MANN HORACE LIFE INSURANCE CO SEPARATE ACCOUNT, 485BPOS, 1999-04-29

MANN HORACE LIFE INSURANCE CO SEPARATE ACCOUNT
485BPOS, 1999-04-29

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

File Nos. 2-24256
811-1343

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4
------------------------------

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 65

and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
------------------------------

HORACE MANN LIFE INSURANCE COMPANY SEPARATE ACCOUNT
---------------------------------------------------
(Exact Name of Registrant)

Horace Mann Life Insurance Company
----------------------------------
(Name of Depositor)

One Horace Mann Plaza, Springfield, Illinois 62715
---------------------------------------------------
(Address of Depositor's Principal Executive Offices)

(217) 789-2500
--------------
(Depositor's Telephone Number)

Ann M. Caparros
One Horace Mann Plaza
Springfield, Illinois 62715
----------------------------
(Name and Address of Agent for Service)

Copies of Communications to:

Cathy G. O'Kelly
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601-1003
---------------------------------

It is proposed that this filing will become effective:

___Immediately upon filing pursuant to paragraph (b) of Rule 485
_X_On May 1, 1999 pursuant to paragraph (b) of Rule 485
___60 days after filing pursuant to paragraph (a)(1) of Rule 485<
___On May 1, 1999 pursuant to paragraph (a)(1) of Rule 485
___75 days after filing pursuant to paragraph (a)(2) of Rule 485
___On (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

___this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- -----------------------------------------------------------------------------

<PAGE>

HORACE MANN LIFE INSURANCE COMPANY SEPARATE ACCOUNT

Cross Reference Sheet Required by Rule 495(a)

Item Number in Form N-4 Caption
- - ----------------------- -------

Part A - Prospectus
-------------------

1. Cover Page Cover

2. Definitions Definitions

3. Synopsis
(a) (b) (c) Summary

(d) *

4. Condensed Financial Information
(a) (b) (c) Condensed Financial
Information

5. General Description of Registrant,
Depositor, and Portfolio Companies
(a) (b) (c) (d) (e) (f) Cover; Summary; Horace
Mann Life Insurance Company,
The Account and The Horace
Mann Mutual Funds; Voting
Rights

6. Deductions
(a) (b) (c) (d) (e) Summary; Purchasing the
Contract; Deductions and
Expenses

(f) *

7. General Description of Variable
Annuity Contracts
(a) (b) (c) (d) Summary; Contract Owners'
Rights; Purchasing the
Contract; Transactions; Death
Benefit Proceeds; Mandatory
Minimum Distribution; Income
Payments; Modification of the
Contract; Tax Consequences;
Other Information

8. Annuity Period
(a) (b) (c) (d) (e) (f) Income Payments;
Mandatory Minimum
Distribution; Transfers

<PAGE>

Item Number in Form N-4 Caption
- - ----------------------- -------

Part A - Prospectus
-------------------

9. Death Benefit
(a) (b) Death Benefit Proceeds;
Tax Consequences

10. Purchases and Contract Value
(a) (b) (c) (d) Summary; Purchasing the
Contract; Purchase
Payments

11. Redemptions
(a) (c) (e) Summary; Surrender Before
Commencement of Annuity
Period; Deferment

(b) (d) *

12. Taxes
(a) (b) (c) Surrender Before
Commencement of Annuity
Period; Tax Consequences

13. Legal Proceedings Other Information

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

PART B - STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------

15. Cover Page Cover

16. Table of Contents Table of Contents

17. General Information and History
(a) (b) *

18. Services
(c) Financial Statements

(a) (b) (d) (e) (f) *

19. Purchase of Securities Being Offered
(a) Underwriter

(b) *

<PAGE>

Item Number in Form N-4 Caption
- - ----------------------- -------

20. Underwriters
(a) (b) (c) Underwriter

(d) *

21. Calculation of Performance Data
(b) Investment Experience

(a) *

22. Annuity Payments *

23. Financial Statements
(a) (b) Financial Statements

PART C
------

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.

*Omitted from the Prospectus or Statement of Additional Information because
the Item is not applicable.

<PAGE>

SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1999

HORACE MANN LIFE INSURANCE COMPANY SEPARATE ACCOUNT
FOR CONTRACTS ISSUED ON
FORMS 66-3A AND 66-4A

The variable annuity Contracts issued by Horace Mann Life Insurance Company on
Forms 66-3A and 66-4A are no longer offered or sold by Horace Mann Life
Insurance Company. These earlier Contracts remain in effect but differ from the
Contracts described in the Prospectus in the following material respects. Please
refer to the Contracts on Forms 66-3A and 66-4A for a complete description of
their provisions.

1. In lieu of the Surrender Charge, 6% of each Purchase Payment (gross
stipulated payment) plus $.50, without any yearly limitation, is deducted for
sales and administrative expenses and death benefit charges. It is estimated
that of the 6% deduction, 4% is for sales expenses and 2% for the death benefit
risk. The additional $.50 deduction is for administrative expenses. All Purchase
Payments, net of applicable deductions, including premium taxes if applicable,
are invested by the Account in shares of Horace Mann Growth Fund. There is no
annual maintenance fee or transfer charge.

2. In lieu of the Mortality and Expense Risk Fee ("M&E Fee") described in the
Prospectus, a fee is deducted from all distributions paid by the Growth Fund to
the Account or, if the fee is accrued and unpaid, from the value of a
Participant's individual account upon withdrawal or transfer from the Account.
This fee is computed weekly at the rate of .0075% of the net assets of the
Account (not to exceed .39% on an annual basis). It is estimated that .31% is
for mortality risk and .08% is for expense risk.

3. The "present value factor" used in calculating the actuarial liability of
the Variable Retirement Annuity Account is computed using the Progressive
Annuity Mortality Table with interest at 4%.

4. With respect to the group Contract issued on Form 66-4A, if the Annuitant
is no longer in the class of eligible Participants or elects not to continue to
participate in the group Contract, the Annuitant may elect, within 31 days after
the date of termination, to purchase from Horace Mann Life Insurance Company its
individual annuity Contract most nearly similar in benefits and provisions to
the group Contract. The individual annuity Contract will be issued at the then
attained age of the Annuitant and at the same annual Purchase Payment as the
group Contract Certificate, unless otherwise agreed to by Horace Mann Life
Insurance Company.

FORM 66-3A AND 66-4A CONTRACTS

<PAGE>

Contract Owner Transaction Expenses,(/1/) as a percentage of Purchase Payments:
Sales Expense Charge............................................... 4.00%
Death Benefit Risk Charge.......................................... 2.00%
Administration Expense Charge............................. $.50 per payment
plus $10.00
issuance fee
Separate Account Annual M&E Fee, as a percentage of average account value:
Mortality Risk .................................................... 0.31%
Expense Risk ...................................................... 0.08%
Total Separate Account Annual M&E Fee.............................. 0.39%
Annual Operating Expenses of Growth Fund,(/2/) as a percentage of average net
assets for the December 31, 1998 fiscal year:
Management Fees.................................................... 0.642%
Other Expenses..................................................... 0.185%
Total Growth Fund Operating Expenses............................... 0.827%

<PAGE>

EXAMPLE(/3/)

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

If you surrender your Contract at the end of the applicable time period:
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:.................................. $72 $97 $123 $199

(/1/)Premium taxes, currently ranging between 0 and 3.5%, are not included. The
rate varies depending upon state of residence, and not all states impose premium
taxes. Also, depending on the state, taxes are taken from Purchase Payments or
are levied at annuitization.

(/2/)The Operating Expenses of the Growth Fund are borne indirectly by
Contract Owners.

(/3/)The EXAMPLE should not be considered a representation of past or future
expenses. Amounts shown are based on the average cash value of the average
number of annuity Contracts in the accumulation phase during the 1998 calendar

year. Actual expenses may be greater or less than those shown.

THE PURPOSE OF THE TABLE IS TO ASSIST CONTRACT OWNERS IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT THEY BEAR DIRECTLY OR INDIRECTLY. THE TABLE
REFLECTS EXPENSES OF THE SEPARATE ACCOUNT AS WELL AS THOSE OF THE GROWTH FUND.

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

The date of this Supplement is May 1, 1999.

<PAGE>

SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1999

HORACE MANN LIFE INSURANCE COMPANY SEPARATE ACCOUNT
FOR CONTRACTS ISSUED ON
FORM 66-2A

The variable annuity Contract issued by Horace Mann Life Insurance Company on
Form 66-2A is no longer offered or sold by Horace Mann Life Insurance Company.
This earlier Contract remains in effect but differs from the Contracts described
in the Prospectus in the following material respects. Please refer to the
Contract on Form 66-2A for a complete description of its provisions.

It is estimated that of the 6% deduction, 4% is for sales expenses and 2% for
the death benefit risk. The additional $.50 deduction is for administrative
expenses.

All Purchase Payments, net of applicable deductions including premium taxes if
applicable, are invested by the Account in shares of Horace Mann Growth Fund.
There is no annual maintenance fee or transfer charge.

2. In lieu of the Mortality and Expense Risk Fee ("M&E Fee") described in the
Prospectus, a fee is deducted from distributions paid by the Growth Fund to the
Account or, if the fee is accrued and unpaid, from the value of a Contract
Owner's individual account upon withdrawal or transfer from the Account. This
fee is computed weekly at the rate of .0075% of the net assets of the Account
(not to exceed .39% on an annual basis). It is estimated that .31% is for
mortality risk and .08% is for expense risk.

FORM 66-2A CONTRACTS
Contract Owner Transaction Expenses,(/1/) as a percentage of Purchase Payments:
Sales Expense Charge............................................... 4.00%
Death Benefit Risk Charge.......................................... 2.00%
Administration Expense Charge............................. $.50 per payment
plus $10.00
issuance fee
Separate Account Annual M&E Fee, as a percentage of average account value:
Mortality Risk............................................ 0.31%
Expense Risk ............................................. 0.08%

<PAGE>

Total Separate Account Annual M&E Fee.............................. 0.39%
Annual Operating Expenses of Growth Fund,(/2/) as a
percentage of average net assets for the December 31, 1998
fiscal year:
Management Fees.................................................... 0.642%
Other Expenses..................................................... 0.185%
Total Growth Fund Operating Expenses............................... 0.827%

<PAGE>

EXAMPLE(/3/)

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
If you surrender your Contract at the end of the applicable time period:
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $72 $97 $123 $199

(/2/)The Operating Expenses of the Growth Fund are borne indirectly by
Contract Owners.

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

The date of this Supplement is May 1, 1999.

<PAGE>

SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1999

HORACE MANN LIFE INSURANCE COMPANY SEPARATE ACCOUNT
FOR CONTRACTS ISSUED ON
FORM 527-GC

The group variable annuity Contract issued by Horace Mann Life Insurance
Company on Form 527-GC is no longer offered or sold by Horace Mann Life
Insurance Company. This earlier Contract remains in effect but differs from the
Contracts described in the Prospectus in the following material respects. Please
refer to the Contract on Form 527-GC for a complete description of its
provisions.

1. The Contract may be terminated or discontinued by the Group Contract Owner
upon written notice to Horace Mann Life Insurance Company. The written notice
must specify the date for termination which may not be earlier than 30 days
following the date such notice is received by Horace Mann Life Insurance
Company. The Contract may be discontinued by Horace Mann Life Insurance Company
upon 90 days' written notice to the Group Contract Owner.

2. If the Contract is terminated or the Annuitant ceases to be in the class of
eligible Annuitants, the Annuitant may elect within 90 days thereafter to
purchase from Horace Mann Life Insurance Company the individual annuity Contract
most similar in benefits and provisions to those of the Annuitant's Certificate.

3. At the end of each fiscal year, Horace Mann Life Insurance Company may, in
its discretion, determine an experience credit to be equitably applied based on
the mortality experience and administration costs of the Contract.

4. The Contract's minimum Purchase Payment is $10. Minimum annual Purchase
Payments that may be allocated to the Account are $200. In lieu of the Surrender
Charge, 5% of each Purchase Payment plus $.50 is deducted for sales and
administrative expenses and death benefit charges. The $.50 charge may not
exceed $6.00 in any Contract Year. If Purchase Payments are allocated to both
the Fixed Accumulation Account and the Separate Account, the per payment fee is
$.75, not to exceed $9.00 in any Contract Year. It is estimated that of the 5%
deduction, 3.2% is for sales expenses, 0.2% is for the death benefit risk and
1.6% is for administrative expenses. Premium taxes payable, if applicable, are
deducted from each payment. All Purchase Payments net of applicable deductions,
are invested by the Account in shares of the Growth Fund. There is no annual
maintenance charge or transfer charge.

