with us. This clause provides that children born of
the insured's present marriage to the primary beneficiary
prior to the end of 10 months after the date of the
insured's death shall share equally with the other children
in the beneficiary class designated. This clause does not
provide for payment to children born of these future
children.
</TABLE>

Page 6

<PAGE> 7

<TABLE>
<CAPTION>
DEATH BENEFIT PROCEEDS
<S> <C>
PAYMENT OF PROCEEDS If the insured dies while this policy is in force, we will
pay the proceeds to the beneficiary on receipt of due proof
of death. If no beneficiary survives the insured, we will
pay the proceeds to the owner or the owner's estate. Payment
will be made in one sum unless a settlement option with a
different method of payment is chosen.

AMOUNT PAYABLE At the insured's death we will pay:
1. the death benefit then in effect; less
2. any monthly deductions due and unpaid at the date of death;
less
3. any loans and accrued loan interest; plus
4. the amounts to be paid under the terms of any attached riders.

DEATH BENEFIT OPTIONS

DEATH BENEFIT This policy offers two death benefit options through
attained age 99. Option A is a variable death benefit.
Option B is a level death benefit. The option you have
selected is shown on the Policy Specifications page. For
attained ages after age 99 the death benefit equals the
contract value.

OPTION A The death benefit through attained age 99 is the greater of:
VARIABLE DEATH BENEFIT 1. the principal sum plus the contract value on the date of
death; or
2. the contract value times the death benefit percentage
shown in the following table.

OPTION B The death benefit through attained age 99 is the greater of:
LEVEL DEATH BENEFIT 1. the principal sum on the date of death; or
2. the contract value times the death benefit percentage
shown in the following table.
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Death Benefit Percentage
-------------------------------------------------------------------------------
Attained Percentage Attained Percentage Attained Percentage
Age % Age % Age %
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 or less 250 54 157 68 117
41 243 55 150 69 116
42 236 56 146 70 115
43 229 57 142 71 113
44 222 58 138 72 111
45 215 59 134 73 109
46 209 60 130 74 107
47 203 61 128 75 to 90 105
48 197 62 126 91 104
49 191 63 124 92 103
50 185 64 122 93 102
51 178 65 120 94 101
52 171 66 119 95 to 99 100
53 164 67 118
-------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
PREMIUMS AND REINSTATEMENTS
<S> <C>
PREMIUM PAYMENTS After the first premium payment has been paid, subsequent
premiums can be paid at any time. The amount of premium
payments is flexible after issue, subject to limits imposed
by tax laws and by minimum premium requirements. The actual
amount and frequency of the premium payments will affect the
values and duration of the insurance. No premiums can be
paid after the insured reaches attained age 100.

Premiums are payable at our home office or to one of our
authorized agents. We
</TABLE>

Page 7

<PAGE> 8

<TABLE>
<S> <C>
will provide a receipt signed by one of our officers upon
request.

MINIMUM PREMIUM The minimum premium must be paid unless the policy has a
positive surrender value. The initial minimum premium is
shown on the Policy Specifications page. The minimum premium
will change if the principal sum changes. Paying the minimum
premium will not necessarily be sufficient to keep the
policy in force if there is a policy loan or if the contract
value is less than the monthly deduction due.

PLANNED PREMIUM PAYMENTS The amount and frequency of the planned premium payment is
shown on the Policy Specifications page. You may change the
amount or frequency of the planned premium by sending us a
signed request. We have the right to limit the amount of any
increase. We will not limit your right to pay the minimum
amount required to keep this policy in force to the end of
the policy year.

UNSCHEDULED PREMIUM Premium payments in addition to the planned payments may be
PAYMENTS made, subject to a minimum of $25 per payment. We have the
right to limit the number and amount of any unscheduled
premium payments.

PREMIUM REFUNDS We have the right to limit or refund any premium, whether
scheduled or not, if the premium would disqualify the policy
as a life insurance contract under the Internal Revenue Code
or regulations or if the payment would increase the death
benefit by more than the amount of the premium.

GRACE PERIOD If the surrender value becomes zero, the policy will enter a
61-day grace period unless cumulative premiums less
withdrawals exceed cumulative minimum premiums. If
cumulative premiums less withdrawals exceed cumulative
minimum premiums, the policy will enter the 61-day grace
period when the contract value minus any outstanding policy
loan and accrued loan interest is insufficient to pay the
entire monthly deduction due. At the end of the grace period
the policy will terminate without value unless a premium
payment or loan repayment is made and is sufficient to cause
either one of the following conditions:

1. The surrender value exceeds zero, after deducting all due
and unpaid monthly deductions; or
2. Both of the following occur:
a. cumulative premiums less withdrawals exceed cumulative
minimum premiums; and
b. the contract value minus any outstanding policy loan and
accrued loan interest exceeds zero, after deducting all due
and unpaid monthly deductions.
The policy will continue in force during the grace period.
If the insured dies during the grace period, the proceeds
will be reduced by any overdue monthly deductions.

We will mail the owner or any assignee notice at least 61
days before the end of a grace period.

CONTINUATION OF You may stop paying premiums at any time. Your policy will
COVERAGE continue in force until the earlier of the maturity date or
the date when one of the following occurs:
1. The insured dies.
2. The surrender value has been exhausted. The surrender
value will be exhausted when the grace period begins. In
this case, the policy will terminate at the end of the grace
period.
3. We receive your signed request to surrender this policy.

REINSTATEMENT Anytime before the maturity date, this policy may be
reinstated within three years of entering a grace period
that ends with subsequent termination of coverage.
Reinstatement is not allowed if the policy has been
surrendered for the surrender value.

To reinstate this policy, we must receive:
1. evidence of insurability which is acceptable to us;
2. payment of the unpaid monthly deductions due during the
last expired grace period;
</TABLE>

Page 8

<PAGE> 9

<TABLE>
<S> <C>
3. payment of a minimum premium sufficient to keep this
policy in force for three months; and
4. payment of any policy loan which existed at the date of
termination of coverage.

The effective date of reinstatement will be the monthly due
date that coincides with or next follows the date the
application for reinstatement is approved by us.

The suicide and incontestability provisions will apply from
the effective date of reinstatement.

CONTRACT VALUE

DESCRIPTION The contract value on the issue date is equal to:
1. the initial premium paid times the percent of premium
factor; less
2. the monthly deduction.

On the issue date the contract value will be allocated to
the fixed account. Any subsequent premiums that are received
prior to the reallocation date, times the percent of premium
factor, will also be allocated to the fixed account. While
held in the fixed account, premium(s) will be credited with
interest at the current fixed account interest rate. On the
reallocation date, the contract value in the fixed account
will be reallocated to the subaccounts and to the fixed
account as described in the Allocations section.

On each date after the issue date, the contract value is
equal to the fixed account value plus the variable account
value plus any loan account value.

FIXED ACCOUNT

INTEREST RATE FOR FIXED ACCOUNT VALUE
GUARANTEED The guaranteed minimum rate used to calculate interest on
RATE the fixed account is 3.0% per year, compounded annually.

CURRENT RATE We may use rates that are higher than the guaranteed minimum
rate to calculate interest on the fixed account. These rates
are subject to change at any time and may apply to all or a
portion of the fixed account.
</TABLE>

Page 9

<PAGE> 10

<TABLE>
<S> <C>
FIXED ACCOUNT VALUE On each valuation day the fixed account value will be equal
to:
A + B + C - D - E - F

"A" is the fixed account value on the preceding valuation
day plus interest from the preceding valuation day to the
date of calculation.

"B" is the portion of the premium, times the percent of
premium factor, that is allocated to the fixed account and
received since the preceding valuation day, plus interest
from the date such net premiums were received to the date of
calculation.

"C" is the amount of any transfers from the subaccounts or
the loan account to the fixed account since the preceding
valuation day, plus interest on such transferred amounts
from the effective dates of such transfers to the date of
calculation.

"D" is the amount of any transfers from the fixed account to
the subaccounts or the loan account since the preceding
valuation day, plus interest on each such transferred amount
from the effective date of each transfer to the date of
calculation.

"E" is the amount of any partial surrenders and any
applicable surrender charges deducted from the fixed account
since the preceding valuation day, plus interest on these
surrendered amounts from the effective date of each partial
surrender to the date of calculation.

"F" is zero except on the monthly due date, when it is a
pro-rata share of the monthly deduction for the month
beginning on that monthly due date. The pro-rata share is
the ratio of the fixed account to the sum of the fixed
account plus the subaccounts.

VARIABLE ACCOUNT

GENERAL DESCRIPTION The name of the variable account is shown on the Policy
Specifications page. The variable account is administered
and accounted for as part of our general business, but the
income, gains and losses of the variable account are
credited to or charged against the assets held in the
variable account, without regard to any other income, gains
or losses of any other variable account or arising out of
any other business we may conduct.

RIGHTS RESERVED The assets of the variable account are segregated by
investment options, thus establishing a series of
subaccounts within the variable account. The assets are
valued at their net asset value on each valuation day.
When permitted by law, we reserve the right to :
1. create new variable accounts;
2. combine variable accounts;
3. remove, combine or add subaccounts and make the new
subaccounts available to you at our discretion;
4. substitute shares of another portfolio of the funds or
shares of another investment company for those of the funds;
5. deregister the variable account under the Investment
Company Act of 1940 if registration is no longer required;
6. make any changes required by the Investment Company Act
of 1940 or any other law; and
7. operate the variable account as a managed investment
company under the Investment Company Act of 1940 or any
other form permitted by law.

If a change is made, we will send you a revised prospectus
and any notice required by law. If required, we would first
seek the approval of the Securities and Exchange
</TABLE>

Page 10

<PAGE> 11

<TABLE>
<S> <C>
Commission, and when required, the appropriate state
regulatory authorities before making a change in the
investment options.

SUBACCOUNTS The subaccounts are separate investment accounts named by
the company. The subaccount values will fluctuate in
accordance with the investment experience of the applicable
portfolio of the fund held within each subaccount.

The subaccount value is determined by multiplying the number
of accumulation units credited to the subaccount by the
appropriate accumulation unit value.

The number of accumulation units to be purchased or redeemed
in a transaction is found by dividing:
1. the dollar amount of the transaction; by
2. the subaccount's accumulation unit value for the
valuation day for that transaction.
At the end of each valuation day:

- The portion of any premiums, times the percent of
premium factor, received since the preceding valuation
day and allocated to each subaccount will be applied to
purchase additional accumulation units in that
subaccount.

- Any transfers to the subaccount from another subaccount
or from the fixed account or the loan account since the
end of the previous valuation day will be applied to
purchase additional accumulation units in that
subaccount.

- Accumulation units will be redeemed from each
subaccount to cover any transfers from that subaccount
to other subaccounts or to the fixed account or the
loan account since the preceding valuation day.

- Accumulation units will be redeemed from each
subaccount to cover any partial surrenders and
applicable surrender charges assessed against that
subaccount since the preceding valuation day.

- Accumulation units will be redeemed to cover a pro-rata
share of the monthly deduction when the monthly due
date coincides with the valuation day. The pro-rata
share for each subaccount is the ratio of that
subaccount to the sum of the fixed account plus the
subaccounts.

</TABLE>

Page 11
<PAGE> 12

<TABLE>
<CAPTION>
<S> <C>
ACCUMULATION UNIT The value of an accumulation unit for each of the
VALUE subaccounts was arbitrarily set at an initial value. The
value at the end of any later valuation day is equal to:
A X B
"A" is equal to the subaccount's accumulation unit value for
the end of the immediately preceding valuation day.

"B" is equal to the net investment factor for the most
current valuation day. This net investment factor equals:

X
--- - Z
Y

"X" equals:
1. the net asset value per portfolio share held in the
subaccount at the end of the current valuation day; plus
2. the per share amount of any dividend or capital gain
distribution on portfolio shares held in the subaccount
during the current valuation day; less
3. the per share amount of any capital loss distribution on
portfolio shares held in the subaccount during the current
valuation day; less
4. the per share amount of any taxes or any amount set aside
during the valuation day as a reserve for taxes due to the
investment results of the subaccount.

"Y" equals the net asset value per portfolio share held in
the subaccount as of the end of the immediately preceding
valuation day.

"Z" equals the mortality and expense risk charge factor. The
mortality and expense risk charges are deducted from each of
the subaccounts on each valuation day. This charge is shown
on the Policy Specifications page.

The net investment factor may be greater, less than or equal
to one. Therefore, the value of the subaccount may increase,
decrease or remain the same.

ALLOCATIONS This policy provides investment options for the contract
value. The initial premium allocation percentages are
indicated in the application for this policy, a copy of
which is attached.

These percentages will also apply to subsequent premium
allocations until you change them. Such allocation
percentages may be changed by written notice to us.

Allocation percentages must be zero or a whole number not
greater than 100. The sum of the premium allocation
percentages must equal 100.

We reserve the right to limit the number of subaccount
allocations in effect at any one time.

Prior to the reallocation date, all premiums, times the
percent of premium factor, are allocated to the fixed
account.

On the reallocation date, the contract value in the fixed
account will be reallocated to the subaccounts at the
accumulation unit value next determined and to the fixed
account based on the premium payment allocation percentages
in the policy application.

After the reallocation date, planned periodic premiums and
unscheduled premiums, times the percent of premium factor,
will be allocated as requested. Such net premium payments
will be allocated to the subaccounts at the accumulation
unit value next determined after receipt of each payment.
</TABLE>

Page 12

<PAGE> 13

<TABLE>
<CAPTION>
POLICY VALUES
<S> <C>
MONTHLY DEDUCTION The monthly deduction will be calculated each month on the
monthly due date.
The monthly deduction is:
1. the cost of insurance charge for the policy; plus
2. the charges for any attached riders; plus
3. the monthly administration charge; plus
4. the flat extra charge for a special premium class, if
any, shown on the Policy Specifications page.
The guaranteed maximum monthly administration charge is
$8.00 per month.
The actual charge may be less; the actual charge on the
issue date is shown on the Policy Specifications page. This
may change at any time after issue.

COST OF INSURANCE The cost of insurance charge for the policy is the monthly
CHARGE cost of insurance rate per $1,000 of Risk Insurance Amount
at the insured's attained age, times the number of thousands
of Risk Insurance Amount. The Risk Insurance Amount is:
1. The current death benefit; minus
2. the contract value at the end of the valuation day
preceding the monthly due date; plus
3. the monthly administrative charge for the month that
begins on the monthly due date; plus
4. any charges for riders for the month that begins on the
monthly due date.
The guaranteed maximum monthly cost of insurance rates are
shown in the table below. We may use rates less than those
shown, but not greater unless the insured is in a special
premium class. The charge for any attached rider is a
separate calculation.

If the insured is in a special premium class, the guaranteed
maximum monthly cost of insurance rate will be the rate
shown in the table times the special premium class rating
factor shown on the Policy Specifications page.
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GUARANTEED MAXIMUM MONTHLY
COST OF INSURANCE RATES
Per $1000 of Risk Insurance Amount
- ----------------------------------------------------------------------------------------------------------------------------------
Attained Cost of Attained Cost of Attained Cost of Attained Cost of Attained Cost of Attained Cost of
Age Insurance Age Insurance Age Insurance Age Insurance Age Insurance Age Insurance
Rate Rate Rate Rate Rate Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 0.13788 35 0.14370 49 0.39205 62 1.35058 75 5.13652 88 16.39051
22 0.13539 36 0.15117 50 0.42611 63 1.50009 76 5.66811 89 17.59988
23 0.13207 37 0.16114 51 0.46514 64 1.66621 77 6.22379 90 18.85909
24 0.12875 38 0.17194 52 0.51000 65 1.84812 78 6.80688 91 20.19721
25 0.12459 39 0.18357 53 0.56150 66 2.04497 79 7.43566 92 21.66408
26 0.12210 40 0.19769 54 0.61881 67 2.25096 80 8.13005 93 23.40255
27 0.12044 41 0.21264 55 0.68276 68 2.48520 81 8.90834 94 25.73492
28 0.11961 42 0.22842 56 0.75254 69 2.73937 82 9.78630 95 29.22599
29 0.11961 43 0.24586 57 0.82646 70 3.02676 83 10.75978 96 34.96802
30 0.12044 44 0.26497 58 0.90869 71 3.35485 84 11.80967 97 44.93622
31 0.12293 45 0.28656 59 1.00089 72 3.73361 85 12.91190 98 61.89321
32 0.12625 46 0.30982 60 1.10389 73 4.16221 86 14.05233 99 83.06141
33 0.13124 47 0.33474 61 1.21851 74 4.63317 87 15.21353 100-109 0.00000
34 0.13705 48 0.36215
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C>
CASH VALUE The cash value of this policy on any date is:
1. the contract value; minus
2. the surrender charge, if any, that you would incur if you
surrendered the entire policy on that date.