5. In lieu of the Mortality and Expense Risk Fee ("M&E Fee") described in the
Prospectus, a fee for mortality and expense risk, computed weekly at the

<PAGE>

rate of .005575% of the net assets of the Account (not to exceed .29% on an
annual basis), will be deducted from dividends and other distributions paid by
the Growth Fund to the Account or to the extent such distributions are accrued
and unpaid, from the value of a Participant's account upon withdrawal or
transfer of the Participant's interest out of the Account. It is estimated that
.24% is for mortality risk and .05% is for expense risk.

6. The "present value factor" used in calculating the actuarial liability of
the Variable Retirement Annuity Account is computed using the Progressive
Annuity Mortality Table with interest at 3.5%. Consequently, the interest rate
used to compute the value of a Variable Retirement Annuity Unit is 3.79% (of
which .29% represents the charge for mortality and expense risks).

FORM 527-GC CONTRACTS
Contract Owner Transaction Expenses,(/1/) as a percentage of Purchase Payments:
Sales Expense Charge.............................................. 3.20%
Death Benefit Risk Charge......................................... 0.20%
Administration Expense Charge........................... 1.60% and $.50
per payment plus
$20.00 issuance fee

Separate Account Annual M&E Fee, as a percentage of total net assets:
Mortality Risk.................................................... 0.24%
Expense Risk...................................................... 0.05%
Total Separate Account Annual M&E Fee............................. 0.29%

Annual Operating Expenses of Growth Fund,(/2/) as a percentage of average net
assets for the December 31, 1998 fiscal year:
Management Fees................................................... 0.642%
Other Expenses.................................................... 0.185%
Total Growth Fund Operating Expenses.............................. 0.827%

<PAGE>

EXAMPLE(/3/)

(/2/)The Operating Expenses of the Growth Fund are borne indirectly by
Contract Owners.

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

The date of this Supplement is May 1, 1999.

<PAGE>

SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1999

HORACE MANN LIFE INSURANCE COMPANY SEPARATE ACCOUNT
FOR CONTRACTS ISSUED ON
FORM 529

The individual variable annuity Contract issued by Horace Mann Life Insurance
Company on Form 529 is no longer offered or sold by Horace Mann Life Insurance
Company. These earlier Contracts remain in effect but differ from the Contracts
described in the Prospectus in the following material respects. Please refer to
the Contract on Form 529 for a complete description of its provisions.

1. The Contract's minimum Purchase Payment (gross stipulated payment) is $10.
Minimum annual Purchase Payments that may be allocated to the Account are $200.
In lieu of the Surrender Charge, 5% of each Purchase Payment plus $.50 is
deducted for sales and administrative expenses and death benefit charges. The
$.50 charge may not exceed $6.00 in any Contract Year. If Purchase Payments are
allocated to both the Fixed Accumulation Account and the Separate Account, the
per payment fee is $.75, not to exceed $9.00 per Contract Year. It is estimated
that of the 5% deduction, 3.2% is for sales expenses, 0.2% is for the death
benefit risk and 1.6% is for administrative expenses. Premium taxes payable, if
applicable, are deducted from each Purchase Payment. All Purchase Payments, net
of applicable deductions, are invested by the Account in shares of the Growth
Fund. There is no annual maintenance charge or transfer charge.

2. In lieu of the Mortality and Expense Risk Fee ("M&E Fee") described in the
Prospectus, a fee for mortality and expense risk, computed weekly at the rate of
.005575% of the net assets of the Account (not to exceed .29% on an annual
basis), will be deducted from dividends and other distributions paid by the
Growth Fund to the Account, or to the extent such distributions are accrued and
unpaid, from the value of a Contract Owner's account upon withdrawal or transfer
of the Contract Owner's interest out of the Account. It is estimated that .24%
of such charge is for mortality risk and .05% is for expense risk.

3. The "present value factor" used in calculating the actuarial liability of
the Variable Retirement Annuity Account is computed using the Progressive
Annuity Mortality Table with interest at 3.5%. Consequently, the interest rate
used to compute the value of a Variable Retirement Annuity Unit is 3.79% (of
which .29% represents the charge for mortality and expense risks).

FORM 529 CONTRACTS
Contract Owner Transaction Expenses,(/1/) as a percentage of

<PAGE>

Purchase Payments:
Sales Expense Charge................................................ 3.20%
Death Benefit Risk Charge........................................... 0.20%
Administration Expense Charge............................... 1.60% and $.50
per payment
plus $20.00
issuance fee
Separate Account Annual M&E Fee, as a percentage of total net assets:
Mortality Risk...................................................... 0.24%
Expense Risk........................................................ 0.05%
Total Separate Account Annual M&E Fee............................... 0.29%
Annual Operating Expenses of Growth Fund,(/2/) as a percentage of average net
assets for the December 31, 1998 fiscal year:
Management Fees..................................................... 0.642%
Other Expenses...................................................... 0.185%
Total Growth Fund Operating Expenses................................ 0.827%

EXAMPLE(/3/)

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- -------- ------- --------
If you surrender your Contract at the end of the applicable time period:
You would pay the following expenses on a
$1,000 investment, assuming 5% annual re-
turn on assets:............................ $81 $103 $128 $197

(/2/)The Operating Expenses of the Growth Fund are borne indirectly by
Contract Owners.

<PAGE>

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

The date of this Supplement is May 1, 1999.

<PAGE>
Horace Mann Life Insurance Company
Separate Account Prospectus
Horace Mann Mutual Funds Prospectus
May 1, 1999
<PAGE>
Prospectus
Variable Tax deferred annuity contracts
Qualified and non-qualified plans

Horace Mann Life Insurance Company
Separate accounts

May 1, 1999
<PAGE>
INDIVIDUAL SINGLE PREMIUM AND INDIVIDUAL AND GROUP FLEXIBLE PREMIUM
VARIABLE DEFERRED ANNUITY CONTRACTS ISSUED BY
HORACE MANN LIFE INSURANCE COMPANY SEPARATE ACCOUNT

This Prospectus offers combination fixed and variable annuity contracts
to individuals and groups. These contracts are issued by Horace Mann Life
Insurance Company ("HMLIC") and can be issued as flexible premium contracts or,
for individuals, as single premium contracts. They are issued in connection with
retirement plans or arrangements some of which may qualify for special tax
treatment under the Internal Revenue Code as amended. Amounts transferred to
Horace Mann Life Insurance Company Separate Account as directed by a Participant
or Contract Owner are invested in one or more of seven Subaccounts. Each
Subaccount purchases shares in a corresponding portfolio of the Horace Mann
Mutual Funds. The Horace Mann Mutual Funds are a registered investment company.
They consist of:

Horace Mann Growth Fund - a fund investing primarily in common stocks
of domestic companies.

Horace Mann Balanced Fund - a fund investing directly or indirectly in
a mix of common stocks, debt securities and money market instruments.

Horace Mann Income Fund - a fund investing primarily in investment
grade debt securities.

Horace Mann Short-Term Investment Fund - a fund investing in short-term
debt instruments.

Horace Mann Small Cap Growth Fund - a fund investing in equity
securities of small cap companies with earnings growth potential.

Horace Mann International Equity Fund - a fund investing in marketable
foreign equity securities.

Horace Mann Socially Responsible Fund - a fund investing primarily in
marketable equity securities of United States chartered companies which are
determined to be socially responsible pursuant to criteria set forth in the
funds Prospectus.

This Prospectus sets forth the information an investor should know.
Additional Information about the HMLIC Separate Account has been filed with the
Securities and Exchange Commission in a Statement of Additional Information,
dated May 1, 1999. The Statement of Additional information is incorporated by
reference and is available upon request, without charge. You may obtain the
Statement of Additional Information by writing to Horace Mann Life Insurance
Company, P.O. Box 4657, Springfield, Illinois 62708-4657, by sending a
telefacsimile (FAX) transmission to (217) 535-7123, or by telephoning (217)
789-2500 or (800) 999-1030 (toll-free). The Table of Contents of the Statement
of Additional Information appears on page 21 of this Prospectus.

THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE FUNDS.* PLEASE
READ THESE DOCUMENTS CAREFULLY AND KEEP THEM FOR FUTURE REFERENCE.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE ANNUITIES OFFERED BY HMLIC ARE NOT INSURED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. THEY ARE NOT DEPOSITS, OBLIGATIONS, OR GUARANTEED BY ANY
BANK. THEY INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL
AMOUNT INVESTED.

The date of this Prospectus is May 1, 1999.

*The Funds' Prospectus follows page 21 of the Horace Mann Life Insurance Company
Separate Account Prospectus.

<PAGE>
TABLE OF CONTENTS
Page
Definitions 3
Summary 4
Condensed Financial Information 8
Horace Mann Life Insurance Company,
The Account and The Horace Mann Mutual Funds 10
Horace Mann Life Insurance Company 10
The Account 10
The Horace Mann Mutual Funds 10
Administration 11

The Contract 11
Contract Owners' Rights 11
Purchasing the Contract 11
Purchase Payments 12
Amount and Frequency of Purchase Payments 12
Allocation of Purchase Payments 12
Accumulation Units and Accumulation Unit Value 12
Transactions 12
Transfers 12
Changes in Allocation Instructions 13
Surrender Before Commencement of Annuity Period 13
Deferment 13
Confirmations 14
Deductions and Expenses 14
Annual Maintenance Charge 14
Mortality and Expense Risk Fee 14
Surrender Charge 14
Operating Expenses of the Horace Mann Mutual Funds 14
Premium Taxes 14
Death Benefit Proceeds 15
Mandatory Minimum Distribution 15
Income Payments 15
Income Payment Options 16
Amount of Fixed and Variable Income Payments 16
Misstatement of Age 17
Modification of the Contract 17
Tax Consequences 17
Separate Account 17
Contract Owners 18
Contributions 18
Distributions Under Qualified Contracts 18
Distributions Under Non-Qualified Contracts 19
Penalty Tax 19

Voting Rights 20
Other Information 20
Additional Information 21

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF, OR SOLICITATION OF AN
OFFER TO ACQUIRE, ANY INTEREST OR PARTICIPATION IN THE CONTRACTS OFFERED BY THIS
PROSPECTUS IN ANY STATE TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER
OR SOLICITATION IN SUCH STATE.

2
<PAGE>

DEFINITIONS
Account: Horace Mann Life Insurance Company Separate Account, a
segregated variable investment account consisting of seven Subaccounts each of
which invests in the corresponding Horace Mann Mutual Fund. The Account was
established by Horace Mann Life Insurance Company under Illinois law and
registered as a unit investment trust under the Investment Company Act of 1940.

Accumulation Unit: A unit of measurement used to determine the value
of a Contract Owner's interest in a Subaccount before Income Payments begin.

Annuitant: The recipient of Income Payments.

Annuity Period: The period during which income payments are made to the
Annuitant or the last surviving Joint Annuitant, if any.

Annuity Unit: A unit of measurement used in determining the amount of
variable Income Payment during the Annuity Period.

Certificate: Each Participant under a group Contract is issued a
Certificate summarizing the provisions of the Contract and showing participation
in the retirement plan adopted by the Contract Owner.

Contract: This Prospectus offers combination fixed and variable annuity
Contracts to individuals as single premium Contracts and to both individuals and
groups as flexible premium Contracts. The term "Contract" in this Prospectus
generally will be used to describe Contracts issued to individuals and
Certificates issued to Participants in a group plan.

Contract Owner: The individual or entity to whom the Contract is
issued. Under a group contract, all references to the Contract Owner refer to
the Participant in a group plan.

Contract Year: A year measured from the date a Contract (or a
Certificate) was issued to an individual Contract Owner (or a Participant) and
each anniversary of this date.

Funds: The Horace Mann Mutual Funds ("Trust") consist of seven
portfolios: Growth Fund, Balanced Fund, Income Fund, Short-Term Investment Fund
("Short-Term Fund"), Small Cap Growth Fund, International Equity Fund and
Socially Responsible Fund. The Trust is an open-end, diversified, management
investment company registered under the Investment Company Act of 1940.

Income Payments: A series of payments that may be for life; for life
with a guaranteed number of payments; for the joint lifetimes of the Annuitant
and another person, and thereafter, during the lifetime of the survivor; or for
some fixed period. A fixed annuity provides a series of payments that will be
substantially equal in amount throughout the annuity payout period. A fixed
annuity does not participate in the investment experience of any subaccount. A
variable annuity provides a series of payments that vary in amount depending
upon the investment experience of the Subaccount(s) selected by the Contract
Owner.

Maturity Date: The date Income Payments begin. The individual Contracts
offered by this Prospectus describe the criteria for determining Maturity Dates.

In addition, tax qualified plans often place certain limitations upon
election of a Maturity Date. Generally, distributions under tax qualified plans
must begin by April 1 following the calendar year in which the Contract Owner or
Participant reaches age 701/2. See "The Contract - Mandatory Minimum
Distribution."

Net Purchase Payment: The balance of each Purchase Payment received by
Horace Mann Life Insurance Company after deducting any applicable premium taxes,
or the balance of any transfer amount from other Subaccounts after applicable
charges, or dividends reinvested after applicable charges.

Participant: A person to whom a Certificate showing participation under
a group Contract has been issued.

Purchase Payment: An amount paid to Horace Mann Life Insurance Company
for the Contract, the amount transferred from other Subaccounts, and any
dividends reinvested.

Qualified Plan: A tax-sheltered annuity as defined in Section 403(b) or
a simplified employee pension plan as defined in Section 408(k) of the Internal
Revenue Code ("IRC"). IRAs as defined in Section 408 could be qualified in some
situations.

Subaccount: A division of the Separate Account of Horace Mann Life
Insurance Company which invests in shares of the corresponding portfolio of the
Horace Mann Mutual Funds.

Surrender Charge: (a contingent deferred sales charge) An amount kept
by Horace Mann Life Insurance Company if a withdrawal is made or if the Contract
is surrendered. The charge is intended to compensate Horace Mann Life Insurance
Company for the cost of selling the product.

Valuation Date: The Valuation Date ends at the earlier of 3:00 p.m.
central time or at the closing of the New York Stock Exchange. No valuations are
made for any day that the New York Stock Exchange is closed and for 1999 no
valuations are made for the day after Thanksgiving.

Valuation Period: The period from the end of a Valuation Date to the
end of the next Valuation Date, excluding the day the period begins and
including the day it ends.

3
<PAGE>

SUMMARY

This summary is intended to provide a brief overview of the more
significant aspects of the Contract. Further information can be found in this
Prospectus, the HMLIC Separate Account Statement of Additional Information, and
the Contract. This Prospectus is intended to serve as a disclosure document for
the variable portion of the Contracts only. As used in this Prospectus,
"variable" means that value varies based on the investment performance of the
subaccount selected. For information regarding the fixed portion, refer to the
Contract.

Detailed information about the Horace Mann Mutual Funds is contained in
the Funds' Prospectus which immediately follows the HMLIC Separate Account
Prospectus. Additional information about the Funds can be found in the Fund's
Statement of Additional Information. The Funds' expenses, including advisory and
management fees, are found in the Table of Annual Operating Expenses shown on
page 6 of this Summary.

WHAT IS "THE SEPARATE ACCOUNT"?

The Horace Mann Life Insurance Company Separate Account (the "Account")
segregates assets dedicated to the variable portion of the combination fixed and
variable Contracts offered herein. The Account is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940 as a unit
investment trust. The Account consists of seven Subaccounts, each investing in
shares of the corresponding portfolio of the Horace Mann Mutual Funds; Growth
Fund, Balanced Fund, Income Fund, Short-Term Investment Fund, Small Cap Growth
Fund, International Equity Fund, and Socially Responsible Fund.

WHO MAY PURCHASE A HORACE MANN ANNUITY OFFERED BY THIS PROSPECTUS?

Individuals, as well as groups, may purchase the combination fixed and
variable flexible premium annuity. Individuals may also purchase the single
premium plan. The Contracts offered by this Prospectus are designed to provide
retirement benefits in connection with Section 403(b) Annuities, Individual
Retirement annuities ("IRAs"), Roth IRA's, Simplified Employee Pension Plans
("SEPs") and non-qualified Retirement Annuities.

The Contract is offered and sold by HMLIC through its licensed life
insurance sales personnel. These insurance sales personnel are registered
representatives of Horace Mann Investors, Inc. ("Investors"). Investors is a
broker/dealer registered under the Securities and Exchange Act of 1934. HMLIC
has entered into a distribution agreement with Investors. Investors, is a member
of the National Association of Securities Dealers, Inc. ("NASD").

IS THERE A MINIMUM PURCHASE PAYMENT?
The minimum annual Purchase Payment under a flexible premium Contract
during any Contract Year is $225. Certain Individual Flexible Premium contracts
may have larger minimums. The minimum Purchase Payment under a single premium
Contract is $2,000. Contract Owners may elect to allocate all or part of the
Purchase Payments to one or more Subaccount(s). The minimum Purchase Payment
allocated to any Subaccount within any given Contract Year must equal or exceed
$100. No Purchase Payments are required after the first Contract Year.
Under certain group plans the minimum may be reduced or eliminated.

WHAT ARE MY INVESTMENT CHOICES?

(a) Separate Account
Includes seven Subaccounts each of which invests in one of the
following funds:

Growth Fund--a fund investing primarily in common
stocks of domestic companies.

Balanced Fund--a fund investing directly or indirectly in a mix of
common stocks, debt securities and money market instruments.

Income Fund--a fund investing primarily in investment grade debt
securities. Short-Term Investment Fund--a fund investing in short-term
debt instruments.

Small Cap Growth Fund--a fund investing primarily in small cap equity
securities with earnings growth potential.

International Equity Fund--a fund investing in marketable foreign
equity securities.

Socially Responsible Fund--a fund investing primarily in marketable
equity securities of United States chartered companies which
are determined to be socially responsible pursuant to criteria set
forth in the Funds prospectus.

b) Fixed Account (See the Contract)

At anytime before the Contract's Maturity Date, amounts may be transferred
from one Subaccount to another, and to and from the fixed account of the
Contract. (Transfers from the fixed portion of the Contract into a Subaccount
are treated like any other partial withdrawal from the fixed portion of the
Contract, except that no surrender charge is imposed and the early withdrawal
penalty is waived. If an amount transferred from the fixed account is
surrendered within 365 days, the amount transferred will be subject to the
applicable surrender and withdrawal penalties as if the money had been withdrawn

<PAGE>

from the fixed account. The penalty will not be charged if (1) the transfer
occurred on a Scheduled Update (renewal date) or (2) if the Scheduled update
occurred between the transfer and withdrawal or surrender date(s). The minimum
amount that can be transferred is $100 or the entire dollar value of the
Subaccount, whichever is less. See "The Contract-Transactions-Transfers."

MAY I WITHDRAW ALL OR PART OF THE CONTRACT VALUE BEFORE THE MATURITY DATE?

Unless restricted by his or her retirement plan or by the Internal
Revenue Code ("IRC"), a Contract Owner may at any time before the Maturity Date
surrender his or her Contract in whole or withdraw in part for cash. Partial
withdrawals are subject to a $100 minimum. Each surrender or partial withdrawal
is processed on the basis of the net asset value of an accumulation unit of the
Subaccount(s) from which the value is being surrendered or withdrawn. Surrenders
and withdrawals may be subject to Surrender Charges as described on page 14 in
this Prospectus.

WHAT ARE THE CHARGES OR DEDUCTIONS?

Contracts may be subject to deductions for applicable state or local
government premium taxes. Premium taxes presently range from 0 to 3.5%.

A mortality and expense risk fee (M&E Fee), computed and accrued weekly, is
deducted from the account value. This fee will not exceed 1.25% of the Contract
Owner's average value in a Subaccount on an annual basis but may be lower on
some group plans and certain individual flexible premium products.

A fixed annual maintenance charge of $25 is assessed against the
Contract on each anniversary, unless the Contract value equals or exceeds
$10,000, in which case such charge is waived. This charge may be waived or
lowered on certain group plans. Certain individual flexible premium products do
not include this charge.

No deduction for sales expense is charged on Purchase Payments, but a
decreasing surrender charge is assessed against certain withdrawals and
surrenders during the first five contract years. The charge may be lower on
certain individual and group plans. In the first Contract Year the charge is 8%
for the Flexible Premium Contract and 5% for the Single Premium Contract. The
charge is taken from the Contract Owner's value in the Subaccount(s) from which
the withdrawal is made. In no event will the charges exceed 8.5% of the Net
Purchases Payments to the Subaccount(s). See "The Contract--Transactions--
Surrender Before Commencement of Annuity Period."

WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF INVESTING IN THIS CONTRACT?

The IRC provides penalties for premature distributions under various
retirement plans. Values may not be withdrawn from Section 403(b) Contracts
except under certain circumstances. See "Tax Consequences." This Contract might
not be suitable for short-term investment. See "The Contract--Transactions--
Surrender Before Commencement of Annuity Period." If I receive my Contract and
am dissatisfied, may I return it?

Subject to various state insurance laws, generally the Contract Owner
may return the Contract to HMLIC within 30 days of receipt of the Contract. The
market value of the assets purchased by payments paid to the Account, less any
taxes, if applicable, will be refunded.

WHEN CAN I BEGIN RECEIVING INCOME PAYMENTS, AND WHAT OPTIONS ARE AVAILABLE?

Payments will begin on the Maturity Date selected by the Contract
Owner. Variable Income Payments are made in monthly installments. A lump sum
payment may be made if the total Contract value is less than $2,000 or if
monthly Income Payments at the Maturity Date would be less than $20. An optional
Maturity Date and various income payment options are available under the
Contract.

Income Payments may be fixed or variable or a combination of fixed and
variable payments. The following options are available for receiving Income
Payments:

Life Annuity with or without Certain Period, Joint and Survivor Life
Annuity, Income for Fixed Period, Income for Fixed Amount, and Interest Income
Payments.

<PAGE>

TABLE OF ANNUAL OPERATING EXPENSES

The following is a summary of costs and expenses borne by the Contract
Owner in connection with an investment in the Account. A contract owner who
invests in the Fixed Account would be subject to the annual maintance charge and
surrender charges.

Horace Mann Life Insurance Company Separate Account
Contract Owner Transaction Expenses:(1)
Maximum Surrender Charge as a percentage of amount surrendered(2)
--for Single Payment Contracts.............................. 5.00%
--for Flexible Premium Contracts............................ 8.00%

Annual Maintenance Charge(3) $25 Separate Account annual expenses, as a
percentage of average account value:
Mortality Risk................................................ 0.45%
Expense Risk.................................................. 0.80%
Total Separate Account M&E Fee......................................... 1.25%

Horace Mann Mutual Funds
Annual Operating Expenses of the Horace Mann Mutual Funds, as a
percentage of average daily net assets:
<TABLE>
<CAPTION>
Short- Small Cap International Socially
Growth(4)6) Balanced(4)(6) Income(4) Term(5) Growth(5) Equity(5) Responsible(5)
Fund Fund Fund Fund Fund Fund Fund
------- -------- ------- ------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee(7) 0.642% 0.642% 0.642% 0.367% 1.392% 1.092% 0.942%
Other Expenses: 0.185% 0.186% 0.570% 2.397% 0.530% 1.148% 0.377%
------ ------ ------ ------ ------ ------ ------
Total Fund
Operating
Expense 0.827% 0.828% 1.212% 2.764% 1.922% 2.240% 1.319%
</TABLE>
(1)Premium taxes, currently ranging between 0 and 3.5%, are not included. The
rate of the premium tax varies depending upon the state of residence, and not
all states impose premium taxes. Also, depending on the state, taxes are taken
from Purchase Payments or are levied at annuitization.

(2)In some cases, the Surrender Charge does not apply. See "The
Contract--Transactions--Surrender Before Commencement of Annuity Period."

(3)The annual maintenance charge equals $25 per year, unless the Contract
value equals or exceeds $10,000 at each anniversary. The annual maintenance
charge is not deducted after the Maturity Date. This charge may be reduced or
eliminated on certain individual contracts and group plans.

(4)The Other Expenses are shown based on actual amounts for the fiscal year
ended December 31, 1998, with the addition of the support services fees which
were not instituted until March 1, 1999.

(5)The Other Expenses are shown based on actual amounts for the fiscal year
ended December 31, 1998, with the addition of the support services fees, which
were not instituted until March 1, 1999. Horace Mann Investors, Inc. voluntarily
waived a portion of its Management Fee and reimbursed certain expenses during
1998. With such reimbursement, the Management Fee, Other Expenses and Total Fund
Operating Expenses, respectively, were: 0.267%, 0.465% and 0.832% for the
Short-Term Investment Fund; 1.392%, 0.282% and 1.674% for the Small Cap Growth
Fund; 1.092%, 0.547% and 1.639% for the International Equity Fund; and 0.942%,
0.282% and1.224% for the Socially Responsible Fund. See the "Investment Advisory
Agreement" and "Other Services" section of the Horace Mann Mutual Funds
Prospectus for a description of the contractual fee rates.