Surrender charges are shown in the attached Surrender Charge Table.
</TABLE>

Page 13

<PAGE> 14

<TABLE>
<S> <C>
SURRENDER VALUE The surrender value of this policy on any date is:
1. the cash value, minus
2. any outstanding policy loan plus due but unpaid loan
interest to the date of computation.

RESERVE BASIS Reserves are based on the Commissioners 1980 Standard
Ordinary Mortality Table, the Commissioners Reserve
Valuation Method, and age last birthday. The statutory
valuation interest rate does not exceed the maximum rate
allowed by the valuation law of the state in which the
policy is delivered.

ANNUAL REPORT

ANNUAL REPORT At least annually we will mail you a report about your
policy. This report will show:
1. the amount of death benefit;
2. the contract value and surrender value;
3. the current principal sum;
4. premiums paid, monthly deductions and loans since the
last report;
5. the amount of any policy loan outstanding;
6. notifications required under the provisions of this
policy; and
7. any other information required by the state where this
policy was delivered.
Upon request, we will send a report at other than the
regularly scheduled interval. We will charge a fee for this
requested report. The fee is shown on the Policy
Specifications page.

SURRENDER VALUE OPTIONS

CASH SURRENDER You may surrender this policy for the surrender value after
we receive your signed request with the policy. We have the
right to defer payment for up to six months or the period
allowed by law, whichever is less.

We will determine the surrender value at the accumulation
unit value next determined as of the close of business on
the day we receive your surrender request at our home
office.

PARTIAL After the first policy year, you may withdraw a part of the
SURRENDER surrender value subject to the following:
1. You must send us a signed request for the amount of the
partial surrender.
2. You may make only one partial surrender per calendar
quarter.
3. The amount requested must be at least $500.
4. The amount requested may not exceed 75% of the surrender
value.
5. We will deduct a processing fee from the contract value
for each partial surrender equal to the lesser of 2% of the
amount requested or $25.
6. The contract value will be reduced by the amount of the
partial surrender, the processing fee, and the surrender
charge, if any.
The partial surrender will be processed at the accumulation
unit values next determined after receipt of your request.

Units equal to the partial surrender, fees and charges
described above will be cancelled from the subaccounts
and/or the fixed account according to your instructions. If
you provide no instructions, these units will be cancelled
from the subaccounts and the fixed account on a pro-rata
basis.

If you have a level death benefit (Option B) at the time of
the partial surrender, the principal sum will be reduced by
the amount of the partial surrender. This reduction in
principal sum will be subject to the terms of the Decrease
in Principal Sum section.
</TABLE>

Page 14

<PAGE> 15

<TABLE>
<S> <C>
MATURITY The maturity date is shown on the Policy Specifications
page. If this policy is in force on the maturity date we
will send you the surrender value and all coverage will end.

TIME PERIOD Any surrender or loan will usually be paid within seven days
FOR PAYMENTS of receiving your written request in our home office.
However, we have the right to suspend or delay the date of
any surrender, partial surrender, loan, maturity payment or
death benefit payment from the subaccounts for any period
during which:
1. the New York Stock Exchange is closed, other than
customary weekend and holiday closings, or trading on the
New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission; or
2. the Securities and Exchange Commission permits by an
order the postponement for the protection of policy owners;
or
3. the Securities and Exchange Commission determines that an
emergency exists that would make the disposal of securities
held in the variable account or the determination of the
value of the variable account's net assets not reasonably
practicable.
For any surrender, partial surrender, loan or transfer from
the fixed account, we may defer payment for up to 6 months,
or the period allowed by law, if less.

POLICY LOANS

POLICY LOANS While this policy is in force, you may make a loan for all
or part of the loan value. You must assign this policy to us
as sole security.

An amount equal to the loan will be transferred from the
subaccounts and the fixed account to the loan account. The
loan account is part of our general account. If allocation
instructions are not specified in your loan request, the
loan will be withdrawn from the subaccounts and the fixed
account on a pro-rata basis.

Amounts transferred to the loan account do not participate
in the investment experience of the fixed account or
subaccount from which they were withdrawn. Amounts in the
loan account will earn interest at the guaranteed minimum
rate of 3.0% per year, compounded annually. This is equal to
0.2466% per month, compounded monthly. Interest rates
applied to the loan account may differ from those applied to
the fixed account.

LOAN VALUE The loan value is the surrender value less loan interest to
the next policy anniversary date.

INTEREST RATE The maximum loan interest rate during the first fourteen
(LOANS) policy years is eight percent (8%) per year, compounded
annually. We may change the interest rate, but it will never
exceed the maximum rate of 8%. We will notify you of any
increase in loan interest at least 30 days before the new
rate becomes effective.

After the fourteenth policy year the maximum loan interest
rate is 3% per year, compounded annually.

INTEREST DUE Interest is charged daily on the loan. Interest is due and
payable at the end of each policy year or, if earlier, on
the date of any policy loan increase or repayment. Any
interest not paid when due will be transferred from the
fixed account and subaccounts to the loan account on a
pro-rata basis if sufficient funds are available for
transfer. Unpaid interest becomes part of the loan and
accrues interest.

LOAN You may repay all or part of your policy loan balance at any
REPAYMENT time. Any loan repayment must be for at least $25.
Repayments must be clearly marked as "loan repayments" or
they will be applied as premiums. Each loan repayment will
result in a transfer of an amount equal to the loan
repayment from the loan account to the fixed account and
subaccounts. Your current premium allocation schedule will
be used to allocate the loan repayments.
</TABLE>

Page 15

<PAGE> 16

<TABLE>
<S> <C>
UNPAID LOANS We will deduct any unpaid loans from the surrender value and
the death benefit proceeds. If the unpaid loan, which
includes accrued interest, equals or exceeds the cash value,
causing the surrender value to become zero, this policy will
end except as described in the grace period provision.

POLICY CHANGES

POLICY After the first policy year, you may change the death
CHANGES benefit option or the amount of principal sum, subject to
the following:
1. You must send us a signed request for a change.
2. We may require evidence of insurability.
3. You may make no more than one change per policy year.
4. The change will take effect on the monthly due date
following our approval of the request.
5. We will send you a policy endorsement with the change to
attach to your policy.

CHANGE OF To change from Option B (level death benefit) to Option A
DEATH BENEFIT (variable death benefit):
OPTION 1. The insured must provide evidence of insurability
satisfactory to us.
2. The principal sum will change. The new Option A principal
sum will equal the Option B principal sum less the contract
value immediately before the change, but in no case will the
new principal sum be less than the minimum principal sum
amount shown on the Policy Specifications page. No surrender
charge will be imposed solely as a result of this change in
principal sum.
3. The minimum premium will decrease as a result of any
decrease in the principal sum.
To change from Option A (variable death benefit) to Option B
(level death benefit):
1. Evidence of insurability is not required.
2. The principal sum will change. The new Option B principal
sum will equal the Option A principal sum plus the contract
value.
3. The minimum premium will increase.
After either change, the total surrender charge for the
policy will continue to be based on the principal sum at the
time of issue on which surrender charges have not already
been imposed.

INCREASE IN The principal sum may only be increased before the insured's
PRINCIPAL SUM attained age 80. Increases in principal sum require evidence
of insurability satisfactory to us. The minimum increase is
$10,000. We will deduct a processing fee of $1.50 per $1,000
of increase, but not more than $300, from the contract
value. If the amount in the contract value is insufficient
to cover this fee, sufficient additional premium will be
required before the increase will become effective. The
minimum premium will increase.

DECREASES IN You may decrease the principal sum, but not below the
PRINCIPAL SUM minimum principal sum amount shown on the Policy
Specifications page. The minimum premium will be reduced.
Deceases in principal sum will reduce:
1. the most recent increase, if any; then
2. prior increases in succession; and then
3. the principal sum at the time of issue (subject to a
surrender charge as
</TABLE>

Page 16

<PAGE> 17

described in the Surrender Charge Table.).
A decrease in principal sum may require that a portion of
the policy's surrender value be distributed as a partial
surrender in order to continue federal tax compliance. It
may also alter your tax obligation on exercise
of certain ownership privileges.

</TABLE>

SURRENDER CHARGE TABLE

The total surrender charge is the sum of a Deferred Sales Charge Component and
an Administrative Component. The Deferred Sales Charge Component is calculated
in these steps:
1. Find the sum of all premiums that have been paid on this policy (do not
deduct amounts withdrawn or the percent of premium factor).
2. Multiply this sum by 0.075 if the insured's issue age was 65 or younger or
by 0.050 if the issue age was 66 or older.
3. Multiply the result by the appropriate number from this table:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------

Policy Year: 1-3 4 5 6 7 8 9 10 11 12 13 14 15 or more
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issue ages 0-65: 1.00 1.00 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Issue ages 66 and older 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.15 0.10 0.05 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Page 17

<PAGE> 18

The Administrative Component is calculated in these steps:

1. Find the appropriate factor for the insured's age at the date of issue and
the number of full policy years completed since that date, regardless of
whether your Policy has lapsed and been reinstated.
2. Multiply this factor by:
a. the number of thousands of principal sum on the issue date, minus
b. any reductions in principal sum for which a surrender charge has
already been imposed.
To determine the surrender charge for a decrease in principal sum:
1. Find the appropriate factor for the insured's age at the date of issue and
the number of full policy years completed since that date.
2. Multiply this factor by the requested decrease in number of thousands of
principal sum. Only a reduction in the original principal sum amount, as of
the date of issue, incurs a surrender charge.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Number of Full Policy Years Completed since the Issue Date

Issue 0 1 2 3 4 5 6 7 8 9 10 11
Age
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
22 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
23 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
24 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
25 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
26 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
27 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
28 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
29 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
30 5.84 5.84 5.84 5.84 5.84 5.26 4.68 4.09 3.51 2.92 2.34 1.75
31 5.91 5.91 5.91 5.91 5.91 5.32 4.73 4.14 3.55 2.96 2.36 1.77
32 5.98 5.98 5.98 5.98 5.98 5.38 4.78 4.19 3.59 2.99 2.39 1.79
33 6.01 6.01 6.01 6.01 6.01 5.41 4.81 4.21 3.61 3.01 2.41 1.80
34 6.11 6.11 6.11 6.11 6.11 5.50 4.89 4.28 3.67 3.06 2.45 1.83
35 6.18 6.18 6.18 6.18 6.18 5.56 4.94 4.33 3.71 3.09 2.47 1.85
36 6.28 6.28 6.28 6.28 6.28 5.66 5.03 4.40 3.77 3.14 2.51 1.89
37 6.32 6.32 6.32 6.32 6.32 5.68 5.05 4.42 3.79 3.16 2.53 1.89
38 6.42 6.42 6.42 6.42 6.42 5.78 5.13 4.49 3.85 3.21 2.57 1.93
39 6.52 6.52 6.52 6.52 6.52 5.87 5.22 4.56 3.91 3.26 2.61 1.96
40 6.62 6.62 6.62 6.62 6.62 5.96 5.30 4.63 3.97 3.31 2.65 1.99
41 6.76 6.76 6.76 6.76 6.76 6.08 5.40 4.73 4.05 3.38 2.70 2.03
42 6.82 6.82 6.82 6.82 6.82 6.14 5.46 4.78 4.09 3.41 2.73 2.05
43 6.99 6.99 6.99 6.99 6.99 6.29 5.59 4.89 4.19 3.50 2.80 2.10
44 7.13 7.13 7.13 7.13 7.13 6.41 5.70 4.99 4.28 3.56 2.85 2.14
45 7.30 7.30 7.30 7.30 7.30 6.57 5.84 5.11 4.38 3.65 2.92 2.19
46 7.46 7.46 7.46 7.46 7.46 6.72 5.97 5.23 4.48 3.73 2.99 2.24
47 7.67 7.67 7.67 7.67 7.67 6.90 6.13 5.37 4.60 3.83 3.07 2.30
48 7.87 7.87 7.87 7.87 7.87 7.08 6.30 5.51 4.72 3.93 3.15 2.36
49 8.14 8.14 8.14 8.14 8.14 7.33 6.51 5.70 4.88 4.07 3.26 2.44
50 8.38 8.38 8.38 8.38 8.38 7.54 6.70 5.86 5.03 4.19 3.35 2.51
51 8.65 8.65 8.65 8.65 8.65 7.78 6.92 6.05 5.19 4.32 3.46 2.59
52 8.95 8.95 8.95 8.95 8.95 8.05 7.16 6.26 5.37 4.47 3.58 2.68
53 9.29 9.29 9.29 9.29 9.29 8.36 7.43 6.50 5.57 4.64 3.71 2.79
54 9.62 9.62 9.62 9.62 9.62 8.66 7.70 6.74 5.77 4.81 3.85 2.89
55 10.06 10.06 10.06 10.06 10.06 9.06 8.05 7.04 6.04 5.03 4.03 3.02
56 10.47 10.47 10.47 10.47 10.47 9.42 8.37 7.33 6.28 5.23 4.19 3.14
57 10.91 10.91 10.91 10.91 10.91 9.82 8.72 7.63 6.54 5.45 4.36 3.27
58 11.41 11.41 11.41 11.41 11.41 10.27 9.13 7.99 6.85 5.71 4.57 3.42
59 11.99 11.99 11.99 11.99 11.99 10.79 9.59 8.39 7.19 5.99 4.79 3.60
60 12.56 12.56 12.56 12.56 12.56 11.30 10.05 8.79 7.54 6.28 5.02 3.77
61 13.17 13.17 13.17 13.17 13.17 11.85 10.53 9.22 7.90 6.58 5.27 3.95
62 13.88 13.88 13.88 13.88 13.88 12.49 11.10 9.71 8.33 6.94 5.55 4.16
63 14.62 14.62 14.62 14.62 14.62 13.16 11.70 10.23 8.77 7.31 5.85 4.39
64 15.43 15.43 15.43 15.43 15.43 13.89 12.34 10.80 9.26 7.71 6.17 4.63
65 16.25 16.25 16.25 16.25 16.25 14.63 13.00 11.38 9.75 8.13 6.50 4.88
66 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
67 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
68 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
69 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
70 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
71 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
72 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
73 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
74 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
75 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
76 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
77 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
78 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
79 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
80 17.50 17.50 15.75 14.00 14.00 12.25 10.50 8.75 7.00 5.25 3.50 2.63
</TABLE>

<TABLE>
<CAPTION>
- -----------------------------------------------
Issue 12 13 14 15
Age or more
- -----------------------------------------------
<S> <C> <C> <C> <C>
21 1.17 0.58 0.00 0.00
22 1.17 0.58 0.00 0.00
23 1.17 0.58 0.00 0.00
24 1.17 0.58 0.00 0.00
25 1.17 0.58 0.00 0.00
26 1.17 0.58 0.00 0.00
27 1.17 0.58 0.00 0.00
28 1.17 0.58 0.00 0.00
29 1.17 0.58 0.00 0.00
30 1.17 0.58 0.00 0.00
31 1.18 0.59 0.00 0.00
32 1.20 0.60 0.00 0.00
33 1.20 0.60 0.00 0.00
34 1.22 0.61 0.00 0.00
35 1.24 0.62 0.00 0.00
36 1.26 0.63 0.00 0.00
37 1.26 0.63 0.00 0.00
38 1.28 0.64 0.00 0.00
39 1.30 0.65 0.00 0.00
40 1.32 0.66 0.00 0.00
41 1.35 0.68 0.00 0.00
42 1.36 0.68 0.00 0.00
43 1.40 0.70 0.00 0.00
44 1.43 0.71 0.00 0.00
45 1.46 0.73 0.00 0.00
46 1.49 0.75 0.00 0.00
47 1.53 0.77 0.00 0.00
48 1.57 0.79 0.00 0.00
49 1.63 0.81 0.00 0.00
50 1.68 0.84 0.00 0.00
51 1.73 0.86 0.00 0.00
52 1.79 0.89 0.00 0.00
53 1.86 0.93 0.00 0.00
54 1.92 0.96 0.00 0.00
55 2.01 1.01 0.00 0.00
56 2.09 1.05 0.00 0.00
57 2.18 1.09 0.00 0.00
58 2.28 1.14 0.00 0.00
59 2.40 1.20 0.00 0.00
60 2.51 1.26 0.00 0.00
61 2.63 1.32 0.00 0.00
62 2.78 1.39 0.00 0.00
63 2.92 1.46 0.00 0.00
64 3.09 1.54 0.00 0.00
65 3.25 1.63 0.00 0.00
66 1.75 0.88 0.00 0.00
67 1.75 0.88 0.00 0.00
68 1.75 0.88 0.00 0.00
69 1.75 0.88 0.00 0.00
70 1.75 0.88 0.00 0.00
71 1.75 0.88 0.00 0.00
72 1.75 0.88 0.00 0.00
73 1.75 0.88 0.00 0.00
74 1.75 0.88 0.00 0.00
75 1.75 0.88 0.00 0.00
76 1.75 0.88 0.00 0.00
77 1.75 0.88 0.00 0.00
78 1.75 0.88 0.00 0.00
79 1.75 0.88 0.00 0.00
80 1.75 0.88 0.00 0.00
</TABLE>

Page 18

<PAGE> 19

TRANSFER PRIVILEGE
<S> <C>
TRANSFER FEES Six transfers per year may be made from subaccounts and the
fixed account free of charge. Any unused free transfers do
not carry over to the next policy year. Any additional
transfers during a policy year will be charged a $25
transfer fee. For the purpose of assessing a fee, each
written request or telephone request is considered to be one
transfer. The processing fee will be deducted from the
amount being transferred, or from the remaining contract
value, according to your instructions.