(6)Commission Credits--The subadvisers for the Growth and Balanced Funds seek
the best price and execution on each transaction and negotiate commission rates
solely on the execution requirements of each trade. Occasionally, they place,
under a directed brokerage arrangement, common stock trades with a broker/dealer
who credits to the Funds part of the commissions paid. With such commissions
credits the Other Expenses and Total Fund Operating Expenses, respectively,
actually were: 0.167% and 0.809% for the Growth Fund and 0.171% and 0.813% for
the Balanced Fund.

(7)The "Management Fees" include both the advisory fee payable to Wilshire
Associates, Inc. and the administration fee payable to Horace Mann Investors,
Inc.

<PAGE>
<TABLE>
<CAPTION>
Example(1)
Short- Small Cap Socially
Growth Balanced Income Term Growth International Responsible
Fund Fund Fund Fund Fund Equity Fund Fund
------- -------- ------- ------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
For Flexible Payment Contracts
If you surrender your Contract at the end
of the applicable time period:
You would pay the following expenses on a
$1,000 investment, assuming 5% annual
return on assets:
1 year $104 $104 $108 $122 $114 $117 $109
3 years $133 $133 $144 $186 $163 $172 $147
5 years $116 $116 $135 $209 $170 $185 $140
10 years $249 $249 $287 $428 $355 $383 $298

If you do not surrender your Contract:
You would pay the following expenses on a
$1,000 investment, assuming 5% annual
return on assets:
1 year $ 22 $ 22 $ 26 $ 41 $ 33 $ 36 $ 27
3 years $ 67 $ 67 $ 79 $124 $100 $109 $ 82
5 years $116 $116 $135 $209 $170 $185 $140
10 years $249 $249 $287 $428 $355 $383 $298
For Single Payment Contracts
If you surrender your Contract at the end of
the applicable time period:
You would pay the following expenses on a
$1,000 investment, assuming 5% annual
return on assets:
1 year $ 73 $ 73 $ 77 $ 92 $ 84 $ 87 $ 78
3 years $100 $100 $111 $155 $132 $141 $114
5 years $116 $116 $135 $209 $170 $185 $140
10 years $249 $249 $287 $428 $355 $383 $298
If you do not surrender your Contract:
You would pay the following expenses on a
$1,000 investment, assuming 5% annual
return on assets:
1 year $ 22 $ 22 $ 26 $ 41 $ 33 $ 36 $ 27
3 years $ 67 $ 67 $ 79 $124 $100 $109 $ 82
5 years $116 $116 $135 $209 $170 $185 $140
10 years $249 $249 $287 $428 $355 $383 $298
(1)The EXAMPLE should not be considered a representation of past or future
expenses. Amounts shown are based on the "Other Expenses" shown on the fee table
and average cash value of the average number of annuity Contracts in the
accumulation phase during the 1998 calendar year. Actual expenses may by greater
or less than those shown. There is no assumption for premium taxes, applicable
in certain states, in these examples.

<PAGE>

CONDENSED FINANCIAL INFORMATION
The following information is taken from the Separate Account financial
statements and is covered by the report of the Separate Account Independent
Auditors. A copy of the financial statements and reports are contained in the
Annual Report for the Separate Account and are incorporated herein by reference
and may be obtained by calling or writing Horace Mann Life Insurance Company.
The Small Cap Growth Fund, International Equity Fund and Socially Responsible
Fund each commenced operations on March 10, 1997.

<TABLE>
<CAPTION>
Accumulation Accumulation # Units
Unit Value Unit Value Outstanding
Beginning of End of End of
Account Division Year Ended Period Period Period
---------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Growth Fund 12/31/98 $25.66 $24.34 22,401,337
12/31/97 23.76 25.66 18,317,985
12/31/96 21.66 23.76 13,503,527
12/31/95 17.64 21.66 9,499,642
12/31/94 19.85 17.64 7,444,937
12/31/93 19.49 19.85 5,271,528
12/31/92 19.15 19.49 3,847,269
12/31/91 16.64 19.15 3,244,626
12/31/90 18.88 16.64 2,748,244
12/31/89 17.30 18.88 2,349,405
<CAPTION>
<S> <C> <C> <C> <C>
Balanced Fund 12/31/98 $19.82 $18.90 21,781,222
12/31/97 18.94 19.82 18,709,483
12/31/96 18.00 18.94 15,151,785
12/31/95 15.26 18.00 12,085,917
12/31/94 16.72 15.26 10,010,131
12/31/93 16.22 16.72 7,470,133
12/31/92 15.91 16.22 5,352,185
12/31/91 14.19 15.91 4,274,088
12/31/90 15.10 14.19 3,528,857
12/31/89 13.48 15.10 2,697,026
<CAPTION>
<S> <C> <C> <C> <C>
Income Fund 12/31/98 $13.00 $13.24 1,006,166
12/31/97 12.69 13.00 718,041
12/31/96 13.03 12.69 817,803
12/31/95 12.02 13.03 776,272
12/31/94 13.06 12.02 746,535
12/31/93 12.95 13.06 694,843
12/31/92 12.92 12.95 566,223
12/31/91 12.26 12.92 473,423
12/31/90 12.35 12.26 415,716
12/31/89 11.64 12.35 346,639
<CAPTION>
<S> <C> <C> <C> <C>
Short-Term Fund 12/31/98 $ 9.99 $ 9.98 125,460
12/31/97 10.03 9.99 114,103
12/31/96 10.00 10.03 112,004
12/31/95 10.08 10.00 95,982
12/31/94 10.07 10.08 103,526
12/31/93 10.09 10.07 106,595
12/31/92 10.10 10.09 99,345
12/31/91 10.37 10.10 94,194
12/31/90 10.73 10.37 106,548
12/31/89 10.49 10.73 96,997
<CAPTION>
<S> <C> <C> <C> <C>
Small Cap Growth Fund 12/31/98 $11.70 $12.38 2,063,019
12/31/97 10.00 11.70 1,219,124
<CAPTION>
<S> <C> <C> <C> <C>
International Equity Fund 12/31/98 $10.27 $12.13 758,622
12/31/97 10.00 10.27 451,401
<CAPTION>
<S> <C> <C> <C> <C>
Socially Responsible Fund 12/31/98 $12.10 $12.99 2,513,258
12/31/97 10.00 12.10 692,571
</TABLE>

<PAGE>

Accumulation Unit Values shown above are reduced annually for dividend
distributions from each underlying mutual fund. Dividend distributions are used
to purchase additional Accumulation Units.
Financial statements of the Account and of HMLIC are available with the
Statement of Additional Information. A copy of the Statement of Additional
Information and of the financial statements may be obtained without charge by
mailing a written request to Horace Mann Life Insurance Company, P.O. Box 4657,
Springfield, Illinois 62708-4657, by sending a telefacsimile (FAX) transmission
request to (217) 535-7123, or by telephoning (217) 789-2500 or (800) 999-1030
(toll-free).
From time to time the Account may advertise total return for the
subaccount. Total return may be used for all seven subaccounts. Total return
performance figures represent past performance and are not intended to indicate
future performance. Investment return and the principal value of an investment
may fluctuate. A Contract Owner's shares, when redeemed, may be worth more or
less than their original cost. Total return is computed by finding the average
annual compounded rate of return that would equate the initial amount invested
to the ending redeemable value.
To the extent required, all charges shown in the Table of Annual
Operating Expenses are reflected in the calculations of the performance figures.
Because the median contract value exceeds $10,000, the annual maintenance charge
of $25 has not been deducted. However, contracts with a value of less than
$10,000 would be subject to the annual maintenance fee, which would reduce
performance. Total return may be calculated to reflect the fact that certain
expenses have ben reimbursed or waived. In addition, total return calculations
assume redemption at the end of the stated period and, therefore, reflect the
applicable Surrender Charge. However, comparative figures may be presented that
do not assume redemption.

9
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY,
THE ACCOUNT AND
THE HORACE MANN MUTUAL FUNDS

HORACE MANN LIFE INSURANCE COMPANY
Horace Mann Life Insurance Company ("HMLIC") located at One Horace Mann
Plaza, Springfield, Illinois 62715-0001, is an Illinois stock life insurance
company organized in 1949. HMLIC is licensed to do business in 48 states and in
the District of Columbia. HMLIC writes individual and group life insurance and
annuity contracts on a nonparticipating basis.
HMLIC is an indirect wholly-owned subsidiary of Horace Mann Educators
Corporation ("HMEC"), a publicly-held insurance holding company traded on the
New York Stock Exchange.

THE ACCOUNT
On October 9, 1965, HMLIC established the Account under Illinois law.
The Account is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. The Account and each
subaccount are administered and accounted for as a part of the business of
HMLIC. However, the income gains and losses, whether or not realized, of each
subaccount are credited to or charged against the amounts allocated to that
subaccount in accordance with the terms of the Contracts without regard to other
income, gains or losses of the remaining subaccounts or of HMLIC. The assets of
the Account may not be charged with liabilities arising out of any other
business of HMLIC. All obligations arising under the Contracts, including the
promise to make Income Payments, are general corporate obligations of HMLIC.
Accordingly, all of HMLIC's assets are available to meet its obligations and
expenses under the Contracts. While HMLIC is obligated to make payments under
the Contracts, the amount of variable Income Payments are not guaranteed since
the payment amounts fluctuate in accordance with the performance of the
subaccounts. The Horace Mann Mutual Funds
The Horace Mann Mutual Funds ("Trust") is an open-end, diversified,
management investment company registered under the Investment Company Act of
1940. The Trust is made up of a series of portfolios ("Funds"). The Trust issues
shares of beneficial interest that are continually offered for sale. The Funds,
advised by Wilshire Associates Incorporated ("Wilshire"), invest in securities
of different issuers and industry classifications in an attempt to spread and
reduce the risks inherent in all investing. Wilshire has entered into an
agreement with investment subadviser(s) for each of the Funds whereby the
subadviser(s) manage the investment and reinvestment of the assets of a Fund.

The primary investment objective of the Growth Fund is long-term
capital growth; conservation of principal and production of income are secondary
objectives. The Growth Fund invests substantially all of its assets in common
stocks of domestic companies. Wellington Management Company, LLP ("Wellington
Management"), Brinson Partners, Inc ("Brinson Partners") and Mellon Equity
Associates, LLP ("Mellon Equity") serve as the investment subadvisers to the
Growth Fund.
The primary investment objective of the Balanced Fund is to realize
high long-term total rate of return consistent with prudent investment risks.
The Balanced Fund's assets are invested in a mix of common stocks, debt
securities and money market instruments. Wellington Management, Brinson Partners
and Mellon Equity serve as the investment subadvisers to the Balanced Fund.
The primary investment objective of the Income Fund is to achieve a
long-term total rate of return in excess of the U.S. bond market over a full
market cycle. The Income Fund invests primarily in U.S. investment grade fixed
income securities. Wellington Management serves as the investment subadviser to
the Income Fund.

The primary investment objective of the Short-Term Fund is to realize
maximum current income to the extent consistent with liquidity. Preservation of
principal is a secondary objective. The Short-Term Fund attempts to realize its
objectives through investments in short-term debt instruments; it is not a money
market fund and does not maintain a stable net asset value per share. Wellington
Management serves as the investment subadviser to the Short-Term Fund.

The investment objective of the Small Cap Growth Fund is long-term
capital appreciation through small cap stocks with earnings growth potential.
The Small Cap Growth Fund invests primarily in small cap stocks, which the
subadviser considers to have favorable and above-average earnings growth
prospects. Accordingly, their stock prices may rise faster, but can also decline
more in unfavorable business climates. As a result of these "higher highs" and
"lower lows," they are more volatile. BlackRock Financial Management,
Inc.("BlackRock") serves as investment subadviser to the Small Cap Growth Fund.
The primary investment objective of the International Equity Fund is
long term capital growth primarily through diversified holding of marketable
foreign equity investments. The International Equity Fund invests primarily in
equity securities of established companies, listed on foreign exchanges, which
the subadviser believes have favorable characteristics. It may also invest in
fixed income securities of foreign governments and companies. Investing in
foreign securities may involve a greater degree of risk than investing in
domestic securities due to the possibility of currency fluctuations, more
volatile markets, less securities regulation and political instability. Scudder
Kemper Investments, Inc. ("Scudder Kemper") serves as the investment subadviser
to the International Equity Fund.

The investment objective of the Socially Responsible Fund is long-term
growth of capital, current income and growth of income. The Socially Responsible
Fund invests primarily in marketable equity securities (including common stocks,

<PAGE>

preferred stocks, and debt securities convertible into common stocks of seasoned
financially strong U.S.-based companies). Investments in equity securities are
limited to issuers which the subadviser determines:

1. Do not produce tobacco products;

2. Do not produce alcoholic beverages;

3. Do not own and/or operate casinos or manufacture gaming
devices;

4. Do not produce pornographic materials;

5. Do not produce nuclear weapons or guidance and/or
delivery systems, specifically for nuclear weapons;

6. By popular standards, maintain non-discriminatory
employment practices throughout a company's facilities; and

7. By popular standards, maintain environmental
policies, practices and procedures which are currently
acceptable, or which are exhibiting improvement.

Because this fund invests in companies with socially responsible
business practices, it has limitations that may have an impact on performance.
Scudder Kemper serves as the investment subadviser to the Socially Responsible
Fund.
Detailed information on the Funds is contained in the Funds' Prospectus
which accompanies this Prospectus.

ADMINISTRATOR: HORACE MANN INVESTORS, INC.
Investors, a wholly-owned subsidiary of Horace Mann Educators
Corporation which is the indirect owner of Horace Mann Life Insurance Company
("HMLIC"), serves as administrator to the Funds pursuant to an Administration
Agreement dated March 1, 1999 with the Trust (the "Administration Agreement").
Investors provides for the management of the business affairs of each fund,
including, but not limited to, office space, secretarial and clerical services,
bookkeeping services, wire and telephone communications services, and other
similar services necessary for the proper management of each fund's business
affairs. Under the current administration agreement, the Funds agree to assume
and pay the charges and expenses of its operations, including, by way of
example, the compensation of Trustees other than those affiliated with
Investors, charges and expenses of independent auditors, of legal counsel, of
any transfer or dividend disbursing agent, of the custodian, all costs of
acquiring and disposing of portfolio securities, interest, if any, on
obligations incurred by the Funds, reports and notices to shareholders, other
like miscellaneous expenses, and all taxes and fees to federal, state, or other
governmental agencies.

For the services and facilities furnished to the Funds, Investors
receives a fee based upon the combined assets of the Funds as follows: 0.25% of
the first $1 billion of assets and 0.20% of assets in excess of $1 billion. An
administration fee is charged directly against all assets in the Balanced Fund.
However, in order to avoid duplication of charges under the fund of funds
structure, Investors has indicated that it intends upon implementation to waive
the majority of the administrative fees charged to the Balanced Fund directly.
In addition, Balanced Fund shareholders will indirectly pay the administration
fee of the assets invested in the Growth Fund and Income Fund under the fund of
funds structure. Therefore, the aggregate administration fees directly and
indirectly borne by shareholders of the Balanced Fund will be higher than the
fees shareholders would bear if they invested directly in the Growth and Income
Fund.

THE CONTRACT

CONTRACT OWNERS' RIGHTS
A Contract may be issued under a retirement plan on a qualified basis
as defined in the IRC or on a non-qualified basis. Qualified and non-qualified
contracts receive different tax treatment. See "Tax Consequences."
To participate in a qualified plan, the Contract Owner may be required
to forego certain rights granted by the Contract and should refer to the
provisions of his or her Contract, the provisions of the plan or trust
instrument, and/or applicable provisions of the IRC.
Unless otherwise provided by law, and subject to the terms of any
governing plan or trust, the Contract Owner may exercise all privileges of
ownership, as defined in the Contract, without the consent of any other person.
These privileges include the right during the period specified in the Contract
to change the beneficiary designated in the Contract, to designate a payee and
to agree to a modification of the Contract terms.
This Prospectus describes only the variable portions of the Contract.
On the Maturity Date, the Contract Owner has certain rights to acquire fixed
annuity payout options. See the Contract for details regarding fixed Income
Payments.

PURCHASING THE CONTRACT
The Contract is offered and sold by HMLIC through its licensed life
insurance sales personnel who are also registered representatives of Horace Mann
Investors, Inc. ("Investors"). HMLIC has entered into a distribution agreement
with Investors, principal underwriter of the Account. Investors, located at One
Horace Mann Plaza, Springfield, Illinois 62715-0001, is a broker-dealer
registered under the Securities Exchange Act of 1934. Investors is a member of
the NASD and is a wholly-owned subsidiary of Horace Mann Educators Corporation.

<PAGE>

In order to purchase a Contract offered by this Prospectus, an
applicant must complete an application bearing all requested signatures and a
properly endorsed suitability questionnaire. For a Contract issued pursuant to
Section 403(b) of the IRC, the applicant must sign an acknowledgment of the IRC
restrictions on withdrawals applicable to such contracts. For an IRA, Roth IRA,
SIMPLE or a Contract issued under a SEP plan, the applicant must acknowledge
receipt of the IRA disclosure form.

Applications for Contracts are to be sent to HMLIC's Home Office. If an
incomplete application is received, HMLIC will promptly request that the
applicant furnish additional information needed to process the application. The
initial Purchase Payment will be held in a suspense account, without interest,
for a period not exceeding five business days. If the necessary information is
not received within these five business days HMLIC will return the initial
Purchase Payment, unless otherwise directed by the applicant.
Sales commissions are paid by HMLIC. Sales commissions typically range
from 2% to 6% of Purchase Payments received.

PURCHASE PAYMENTS
Amount and Frequency of Purchase Payments--The minimum annual Purchase
Payment under a flexible premium Contract is $225. Payments may be made in a
lump sum or installments. The minimum monthly Purchase Payment is $25. No
Purchase Payments are required after the first Contract Year. The minimum
Purchase Payment under a single premium Contract is $2,000. Under certain
individual contracts and group plans the minimum may be reduced or eliminated.
In addition, some individual contracts require a minimum Purchase Payment of
$50,000, $100,000 or $250,000.
The IRC limits the amounts which may be contributed to qualified plans.
See "Tax Consequence--Contract Owners Contributions."
Allocation of Purchase Payments--All or part of the Purchase Payments
made may be allocated to one or more subaccounts. The minimum Purchase Payment
amount allocated to any subaccount in any given Contract Year must equal or
exceed $100.
Accumulation Units and Accumulation Unit Value--The number of
Accumulation Units purchased by Purchase Payments is determined by dividing the
dollar amount credited to each subaccount by the applicable accumulation unit
value next determined following receipt of the payment by HMLIC. The value of an
Accumulation Unit is based on the investment experience of the underlying Fund.
Accumulation Units are valued on each Valuation Date. The accumulation
unit value of each subaccount is equal to the net asset value of the underlying
Fund (computed by dividing the net assets of a mutual fund by the outstanding
number of mutual fund shares on each Valuation Date). Dividends declared by the
underlying Fund of each subaccount, net of applicable deductions and charges,
are used to purchase additional Accumulation Units. To the extent that
deductions and charges exceed dividends, Accumulation Units will be surrendered.
The accumulation unit value of the Growth Fund was established at $16.87 on
October 9, 1965. The accumulation unit value of the Balanced Fund, Income Fund
and Short-Term Funds was established at $10.00 on February 1, 1983. The
accumulation unit value of the Small Cap Growth Fund, International Equity Fund
and Socially Responsible Fund was established at $10.00 on March 10, 1997.

TRANSACTIONS
Transfers--Amounts may be transferred from one subaccount to another,
and to and from the fixed portion of the Contract, prior to the Maturity Date.
(Transfers from the fixed portion of the Contract into a subaccount are treated
like any other partial withdrawal from the fixed account, except that the early
withdrawal penalty is being waived. If an amount transferred from the fixed
account is surrendered or withdrawn within 365 days, the amount transferred will
be subject to the applicable surrender charge and early withdrawal penalty as if
the money had been withdrawn from the fixed account. The penalty will not be
charged if (1) the transfer occurred on a Scheduled Update (renewal date) or (2)
if the Scheduled update occurred between the transfer and withdrawal or
surrender date(s)). The minimum amount that can be transferred is $100 or the
entire dollar value of the subaccount(s), whichever is less.
A Contract Owner may elect to transfer funds between subaccounts and
the fixed account by submitting a written request to Horace Mann Life Insurance
Company at P.O. Box 4657, Springfield, Illinois 62708-4657 or by calling (800)
999-1030. Telefacsimile (FAX) transmissions of the request also will be accepted
if sent to (217) 527-2307. The request must: (1) be signed by the Contract
Owner, or for telephone transactions, be made by the Contract Owner, (2) include
the name of the Contract Owner and the Contract number, and (3) specifically
state either the dollar amount or the number of accumulation units to be
transferred. The request also must specify the subaccounts from which and to
which the transfer is to be made. Transfers are effective either on a date
specified in the request, provided that date falls on or after receipt of the
request at the Home Office, or on the first Valuation Date following receipt of
the request by the Home Office.
Up to twelve transfers not extending beyond a twelve month period) may
be pre-scheduled at any point in time. Transfers can be pre-scheduled by
following the procedures in the paragraph above. See "Other Information-Forms
Availability." If Contract Owner decides to cancel a pre-scheduled transfer
arrangement, he or she must notify the Home Office either in writing or by
calling (800) 999-1030 or Telefacsimile (FAX) (217) 527-2307 prior to the next
designated transfer date.

<PAGE>

Changes in Allocation Instructions--A Contract Owner may elect to
change the allocation of future Purchase Payments at any time by mailing a
written request to Horace Mann Life Insurance Company at P.O. Box 4657,
Springfield, Illinois 62708-4657 or by calling (800) 999-1030. Telefacsimile
(FAX) transmissions of the request also will be accepted if sent to (217)
527-2307. The request must: (1) be signed by the Contract Owner, (2) include the
Contract Owners's name and Contract number, and (3) specify the new allocation
percentage for each subaccount. If allocations are made to the fixed portion of
the Contract or to one or more subaccounts, the percentages must total 100%.
Changes in allocation instructions are effective either on a date specified in
the request, provided that date falls on or after receipt of the request in the
Home Office, or on the first Valuation Date following receipt of the request by
the Home Office. See "Other Information--Forms Availability."
Surrender Before Commencement of Annuity Period--Values may not be
withdrawn from Section 403(b) Contracts except under certain circumstances. (See
"Tax Consequences.") However, if not restricted by the IRC or applicable
retirement plan under which the Contract is issued, a Contract Owner may
surrender the Contract in whole or withdraw in part for cash before Income
Payments begin.
The surrender or partial withdrawal value is determined on the basis of
the accumulation unit value next computed following the receipt of the request
for surrender or partial withdrawal in the Home Office. A surrender or partial
withdrawal may result in adverse federal income tax consequences to the Contract
Owner. These consequences include current taxation of payments received, and may
include penalties resulting from premature distribution. See "Tax Consequences."
A Contract Owner eligible to surrender or request a partial withdrawal
may elect to do so by submitting a signed, written request to Horace Mann Life
Insurance Company at its Home Office at P.O. Box 4657, Springfield, Illinois
62708-4657. A partial withdrawal request must be in a form acceptable by HMLIC;
telefaxsimile (FAX) transmissions of the request will be accepted if the
proceeds are sent to the Contract Owner. A surrender request must be in a form
acceptable by HMLIC; telefaxsimile (FAX) transmissions of the request will not
be accepted. See "Tax Consequences and Other Information--Forms Availability."
Partial withdrawals and surrenders will be processed either on a date
specified by you in a request, provided the date specified occurs on or after
receipt of the request at the Home Office, or on the first Valuation Date
following receipt of the request at the Home Office.

Any partial withdrawal is subject to a $100 minimum and may not reduce
the Contract Owner's interest in a subaccount to less than $100. A complete
surrender may be made at any time, unless otherwise restricted by the retirement
plan or the IRC.
Surrenders and partial withdrawals from any variable subaccount are
subject to the Surrender Charges shown in "Deductions and Expenses--Surrender
Charges".