TRANSFERS FROM After the Right to Examine Period, you may transfer all or a
SUBACOUNTS part of an amount in any subaccount to one or more
subaccounts or to the fixed account. The minimum amount that
you may transfer is the lesser of :
1. $250; or
2. the total value in that subaccount on that date.

Any transfer that would reduce the amount in a subaccount
below $250 will be treated as a transfer request for the
entire amount in that subaccount.

We may suspend or modify this transfer privilege at any
time.

Transfers will be processed based on accumulation unit
values from next determined at the end of the valuation day
during which we receive the transfer request.

TRANSFERS FROM At your request you may also transfer an amount from the
THE FIXED ACCOUNT fixed account to one or more subaccounts. We must receive
the request in writing or other form acceptable to us. Only
one transfer may be made from the fixed account each policy
year. Transfers will only be made if the amount requested is
not more than 25% of the fixed account.

We will not transfer more than 25% of the policy fixed
account value unless the balance after the transfer is less
than $250, in which case the entire amount will be
transferred.

We may suspend or modify this transfer privilege at any
time.

SETTLEMENT PRIVILEGES

SETTLEMENT The proceeds of this policy may be paid in one sum. The
proceeds may also be paid under any reasonable settlement
that may be arranged with our consent.

When the proceeds from a death claim are payable as one sum,
the beneficiary may select a reasonable settlement.

When you select a settlement, the beneficiary may not assign
or receive payments before they are due unless expressly
given this right by you.

A payee may name a contingent payee to receive any final
amount that would otherwise be paid to the payee's estate.

Any settlement requires the proceeds to be at least $2,500
and any periodic payment to be at least $25.

The first installment will be due, or interest will begin on
the date of death, maturity, or surrender.
OPTIONS A brief outline of several specific fixed settlements is
shown below. The amounts and interest rates shown in the
options are based on guaranteed minimum interest rates. We
may choose to use rates that are higher than the guaranteed
</TABLE>

Page 19

<PAGE> 20

<TABLE>
<S> <C>
minimum rate. These rates are subject to change at any time.
Information regarding current rates is available from
our home office.

INTEREST Proceeds will earn interest at the rate of 2.5 percent per
ACCUMULATION year compounded annually.

We may retain these funds under this option for not longer
than five years. If the beneficiary is a minor we may retain
these funds until the beneficiary attains the
age of majority.

INTEREST Each $1000 of proceeds will yield an income of not less than
INCOME $25.00 annually, $12.42 semi-annually, $6.19 quarterly, or
$2.05 monthly.

Unless you direct otherwise, the payee may withdraw the
proceeds at any time. After the first year, we may defer
such withdrawal for up to six months.

INCOME -- We will pay installments for a specified period. The amount
PERIOD CERTAIN of each installment will not be less than those shown in the
table below.

If the payee dies prior to the end of the specified period,
the installments remaining to the end of the period will be
paid to the contingent payee.
</TABLE>

<TABLE>
<CAPTION>
Amount of Each Amount of
Number of Monthly Number of Each Monthly
Installments Installment Installments Installment
<S> <C> <C> <C>
12 $84.65 96 $11.90
24 43.05 108 10.75
36 29.19 120 9.83
48 22.27 180 7.10
60 18.11 240 5.75
72 15.35 300 4.96
84 13.38
</TABLE>

<TABLE>
<S> <C>
INCOME -- We will pay installments of a specified amount until the
AMOUNT CERTAIN proceeds, together with 2.5 percent interest compounded
annually, are paid in full.

INCOME -- We will pay installments for the lifetime of the payee but
LIFE for not less than a guaranteed period. If the payee dies
prior to the end of the guaranteed period, the installments
remaining will be paid to the contingent payee.

The amount of each installment will depend upon the adjusted
age and sex of the payee at the time the first payment is
due.

The adjusted age is determined by calculating the age at the
nearest birthday of the payee on the date of the first
payment and subtracting a number that depends on the year in
which the first payment begins:
</TABLE>

<TABLE>
<CAPTION>
First Payment Date Adjusted Age is Age Minus
<S> <C>
Before 2001 0
2001 to 2010 1
2011 to 2020 2
2021 to 2030 3
2031 to 2040 4
After 2040 5
</TABLE>

Page 20

<PAGE> 21

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT OF EACH MONTHLY INSTALLMENT
(Per $1,000 of Proceeds)
- ---------------------------------------------------------------------------------------
Number of Installments Number of Installments
Male Guaranteed Female Guaranteed
- ----------------- -------------

Age of Payee 60 120 240 Age of Payee 60 120 240
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 3.80 3.78 3.69 50 3.55 3.54 3.49
51 3.87 3.85 3.74 51 3.61 3.60 3.54
52 3.94 3.92 3.80 52 3.67 3.66 3.60
53 4.02 3.99 3.86 53 3.74 3.73 3.65
54 4.10 4.07 3.92 54 3.81 3.79 3.71
55 4.19 4.15 3.98 55 3.88 3.86 3.77

56 4.28 4.24 4.05 56 3.96 3.94 3.83
57 4.37 4.33 4.11 57 4.04 4.02 3.90
58 4.47 4.42 4.18 58 4.13 4.10 3.97
59 4.58 4.52 4.24 59 4.22 4.19 4.03
60 4.70 4.63 4.31 60 4.32 4.28 4.10

61 4.82 4.74 4.38 61 4.42 4.38 4.18
62 4.95 4.85 4.45 62 4.53 4.48 4.25
63 5.09 4.98 4.51 63 4.65 4.59 4.32
64 5.23 5.11 4.58 64 4.77 4.71 4.40
65 5.39 5.24 4.65 65 4.90 4.83 4.47

66 5.55 5.38 4.71 66 5.04 4.96 4.54
67 5.73 5.53 4.77 67 5.20 5.09 4.62
68 5.91 5.68 4.83 68 5.36 5.23 4.69
69 6.11 5.83 4.88 69 5.53 5.38 4.76
70 6.32 6.00 4.93 70 5.71 5.54 4.82

71 6.54 6.16 4.98 71 5.91 5.71 4.88
72 6.77 6.33 5.03 72 6.13 5.88 4.94
73 7.01 6.51 5.06 73 6.35 6.06 4.99
74 7.27 6.68 5.10 74 6.60 6.25 5.04
75 7.54 6.86 5.13 75 6.86 6.45 5.08

76 7.83 7.04 5.16 76 7.14 6.64 5.12
77 8.13 7.22 5.18 77 7.43 6.85 5.15
78 8.44 7.40 5.20 78 7.75 7.05 5.18
79 8.77 7.57 5.22 79 8.09 7.26 5.20
80 9.11 7.74 5.24 80 8.44 7.46 5.22
- ---------------------------------------------------------------------------------------
</TABLE>

Page 21

<PAGE> 22

FARMERS NEW WORLD LIFE INSURANCE COMPANY
Policy Specifications

INSURED JOHN A DOE PRINCIPAL SUM $150,000
POLICY NUMBER 001234567 DEATH BENEFIT OPTION LEVEL
ISSUE DATE OCTOBER 1, 1998 ISSUE AGE 35 SEX M
MATURITY DATE OCTOBER 1, 2073 MONTHLY DUE DATE 01
OWNER GEORGE B DOE

VARIABLE ACCOUNT: FARMERS NEW WORLD LIFE VARIABLE LIFE SEPARATE ACCOUNT "A"

SCHEDULE OF BENEFITS MAXIMUM PERIOD OF COVERAGE

BASIC POLICY $150,000 TO AGE 110

PREMIUM CLASS
INSURED NON-NICOTINE

PREMIUMS* ANNUAL MONTHLY QUARTERLY
MINIMUM PREMIUM $772.50 $ 64.38 $193.13
PLANNED PREMIUM PAYMENTS $900.00 $ 75.00 $225.00

*THESE PREMIUMS INCLUDE THE PREMIUMS FOR ANY BENEFITS PROVIDED BY RIDER.

MINIMUM PRINCIPAL SUM $50,000
PERCENT OF PREMIUM FACTOR 0.965
MONTHLY ADMINISTRATION CHARGE $5.00
MORTALITY AND EXPENSE RISK CHARGE 0.90% (ON AN ANNUAL BASIS) OF THE
AVERAGE DAILY NET ASSETS OF THE
VARIABLE ACCOUNT.

REQUESTED ANNUAL REPORT FEE $5.00

Page 22

<PAGE> 1
EXHIBIT 1.A.(5)(b)

MONTHLY DISABILITY BENEFIT RIDER

<TABLE>
<S> <C>
BENEFIT When we receive due proof that the insured is totally disabled as
defined in the Disability Defined section, we will add a monthly
benefit to the fixed account of this policy during the insured's
continued disability, but not beyond the insured's attained age 65. The
monthly benefit is the monthly disability benefit rider amount
multiplied by the percent of premium factor. The monthly disability
benefit rider amount and the percent of premium factor are shown on the
policy specifications page.

DISABILITY Disability shall mean that as a result of bodily injury or disease
DEFINED starting after the date of issue, the insured is totally disabled so
that the insured:

1. is and for a continuous period of at least 180 days has been
prevented from working in any occupation for which the
insured is reasonably qualified by education, training, or
experience; or

2. has suffered total and irrecoverable loss of the sight of
both eyes, or the loss of both hands, or both feet, or one
hand and one foot.

START OF Disability must start:
DISABILITY
1. while this policy and rider are in force, and

2. before the insured's attained age 60.

GENERAL If the claim is approved, we will add the monthly benefit to the fixed
TERMS account of this policy beginning on the first monthly due date after
the start of the insured's disability.

ALL BENEFITS PROVIDED BY THIS RIDER WILL BE ALLOCATED TO THE FIXED
ACCOUNT.

We will add no more than 12 retroactive benefits in cases of delayed
notice of a claim.

We will not pay monthly benefits if the disability results from:

EXCLUSIONS 1. intentionally self-inflicted injury, or
FROM COVERAGE
2. war or any act attributable to war, declared or undeclared,
while the insured is in the military service of any country.

TERMINATION The owner must give proof of the insured's continuing disability upon
OF DISABILITY request unless benefits are being paid under Item 2 of the Disability
Defined section. This proof may require that the insured be examined by
a physician acceptable to us. If this proof is not furnished within 91
days of a request, the monthly benefit for this disability will end.

We will notify you of the termination of the monthly disability benefit.

CHARGE FOR The charge for this rider will be added to the monthly deduction for
THIS RIDER this policy. The monthly charge for this rider is the sum of:

1. the monthly disability benefit rider amount shown on the policy
specifications page times a percentage at the insured's attained
age; plus

2. the extra monthly charge for a special premium class for this
rider, if any.

The guaranteed maximum percentages are shown in the following table.
</TABLE>

2000-103(031)MDB 41870
<PAGE> 2

GUARANTEED MAXIMUM PERCENTAGES

<TABLE>
<CAPTION>
----------------------- ----------------------- ----------------------- -----------------------
Attained Percentage Attained Percentage
Age % Age %
----------------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
21-30 6.0 51-55 15.0
31-40 7.0 56-59 20.0
41-45 8.0 60 and 20.0
46-50 10.0 above
----------------------- ----------------------- ----------------------- -----------------------
</TABLE>

<TABLE>
<S> <C>
TERMINATION This rider will end when:
1. the insured attains age 60 before the start of any disability;
2. the owner is receiving the benefits of this rider and the insured
attains age 65;
3. the policy ends for any reason; or
4. the owner's signed request for termination is received.

PROCEEDS Any proceeds paid under this policy will not be reduced by any monthly
benefits paid by this rider.

GUARANTEED This rider does not increase or decrease any guaranteed values of this
VALUES policy.

CONTRACT This rider is subject to all the terms of this policy except as
modified in this rider.

Attached to and made a part of this policy effective as of the date of
issue of the rider.
</TABLE>

FARMERS NEW WORLD LIFE INSURANCE COMPANY

/s/ C. Paul Patsis /s/ Jeffrey T. Blackburn
C. Paul Patsis Jeffrey T. Blackburn
President Secretary

2000-103(031)MDB

<PAGE> 1

EXHIBIT 1.A.(5)(c)

WAIVER OF DEDUCTION RIDER

BENEFIT When we receive proof that the insured is totally disabled as defined in
the section entitled Disability Defined, we will waive the monthly
deductions due after the start of and during the insured's continued
total disability, subject to the terms below.

DISABILITY Disability means that as a result of bodily injury or disease starting
DEFINED after the date of issue, the insured is totally disabled so that the
insured:

1. is and for a continuous period of at least six months has been
prevented from working in any occupation for which the insured is
reasonably qualified by education, training or experience; or
2. has suffered total and irrecoverable loss of the sight of both
eyes, or the loss of both hands, or both feet, or one hand and one
foot.

START OF Disability must start:
DISABILITY 1. while this policy and rider are in force, and
2. before the insured reaches attained age 60.

NOTICE OF Written notice of disability must be received by us at the home office
DISABILITY during the insured's continuing disability unless it can be shown that
notice was given as soon as reasonably possible. No monthly
deduction will be waived which became due more than 12 months before
receipt of written notice of claim.

GENERAL The monthly deduction must be paid until the claim is approved. If
TERMS the claim is approved, we will credit the contract value with all
monthly deductions that were deducted from the contract value since the
start of the disability.

EXCLUSIONS FROM We will not waive monthly deductions if disability results from:
COVERAGE 1. Intentional self-inflicted injury.
2. War or any act attributable to war, declared or undeclared, while
the insured is in the military, naval or air service of any
country.
3. Participation in aviation, except as a passenger.

TERMINATION OF The owner must give proof of the insured's continuing disability
DISABILITY upon request unless benefits are being paid under Paragraph 2 of
the section entitled Disability Defined. This proof may require that
the insured be examined by a physician acceptable to us. If this proof
is not furnished within 91 days of a request, this disability benefit
will end. We will notify the owner of the monthly deduction then due.

CHARGE FOR The charge for this rider will be added to the monthly deduction for
THIS RIDER this policy. The monthly charge for this rider is a percentage of the
sum of:

1. the cost of insurance charge for the policy; and
2. the monthly charges for any other riders attached to this policy;
and
3. the monthly administration charge; and
4. the flat extra monthly charge for a special premium class, if any.

This percentage is based on the insured's attained age and the death
benefit option. The guaranteed maximum percentages are shown in the
following table.
</TABLE>

2000-90(031)WD 41871
<PAGE> 2

GUARANTEED MAXIMUM PERCENTAGES
-------------------- -------------------- -------------------- --------------------
Attained Percentage Attained Percentage
Age % Age %
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C>
16-30 6.0 51-55 15.0
31-40 7.0 56-59 20.0
41-45 8.0 60 and above 0.0
46-50 10.0
-------------------- -------------------- -------------------- --------------------
</TABLE>

<TABLE>
<S> <C>
TERMINATION This rider will end when:
OF RIDER 1. the insured attains age 60 before the start of any disability; or
2. the policy ends; or
3. the owner's signed request for termination is received.

PROCEEDS Any proceeds paid under this policy will not be reduced by any monthly
deductions waived under this rider.

CONTRACT This rider is subject to all the terms of this policy except as
modified in this rider.

Attached to and made a part of this policy effective as of the date of
issue of the rider.
</TABLE>

FARMERS NEW WORLD LIFE INSURANCE COMPANY

/s/ C. Paul Patsis /s/ Jeffrey T. Blackburn
C. Paul Patsis Jeffrey T. Blackburn
President Secretary

2000-90(031)WD
<PAGE> 3

2000-90(031)WD

<PAGE> 1
EXHIBIT 1.A.(5)(d)

ACCIDENTAL DEATH BENEFIT RIDER
<TABLE>
<S> <C>
BENEFIT We will pay the Accidental Death Benefit amount to
the beneficiary upon receipt of due proof that the
insured's death was caused by accidental bodily
injury subject to the terms below. The Accidental
Death Benefit amount is shown on the policy
specifications page. This Accidental Death Benefit
provides insurance on the life of the Insured, but
does not provide insurance on any other person or
persons insured.

ACCIDENTAL Death must occur:
DEATH 1. as a direct result of accidental bodily
BENEFIT injury and independently of all other
causes; and
2. within 90 days of such injury; and
3. before the insured reaches attained age 70; and
4. while this policy and rider are in force.