HMLIC Surrender Charges are applied to the withdrawals based on the
date the account is opened and not on the date the premium is paid. Under
certain group plans the surrender charges may be reduced.
Partial withdrawals may be made without charge if (1) the withdrawal
does not exceed 15% of the Contract value; and (2) the Contract has been in
force for two or more Contract Years; and (3) more than twelve months have
passed since the date of the last partial withdrawal. Contract value is computed
on the first Valuation Date following receipt of the request in good form by the
Home Office. If all three conditions are not met, partial withdrawals may be
subject to Surrender Charges.
Any request for partial withdrawal, where the withdrawal is subject to
a Surrender Charge, will be increased by the amount of the Surrender Charge. For
example, a request to withdraw $3,000 at a 4% Surrender Charge will require a
withdrawal of $3,125. This withdrawal represents a cash distribution of $3,000
and a Surrender Charge of $125. Any taxes withheld will reduce the dollar amount
of the distribution.
The Surrender Charge is assessed on the basis of the amount surrendered
or withdrawn from the subaccount(s), but will never exceed 8.5% of Net Purchase
Payment(s) to a subaccount during the lifetime of the Contract. For example, if
a Contract Owner's subaccount value is $12,000 and Purchase Payments to date
equal $10,000 and the Contract Owner withdraws $2,000 (i.e., one sixth of the
subaccount value), then the Surrender Charge may not exceed 8.5% of $1,666.66
(one sixth of the Purchase Payment(s) to which the withdrawal relates).
If premium taxes are deducted prior to surrender or partial withdrawal,
any reduction of HMLIC's premium tax liability due to the surrender or partial
withdrawal will be to HMLIC's benefit.
Deferment--HMLIC ordinarily completes a transaction within seven
calendar days after receipt of a proper request to transfer, surrender,
partially withdraw or commence Income Payments. The value of the Contract is
determined as of the Valuation Date on which the request is received. However,
determination of Contract value and processing the transaction may be deferred
for (1) any period during which the New York Stock Exchange is closed for other
than customary weekend or holiday closings or during which trading is restricted
by the Securities and Exchange Commission; (2) any emergency period when it is
not reasonably practicable to sell securities or fairly determine accumulation
unit values or annuity unit values; or (3) any other period designated by the
Securities and Exchange Commission to protect persons with interests in the
Account.

13
<PAGE>

Confirmations--HMLIC mails written confirmations of Purchase Payments
to Contract Owners on a quarterly basis within five business days following the
end of each calendar quarter. Written confirmations of transfers, changes in
allocations, partial withdrawals, and surrenders, are mailed to Contract Owners
within seven calendar days of the date the transaction occurred.
If a Contract Owner believes that the confirmation statement contains
an error, the Contract Owner should notify HMLIC as soon as possible after
receipt of the confirmation statement. Notice may be provided by writing to
HMLIC, P.O. Box 4657, Springfield, Illinois 62708-4657, by sending a
telefacsimile (FAX) transmission to (217) 527-2307, or by telephoning (217)
789-2500 or (800) 999-1030 (toll free). Deductions and Expenses
Annual Maintenance Charge--An annual maintenance charge of $25 is
deducted from each Contract on the Contract anniversary date unless the contract
value equals or exceeds $10,000. This charge may be reduced or eliminated on
certain individual contracts and on some group plans. The annual maintenance
charge is deducted from the subaccount containing the greatest dollar amount or
from the fixed portion of the Contract when none of the variable subaccount(s)
have any value.
Charges for annual maintenance cease on the Maturity date. No annual
maintenance charge is taken, in whole or in part, in the event of a complete
surrender unless the surrender occurs on the Contract anniversary date.
The annual maintenance charge is intended to reimburse HMLIC for actual
expenses incurred in administering the Contract. HMLIC does not expect to profit
from such annual maintenance charge and assumes the risk that this annual
maintenance charge may be insufficient to cover the actual costs of
administering the Contract.
Mortality and Expense Risk Fee--For assuming mortality and expense
risk, HMLIC applies an asset charge to the account value of each Contract. The
fee for mortality and expense risk may not exceed the annual rate of 1.25% of
the average net variable account value based on the date of calculation (0.45%
for mortality risk, and 0.80% for expense risk); however, HMLIC reserves the
right to change the fee (subject to the 1.25% ceiling) in the future. The fee
accumulates on a weekly basis at a rate of .0238268%(for a fee of 1.25, see
below for other rates) of the net variable account value as of the date of the
calculation. The accumulated value of the fee is deducted annually (usually at
the time the Trust declares dividends) from each subaccount or upon any
surrender, partial withdrawal or transfer of value accruing before such annual
deduction with the necessary number of units, at the then current accumulation
unit value, being redeemed to equal the dollar amount of the charges owed.

Initial Mortality and
Contract Expense
value Risk Fee Weekly Factor
Less than $50,000 1.25% .0238268%
$50,000+ 1.15% .0219313%
$100,000+ 1.05% .0200340%
$250,000+ 0.95% .0181348%

Surrender Charges--Values may not be withdrawn from Section 403(b) Contracts
except under certain circumstances. (See "Tax Consequences.") However, if not
restricted by the IRC or applicable retirement plan under which the Contract is
issued, a Contract Owner may surrender the Contract in whole or withdraw in part
for cash before Income Payments begin. The products reflected below may not be
available in all states.

During Single
Contracts Flexible Premium Payment
Year (based on cash value at issue) Contracts
Under age 55
Under $50,000 $50,000+ $100,000+ $250,000+
1 8% 7% 6% 6% 5%
2 8% 6% 5% 5% 4%
3 6% 5% 5% 5% 3%
4 4% 5% 5% 5% 2%
5 2% 5% 5% 5% 1%
Thereafter 0% 0% 0% 0% 0%

Age 55+
1 8% 7% 6% 6% 5%
2 8% 6% 5% 5% 4%
3 6% 5% 4% 4% 3%
4 4% 4% 3% 3% 2%
5 2% 3% 2% 2% 1%
6 0% 2% 1% 1% 0%
7 0% 1% 0% 0% 0%
Thereafter 0% 0% 0% 0% 0%

For further information regarding surrender or partial withdrawals see
"Surrender Before Commencement of Annuity Period."

Operating Expenses of the Horace Mann Mutual Funds--There are
deductions from and expenses paid out of the assets of the Funds that are
described in the Funds' Prospectus which accompanies this Prospectus.
Premium Taxes--Certain state and local governments levy a premium tax,
presently ranging from 0 to 3.5%, on the amount of Purchase Payments made under
this Contract. The premium tax, if any, is deducted either when payments are
received or when an amount is applied to provide an annuity at the Maturity
Date, depending upon the applicable law.

<PAGE>

DEATH BENEFIT PROCEEDS
If a Contract Owner dies before the Maturity Date, the Contract value,
or the amount of Purchase Payments less any withdrawals, whichever is greater,
will be paid to the beneficiary designated by the Contract Owner. The Contract
value is determined as of the date proof of death is received by HMLIC from the
beneficiary. Under some group plans and certain individual flexible premium
products the death benefit may include an annual increase in value. Proof of
death includes a certified death certificate and a completed claimant's
statement.
All or part of the death benefit proceeds may be paid to the
beneficiary under one of the income payment options described under "Income
Payments-Income Payment Options." If the form of Income Payment selected
requires that payment be made by HMLIC after the death of the beneficiary,
payments will be made to a payee designated by the beneficiary or, if no
subsequent payee has been designated, to the beneficiary's estate.
For all Contracts issued in connection with this Prospectus, except
Roth IRAs, if the Contract Owner dies before Income Payments begin and the
designated beneficiary is not a surviving spouse, the IRC requires the complete
distribution of proceeds by December 31 of the calendar year of the fifth
anniversary of the death; i.e., "the five-year rule." This requirement can be
satisfied by an annuity for life or a period certain not exceeding the life
expectancy of a designated beneficiary, provided the Income Payments begin no
later than December 31 of the calendar year following the Contract Owner's
death. Any part of a Contract Owner's interest payable to a minor child will be
paid to the child's legal guardian for the benefit of the child.
If the designated beneficiary is the Contract Owner's surviving spouse,
Income Payments may be deferred until April 1 following the calendar year in
which the Annuitant would have reached age 701/2. For non-qualified annuities, a
designated beneficiary which is a surviving spouse may defer distributions until
he or she reaches age 701/2. However, if the surviving spouse dies before
distributions begin under any non-qualified Contract issued in connection with
this Prospectus, the five-year rule and its exceptions, explained in the
preceding paragraph, will apply to his or her beneficiary.
If the Contract Owner dies on or after the Maturity Date, the remaining
portion of the interest in the Contract undistributed at the time of the
Contract Owner's death must be distributed at least as rapidly as under the
method of distribution in force at the time of the Contract Owner's death.

MANDATORY MINIMUM DISTRIBUTION
Qualified plans are subject to distribution requirements of the IRC. A
distribution must occur each calendar year once a Contract Owner reaches age
701/2. The Contract Owner may elect to defer the first distribution until April
1 of the year following his or her attainment of age 701/2. Should the first
payment be deferred, the Contract Owner must take two distributions in the
calendar year following attainment of age 701/2.
Generally, the amount of the mandatory minimum distribution depends on
the Contract value and the life expectancy of the Contract Owner. Under
Mandatory Minimum Distribution requirements, distributions must be made for the
life (or lives) or a period not exceeding the life expectancy (or joint life
expectancy) of the Contract Owner (or the Contract Owner and a designated
beneficiary). To begin mandatory distributions the Contract Owner must contact
the Home Office at P. O. Box 4657, Springfield, Illinois 62708-4657.
The Internal Revenue Service has indicated that a Contract Owner who
can verify the December 31, 1986 balance in his or her Section 403(b) annuity,
can delay distribution of that amount until the end of the calendar year in
which he or she turns age 75. At that time, the December 31, 1986 balance is
subject to the minimum distribution requirements. The December 31, 1986 balance
includes deposits received and any interest earned as of December 31, 1986.
Deposits received after that date, interest on those deposits, and interest
earned on the December 31, 1986 balance are subject to the age 701/2
distribution requirements. Also, 403(b) Contract Owner's who have not separated
from service can delay their distributions until after they separate from
service (ie.
quit teaching).
Failure to take the required distributions results in the imposition of
a penalty tax equal to one-half (50%) of the difference between what was and
what should have been distributed. In addition, income tax is due on the full
amount that should have been distributed. Further, any distribution from a
403(b) contract in excess of the mandatory minimum distribution is subject to a
20% federal income tax withholding. Roth IRA's are not subject to Mandatory
Distribution. See "Tax Consequences."

INCOME PAYMENTS
The Contract provides for fixed or variable income payment options or a
combination of both. The Contract Owner may elect to have Income Payments made
under any one or more of the options described below or may elect a lump sum
payment. To begin receiving Income Payments a properly completed request form
must be received in the Home Office. The request will be processed so that the
Income Payments begin on the first of the month following the month of receipt
unless a later date is requested and approved by the Company. If a fixed payment
option is elected, the variable account value will be transferred to the fixed
account on the date the request is received in the Home Office. In addition, if
a variable payment is elected, any money in the fixed account will be
transferred to the variable account on the date we received the request in the
Home Office. Generally, at the time an income payment option is selected, a
Contract Owner must elect whether to withhold for federal and state income
taxes. See "Other Information-Forms Availability" and "Tax Consequences."

<PAGE>

In general, the longer Income Payments are guaranteed, the lower the
amount of each payment. Fixed Income Payments are paid in monthly, quarterly,
semi-annual & annual installments. Variable Income Payments are paid only on a
monthly basis. If the Contract value to be applied under any one fixed or
variable income payment option is less than $2,000 or if the option chosen would
provide Income Payments less than $20 per month at the Maturity Date, then the
Contract value may be paid in a lump sum.

INCOME PAYMENT OPTIONS
The following income payment options are available on a variable basis
unless otherwise stated.
Life Annuity with or without Period Certain--The life option guarantees
Income Payments for the lifetime of the Annuitant. If a certain period is
selected (5, 10, 15, 20 years) and the Annuitant dies before the end of the
period, Income Payments are guaranteed to the beneficiary until the end of the
period selected. If no beneficiary is living at the time of the Annuitant's
death, the present value, if any, of the remaining certain period payments will
be paid in a single sum to the estate of the Annuitant. Under the life without
period certain option, it is possible that only one Income Payment may be made
if the Annuitant's death occurred before the due date of the second Income
Payment. This option usually provides the largest Income Payments. The Annuitant
cannot make unscheduled withdrawals or change to another option after the first
Income Payment has been made.

Joint and Survivor Life Annuity--This life only option provides
lifetime Income Payments during the lifetimes of two Annuitants. After one
annuitant dies, the Income Payments will continue during the lifetime of the
survivor based on the survivor percentage elected (ie, 100%, 50%, etc.). The
Income Payments cease after the last payment paid prior to the survivor's death.
It could be possible for only one payment to be made under this option if both
Annuitants die before the due date of the second payment. The Annuitants cannot
make unscheduled withdrawals or change to another income option after the first
Income Payment has been made.
Income for Fixed Period--This option provides Income Payments for a
fixed period not less than one year nor exceeding 30 years; however, payments
may not extend beyond the life expectancy of the Annuitant. Upon the Annuitant's
death, the beneficiary will be paid the remaining Income Payments due, if any.
If no beneficiary is living at the time of the Annuitant's death, the present
value, if any, of the remaining Income Payments will be paid in a lump sum to
the estate of the Annuitant. The Annuitant has the right to change to another
income option or make unscheduled withdrawals subject to surrender penalties, if
applicable, from the remaining present value subject to IRC requirements. To
determine the surrender penalty rate, contract years are counted from the
original effective date of the accumulation contract. Refer to "Deduction and
Expenses--Surrender Changes" for the appropriate rate. This option is available
on a fixed payment basis only.
Income for Fixed Amount--This option provides payments of a fixed
amount until the account value, with interest, has been paid; however, payments
may not extend beyond the life expectancy of the Annuitant. Upon the Annuitant's
death, the beneficiary will be paid the remaining Income Payments due, if any,
or the beneficiary may request the present value, if any, of the remaining
Income Payments. If no beneficiary is living at the time of the Annuitant's
death, the present value, if any, of the remaining Income Payments will be paid
in a lump sum to the estate of the Annuitant. The Annuitant has the right to
change to another income option or make unscheduled withdrawals subject to
surrender penalties, if applicable, from the remaining present value subject to
IRC requirements. To determine the surrender penalty rate, contract years are
counted from the original effective date of the accumulation contract. Refer to
"Deduction and Expenses--Surrender Changes" for the appropriate rate. This
option is available on a fixed payment basis only.
Interest Income Payments--This option provides Income Payments based on
interest earned from the proceeds of the Contract, at a rate determined by
HMLIC, but never less than the annual guaranteed interest rate. Interest will be
credited at the end of each payment period. Once the Annuitant reaches age
701/2, Interest Income Payments may continue, however, the total annual
distribution must meet the Minimun Mandatory Distribution requirements of the
IRC. The Annuitant may elect another income option at the end of any payment
period, or subject to IRC requirements, may withdraw the Contract value in whole
or in part upon written request subject to surrender penalties if applicable..
The request must be made prior to the end of the period that the Annuitant
agreed to receive Income Payments. See "Mandatory Minimum Distribution." This
option is available on a fixed payment basis only.
Other Income Options--If the Annuitant does not wish to elect one or
more income payment options, the Annuitant may:

a) receive the proceeds in a lump sum, or
b) leave the Contract with HMLIC and receive the value
under the mandatory minimum distribution requirements
of IRC Section 401(a)(9), see "Mandatory Minimum
Distribution," or
c) elect any other option that HMLIC makes available.

AMOUNT OF FIXED AND VARIABLE INCOME PAYMENTS
In general, the dollar amount of Income Payments under the Contract
depends on Contract value. Contract value equals the value of the fixed portion
of the Contract plus the value of each subaccount. The value of each subaccount
is determined by multiplying the number of Accumulation Units credited to each
subaccount by its respective accumulation unit value, less any accumulated
Mortality & Expense Risk fee. Contract value may be more or less than the amount
of Net Purchase Payments allocated to the Contract.

<PAGE>

Fixed Income Payments--The amount of each payment under a fixed income
payment option is determined from the income option tables in the Contract.
These tables show the monthly payment for each $1,000 of Contract value
allocated to provide a fixed Income Payment. Guaranteed fixed Income Payments
will not change regardless of investment, mortality or expense experience.
Higher Income Payments may be made at the sole discretion of HMLIC.
Variable Income Payments--- The amount of the first monthly variable
Income Payment is determined from the income option tables in the Contract. The
tables show the amount of the Income Payment for each $1,000 of value allocated
to provide Income Payments. The income option tables vary with the form of
income option payment selected and adjusted age of the Annuitant(s).
The first monthly variable Income Payment is used to calculate the
number of variable annuity units for each subsequent monthly Income Payment. The
number of variable annuity units remains constant over the payment period except
when a joint and survivor option is chosen. The number of variable annuity units
will be reduced upon the death of either Annuitant by the survivor percentage
elected.
The amount of monthly Income Payments following the first variable
Income Payment varies from month to month to reflect the investment experience
of each subaccount funding those payments. Income Payments are determined each
month by multiplying the variable annuity units by the applicable variable
annuity unit value at the date of payment. The variable annuity unit value will
change between Valuation Dates to reflect the investment experience of each
subaccount.
Assumed Interest Rate--The selection of an assumed interest rate
affects both the first monthly variable Income Payment and the pattern of
subsequent payments. One divided by the sum of the assumed interest rate and the
mortality and expense risk charge, adjusted to a monthly rate, is the investment
multiplier. If the investment performance of a subaccount funding variable
Income Payments is the same as the investment multiplier, the monthly payments
will remain level. If its investment performance exceeds the investment
multiplier, the monthly payments will increase. Conversely, if investment
performance is less than the investment multiplier, the payments will decrease.
Unless otherwise provided, the assumed interest rate is 3.0% per annum.
Annuity Unit Value--The variable annuity unit value for the Growth,
Balanced, and Income Fund was set at $10.00 as of the date amounts first were
allocated to provide Income Payments. The variable annuity unit value for the
Short-Term Fund, International Fund, Small Cap Fund and Socially Responsible
Fund also have been set at $10.00, however, no Income Payments have been paid
from these subaccounts. The current variable annuity unit value is equal to the
prior variable annuity unit value on the Valuation Date when payments were last
determined, multiplied by the applicable net investment factor. The net
investment factor reflects the investment performance of the subaccount during
the current month plus the value of any dividends and distributions during the
current month. This factor is computed by dividing the net asset value of a
share of the underlying Fund on the last business day of the current month, plus
any dividends or other distributions, by the net asset value of a share on the
last business day of the preceding month, and multiplying this result by the
investment multiplier.

MISSTATEMENT OF AGE
If the age of the Annuitant has been misstated, any Income Payment
amount shall be adjusted to reflect the correct age. If the Income Payments were
too large because of a misstatement of age, HMLIC will deduct the difference
with interest, at an effective annual interest rate of 6%, from future payments
until totally repaid. If the Income Payments were too small, HMLIC will add the
difference with interest, at an effective annual interest rate of 6%, to the
next payment.

MODIFICATION OF THE CONTRACT
The Contract provides that it may be modified by HMLIC to maintain
continued compliance with applicable state and federal laws. Contract Owners
will be notified of any modification. Only officers designated by HMLIC may
modify the terms of the Contract.

HMLIC reserves the right to offer Contract Owners, at some future date
and in accordance with the requirements of the Investment Company Act of 1940,
the option to direct that their Purchase Payments be allocated to a portfolio
within the Trust other than one or more of the seven currently offered Horace
Mann Mutual Funds. If any shares of the Trust's seven portfolios are not
available for purchase by the Account, or if in the judgment of HMLIC further
investment in these shares is no longer appropriate in view of the purposes of
the Account or subaccount, then (i) shares of another portfolio may be
substituted for existing Fund shares held in the affected subaccount and/or (ii)
payments received after a date specified by HMLIC may be applied to the purchase
of shares of another portfolio. No substitution will be made without prior
approval of the Securities and Exchange Commission. Any substitution would be
for shares of portfolio with investment objectives similar to those of the Fund
it replaces.

TAX CONSEQUENCES

SEPARATE ACCOUNT
The operations of the Account form part of the operations of HMLIC;
however, the IRC provides that no federal income tax will be payable by HMLIC on
the investment income and capital gains of the Account if certain conditions are
met. Provided the investments of the underlying Funds continue to meet the
diversification requirements of IRC Section 817(h), the Contract Owner will not
pay federal income tax on the investment income and capital gains under a
Contract until Income Payments begin or a full or partial withdrawal is made.

<PAGE>

CONTRACT OWNERS
Contributions--Under IRC Section 403(b), Purchase Payments made by
public school systems, churches, or certain tax-exempt organizations to purchase
annuities for their employees are excludable from the gross income of the
employee to the extent that aggregate Purchase Payments for the employee do not
exceed certain limitations imposed by the IRC. Further, any amounts credited to
the Contract Owner's account are not taxable until such amounts are distributed.
If the Contract is used for a tax-sheltered annuity described in IRC Section
403(b) or simplified employee pension plan described in IRC Section 408(k) or
("qualified plans"), contributions made by an employer through a salary
reduction plan are permitted up to prescribed limits.
Generally, IRC Section 403(b) imposes a limitation on the amount of
tax-deferred Purchase Payments that may be made in a calendar year equal to 20%
of an employee's compensation includable in gross income for that year.
Adjustments to this limitation are made based upon the Contract Owner's years of
service with his or her employer and take into account the Contract Owner's
prior and current contributions to qualified plans. The Section 403(b)
limitation also is adjusted for any amounts deferred in prior taxable years
under an eligible deferred compensation plan as defined by IRC Section 457. In
addition, IRC Section 415 imposes a 25% limitation on total pre-tax
contributions to all tax-qualified plans. No limitations are imposed on the
amount of contributions made to a non-qualified contract.
If the Contract is used as a traditional IRA, subject to certain
limitations, all or a portion of the contribution up to $2,000 ($4,000 for a
spousal IRA) may be deducted from gross income. The same contribution limits
apply to the Roth IRA, however, it is funded with after tax dollars. The maximum
annual contributions for all IRAs (including Roth IRA's) is $2,000.
Contributions to a simplified employee pension plan contract generally may not
exceed 15% of compensation or $26,000, whichever is less. Until a taxable
distribution occurs, no federal income tax is payable by the Contract Owner on
Purchase Payments and investment earnings of a Contract purchased for a
qualified plan or a deductible IRA. No limitations are imposed on the amount of
contributions made to a nonqualified contract.

Effective January 1, 1989, the IRC imposes restrictions on
distributions (i.e., partial withdrawals or surrenders) from annuity contracts
qualified under IRC Section 403(b). IRC Section 403(b)(11) requires that for
these annuity contracts to receive tax-deferred treatment, the following
distribution restrictions must be applied to contributions and all earnings
credited after December 31, 1988.

DISTRIBUTIONS MAY BE PAID ONLY:
(1) When the employee attains age 591/2, separates from service, dies,
or becomes disabled (within the meaning of IRC Section 72(m)(7)), or
(2) In hardship cases and cannot exceed contributions made through a
salary reduction agreement. Distribution of any income attributable to
these contributions is prohibited(IRC 403(b)(11)(B)).

Distributions Under Qualified Contracts--The IRC subjects qualified
plans to certain mandatory minimum distribution requirements. See "The
Contract-Mandatory Minimum Distribution."

If certain requirements are met, full or partial distributions other
than mandatory minimum distributions, either may be rolled over or exchanged on
a tax-free basis from one plan to another in accordance with IRC Section 1035 or
Revenue Ruling 90-24. Distributions from an IRC Section 403(b) Contract may be
rolled over to another IRC Section 403(b) Contract or to an IRA. Distributions
from an IRA may be rolled over to another IRA or to an IRC Section 403(b)
Contract if the IRA contains only amounts rolled over from a 403(b) plan. Roth
IRA's can only accept rollover money from a traditional IRA or another Roth.
Effective January 1, 1993, federal tax law requires HMLIC to withhold
for ordinary income tax purposes, 20% of any distributions from annuity
Contracts or plans qualified under IRC Section 403 with the exception of the
following:
(1) eligible rollover distributions made directly to another trustee,
(2) periodic payments received over the Contract Owner's lifetime, (3) periodic
payments received under the minimum required distribution rules, or (4) periodic
payments received over a period of ten years or more.
The Contract Owner, after receiving a distribution that is subject to
the 20% withholding tax, may elect to rollover the distribution within 60 days
of receiving it. However, in order to qualify the entire distribution as a
rollover, the Contract Owner must replace the 20% withheld when making the
rollover payment. If the 20% is not replaced, the amount withheld will be
subject to ordinary income taxes and a possible 10% tax penalty if the
distribution occurred before age 591/2.
All distributions, with the exception of a return of nondeductible
employee contributions and certain Roth distributions, received from a qualified
plan or an IRA are includable in gross income in the year paid. Once Income
Payments begin, any nondeductible contributions are recovered tax-free as a
portion of each Income Payment. Under certain limited circumstances, an
individual may elect forward averaging with respect to a lump sum distribution.
For any distribution not subject to the 20% withholding, HMLIC is
required to withhold federal income tax unless the Contract Owner elects not to
have federal income tax withheld. After an election is made with respect to
Income Payments, a Contract Owner may revoke the election at any time. HMLIC
will notify the Contract Owner at least annually of his or her right to revoke
the election. Contract Owners are required by law to provide their correct
taxpayer identification numbers ("TIN") to HMLIC. If the Contract Owner is an
individual, the TIN is his or her Social Security number.