EXCLUSIONS FROM We will not pay this benefit if the death results from:
COVERAGE 1. suicide whether sane or insane;
2. war or any act attributable to war, declared or
undeclared, whether the insured is in the military
service or not;
3. bodily or mental infirmity, illness or disease of
any kind;
4. bacterial infection other than infection occurring as
a result of accidental or external bodily injuries;
5. committing or attempting to commit an assault or felony;
6. the voluntary taking of any poison, drug or sedative,
asphyxiation from voluntary inhalation of gas;
7. participation in aviation, except as a passenger.

CHARGE FOR The charge for this rider will be added to the
THIS RIDER monthly deduction for this policy. The monthly
charge for this rider is the sum of:
1. the risk rate at the insured's attained age times
the number of thousands of Accidental Death Benefit
amount shown on the policy specifications page; plus
2. the extra monthly charge for a special premium class for
this rider, if any.

If this policy provides for Waiver of Deduction, the monthly charge
for this rider will be waived if the monthly deduction for the
policy is waived.

Guaranteed maximum monthly risk rates are shown in the following
table.
</TABLE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
GUARANTEED MAXIMUM RISK RATES PER $1,000 BY ATTAINED AGE
- -----------------------------------------------------------------------------------------------------------------
AGE RISK RATE AGE RISK RATE AGE RISK RATE AGE RISK RATE AGE RISK RATE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0.104 15 0.104 29 0.083 43 0.104 57 0.125
2 0.104 16 0.125 30 0.083 44 0.104 58 0.125
3 0.083 17 0.146 31 0.083 45 0.104 59 0.125
4 0.083 18 0.146 32 0.083 46 0.104 60 0.125
5 0.083 19 0.146 33 0.083 47 0.104 61 0.146
6 0.083 20 0.146 34 0.083 48 0.104 62 0.146
7 0.083 21 0.146 35 0.083 49 0.104 63 0.146
8 0.083 22 0.125 36 0.083 50 0.104 64 0.167
9 0.083 23 0.125 37 0.083 51 0.104 65 0.167
10 0.083 24 0.104 38 0.083 52 0.104 66 0.167
11 0.083 25 0.104 39 0.083 53 0.104 67 0.188
12 0.083 26 0.104 40 0.083 54 0.104 68 0.188
13 0.083 27 0.104 41 0.083 55 0.125 69 0.188
14 0.083 28 0.083 42 0.083 56 0.125
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

2000-100(031)ADB 41866
<PAGE> 2

<TABLE>
<S> <C>
TERMINATION This rider will end when:
OF RIDER 1. the insured attains age 70; or
2. the policy ends; or
3. the owner's signed request for termination is received.

GUARANTEED This rider does not increase or decrease the guaranteed values
VALUES of this policy.

CONTRACT This rider is subject to all the terms of the policy, except as
modified in this rider.

Attached to and made a part of this policy effective as of the
date of issue of the policy.
</TABLE>

FARMERS NEW WORLD LIFE INSURANCE COMPANY

/s/ C. PAUL PATSIS /s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary

THIS ACCIDENTAL DEATH BENEFIT PROVIDES INSURANCE ON THE LIFE OF THE
INSURED, BUT DOES NOT PROVIDE INSURANCE ON ANY OTHER PERSON OR PERSONS
INSURED.

2000-100(031)ADB

<PAGE> 1

EXHIBIT 1.A.(5)(e)

FARMERS NEW WORLD LIFE INSURANCE COMPANY
ADDITIONAL INSURED TERM INSURANCE RIDER

<TABLE>
<S> <C>
ADDITIONAL The person named in the application for this rider is the additional
INSURED insured. This rider provides level term insurance to the additional
insured's attained age 70. Attained age is the additional insured's age
at issue plus the number of years since issue of this rider.

BENEFIT Upon receipt of due proof of the death of the additional insured
while this rider is in force we will pay the additional insured
rider amount shown on the Policy Specifications page. The
additional insured rider amount may not exceed the principal sum
of the policy to which this rider is attached.

BENEFICIARY The insured is the beneficiary of this rider. If the insured and the
additional insured die at the same time, or if the order of the
deaths cannot be determined, the benefits of this rider will be
paid as if the additional insured died first.

CONVERSION While this policy and rider are in force, the insurance on the
PRIVILEGE additional insured may be converted to a permanent plan of life
insurance available at the time of conversion.

This rider may be converted:
1. prior to the additional insured's attained age 59; or
2. within 60 days of the insured's death prior to the additional
insured's attained age 70.

Conversion is subject to the following:
1. The new policy will be based on the additional insured's
attained age on the date it takes effect. The new policy
will contain the provisions then being included in new
policies. It will be based on the policy minimums and
rates in effect at that time. The additional insured
will retain the same rating classification as on this
rider.
2. Evidence of insurability will not be required for the
new policy. It will be required for:
a. accidental death benefits, or
b. disability benefits, or
c. any other benefits which increase the insurance risk.
3. The suicide and incontestable periods for
the new policy will be measured from the date of
issue of this rider.
4. The principal sum of the new policy may not exceed the
death benefit amount of this rider.
5. If the charge for this rider is being waived
under the Waiver of Deduction rider at the
date of conversion, the charge or premium for the
new policy will not continue to be waived.
6. The required premium and this policy must accompany
the owner's signed request for conversion.

TERMINATION OF RIDER This rider will end when:
1. the policy ends for any reason;
2. we receive the owner's signed request for termination; or
3. the additional insured attains age 70.

CHARGE FOR The charge for this rider will be added to the monthly deduction for
THIS RIDER this policy. The monthly charge for this rider is the risk rate per
$1,000 at the additional insured's attained age times the number of
thousands of additional insured rider amount shown on the Policy
Specifications page.
</TABLE>

2000-548 AIR 41868
<PAGE> 2

<TABLE>
<S> <C>
If the additional insured is in a special premium class, the
charge for this rider will be increased by an extra monthly
charge.

If this policy provides for Waiver of Deduction, the charge
for this rider will be waived if the monthly deduction for
the policy is waived.

Guaranteed maximum monthly risk rates are shown in the
following table. These will be increased by an extra monthly
charge if the additional insured is in a special premium
class.
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
GUARANTEED MAXIMUM MONTHLY RISK RATES PER $1,000
OF ADDITIONAL INSURED RIDER AMOUNT AT
ADDITIONAL INSURED'S ATTAINED AGE
- --------------------------------------------------------------------------------------------
RISK RATE RISK RATE RISK RATE RISK RATE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
21 0.13788 34 0.13705 46 0.30982 58 0.90869
22 0.13539 35 0.14370 47 0.33474 59 1.00089
23 0.13207 36 0.15117 48 0.36215 60 1.10389
24 0.12875 37 0.16114 49 0.39205 61 1.21851
25 0.12459 38 0.17194 50 0.42611 62 1.35058
26 0.12210 39 0.18357 51 0.46514 63 1.50009
27 0.12044 40 0.19769 52 0.51000 64 1.66621
28 0.11961 41 0.21264 53 0.56150 65 1.84812
29 0.11961 42 0.22842 54 0.61881 66 2.04497
30 0.12044 43 0.24586 55 0.68276 67 2.25096
31 0.12293 44 0.26497 56 0.75254 68 2.48520
32 0.12625 45 0.28656 57 0.82646 69 2.73937
33 0.13124
- --------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C>
INCONTESTABILITY We will not contest this rider after it has been in force for two
years from the effective date of this rider during the additional
insured's lifetime.

SUICIDE If, within two years from the effective date of this rider, the
additional insured dies by suicide, while sane or insane, we
will limit the proceeds to the sum of monthly charges deducted for
this rider.

RESERVE BASIS The reserves for this rider are based on the Commissioners 1980
Standard Ordinary Table, the Commissioners Reserve Valuation
Method and age last birthday. The statutory valuation interest rate
does not exceed the maximum rate allowed by the valuation law of the
state in which this rider is delivered.

GUARANTEED VALUES This rider does not increase or decrease the guaranteed values of this
policy.

CONTRACT The rider is subject to all the terms of the policy except as
modified in this rider.

Attached to and made a part of this policy effective as of the
date of issue of the policy, unless the rider is added at a
later date.
</TABLE>

FARMERS NEW WORLD LIFE INSURANCE COMPANY

/s/ C. PAUL PATSIS /s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary

2000-548 AIR
<PAGE> 3

2000-548 AIR

<PAGE> 1
EXHIBIT 1.A.(5)(f)

FARMERS NEW WORLD LIFE INSURANCE COMPANY
CHILDREN'S TERM INSURANCE RIDER

<TABLE>
<S> <C>
BENEFITS A. Upon receipt of due proof of the death of an
insured child, we will pay to the beneficiary
of this rider the Children's Term Rider
amount shown on the policy specifications
page, provided:

1. the rider is in force on the date of death, and
2. death occurred prior to the child's 22nd birthday.

B. Upon receipt of due proof of the insured's death while
this rider is in force, we will waive the monthly
charges for this rider and continue the term
insurance to age 22 on each insured child.

INSURED Each of the children described below is insured
CHILDREN from age 15 days until the earliest of either the
child's 22nd birthday or the insured's attained age
65.

1. Each child listed in the application who is not yet
20 years of age on the effective date of this rider.
2. Each future child born to the insured.
3. Each child legally adopted by the insured before the
child is age 20 and before the insured attains age 63.

BENEFICIARY The insured is the beneficiary under this rider. If the
owner is living at the time of the insured's death, the
owner will become the beneficiary. If the owner is not
living, the surviving insured children will share and
share alike.

CHARGE FOR The charge for this rider will be added to the
THIS RIDER monthly deduction for this policy. The guaranteed
maximum monthly charge for this rider is $X.XX times
the number of thousands of Children's Term Rider amount.

If this policy provides for Waiver of Deduction, the monthly charge
for this rider will be waived if the monthly deduction for the
policy is waived.

TERMINATION This rider will end when:
OF RIDER
1. the insured attains age 65; or
2. the youngest child covered by this rider reaches age 22; or
3. the policy ends; or
4. the owner's signed request for termination is received.

CONVERSION The insurance on each child may be converted to a permanent plan
PRIVILEGE of life insurance available at the time of conversion. Conversion
is subject to the following terms:

1. The new policy will be based on the child's attained age
on the date it takes effect. The new policy will contain
the provisions then being included in new policies. It
will be based on the policy minimums and rates in effect
at that time.
2. The amount of the policy may not exceed $1,000 for each
$1,000 of insurance provided by this rider. If the
conversion is made within 31 days following the earliest
of either the child's 22nd birthday or the insured's
attained age 65, the amount of the new policy may not
exceed $5,000 for each $1,000 of insurance provided by
this rider.
3. If the charge for this rider is being waived at the date
of conversion, the charge or premium for the new policy
will not continue to be waived.
</TABLE>

2000-107(031)CTIR 41869
<PAGE> 2

<TABLE>
<S> <C>
4. Evidence of insurability will not be required for the
new policy. It will be required for:
a. accidental death benefits, or
b. disability benefits, or
c. any other benefits which increase the insurance risk.
5. The suicide and incontestability periods on the new policy
will be measured from the effective date of this rider.
6. We must receive the owner's signed request for conversion
while this policy and rider are in force or within 31 days
of the end of this rider.
7. The required premium and this policy must accompany the request
for conversion. We will endorse this rider to exclude the child
with the new policy and return the policy to the owner.

Upon receipt of due proof that the death of a child eligible to be
insured under a new policy occurred during the 31 days following
the expiry of that child's insurance under this rider and before
any new policy had become effective, we will pay to the beneficiary
of this rider the amount which would have been paid if such child's
term insurance had not expired.

INCONTESTABILITY We will not contest this rider after it has been in force for two
years from the effective date of the rider during the insured
children's lifetimes.

CONTRACT This rider is subject to all the terms of this policy, except as
modified in this rider.

Attached to and made a part of this policy effective as of the
date of issue of the policy, unless the rider is added at a
later date.
</TABLE>

FARMERS NEW WORLD LIFE INSURANCE COMPANY

/s/ C. PAUL PATSIS /s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary

2000-107(031)CTIR 41869

<PAGE> 1

EXHIBIT 1.A.(5)(g)

AUTOMATIC INCREASE BENEFIT RIDER

<S> <C>
BENEFIT We will automatically increase the principal sum of this policy on
each anniversary of the policy issue date subject to the terms
below. Evidence of insurability is not required.

INCREASES On each policy anniversary prior to the insured's attained age 55
we will increase:

1. the planned (billed) premium by 3 percent and

2. the principal sum of this policy by the lesser of 3 percent
of the original principal sum or $10,000.

These increases will continue automatically unless:

1. benefits are paid under the terms of the Waiver of Deduction
or Monthly Disability Benefit riders (automatic increases
will resume when benefits are no longer being paid under the
terms of either of these riders); or

2. this rider ends as described in the Termination of Rider
section.

CHARGE FOR THIS RIDER There are no monthly charges for this rider. Cost of insurance
charges are applied to the increased risk insurance amount as
described in the policy.

TERMINATION OF RIDER This rider will end when:
1. the insured attains age 55;
2. an increase is refused by the owner of this policy (we must
receive the owner's signed notice of refusal within 30 days
of the policy anniversary);
3. the total of all increases equals the original principal sum
of this policy;
4. the policy ends for any reason;
5. the owner requests a decrease in principal sum; or
6. the owner's signed request for termination is received.

CONTRACT This rider is subject to all the terms of the policy except as
modified in this rider.

Attached to and made a part of this policy effective as of the
date of issue of the rider.
</TABLE>

FARMERS NEW WORLD LIFE INSURANCE COMPANY

/s/ C. PAUL PATSIS /s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary

2000-310(031)AI 41867

<PAGE> 1

EXHIBIT 1.A.(5)(h)

FARMERS NEW WORLD LIFE INSURANCE COMPANY
ACCELERATED BENEFIT RIDER

NOTICE Benefits advanced under this rider may be taxable. The recipient
should obtain advice from a tax professional or an attorney before deciding to
receive payment of this benefit. Also, receipt of an accelerated benefit
payment may cause the recipient to lose the right to receive certain public
funds, such as Medicare, Medicaid, Social Security, Supplemental Security,
Supplemental Security Income, and possibly others.

DEFINITIONS

ACCELERATED BENEFIT INSURED The accelerated benefit insured is the named
insured under this policy. Other individuals covered under riders are not
included as accelerated benefit insureds. Subject to this definition, the
accelerated benefit insured will be referred to as "you" or "your" in this
rider.

BENEFIT PERCENTAGE The benefit percentage is: 1. The accelerated benefit
amount before any adjustments and deductions, divided by 2. The current death
benefit provided by the policy excluding any attached riders.

PHYSICIAN Physician means a person who is licensed to practice medicine in the
United States and who is acting within the scope of that license. Physician
does not include: 1. you; 2. the owner, 3. a person who lives with you or the
owner; 4. a person who is a relative of you or the owner.

TERMINAL ILLNESS Terminal Illness is a medical condition that with reasonable
medical certainty will result in your death within 12 months or less from the
date of the physician statement, regardless of any medical treatment you
receive, with the exception of major organ transplants.

MAJOR ORGANS Major organs are defined as heart, lung, liver, pancreas,
kidney, and bone marrow.

PHYSICIAN STATEMENT A physician statement means a statement acceptable to us,
signed by a physician which gives the diagnosis of your terminal illness, as
defined above. We may also require additional information from other physicians
having knowledge of your terminal illness.

BENEFITS

ACCELERATED BENEFIT We will pay an accelerated benefit, subject to the terms
of this rider, if you develop a terminal illness as defined above. The
accelerated benefit is a part of this policy's death benefit paid while you are
living. Benefits provided by riders attached to the policy are not included in
the determination of the accelerated benefit. If you die before payment is made,
then no accelerated benefit is payable.

The maximum portion of the death benefit available for acceleration is the
lesser of: (1) $150,000; or (2) 50% of the death benefit available on the
policy to which this rider is attached on the date the request is received in
our home office. Any riders attached to the policy are not included in the
determination of the amount of the accelerated benefit.

ADJUSTMENTS AND DEDUCTIONS The accelerated benefit amount is subject to the
following adjustments and deductions:
1. We will pay the present value of the amount accelerated. This calculation
will be based on the applicable actuarial discount appropriate to the
policy to which this rider is attached. The maximum interest rate used for
the discount is the greater of:
a.) the current yield on 90 day U.S. Treasury Bills; or
b.) the current maximum statutory adjustable policy loan interest rate.
2. If, on the date we approve the request, there is an outstanding policy
loan, the accelerated benefit amount will be reduced by the benefit
percentage multiplied by the outstanding loan balance. This reduction
repays a portion of the policy loan.
3. We will reduce the accelerated benefit amount by any premiums which are due
and unpaid at the time we approve your request.
4. We will reduce the accelerated benefit amount by an administrative charge
not to exceed 1% of the accelerated benefit amount.

CONDITIONS FOR PAYMENT OF THE ACCELERATED BENEFIT:
1. The expiration or maturity date of this policy must be more than 2 years
from the date an accelerated payment is requested.

2000-127(031)ABR 41865
<PAGE> 2

2. The sum of accelerated payments on this and any other policies issued by us
on your life may not exceed $150,000. Only one accelerated payment is
allowed per policy.
3. We must receive proof of eligibility that is acceptable to us and pay the
accelerated benefit during your lifetime.
4. We must receive a consent form from all assignees and irrevocable
beneficiaries, in any. We also reserve the right to require a consent form
from you, your spouse, other beneficiaries, or any other person if, in our
discretion, such person's consent is necessary to protect our interests.
5. This benefit is not meant to cause involuntary access to proceeds
ultimately payable to the beneficiary. Therefore, this benefit is not
available:
a.) If either you or the owner are required by law to use this benefit to
meet the claims of creditors, whether in bankruptcy or otherwise; or
b.) If either you or the owner are required by a government entity to use
this benefit in order to apply for, obtain, or otherwise keep a
government benefit or entitlement, or any other reason.

EFFECT ON THE POLICY After the accelerated payment is paid, the policy will
remain in force subject to the following adjustments:
1. The death benefit, contract value, and cash value of the policy, as
applicable, excluding any riders will be reduced by the benefit percentage.
2. Cost of Insurance Charges will be adjusted appropriately to reflect the
current coverage.
3. Any outstanding loan will be reduced by the amount of loan repaid as
described in item 2 of the Adjustments and Deductions section.
4. We will send the owner, any irrevocable beneficiary and any assignee a
statement showing the effect of the accelerated benefit on the policy.

If a benefit is paid under the terms of this rider, the accidental death
benefit provision, if any, shall not be affected.

LIMITATIONS No benefit will be provided by this rider if the terminal illness
results from intentionally self-inflicted injuries.

CLAIMS

PROOF OF ELIGIBILITY Written proof of your terminal illness must be received
by us before we will pay the accelerated benefit. This proof will include a
properly completed claim form, a physician statement, and medical information
acceptable to us supporting the diagnosis. We may require additional medical
information from the physician submitting the statement and from other
physicians or institutions having knowledge of your terminal illness.

PHYSICIAN EXAMINATION At our expense we reserve the right to have a physician
of our choosing examine you prior to paying the accelerated benefit. In the
event the physician we choose provides a different physician statement, we
reserve the right to rely on that physician statement for claim purposes. In
case of disagreement, the parties shall submit to arbitration.

PAYMENT OF CLAIMS The accelerated death benefit will be paid to the policy
owner. At our option, benefits will be placed in an interest bearing account to
which the owner will have full access.

GENERAL PROVISIONS

PREMIUM There is no additional charge for this rider.

TERMINATION OF RIDER This rider ends:
1. on the day we receive the owner's written request of cancellation; or
2. when the policy to which this rider is attached ends for any reason; or
3. upon payment of the accelerated benefit provided by this rider.

CONTRACT This rider is subject to all terms of the policy except as modified
in this rider.

Attached to and made a part of this policy effective as of the issue date of
this policy.

FARMERS NEW WORLD LIFE INSURANCE COMPANY

/s/ C. PAUL PATSIS /s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary

<PAGE> 1
EXHIBIT 1.A.(9)

<TABLE>
LIFE APPLICATION Application Number

FARMERS NEW WORLD LIFE INSURANCE COMPANY(R) GA
Member of Farmers Insurance Group of Companies
- ----------------------------------------------
<S> <C>
[ ] Mercer Island Life Office [ ] Columbus Life Office
3003-77th Ave., S.E., Mercer Island, WA 98040 - (206) 232-8400 P.O. Box 2529, Columbus, OH 43216 - (614) 764-9975
- -----------------------------------------------------------------------------------------------------------------------------------
A. PRIMARY PROPOSED INSURED
- -----------------------------------------------------------------------------------------------------------------------------------
/ / / / -- / / / -- / / / / /
-----------------------------------------
Social Security Number

Name __________________________________________________________________________________
First Middle Last

[ ] Male [ ] Female Age ______ Birthdate _____________________ Birthplace _________________ Marital Status __________

Height ________ Weight ________ Driver's License No. _________________________________ State ______________________________

Billing Address ___________________________________________________________________________________________________________________
Street City State Zip

Residence Address _________________________________________________________________________________________________________________
Street City State Zip No. of Years

Occupation __________________________ Duties _________________________________________________ Net Annual Income $ ____________
No. of years (If relevant, show % of time at different duties.)

Employer Name and Address _________________________________________________________________________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
B. OTHER PROPOSED INSUREDS
- -----------------------------------------------------------------------------------------------------------------------------------

Full Name Sex Relationship to Primary Birthdate Age Height Weight Social Security Number
Proposed Insured
___________________________________________________________________________________________________________________________________

___________________________________________________________________________________________________________________________________

___________________________________________________________________________________________________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
C. OWNER (Required if owner is other than Proposed Insured)
- -----------------------------------------------------------------------------------------------------------------------------------
/ / / / -- / / / -- / / / / /
-----------------------------------------
Taxpayer Identification Number

Name __________________________________________________________________________________
First Middle Last

Age ________ Birthdate _______________________ Birthplace __________________________________ Height __________ Weight _________

Address ___________________________________________________________________________________________________________________________
Street City State Zip

Relationship to Primary Proposed Insured _____________ Is owner of juvenile policy to remain owner after juvenile reaches 21?
[ ] yes [ ] no
-----------------------------------------
/ / / / -- / / / -- / / / / /
-----------------------------------------
Taxpayer Identification Number

OPTIONAL - Successor Owner Name ______________________________________________________
First Middle Last

Successor Owner Address ________________________________________________________________ Birthdate _______________________________
- -----------------------------------------------------------------------------------------------------------------------------------
D. UNIVERSAL LIFE
- -----------------------------------------------------------------------------------------------------------------------------------

Principal Plan Death Benefit Check Additional Insured
Sum: Code: Option (required): only one: Rider?

[ ] 037 Nicotine PUL [ ] Option A - Increasing Primary Adult: [ ]Yes [ ]No
[ ] 137 Non-Nicotine PUL [ ] Option B - Level Waiver of Deduction?......... [ ] $ _________________
$____________ [ ] 038 Nicotine FFUL
[ ] 138 Non-Nicotine FFUL Accidental Death Benefit? Monthly Disability Benefit?.. [ ] Accelerated Benefit
Planned Premium [ ] 238 Juvenile FFUL $_______________________ $__________________ per month Rider? [ ]Yes [ ] No
(to be billed): [ ]Yes [ ] No
Lump Sum at Issue: Automatic Increase Benefit? Children's Term
$____________ [ ]Yes [ ] No Rider? [ ]Yes [ ] No
$__________________ Guaranteed Insurability Benefit? Owner of Juvenile FFUL Policy Only:
(juvenile FFUL policy only) Payor Benefit?............... [ ] # of units__________
$____________________ Complete Section C List children in
[ ]Yes [ ] No Section B.
- -----------------------------------------------------------------------------------------------------------------------------------
E. OTHER LIFE PLANS
- -----------------------------------------------------------------------------------------------------------------------------------
Initial/Basic Plan Name: Plan Code: Waiver of Premium? Accidental Death Benefit? Excess Credit
Amount: (primary adult) [ ]Yes [ ]No Option: (check one):
[ ]Yes [ ] No $___________________ [ ] Paid Up Additions
$ _______________ ________________ __________ [ ] Reduce Premium
Payor Benefit?...... Guaranteed Insurability (direct billing only)
Rider: Rider Name: Plan Code: [ ]Yes [ ] No Benefit? [ ] Deposit Fund
(owner of juvenile (juvenile policy only) [ ] Cash
policy only) Complete [ ]Yes [ ]No
Section C. $_______________ Automatic Premium Loan?
(not available on term
$ _______________ ________________ __________ Children's Term Rider?... Accelerated Benefit plans)...........
[ ]Yes [ ] No Rider?.........
Rider: Rider Name: Plan Code: # of Units ___________ [ ]Yes [ ]No [ ]Yes [ ]No

Additional Insured Rider?
List children in Section B. (PWL only)
[ ]Yes [ ]No
$ _______________ ________________ __________ $ ____________________

</TABLE>
1
<PAGE> 2
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>

F. DEPOSIT FUND G. BILLING INSTRUCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Initial Deposit Regular Deposit Total Mode Cash Collected If multiple Billing, bill with
$ $ Premium $ [ ] Annual [ ] BCP Policy Number(s):
$ [ ] Specify other _________
- -----------------------------------------------------------------------------------------------------------------------------------
31-1548 AGENT CODE: - - MO (1-99)
------------------------------------------------
Application Number
- -----------------------------------------------------------------------------------------------------------------------------------
H. HEALTH STATEMENTS Answer for all Proposed Insureds, including Owner, if Payor Benefits are requested.
- -----------------------------------------------------------------------------------------------------------------------------------
1. Name, address and phone number of any Proposed Insured's (including Owner's) medical facility or physician:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
2. Has any Proposed Insured in the past 10 years had, sought medical advice or been treated for, or been diagnosed
as having: (IF "YES," CIRCLE DISEASE OR DISORDER.) YES NO

a. high blood pressure, heart attack, murmur, chest pain, or any disorder of the heart or vascular system? . . . . [ ] [ ]
b. seizures, stroke, Alzheimer's, or any other disorder of the brain or nervous system? . . . . . . . . . . . . . [ ] [ ]
c. diabetes, hepatitis, or any other disorder of the endocrine or gastrointestinal system? . . . . . . . . . . . . [ ] [ ]
d. liver or kidney disorder, protein or blood in the urine, or any other disorder of the urinary or reproductive
system? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
e. cancer, tumor, mass, or any malignant or benign growth? . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
f. asthma, emphysema, tuberculosis, pneumonia, sleep apnea or any other disease or disorder of the lungs
or respiratory system; arthritis or any connective tissue or musculoskeletal disorder?. . . . . . . . . . . . . [ ] [ ]
g. depression, schizophrenia, or any other emotional, mental or psychiatric disorder? . . . . . . . . . . . . . . [ ] [ ]
h. anemia, hemophilia, high cholesterol or glucose, or any other disorder of the blood? . . . . . . . . . . . . . [ ] [ ]

3. Has any Proposed Insured ever:
a. been diagnosed by a medical professional or received treatment for lymph gland disorder, AIDS or
AIDS related condition? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
b. tested positive for the presence of Human Immunodeficiency Virus (HIV) antibodies or antigens?. . . . . . . . . [ ] [ ]
c. been advised to reduce or stop drinking alcohol by a medical professional or received counseling
or treatment for alcohol use or abuse?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
d. attempted suicide? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
e. had any surgical operation (including biopsies) performed or recommended? . . . . . . . . . . . . . . . . . . . [ ] [ ]

4. Is any Proposed Insured currently taking or within the past year has any Proposed Insured taken any
treatments or medications?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

5. During the past five years, has any Proposed Insured:
a. seen a medical professional or been advised to be or been admitted to, evaluated, or treated in an
urgent care center, emergency room, hospital or other treatment facility? . . . . . . . . . . . . . . . . . . . [ ] [ ]
b. had or been advised to have urine or blood tests (excluding HIV test), x-rays, scans, EKGs, or
other tests not listed? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

6. Within the past 8 years, has any Proposed Insured used or received counseling or treatment for the use
of any drug, including but not limited to: marijuana, cocaine, amphetamines, barbiturates, narcotics, opiates
(such as heroin), hallucinogens (such as LSD, PCP); or used to excess or received counseling or treatment
for the use of any prescription medication?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

7. Has any Proposed Insured lost more than 10 pounds in the last year? . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

8. Does any Proposed Insured currently drink alcoholic beverages? . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
If "Yes," number of drinks, cans or glasses per week:
-------------------------------------------------------------------------

9. LIST AND EXPLAIN ANY "YES" ANSWERS TO QUESTIONS 2 THROUGH 7 ABOVE: (Use separate sheet if necessary)
</TABLE>

<TABLE>
<CAPTION>
Proposed Insured Condition/Disorder Dates of: Name, Address & Phone
Question # (& Patient ID Number, if Treatment/Medication Received Onset Last Treatment/Visit of Physician/Hospital
any)

- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

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

- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2

<PAGE> 3

<TABLE>
Application Number
- ------------------------------------------------------------------------------------------------------------------------------------
I. ADDITIONAL INFORMATION FOR PROPOSED INSUREDS
- ------------------------------------------------------------------------------------------------------------------------------------
ANSWER FOR ALL PROPOSED INSUREDS, INCLUDING OWNER, IF PAYOR BENEFITS ARE
REQUESTED.
<S> <C>
1. Has any Proposed Insured: YES NO

a. applied for, or received, compensation for any accident, sickness, or disability (including Social Security
Disability Income (SSDI) benefits or any other government program)? . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

b. had a driver's license suspended or revoked, or been convicted of an alcohol- or drug-related offense? . . . . [ ] [ ]

c. pled guilty to or been convicted of a felony? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

d. participated in professional or amateur airborne sport, powered racing vehicles, mountain climbing,
rodeos, or skin or scuba diving; or does any Proposed Insured intend doing so in the future? . . . . . . . . . [ ] [ ]

2. Does any Proposed Insured intend to work or travel outside of the United States for more than 30 days, within the
next two years?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

3. Has any Proposed Insured had any application for Life, Accident, or Health Insurance, or reinstatement of
any policy postponed or issued on a modified basis?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

4. EXPLAIN ANY "YES" ANSWERS TO QUESTIONS 1 THROUGH 3 ABOVE: (use separate sheet if necessary)

- -----------------------------------------------------------------------------------------------------------------------------------
Question # Proposed Insured Name Explanation
- -----------------------------------------------------------------------------------------------------------------------------------

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

- -----------------------------------------------------------------------------------------------------------------------------------
5. a. Will any life insurance or annuity be reduced, discontinued, or payment of premiums stopped if
the insurance applied for is issued? If "Yes," complete Replacement forms if required.. . . . . . . . . . . . . [ ] [ ]
b. Is the insurance applied for intended to be a 1035 Exchange? If "Yes," complete 1035 Exchange forms. . . . . . . [ ] [ ]

6. Is any life insurance in force or application pending on the life of any Proposed Insured(s)? . . . . . . . . . . . . [ ] [ ]

7. PROVIDE DETAIL OF "YES" ANSWERS TO QUESTIONS 5 AND 6 ABOVE:

- -----------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Name Full Company Name Life Amount ADB Amount Policy Number Will Policy
Be Replaced?
- -----------------------------------------------------------------------------------------------------------------------------------

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

Give policy numbers of all FNWL Life Insurance:
--------------------------------------------------------------------------------

8. Complete if Juvenile Plan:
Amount of Life Insurance in force on: If none on parents, or different amount on other children, please
Mother $ Father $ explain giving name of each child or parent:
------------------ ------------ -------------------------------------------------------------------
Each Child $
---------------- -------------------------------------------------------------------

9. Has any Proposed Insured flown in the past two years as a pilot, student pilot, or crew member, or does any Proposed
Insured intend doing so in the future? If "Yes," complete Aviation Questionnaire. . . . . . . . . . . . . . . . . . [ ] [ ]
If aviation activity requires an extra charge, is an Aviation Exclusion requested? . . . . . . . . . . . . . . . . . [ ] [ ]

10. Has any Proposed Insured used cigarettes, cigars, pipe or chewing tobacco, snuff, nicotine gum, nicotine patches, or
any other products containing nicotine in the past 12 months? Primary Proposed Insured Other Proposed Insured
[ ] Yes [ ] No [ ] Yes [ ] No
11. Are all Proposed Insureds U.S. citizens? If "No," give details below: . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

- -----------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Name How Long in U.S.A.? Visa Number/Type Permanent Alien Registration Card Number
- -----------------------------------------------------------------------------------------------------------------------------------

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

- -----------------------------------------------------------------------------------------------------------------------------------
J. BENEFICIARIES
- -----------------------------------------------------------------------------------------------------------------------------------

1. When more than one Proposed Insured is involved, list Primary and Contingent Beneficiaries for each. Beneficiaries by class
will share and share alike unless specific percentages are noted.

- -----------------------------------------------------------------------------------------------------------------------------------
Proposed Full Name of Date of Relationship Full Name of Date of Relationship
Insured Primary Birth Contingent Birth
Beneficiary Beneficiary
- -----------------------------------------------------------------------------------------------------------------------------------

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

- -----------------------------------------------------------------------------------------------------------------------------------
If Beneficiary is a Trust, name and date of Trust Agreement:
--------------------------------------------------------------------

2. Include Delay Clause? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes [ ] No [ ]
If "Yes," check one: [ ]15-Day Delay [ ] Other (Specify) -Day Delay
------------------
</TABLE>

3
<PAGE> 4

<TABLE>
Application Number
- -----------------------------------------------------------------------------------------------------------------------------------
K. TEMPORARY INSURANCE AGREEMENT HEALTH STATEMENTS ANSWER FOR PRIMARY PROPOSED INSURED ONLY. Yes No
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Within the past 90 days, have you been advised to be or been admitted to, evaluated or treated in an urgent
care center, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

emergency room, hospital, or other treatment facility including hospice or nursing home,or undergone
or been advised to undergo surgery for any cause? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

2. Within the past two years, have you seen a medical professional, or received any medical care, treatment or
medication for any kind of: heart disease or disorder, heart attack, congenital or birth disease or disorder,
stroke, cancer, or tumor or mass? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

3. Within the past 2 years, have you used or received counseling or treatment for the use of any drug, including
but not limited to: marijuana, cocaine, amphetamines, barbiturates, narcotics, opiates (such as heroin)
hallucinogens (such as LSD, PCP); or used to excess or received counseling or treatment for the use of any
prescription medication; or been advised to be or been admitted to any health care facility for drug or alcohol
rehabilitation? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

- -----------------------------------------------------------------------------------------------------------------------------------
L. CERTIFICATION, ACKNOWLEDGEMENT & AUTHORIZATION
- -----------------------------------------------------------------------------------------------------------------------------------
TEMPORARY INSURANCE AGREEMENT

I, as Owner, understand and agree that if the Primary Proposed Insured qualifies for temporary insurance, it applies only to
the Primary Proposed Insured and not to other Proposed Insureds named in this application. Furthermore, temporary coverage is
limited to the amount applied for in this Application (excluding ADB) or $50,000, whichever is less. The terms and conditions are
set forth on the receipt on page 7 of this Application.

TAXPAYER CERTIFICATION

Under penalty of perjury I, as owner, certify that:

1. The number shown on this form is my correct taxpayer identification number (Social Security Number or Employer
Identification Number), and
2. I am not subject to backup withholding either because I have not been notified by the IRS that I am subject to backup
withholding as a result of failure to report all interest or dividends, or the IRS has notified me that I am no longer
subject to backup withholding.
NOTE: Cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross
out item (2). (See Instructions - page 8.) [ ] The IRS does not require your consent to any provision of this document other than
the certifications required to avoid backup withholding.

ACKNOWLEDGEMENT & AUTHORIZATION
I (we) authorize any licensed physician; medical practitioner; hospital, clinic or other medical or medically related facility;
insurance company; the Medical Information Bureau; or other organization, institution or person, that has any records or knowledge
of me (us) or my (our) health, including information related to HIV, sexually transmitted disease, nicotine use, drug use or
treatment, alcoholism, or psychiatric disorder, to give to Farmers New World Life Insurance Company, its reinsurers, and their
authorized representatives any such information. A photographic copy of this authorization shall be as valid as the original.

I (we), as Proposed Insured(s), understand that application for a non-nicotine policy requires that I (we) have not used cigarettes;
cigars; pipe or chewing tobacco; snuff; nicotine gum; nicotine patches; and/or other products containing nicotine in the past 12
months immediately prior to the date of this Application. Misstatement of nicotine use could result in denial of benefits within
the contestability period.

I (we), agree that this Application will become a part of the contract issued by Farmers New World Life. I (we) have read and
understand the Disclosure Statement detached from this Application and delivered to me (us) on this date.

I (WE) DECLARE TO THE BEST OF MY (OUR) KNOWLEDGE AND BELIEF THAT THE STATEMENTS AND ANSWERS TO THE QUESTIONS ON THIS APPLICATION ARE
TRUE AND COMPLETE.

Any person who with intent to defraud or knowing that he/she is facilitating fraud against an insurer, submits an application or
files a claim containing a false or deceptive statement is guilty of insurance fraud.
</TABLE>

<TABLE>
<S> <C> <C>
- ------------------------------------------ -------------------------------------------- -------------------------------
X signed on
at
- ------------------------------------------ -------------------------------------------- --------------------------------
SIGNATURE OF PRIMARY PROPOSED INSURED, or City, State Month, Day, Year
parent if Proposed Insured is a juvenile

- ------------------------------------------ -------------------------------------------- --------------------------------
X X X
- ------------------------------------------ -------------------------------------------- ---------------------------------
SIGNATURE OF OTHER PROPOSED INSURED SIGNATURE OF OWNER'S SPOUSE where required SIGNATURE OF WITNESS (Soliciting
in community property states when a person Agent)
other than owner's spouse is named as
Primary Beneficiary

- -------------------------------------------------------------------------------------------- ---------------------------------
X
- -------------------------------------------------------------------------------------------- ---------------------------------
SIGNATURE OF OWNER (if other than Proposed Insured) and Title, if applicable Agent's Code Number
</TABLE>

4
<PAGE> 5

<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
M. AGENT'S REPORT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Yes No
1.a. Was this Application personally signed and completed in your presence by the Proposed Insured(s) and
dated the same day? [ ] [ ]
b.Were ALL Proposed Insureds, including children, present during completion of the Application? [ ] [ ]
If "No" to 1a or 1b, explain in "Remarks."

2. Does any Proposed Insured live at an address other than that given in Section A (page 1)? . . . . . . . . . . . . . [ ] [ ]
If "Yes." give address in "Remarks."

3. Do you know of any factor not indicated in this Application which would affect the insurability
of the Proposed Insured(s)? If "Yes," explain in "Remarks." . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

4. During completion of the Application was a language other than English used? . . . . . . . . . . . . . . . . . . . . [ ] [ ]
If "Yes," complete Interpretation Amendment Form 51-0509.

5. Is any Proposed Insured, Owner or member of the immediate family employed by Farmers New World Life? . . . . . . . . [ ] [ ]

6. Is any Proposed Insured an Agent, District Manager, District Life Specialist or Agency Producer for Farmers
Insurance Group of Companies, or a member of their family? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

7. To the best of your knowledge, is the insurance being purchased to replace or reduce current coverage in
this or any other company? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
If "Yes," forward proper replacement forms, if required.

8. Is a medical examination required by the age, plan or amount limits? . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
If "Yes," has the Proposed Insured been advised of its necessity? . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
Will you be scheduling an exam? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
If applying for Preferred Rates, have appropriate medical examination requirements been ordered? . . . . . . . . . . [ ] [ ]

9. If premium was collected with this Application, did you give the Temporary Insurance Agreement to
the Proposed Insured? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]

10. Was this Application completed or solicited by a licensed solicitor other than yourself? . . . . . . . . . . . . . [ ] [ ]
If "Yes," name of solicitor:
-----------------------------------------

11. Are commissions to be paid under a special program such as a DLS, CSP or APP agreement? . . . . . . . . . . . . . [ ] [ ]
If "Yes," affix proper sticker in "Remarks" below.

12. Did the Proposed Insured(s) or the Beneficiary approach you for insurance? . . . . . . . . . . . . . . . . . . . . [ ] [ ]

13. If you are related to the Proposed Insured(s), what is the relationship?
------------------------------------------------------
14. How long and how well have you known the Proposed Insured(s)?
-----------------------------------------------------------------
15. Who else was present when the Application was completed?
----------------------------------------------------------------------

16. REQUIRED TELEPHONE VALIDATION INFORMATION:
Primary Proposed Insured's Telephone Number Best Time to Call: Best Place to Call: Specify preferred language
Home Work if other than English:

( ) ( ) [ ] a.m. [ ] p.m. [ ] Home [ ] Work
-------------------------------- ----------------- ---------------------------------

17. Purpose of Insurance: [ ] Personal/Family [ ] Business Needs [ ] Estate Planning [ ] Other
------------------------------

Special Instructions/Remarks: Place Blue
-----------------------------------------------------------------------------------
Vase Sticker
----------------------------------------------------------------------------------------------------------------
Here
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Commissions

[ ] Check box if application has been faxed (to avoid duplication). Program
-----------
Sticker Here
AGENT'S STATEMENT: This is to certify that I have truly and
accurately recorded on this Application the information given by Yes No
the Primary Proposed Insured, Owner, and Other Proposed Insureds. Application Advance Desired? [ ] [ ]

- ----------------------------------------------- --------------------------
-- --
- ----------------------------------------------- -------------------------- ----------------------------------------------
Agent's Code Number Date Agent's Stamp or Address and Telephone Number

</TABLE>

5
<PAGE> 6

<TABLE>
<CAPTION>
FARMERS NEW WORLD LIFE INSURANCE COMPANY
[ ]Mercer Island Life Office: 3003 77th Ave. S.E., Mercer Island, WA 98040 / (206) 232-8400
[ ]Columbus Life Office: P.O. Box 2529, Columbus, OH 43216 / (614) 764-9975

<S> <C>
BANK AUTHORIZATION

ACCOUNT HOLDER'S NAME: ____________________________________________________________________________________________________________

ACCOUNT NO.: ______________________________________ POLICY NO(S).: ________________________________________________________________

TO: _______________________________________________________________________________________________________________________________

___________________________________________________________________________________________________________________________________
BANK BRANCH STREET NUMBER CITY STATE ZIP
</TABLE>

As a convenience to me, I hereby request and authorize you to pay and charge to
my account checks, electronic funds transfers, or other orders drawn on or
initiated to my account by and payable to the order of Farmers New World Life
Insurance Company.

I agree that your rights in regard to each such check, electronic or other
order shall be the same as if it were a check drawn on you and signed
personally by me. This authority is to remain in effect until revoked by me in
writing and until you actually receive such notice. I agree that you shall be
fully protected in honoring any such check, electronic or other order.

I further agree that if any such check, electronic or other order be
dishonored, whether with or without cause and whether intentionally or
inadvertently, you shall be under no liability whatsoever even though such
dishonor results in the forfeiture of insurance.

ATTENTION: Please include a Payor's check or pre-printed deposit
slip marked "VOID" and attach below.

--------------------------------------------------------------
PLEASE ATTACH A "VOID" CHECK OR PRE-PRINTED DEPOSIT SLIP HERE.

TYPE OF ACCOUNT
---------------
[ ] Checking
[ ] Savings

If you change accounts or banks, please send a new "VOID"
check or pre-printed deposit slip thirty (30) days in
advance. It is not necessary to send a new authorization. WE
RECOMMEND YOU LEAVE SUFFICIENT FUNDS IN YOUR OLD ACCOUNT TO
COVER PREMIUMS UNTIL WE BEGIN DRAFTING YOUR NEW ACCOUNT,
AND/OR YOU RECEIVE NOTIFICATION THAT WE HAVE COMPLETED THE
CHANGE.

PLEASE DO NOT ALTER OR WRITE OVER MICRO-ENCODING NUMBERS AT
BOTTOM OF VOID CHECK OR PRE-PRINTED DEPOSIT SLIP.
-------------------------------------------------------------

AUTHORIZATION TO FARMERS NEW WORLD LIFE INSURANCE COMPANY

I hereby request and authorize Farmers New World Life Insurance Company (the
Company) to periodically draw a check on the account of the signer for the
purpose of paying monies due on policies issued. This authority is to remain
in effect until the Company has received written notice from me of its
termination, in such time and manner as to afford the Company a reasonable
opportunity to act upon it.

This method of payment is known as electronic funds transfer or Bank Check Plan
and may entitle me to a more favorable premium rate. The Company reserves the
right to revoke this method of payment.

The Company, at its discretion, may make or discontinue withdrawals from my
account while this authorization is in effect. In the event of an unhonored
draft for "Non-Sufficient Funds," a replacement draft may be submitted to my
account.

<TABLE>
<S> <C>
- --------------------------------------------------------------------------------- --------------------------------------------
SIGNATURE(S) AS IT APPEARS ON BANK ACCOUNT DATE

- -----------------------------------------------------------------------------------------------------------------------------------
YOUR STREET NUMBER CITY STATE ZIP CODE

Is this a new address? [ ] Yes [ ] No Bill with Policy Number(s):
Requested monthly draft date: _________________ ______________________________________________________
Please note that we cannot draft on the 29th, 30th, or 31st of the month.
</TABLE>

6
<PAGE> 7
FARMERS NEW WORLD LIFE INSURANCE COMPANY RECEIPT
Receipt Number
GA

Received from_________________________________ the sum of $ ___________________
in connection with the Application bearing the same number as this receipt. If
the Company declines to issue the policy, this payment will be refunded without
interest.

Dated_________________________ AGENT'S SIGNATURE _X___________________________

TEMPORARY INSURANCE AGREEMENT CONDITIONS
TEMPORARY COVERAGE ON PRIMARY PROPOSED INSURED ONLY

NO COVERAGE IS IN EFFECT UNLESS THE FOLLOWING ELIGIBILITY REQUIREMENTS ARE MET:

<TABLE>
<S> <C>
1. The Primary Proposed Insured is more than 15 days and declined; and in no case later than 12:01 a.m. Pacific Standard
less than 70 years of age on the date this Application Time of the fifth day after Farmers New World Life (FNWL) has
is signed; and mailed a letter giving such notice; or 3. FNWL receives the
2. Questions 1, 2, and 3 on page 4 of this Application are Owner's signed request to cancel; in which case the full amount
truthfully answered NO. paid with this Application will be refunded. No temporary
benefits will be paid if: 1. the premium check and/or draft
IMPORTANT: IF THESE TWO CONDITIONS ARE NOT MET, NO AGENT OF submitted is not honored by the bank upon first presentation;
FARMERS NEW WORLD LIFE IS AUTHORIZED TO ACCEPT MONEY AND NO or 2. the Primary Proposed Insured dies by suicide, whether
COVERAGE IS IN EFFECT. sane or insane, in which case FNWL's only liability will be to
refund the premium submitted. (If temporary coverage is issued
Temporary coverage for the amount applied for (excluding ADB) to a Missouri resident, suicide is no defense to payment of
or $50,000, whichever is less, will begin when the Primary temporary insurance benefits, unless FNWL can show that the
Proposed Insured and Owner complete, sign and deliver this Primary Proposed Insured intended suicide at the time of
Application with at least 1/12th of the minimum first year's application for temporary coverage.) If a material
premium to the Agent. Temporary coverage ends when: misrepresentation or omission of fact is made with respect to
questions in Section K, coverage under the Temporary Insurance
1. the life insurance policy applied for has been issued; or 2. Agreement will be void and FNWL's only obligation shall be to
the Owner receives notice that this has been return the premium paid.
</TABLE>

If money is submitted with Application, please attach check payable to Farmers
New World Life. Do not make check payable to agent or leave payee blank. No
premium is to be collected if insurance applied for with FNWL is over
$500,000.

- -------------------------------------------------------------------------------
IMPORTANT NOTICE
- -------------------------------------------------------------------------------

DETACH THIS DISCLOSURE STATEMENT AND LEAVE IT WITH THE PROPOSED INSURED

We appreciate your Application for insurance with Farmers New World Life, and
want to assure you that your Application will receive the most prompt and
favorable consideration possible. As part of our normal procedure for
processing your Application, an investigative consumer report may be obtained
regarding you. The information is secured by an independent inspection
company or by Farmers New World Life Home Office through personal interviews
with your friends, neighbors, business acquaintances, and others with whom you
may be acquainted. This report, if obtained, contains information as to
personal character, general reputation and mode of living except as may be
related directly or indirectly to your sexual orientation. Upon written
request to us, further information as to the nature and scope of this report
will be provided.

Information regarding your insurability will be treated as confidential.
Farmers New World Life Insurance Company or its reinsurers may, however, make
a brief report thereon to the Medical Information Bureau, a non-profit
membership organization of life insurance companies which operates an
information exchange on behalf of its members. If you apply to another Bureau
member for life or health insurance coverage, or a claim for benefits is
submitted to such a company, the Bureau, upon request, will supply such
company with the information it may have in its file.

Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. If you question the accuracy of
information in the Bureau's file, you may contact the Bureau and seek a
correction in accordance with the procedures set forth in the Federal Fair
Credit Reporting Act. The address of the bureau's information office is Post
Office Box 105, Essex Station, Boston, Massachusetts 02112; telephone number:
(617) 426-3660.

Farmers New World Life Insurance Company, or its reinsurers, may also release
information in its file to other life insurance companies to whom you may
apply for life or health insurance, or to whom a claim for benefits may be
submitted.

<PAGE> 8

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
WHAT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER TO GIVE THE PAYER (FARMERS NEW WORLD LIFE)
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THIS TYPE OF GIVE THE SOCIAL SECURITY NUMBER OF: FOR THIS TYPE OF GIVE THE EMPLOYER IDENTIFICATION
ACCOUNT: ACCOUNT: NUMBER OF:
<S> <C> <C> <C>
Individual The individual A trust, estate, or Legal entity (Do not furnish the
pension trust identification number of the
personal representative or trustee
Two or more The actual owner of the account or, unless the legal entity itself is
individuals if combined funds, the first not designated in the account title.)
(joint account) individual on the account

Custodian account of The minor Association, club, The organization
a minor (Uniform religious,
Transfers/Gifts to charitable,
Minors Act) educational, or
other tax-exempt
organization

Sole Proprietorship The owner (the sole proprietor) Partnership The partnership

Revocable Living The Trustor(s)-Person(s) who Corporate The corporation
Trust where established the trust
trustor(s) is(are)
Trustee(s) and the
current beneficiary
</TABLE>

PURPOSE OF THE TAXPAYER CERTIFICATION

If you certify: 1) on page 4 of the Application that you are not subject
to backup withholding because of underreporting interest and dividends; and 2)
if you give the payer the correct Taxpayer Identification Number (TIN), the
payer will not be required to withhold 20% of payments made to you.

PENALTIES
If you fail to furnish your correct TIN to a payer, you are subject to a penalty
of $50 for each failure unless your failure is due to reasonable cause and not
to willful neglect.

Willfully falsifying certifications or affirmations may subject you to criminal
penalties including fine and/or imprisonment.

NAME
Be sure to enter your correct name. If you are an individual and your name has
changed, contact the Social Security Administration to report your new name.

PRIVACY ACT NOTICE
Section 6109 (Internal Revenue Code) requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 20%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.

<PAGE> 1
EXHIBIT 1.A.(11)

DESCRIPTION OF ISSUANCE,
TRANSFER AND REDEMPTION PROCEDURES
FOR INDIVIDUAL FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICIES
ISSUED BY
FARMERS NEW WORLD LIFE INSURANCE COMPANY

This document sets forth the administrative procedures, as required by Rule
6e-3(T)(b)(12)(iii), that will be followed by Farmers New World Life Insurance
Company (the "Company" or "Farmers") in connection with the issuance of its
individual flexible premium variable life insurance policy ("Policy" or
"Policies") and acceptance of payments thereunder, the transfer of assets held
thereunder, and the redemption by owners of the Policy ("owners") of their
interests in those Policies. Terms used herein have the same definition as in
the prospectus for the Policy that is included in the current registration
statement on Form S-6 for the Policy (File No. 333-84023) as filed with the
Securities and Exchange Commission ("Commission" or "SEC").

I. PROCEDURES RELATING TO PURCHASE AND ISSUANCE OF THE POLICIES AND ACCEPTANCE
OF PREMIUMS

A. OFFER OF THE POLICIES, APPLICATION, INITIAL PREMIUM, AND ISSUANCE

Offer of the Policies. The Policies are offered and issued pursuant to
underwriting standards in accordance with state insurance laws. The
initial premium for the Policies is not the same for all owners with
the same principal sum. Insurance is based on the principle of pooling
and distribution of mortality risks, which assumes that each owner
pays an initial premium commensurate with the insured's mortality risk
as actuarially determined utilizing factors such as age, gender, and
risk class of the insured. Uniform premiums for all insureds would
discriminate unfairly in favor of those insureds representing greater
risk. Although there is no uniform premium for all insureds, there is
a uniform premium for all insureds of the same risk class, age, and
gender and same principal sum.

Application. Persons wishing to purchase a Policy must complete an
application and submit it to the Company through any licensed Farmers
life insurance agent who is also a registered representative of a
broker-dealer having a selling agreement with the principal
underwriter for the Policy. The application must specify the name of
the insured(s) and provide certain required information about the
insured(s). The application must be accompanied by an initial premium,
designate premium allocation percentages, principal sum, and name the
beneficiary. The minimum initial premium depends on a number of
factors including the age, sex, and risk class of the proposed insured
and the principal sum. The Company determines the minimum principal
sum for a Policy based on the attained age of the insured when the
Policy is issued. The minimum principal
<PAGE> 2
sum for the preferred underwriting class is $150,000, and $50,000 for
all others. The maximum issue age for owners in the preferred
underwriting class is age 75, and for all other risk classes is age
80.

Receipt of Application and Underwriting. Upon receipt of the initial
premium and a completed application in good order from an applicant,
the Company will follow its established insurance underwriting
procedures for life insurance designed to determine whether the
proposed insured is insurable. This process may involve such
verification procedures as medical examinations and may require that
further information be provided about the proposed insured before a
determination can be made.

The underwriting process determines the risk class to which the
insured is assigned if the application is accepted. The Company
currently places insureds in several risk classes, based on the
Company's underwriting, including standard, preferred, smoker, and
non-smoker. This original risk class applies to the initial principal
sum.

The Company reserves the right to reject an application for any reason
permitted by law. If an application is rejected, any premium received
will be returned without interest.

Issuance of Policy. Generally, when the underwriting procedure has
been completed, the original application as applied for has been
approved, and an initial premium of sufficient amount has been
received, the Policy is issued. This is the issue date.

The issue date is the date when our underwriting process is complete,
full life insurance coverage goes into effect, the Company issues the
Policy, and the Company begins to deduct the monthly insurance
charges. The issue date is shown on the specifications page of the
Policy. It is also the date when the Company will allocate the initial
premium to the fixed account. We measure Policy months, years, and
anniversaries from the issue date.

Initial Premium and Temporary Insurance Coverage . An applicant must
pay an initial premium with the application. If the insured meets the
Company's eligibility requirements, then the Company will provide him
or her with temporary insurance coverage. Temporary insurance coverage
is limited to the lesser of the amount applied for or $50,000.
Temporary insurance coverage continues until the application is
approved or other conditions specified in the prospectus are met.

B. ADDITIONAL PREMIUMS

1. Additional Premiums Permitted. Additional premiums may be paid in
any amount, and at any time, subject to the following limits:

-2-
<PAGE> 3

- A premium must be at least $25.

- Total premiums paid in a Policy Year may not exceed guideline
premium limitations for life insurance set forth in the Internal
Revenue Code.

- A premium cannot increase the death benefit by more than the
amount of the premium.

- Additional premiums may not be paid after the insured reaches
attained age 100.

An owner may pay premiums by any method the Company deems acceptable.
The Company will treat any payment made as a premium payment unless it
is clearly marked as a loan repayment.

Electronic Payments or Billing. An owner may authorize electronic
payment of premiums from his or her bank account, or may ask to be
billed for payments. In such circumstances, the total amount of
premiums being debited or billed must be at least $300 per year. An
owner may be billed or make electronic payments on an annual,
semi-annual, quarterly, or monthly basis.

2. Refund of Excess Premium Amounts. If at any time a premium is paid
that would result in total premiums exceeding limits established by
law to qualify a Policy as a life insurance policy, the Company will
only accept that portion of the premium that would make total premiums
equal the maximum amount that may be paid under the Policy. The excess
premium will be refunded. If the Company refunds an excess premium,
additional premium payments may not be made until they are allowed by
the maximum premium limitations. The Company will monitor Policies and
will attempt to notify an owner on a timely basis if the owner's
Policy is in jeopardy of becoming a modified endowment contract under
the Internal Revenue Code.

3. Planned Premiums. An owner may determine a planned premium schedule
which allows him or her to pay level premiums at fixed intervals over
a specified period of time. An owner is not required to pay premiums
according to this schedule. The owner may change the planned premium
frequency, amount and time period over which the owner makes planned
premiums by providing a written notice. Any such change must comply
with the premium limits for additional premiums discussed above. We
have the right to limit the amount of any increase in planned
premiums. A Policy may lapse if investment experience is poor, even if
planned premium payments are made on schedule.

-3-
<PAGE> 4
C. CREDITING PREMIUMS

Initial Premium. The initial premium will be credited to the Policy on
the issue date. Once the Company determines that the insured(s) meets
its underwriting requirements, full insurance coverage begins, the
Company issues the Policy, and begins to deduct monthly insurance
charges from the premium. On the issue date, the Company will allocate
the initial premium to the fixed account.

On any day that the Company credits premiums or transfers cash value
to a subaccount, the Company will convert the dollar amount of the
premium (or transfer) into subaccount units at the unit value for that
subaccount, determined at the end of that valuation day. We will
credit amounts to the subaccounts only on a valuation day, that is, on
a date the New York Stock Exchange is open for trading (except when a
subaccount's corresponding portfolio does not value its shares).

The Company will allocate the initial premium, times the percent of
premium factor, minus the monthly deduction(s) on the issue date to
the fixed account. The Company will also allocate any premiums it
receives from the issue date to the reallocation date (the record
date, plus the number of days in an owner's state's right to examine
period, plus 10 days) to the fixed account. While held in the fixed
account, the premium(s) will earn interest at the current rates for
the fixed account. The premium(s) will remain in the fixed account for
the number of days in the applicable state free look period plus 10
days.

On the reallocation date, the Company will reallocate all premium(s)
(at the unit value next determined) from the fixed account to the
subaccounts and fixed account options the owner selected on the
application, in accordance with the allocation percentages provided in
the application.

D. PREMIUMS DURING A GRACE PERIOD AND PREMIUMS UPON REINSTATEMENT

If the surrender value is zero, and cumulative premiums paid (less
withdrawals) are less then the cumulative minimum premiums required
under the Policy, or if the cumulative premiums paid (less
withdrawals) are greater than the cumulative minimum premiums but the
Contract value (minus outstanding loans and interest owed) is less
than the amount needed to pay the monthly deduction due, the Policy
will be in default and a grace period will begin.

The grace period will end 61 days after the date we mail the notice
stating the amount required to be paid and the final date by which the
Company must receive the payment. The notice will be sent to the
owner's last known address and to any assignee of record. The Policy
does not lapse, and the insurance coverage continues, until the
expiration of this grace period.

-4-
<PAGE> 5
If the grace period ends, all coverage under the Policy will terminate
without value. The owner may reinstate the Policy within three years
of entering a grace period that ends with subsequent termination of
coverage. Reinstatement is not allowed if the policy was surrendered
for its surrender value.

To reinstate a policy, an owner must provide the Company with:

- evidence of insurability which is acceptable to the Company;
- payment of the unpaid monthly deductions due during the last
expired grace period;
- payment of a minimum premium sufficient to keep the Policy in
force for three months; and
- payment of any Policy loan which existed at the date of
termination of coverage.

On reinstatement, the Contract value will equal the net premiums paid
at reinstatement, minus all unpaid monthly deductions due during the
last expired grace period, minus an additional monthly deduction due
at the time of reinstatement. Surrender charges will still apply, and
will be calculated as of the original issue date of the Policy. The
reinstatement date for a Policy will be the monthly due date on or
following the date the Company approves the application for
reinstatement. The suicide and incontestability provisions will apply
from the effective date of reinstatement.

E. ALLOCATIONS OF INITIAL PREMIUM AMONG THE SUBACCOUNTS AND THE FIXED
ACCOUNT OPTIONS

The Variable Account. An owner may allocate premiums to one or more of
the subaccounts of Farmers Variable Life Separate Account A (the
"variable account"). The variable account currently consists of 12
subaccounts, the assets of which are used to purchase shares of one of
the corresponding investment portfolios of the Janus Aspen Series,
Kemper Variable Series, PIMCO Variable Insurance Trust, Scudder
Variable Life Investment Fund, and Templeton Variable Products Series
Fund ("funds"). Each fund is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company.
Additional subaccounts may be added from time to time to invest in
other portfolios of the funds or any other investment company.

When an owner allocates an amount to a subaccount (either by premium
allocation, transfer of contract value or repayment of a Policy loan),
the Policy is credited with accumulation units in that subaccount. The
number of accumulation units is determined by dividing the dollar
amount allocated, transferred or repaid to the subaccount by the
subaccount's accumulation unit value at the end of the valuation
period when the allocation, transfer or repayment is effected. A
subaccount's accumulation unit value is determined for each valuation
day by multiplying the accumulation unit value for a subaccount for
the prior valuation

-5-
<PAGE> 6
day by the net investment factor for the subaccount for the current
valuation day. The accumulation unit value for each subaccount was
arbitrarily set at an initial value at the time the subaccount
commenced operations. The net investment factor is an index used to
measure the investment performance of a subaccount from one valuation
period to the next.

The Fixed Account Options. Owners also may allocate premiums to the
fixed account option which guarantees principal and a minimum fixed
rate of interest.

Money allocated or transferred to the fixed account option will earn
interest at least at a guaranteed minimum rate of 3%. The Company may
use rates that are higher than the guaranteed minimum rate.

Allocations Among the Variable Account and the Fixed Account Options.
Premiums are allocated to the subaccounts and the fixed account
options in accordance with the following procedures:

General. In the application for the Policy, the owner will specify the
percentage of premium to be allocated to each subaccount of the
variable account and/or the fixed account. The percentage of each
premium that may be allocated to any subaccount or the fixed account
must be a whole number, and the sum of the allocation percentages must
be 100%. An owner must allocate at least 1% of each premium in any
subaccount or the fixed account selected.

Allocation percentages may be changed at any time by the owner
submitting a written notice (or any other notice the company deems
satisfactory) to the Company's office.

Allocation to the Fixed Account. On the issue date the Company will
allocate the initial premium to the fixed account until the
reallocation date. While held in the fixed account, the premium will
earn interest at the current rates for the fixed account. The premium
will remain in the fixed account for the number of days in the
applicable state's free look period, plus 10 days. This is the
reallocation date. On the reallocation date, the Contract value will
be reallocated to the subaccounts or fixed account options selected by
the owner on the application.

Allocation After the Reallocation Date. Additional premiums received
after the reallocation date will be credited to the Policy and
allocated to the subaccounts or fixed account in accordance with the
allocation percentages in effect on the valuation day that the premium
is received at the Company's office. Allocation percentages can be
changed at any time.

F. LOAN REPAYMENTS AND INTEREST PAYMENTS

Repaying Loan Amount. The owner may repay all or part of the loan
amount at any time. The loan amount is equal to the sum of all
outstanding Policy loans

-6-
<PAGE> 7
including both principal plus any accrued interest. Loan repayments
must be sent to the Company's Service Center and will be credited as
of the date received. Loan repayments must be at least $25. Loan
repayments must be clearly marked as such, or they will be applied as
premiums. If the death benefit becomes payable while a Policy loan is
outstanding, the loan amount will be deducted in calculating the death
benefit.

Allocation for Repayment of Policy Loans. On the date the Company
receives a repayment of all or part of a loan, the Company will
compare the amount of the outstanding loan to the amount in the loan
account. Any amount in excess of the amount of the outstanding loan
amount will be transferred from the loan account to the subaccounts
and the fixed account and allocated in the same manner as current
premiums are allocated, or as directed by the owner.

Interest on Loan Reserve. The amount in the loan account will be
credited with interest at a guaranteed minimum rate of 3%, compounded
annually. See "Policy Loans" below.

II. TRANSFERS

A. TRANSFERS AMONG THE SUBACCOUNTS AND THE FIXED ACCOUNT

The owner may transfer cash value between and among the subaccounts of
the separate account and, subject to certain special rules, to and
from the fixed account.

In any Policy year, the owner may make an unlimited number of
transfers; however, the Company imposes an excess transfer charge of
$25 for each transfer in excess of 12 during any Policy year. For
purposes of the transfer charge, each written or telephone request is
considered to be a single transfer regardless of the number of
subaccounts affected by the transfer. Any unused "free" transfers do
not carry over to the next year.

The minimum amount that may be transferred from each subaccount is the
lesser of $250 or the total value in the subaccount on that date. A
transfer request that would reduce the amount in a subaccount below
$250 will be treated as a transfer request for the entire amount in
that subaccount.

Only one transfer from the fixed account may be made in a Policy year.
The maximum transfer amount from the fixed account to the subaccounts
in any Policy year is the greater of 25% of the value in the fixed
account, or the entire value in the fixed account, if the balance in
the fixed account would be less than $250 after transfer of 25%.

The Policy, as applied for and issued, will automatically receive
telephone transfer privileges unless the owner provides other
instructions. The telephone

-7-
<PAGE> 8
transfer privileges allow the owner to give authority to the
registered representative or agent of record for the Policy to make
telephone transfers and to change the allocation of future payments
among the subaccounts and the fixed account on the owner's behalf
according to the owner's instructions.

The Company reserves the right to modify, restrict, suspend, or
eliminate the transfer privileges (including telephone transfer
privileges) at any time and for any reason.

The owner may participate in a dollar cost averaging ("DCA") program,
whereby the owner can systematically transfer for a specified duration
(on a monthly basis) a set dollar amount from the fixed account to one
or more of the 12 subaccounts. The owner can specify a maximum of 8
subaccounts to accept the transfers. DCA transfers must be at least
$100.

The owner may also participate in an asset allocation rebalancing
("AAR") program, whereby the owner may make automatic transfers among
the subaccounts on a quarterly basis. There is no minimum amount for
AAR transfers.

B. TRANSFER ERRORS

In accordance with industry practice, the Company will establish
procedures to address and to correct errors in amounts transferred
among the subaccounts and the fixed account, except for de minimis
amounts. The Company will correct non-de minimis errors it makes and
will assume any risk associated with the error. Owners will not be
penalized in any way for errors made by the Company. The Company will
take any gain resulting from the error.

III. "REDEMPTION" PROCEDURES

A. "FREE-LOOK" RIGHTS

The Policy provides for an initial free-look right during which an
owner may cancel the Policy by returning it to the Company before the
end of 10 days after the Policy is delivered. The free-look period may
be longer in some states. Upon returning the Policy to the Company,
the Policy will be deemed void from the beginning. Within seven
calendar days after the Company's office receives the cancellation
request and Policy, the Company will pay a refund. The refund will be
equal to the greater of:

- Contract value at the end of the valuation date on which the
Company receives the returned Policy at its home office; or

- the sum of all premiums paid for the Policy.

-8-
<PAGE> 9
B. SURRENDERS

Requests for Surrender Value. The owner may surrender the Policy at
any time for its surrender value. The insured must be alive, and the
Policy must be in force at the time the written request is made. The
surrender value on any valuation day equals the Contract value, minus
any applicable surrender charge, minus any applicable loan amount, and
minus any interest owed on the Policy Loans. The surrender value will
be determined by the Company at the end of the valuation day the
Company's Service Center receives all required documents, including a
satisfactory written request signed by the owner. The Company will
cancel the Policy as of the date the written request is received at
the Company's Service Center and the Company will ordinarily pay the
surrender value in a lump sum within seven days following receipt of
the written request and all other required documents. An owner may
request other arrangements for payment. The Company has the right to
defer payment for up to six months or the period allowed by law,
whichever is less. The Policy cannot be reinstated after it is
surrendered.

Surrender of Policy -- Surrender Charge. If the Policy is surrendered
during the first 14 Policy years, the Company will deduct a surrender
charge from Contract value and pay the remaining Contract value (less
any surrender charge and outstanding loan amounts) to the owner. The
surrender charge is equal to the sum of the Deferred Sales Charge
Component and the Administrative Component.

The Deferred Sales Charge Component is calculated by:

1. find the sum of all premiums that have been paid to the Policy
(do not deduct amounts withdrawn or the percent of premium
factor);
2. multiple this sum by 0.075 if the insured's issue age was 65 or
younger, or by 0.050 if the insured's issue age was 66 or older;
3. multiple the result by the appropriate number on this table:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Policy Year: 1-3 4 5 6 7 8 9 10 11 12 13 14 15 or
more
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issue ages 0-65 1.00 1.00 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00
- -------------------------------------------------------------------------------------------------------
Issue ages 66 and older 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.15 0.10 0.05 0.00
- -------------------------------------------------------------------------------------------------------
</TABLE>

The Administrative Component is calculated by:

1. the appropriate surrender charge factor from the tables in the
prospectus for the insured's age on the issue date and the number
of full Policy years since the issue date (regardless of whether
the Policy has lapsed and been reinstated) (the tables vary by
sex and risk class); MULTIPLIED BY
2. the number of thousands of principal sum on the issue date, MINUS
any reductions in principal sum for which a surrender charge has
already been imposed.

-9-
<PAGE> 10
C. PARTIAL WITHDRAWALS

When Withdrawals are Permitted. After the first Policy year, the owner
may withdraw a portion of the Contract value, subject to the following
conditions:

- The owner must make partial withdrawal requests in writing to our
Service Center.
- Only one partial withdrawal is allowed during a calendar quarter.
- The owner must request at least $500.
- The owner cannot withdraw more than 75% of the surrender value
without surrendering the Policy.
- The owner can specify the subaccount(s) and the fixed account
from which the withdrawal will be taken; otherwise, the Company
will deduct the amount from the subaccounts and the fixed account
on a pro rata basis.
- The Company will process the withdrawal at the unit values next
determined after the request is received.
- The Company generally will pay a partial withdrawal request
within seven days following the valuation day on which the
withdrawal request is received.
- The Company deducts a processing fee (on a pro rata basis) equal
to the greater of $25 or 2% of the amount withdrawn from the
Contract value for each partial withdrawal.

The Company may delay making a payment if: (1) the disposal or
valuation of the separate account's assets is not reasonably
practicable because the New York Stock Exchange is closed for other
than a regular holiday or weekend, trading is restricted by the SEC,
or the SEC declares that an emergency exists; or (2) the SEC by order
permits postponement of payment to protect the Policy owners. The
Company also may defer making payments attributable to a check that
has not cleared.

Effect of Withdrawal on Death Benefit. A partial withdrawal will
reduce the Contract value by the amount of the partial withdrawal, the
processing fee, and any surrender charge. If the Owner has chosen the
level death benefit (Option B), a partial withdrawal will reduce the
principal sum by an amount equal to the amount of the partial
withdrawal (but not by any surrender charges or the processing fee).
The Company will not allow any withdrawal to reduce the principle sum
below the minimum set forth in the Policy.

D. LAPSES

If a sufficient premium has not been received by the 61st day after a
grace period notice is sent, the Policy will lapse without value and
no amount will be payable to the owner.

-10-
<PAGE> 11
E. MONTHLY DEDUCTION

On the issue date and on each monthly due date, redemptions in the
form of deductions will be made from Contract value for the monthly
deduction, which is a charge compensating the Company for the services
and benefits provided, costs and expenses incurred, and risks assumed
by the Company in connection with the Policy. The monthly deduction
consists of five components: (a) the cost of insurance charge; (b) a
monthly administration charge; (c) any charges for additional benefits
added by riders to the Policy; (d) the special premium factor applied
to the cost of insurance for a special premium class, if any; and (e)
the flat extra charge for a special premium class, if any.

The Monthly Deduction. A monthly deduction will be deducted from each
subaccount and the fixed account on the issue date and on each monthly
due date in accordance with the current premium allocation
instructions. If the value of any account is insufficient to pay that
account's portion of the monthly deduction, the Company will take the
monthly deduction on a pro-rata basis from all accounts (i.e., in the
same proportion that the value in each subaccount and the fixed
account bears to the total Contract value on the monthly due date).

The monthly deduction is equal to:

- the cost of insurance charge for the Policy; PLUS
- the charges for any riders; PLUS
- the monthly administration charge; PLUS
- the special premium factor applied to the cost of insurance for a
special premium class, if any; PLUS
- The flat extra charge for a special premium class, if any.

Cost of Insurance Charge. The Company deducts a cost of insurance
charge. The cost of insurance charges are calculated monthly, and
depend on a number of variables, including the issue age, gender and
risk class of the insured, the number of months since the issue date,
and Contract value. The charge varies from Policy to Policy and from
monthly due date to monthly due date. The cost of insurance charge is
equal to the cost of insurance rate at the insured's attained age,
times the number of thousands of Risk Insurance Amount.

The Risk Insurance Amount is:

1. The current death benefit; MINUS
2. The Contract value at the end of the valuation day preceding the
monthly due date; PLUS
3. The monthly administrative charge for the month that begins on
the monthly due date; PLUS
4. Any charges for riders for the month that begins on the monthly
due date.

-11-
<PAGE> 12
The Risk Insurance Amount may increase, or decrease, depending on
investment experience, the payment of additional premiums, Policy
riders, and the application of the death benefit percentage formula.
Therefore, the cost of insurance charges can increase or decrease over
time.

Monthly Administration Charge. The monthly Administration charge is
currently equal to $5, and is guaranteed never to be higher than $8.

Special Premium Class Charge. If the insured is in a special premium
class, the guaranteed maximum monthly cost of insurance rate will be
the rate shown in the Policy times the special premium rate factor
shown on the Policy's specifications page. This factor is applied to
both current and guaranteed cost of insurance rate. This charge
compensates us for additional costs associated with claims from the
insureds in the special premium class.

Flat Extra Charge. The Company deducts a flat extra charge if the
insured is in a special premium class. This charge compensates us for
the additional costs associated with the special premium class.

F. DEATH BENEFITS

Payment of Death Benefit Proceeds. As long as the Policy remains in
force, the Company will pay the death benefit proceeds to the
beneficiary or contingent beneficiary upon receipt at the Company's
office of due proof of the insured's death. If there is no beneficiary
or contingent beneficiary living, the Company will pay the death
benefit proceeds to the owner or to the owner's estate. The Company
will pay the death benefit proceeds into an interest paying checking
account or under a payment option.

The Death Benefit Proceeds. The death benefit proceeds will equal:

- the death benefit; MINUS
- any past due monthly deductions; MINUS
- any outstanding Policy loan on the date of death; MINUS
- any interest owed on the Policy loan(s); PLUS
- any additional insurance provided by rider.

If all or part of the death benefit proceeds are paid in one sum, the
Company will pay interest on this sum as required by applicable state
law from the date we receive due proof of the insured's death to the
date the Company makes payment.

The Death Benefit. Through attained age 99, the Owner may choose
between two death benefit options on his or her application. For
attained ages after age 99, the death benefit equals the Contract
value. The Owner may change the death benefit option after the first
Policy year.

-12-
<PAGE> 13
Option A. Option A is a variable death benefit. It is equal to the
greater of:

- the principal sum PLUS the Contract value (determined as of the
end of the Valuation Period during which the insured dies); or
- the death benefit required by the Tax Code (Contract value on the
date of death multiplied by the applicable death benefit
percentage).

Option B. Option B is a level death benefit. It is equal to the
greater of:

- the principal sum on the date of death; or
- the death benefit required by the Tax Code (Contract value on the
date of death multiplied by the applicable death benefit
percentage).

G. POLICY LOANS

Policy Loans. The owner may obtain a Policy loan from the Company at
any time by submitting a written, request to the Service Center. The
maximum loan amount is the surrender value minus loan interest the
owner would have to pay to the next Policy anniversary date. Policy
loans will be processed as of the valuation day the request is
received and loan proceeds generally will be sent to the owner within
seven days thereafter.

Collateral for Policy Loans. When a Policy loan is made, an amount
equal to the loan proceeds is transferred from the Contract value in
the subaccounts or fixed account to the loan account. The loan account
is part of the Company's general account. This withdrawal is made
based on the owner's premium allocation instructions in the loan
application. If allocation instructions are not specified in the
Owner's loan application, the loan will be withdrawn from the
subaccounts and the fixed account on a pro rata basis.

Interest on Policy Loans. The Company charges interest daily on any
outstanding Policy. During the first 14 policy years, the current loan
interest rate is 4.5%. The maximum loan interest rate during the first
14 policy years is 8% per year, compounded annually. After the
fourteenth policy year the maximum loan interest rate is 3% per year,
compounded annually. The Company may change the interest rate, but it
will never exceed the maximum rate. Interest is due and payable at the
end of each Policy year or, if earlier, on the date of any policy loan
increase or repayment. On each Policy anniversary, any unpaid amount
of loan interest accrued since the last Policy anniversary becomes
part of the outstanding loan and accrues interest. An amount equal to
the unpaid amount of interest is transferred to the loan reserve from
each subaccount and the fixed account based on a pro rata basis.

Effect on Death Benefit. If the death benefit becomes payable while a
Policy loan is outstanding, the loan amount will be deducted in
calculating the death benefit. The Company will send the owner, and
any assignee of record, notice of the

-13-
<PAGE> 14
default. The owner will have a 61-day grace period to submit a
sufficient payment to avoid lapse.

H. LUMP SUM PAYMENTS BY THE COMPANY

Lump sum payments of withdrawals, surrenders or death benefits from
the subaccounts will be ordinarily made within seven days of the
valuation day on which the Company receives the request and all
required documentation at the Company's office. The Company may
postpone the processing of any such transactions for any of the
following reasons:

1. If the disposal or valuation of the separate account's assets is
not reasonably practicable because the New York Stock Exchange
("NYSE") is closed for trading other than for customary holiday
or the weekend closings, or trading on the NYSE is otherwise
restricted, or an emergency exists, as determined by the
Securities and Exchange Commission ("SEC").

2. When the SEC by order permits a delay for the protection of
owners.

3. If the payment is attributable to a check that has not cleared.

I. REDEMPTION ERRORS

In accordance with industry practice, the Company will establish
procedures to address and to correct errors in amounts redeemed from
the subaccounts and the fixed account, except for de minimus amounts.

J. MISSTATEMENT OF AGE OR SEX

If the insured's age or gender has been misstated in the application
or any other supplemental application, then the death benefit under
the Policy will be adjusted based on what would have been payable at
the correct age and gender based on the most recent cost of insurance
deduction. If the insured's age has been overstated or understated, we
will calculate future monthly deductions using the cost of insurance
based on the insured's correct age and gender.

K. INCONTESTABILITY

The Policy limits the Company's right to contest the Policy as issued
or as increased, except for reasons of material misstatements
contained in the application, after it has been in force during the
insured's lifetime for a minimum period, generally for two years from
the Policy date or effective date of a reinstatement.

-14-
<PAGE> 15
L. LIMITED DEATH BENEFIT

The Policy limits the death benefit if the insured dies by suicide
generally within two years after the Policy date (or reinstatement
date, if provided by state law).

-15-

<PAGE> 1

EXHIBIT 2

FARMERS NEW WORLD LIFE
INSURANCE COMPANY
4680 Wilshire Blvd.
Los Angeles, California 90010
Direct Dial Number: 323-932-7165
Facsimile: 323-964-8093

December 1, 1999

Board of Directors
Farmers New World Life Insurance Company
Farmers Annuity Separate Account A
3003 - 77th Avenue, S.E.
Mercer Island, Washington 98040

Gentlemen:

In my capacity as Vice President and General Counsel of Farmers New World
Life Insurance Company ("Farmers"), I have participated in the preparation and
review of this Pre-Effective Amendment No. 1 to the Registration Statement on
Form S-6 (File No. 333-84023) filed with the Securities and Exchange Commission
under the Securities Act of 1933 for the registration of individual flexible
premium variable life insurance policies (the "Policies") to be issued with
respect to Farmers Variable Life Separate Account A (the "Account"). The Account
was established on April 6, 1999, by the Board of Directors of Farmers as a
separate account for assets applicable to the Policies, pursuant to the
provisions of Section 48.18A.020 of the Washington Insurance Laws.

The Separate Account is a separate account of Farmers validly existing
pursuant to Washington law and the regulations issued thereunder.

The Policies, when issued as contemplated by the Registration Statement,
will be legal and binding obligations of Farmers in accordance with their terms.

In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as I judged to be necessary or
appropriate.

I hereby consent to the filing of this opinion as an exhibit to the above
referenced Registration Statement and to the use of my name under the caption
"Legal Matters" in the Prospectus constituting a part of the Registration
Statement.

Sincerely,

/s/ M. Douglas Close
- --------------------
M. Douglas Close
Vice President and
General Counsel

<PAGE> 1
EXHIBIT 6

[FARMERS NEW WORLD LIFE INSURANCE COMPANY LETTERHEAD]

December 1, 1999

Farmers New World Life Insurance Company
3003 77th Avenue, S.E.
Mercer Island, Washington 98040

Gentlemen:

This opinion is furnished in connection with the registration by Farmers New
World Life Insurance Company of a flexible premium variable life insurance
policy (the "Policy") under the Securities Act of 1933, as amended. The
prospectus included in Pre-Effective Amendment No. 1 to the Registration
Statement on Form S-6 (File No. 333-84023) describes the Policy. I have provided
actuarial advice concerning certain aspects of the preparation of the policy
form described in the Registration Statement and exhibits thereto.

It is my professional opinion that:

(1) The illustrations of death benefits and surrender values included in 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 age illustrated than for policyowners at other
ages except to the extent that the relationship between premiums and
benefits differs reasonably by issue age, attained age, sex and
underwriting class.

(2) The information contained in the example of surrender charges set forth in
the Prospectus, based on the assumptions stated in the example, is
consistent with the provisions of the Policy.

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

Sincerely,

/s/Joel D. Kuni

Joel D. Kuni, FSA
Associate Actuary
Farmers New World Life Insurance Company

<PAGE> 1
EXHIBIT 7.(a)

[letterhead of Deloitte & Touche LLP]

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 1 to Farmers Variable Life Separate
Account A Registration Statement No. 333-84023 of Farmers New World Life
Insurance Company on Form S-6 of our report dated February 3, 1999 appearing in
the Prospectus, which is a part of such Registration Statement, and to the
reference to us under the heading "Experts" in such Prospectus.

DELOITTE & TOUCHE LLP

November 29,1999
Seattle, Washington

<PAGE> 1
EXHIBIT 7.(b)

[Sutherland Asbill & Brennan LLP Letterhead]

STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]

November 30, 1999

Board of Directors
Farmers New World Life Insurance Company
Farmers Variable Life Separate Account A
3003 77th Avenue, S.E.
Mercer Island, WA 98040

RE: Farmers Variable Life Separate Account A
File No. 333-84023

Ladies and Gentlemen:

We hereby consent to the use of our name under the caption "Legal Matters"
in the prospectus for the Farmers flexible premium variable life insurance
policy contained in Pre-Effective Amendment No. 1 to the Registration Statement
on Form S-6 (File No. 333-84023) of the Farmers Variable Life Separate Account A
filed by Farmers New World Life Insurance Company with the Securities and
Exchange Commission. 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.

Very truly yours,

Sutherland Asbill & Brennan LLP

By: /s/Stephen E. Roth
--------------------------
Stephen E. Roth