<PAGE>

If the designated beneficiary is not the Contract Owner's spouse, then
at least 50% of the present value of the amount available for distribution must
be paid within the life expectancy of the Contract Owner of an IRA or a
qualified plan. Each payment to the beneficiary must be no less than each
payment to the Contract Owner.

Distributions Under Non-Qualified Contracts - Contract Owners of
non-qualified Contracts are not subject to federal income tax on earnings until
Income Payments are received under the Contract. Contract Owners of
non-qualified contracts are not subject to the minimum distribution
requirements.

A distribution by surrender or partial withdrawal during the
accumulation period may subject the Contract Owner to federal income tax. For
this purpose, an assignment or pledge (or agreement to assign or pledge) is
considered a distribution.
If the distribution is a full surrender, the Contract Owner is taxed on
the amount distributed, less Purchase Payments reduced by any prior partial
withdrawals which were not subject to income tax.
A distribution by partial withdrawal is deemed to come first from any
previously untaxed accumulation and then from principal. The Contract Owner is
subject to income tax on any previously untaxed accumulation which is
distributed.
Purchase Payments may also be made by means of a full tax free exchange
of annuity contracts under IRC Section 1035. Contracts exchanged under IRC
Section 1035 after January 18, 1985 will be subject to the annuity income tax
rules of IRC Section 72 in effect after that date, with exceptions set forth
below regarding the first-in first-out treatment of contracts issued prior to
August 14, 1982. See below "Penalty Tax."
If distributions are made pursuant to an income payment option, that
portion of each Income Payment which represents the Contract Owner's investment
in the Contract is excluded from gross income for federal income tax purposes.
The "investment in the Contract" is equal to total Purchase Payments to the
Contract less the portion of any periodic distributions that were excluded from
the individual's gross income. Once the Contract Owner's investment is returned
in full, the entire amount of each Income Payment is taxable as ordinary income.
Penalty Tax--Distributions to a Contract Owner under a qualified plan
or IRA are subject to a 10% penalty tax unless the distributions are received:

(1) on or after age 591/2,
(2) on account of death,
(3) on account of disability, as defined in IRC Section
72(m)(7),

(4) pursuant to a qualified domestic relations order, as
defined in IRC 414(p),
(5) for deductible medical expenses in excess of 71/2% of
adjusted gross income,
(6) on account of separation from service after age 55, or

(7) as a series of substantially equal payments for the life
or a period not exceeding life expectancy of the Contract Owner, or the
lives or a period not exceeding the joint life expectancy of the
Contract Owner and a designated beneficiary.

Taxable distributions from non-qualified Contracts received prior to
age 59 1/2 are also subject to a 10% penalty tax unless the distribution is made
after the Contract Owner's death or disability, received as part of
substantially equal periodic payments for the Contract Owner's lifetime, or
attributable to Purchase Payments made prior to August 14, 1982. In addition,
for non-qualified Contracts issued during the period August 14, 1982 through
January 18, 1985 and for additional Purchase Payments to non-qualified Contracts
issued prior to August 14, 1982, the penalty tax will not apply to distributions
attributable to Purchase Payments paid ten years or more prior to the
distribution. For this purpose, distributions will be attributed to Purchase
Payments on a "first-in first-out" basis (i.e. to the earliest Purchase Payment
which has not been fully allocated to prior distributions.)

Roth IRAs are not subject to the 10% penalty if;

The contract has been inforce for five years, and;

The Annuitant has attained age 59 1/2; or

when used to purchase a first home not to exceed $10,000 (as adjusted
by the IRA);or

The annuitant becomes disabled as defined in IRC Section 72(m)(7); or

The distribution is made after the death of the Annuitant.

<PAGE>

The preceding discussion is informational only and is not to be
considered tax advice. Contract Owners are urged to consult a competent tax
adviser before taking any action that could have tax consequences.

VOTING RIGHTS
Unless otherwise restricted by the plan under which a Contract is
issued, each Contract Owner has the right to instruct HMLIC with respect to
voting his or her interest in the shares of the Funds held by the Separate
Account at all shareholder meetings.
The number of votes that may be cast by a Contract Owner is based on
the number of units owned as of the record date of the meeting. Shares for which
no instructions are received are voted in the same proportion as the shares for
which instructions have been received. Any Fund shares attributable to
investment by HMLIC will be voted in proportion to the vote by Contract Owners
who have Separate Account units. Contract Owners receive various materials, such
as proxy materials and voting instruction forms, that relate to voting Fund
shares.

OTHER INFORMATION
Legal Proceedings--There are no legal proceedings to which the Separate
Account is a party or to which the assets of the Separate Account are subject.
HMLIC is engaged in various kinds of routine litigation that, in HMLIC's
judgment, are not material to its financial condition. None of this litigation
relates to the Separate Account.
Registration Statement--A registration statement has been filed with
the Securities and Exchange Commission under the Securities Act of 1933 with
respect to the Contract. This Prospectus does not contain all information set
forth in the registration statement, its amendments and exhibits. Statements
contained in this Prospectus as to the content of the Contract and other legal
instruments are summaries. For a complete statement of the terms thereof,
reference is made to these instruments as filed.
Contract Owner Communications--To ensure receipt of communications,
Contract Owners must notify HMLIC of address changes. Notice of a change in
address may be sent to Horace Mann Life Insurance Company, Annuity Customer
Service, P.O. Box 4657, Springfield, Illinois 62708-4657. Contract Owners may
also provide notice of an address change by sending a telefacsimile (FAX)
transmission to (217) 527-2307 or by calling (217) 789-2500 or (800) 999-1030
(toll free).
HMLIC will attempt to locate Contract Owners for whom no current
address is on file. In the event HMLIC is unable to locate a Contract Owner,
HMLIC may be forced to surrender the value of the Contract to the Contract
Owner's last known state of residence in accordance with the state's abandoned
property laws.
Contract Owner Inquiries--A toll free number, (800) 999-1030, is
available to telephone HMLIC's Annuity Customer Service Department. Written
questions should be sent to Horace Mann Life Insurance Company, Annuity Customer
Service, P.O. Box 4657, Springfield, Illinois 62708-4657.
Forms Availability--Specific forms are available from HMLIC to aid the
Contract Owner in affecting many transactions allowed under the Contract. These
forms may be obtained by calling the Annuity Customer Service Department toll
free at (800) 999-1030.

NASD Regulation's Public Disclosure Program--Information about Horace
Mann Investors, Inc. and your agent is available from the National Association
of Securities Dealers (NASD) at www.nasdr.com or by calling (800) 289-9999.

Year 2000 Readiness--HMLIC relies on computer systems to maintain
customer accounts and records and process customer account transactions. Because
of the way that computers have historically stored dates, some of these systems
currently may not be able to correctly process activity occurring in the year
2000. By early 1995, HMLIC had a comprehensive plan developed to update these
systems. HMLIC expects, but there can be no absolute assurance that, the
necessary work will be completed on a timely basis.

<PAGE>

ADDITIONAL INFORMATION

A copy of the Statement of Additional Information providing more
detailed information about the Account is available, without charge, upon
request. The Table of Contents of this Statement follows:

Topic Page
- ----- ----
General Information and History 2
Investment Experience 2
Underwriter 3
Financial Statements 3

To receive, without charge, a copy of the 1998 Annual Report of the
Horace Mann Mutual Funds and the Horace Mann Life Insurance Company Separate
Account and/or a copy of the Statement of Additional Information for Horace Mann
Life Insurance Company Separate Account and/or the Horace Mann Mutual Funds,
please complete the following request form and mail it to the address indicated
below, or send it by telefacsimile (FAX) transmission to (217) 535-7123 or
telephone (217) 789-2500 or (800) 999-1030 (toll-free).

Horace Mann Life Insurance Company
P.O. Box 4657
Springfield, Illinois 62708-4657

Please provide free of charge the following information:
1998 Annual Report of the Horace Mann Mutual Funds and the Horace Mann
Life Insurance Company Separate Account.
Statement of Additional Information dated May 1, 1999 for the Horace
Mann Mutual Funds.

Statement of Additional Information dated May 1, 1999 for the Horace
Mann Life Insurance Company Separate Account.

Please mail the above documents to:

--------------------------------------------
(Name)

--------------------------------------------
(Address)

--------------------------------------------
(City/State/Zip)

<PAGE>

Statement of Additional Information

Variable tax deferred annuity contracts
Qualified and non-qualified plans

Horace Mann Life Insurance Company
Separate Account

May 1, 1999

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

Individual and Group
Flexible Payment and Individual Single Payment Variable Tax
Deferred Annuity Contracts

Horace Mann Life Insurance Company

This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the Prospectus, dated May 1, 1999, for Horace Mann Life
Insurance Company Separate Account. A copy of the Prospectus may be obtained by
writing to Horace Mann Life Insurance Company, P.O. Box 4657, Springfield,
Illinois 62708-4657, by sending a telefacsimile (FAX) transmission to (217)
535-7123, or by telephoning toll-free (800) 999-1030.

May 1, 1999

TABLE OF CONTENTS

Topic Page

General Information and History.................. 2
Investment Experience............................ 2
Underwriter...................................... 3
Financial Statements............................. 4

<PAGE>

GENERAL INFORMATION AND HISTORY

Horace Mann Life Insurance Company ("HMLIC") sponsors the Horace Mann Life
Insurance Company Separate Account (the "Account"). HMLIC is an indirect
wholly-owned subsidiary of Horace Mann Educators Corporation ("HMEC"), a
publicly-held insurance holding company traded on the New York Stock Exchange.

INVESTMENT EXPERIENCE
(Applies to Annuity Alternative Contracts Only)(5)
December 31, 1998

TOTAL RETURN DATA
AVERAGE ANNUAL TOTAL RETURN(1)
(Based on a $1,000
investment)(2) 1 YR 5 YRS 10 YRS

Growth Fund Account Division
With Redemption(3) (2.28)% 15.81% 14.83%
Without Redemption 6.22% 15.81% 14.83%
Balanced Fund Account Division
With Redemption(3) (2.24)% 12.32% 12.37%
Without Redemption 6.26% 12.32% 12.37%
Income Fund Account Division
With Redemption(3) (1.83)% 5.21% 7.18%
Without Redemption 6.67% 5.21% 7.18%
Short-Term Fund Account Division
With Redemption(3) (4.71)% 3.46% 3.84%
Without Redemption 3.57% 3.46% 3.84%
Small Cap Growth Fund Account Division(4)
With Redemption(3) (3.81)%
Without Redemption 4.56%
International Equity Fund Account Division(4)
With Redemption(3) 8.99%
Without Redemption 17.49%
Socially Responsible Fund Account Division(4)
With Redemption(3) (0.15)%
Without Redemption 8.35%

</TABLE>

1 In some cases, actual performance reflects subsidization where total return
has been enhanced due to expenses of each Fund being waived or paid by
affiliates of the Funds.

2 To the extent required, all charges shown in the Table of Annual Operating
Expenses are reflected in the calculations of the performance figures. Because
the median contract value exceeds $10,000, the annual maintenance charge of $25
has not been deducted. However, contracts with a value of less than $10,000
would be subject to the annual maintenance charge, which would reduce
performance. Total return may be calculated to reflect the fact that certain
expenses have been reimbursed or waived. In addition, total return calculations
assume redemption at the end of the stated period and, therefore, reflect the
applicable Surrender Charge. However, comparative figures may be presented that
do not assume redemption.

3 With redemption reflects performance of a surrendered contract. Redemption has
no effect on return after the initial five-year contract period.

<PAGE>

4 Small Cap Growth Fund, International Equity Fund and Socially Responsible Fund
each commenced operations on March 10, 1997.

5 Annuity Alternatities refers to the Combination Annuity Contract offered by
Horace Mann Life Insurance Co.

This performance data represents past performance. Investment return and the
principal value of an investment may fluctuate. An investor's shares, when
redeemed, may be worth more or less than their original cost. All charges as
shown in the Prospectus fee tables are reflected in this data, with the
exception of the annual maintenance charge and premium taxes.

The total return quotations are based on the average annual compounded rates of
return over one, five, and ten year periods ended December 31, 1998. Small Cap
Growth, International Equity and Socially Responsible Funds commenced operations
on March 10, 1997. Total return is computed by finding the average annual
compounded rates of return that would equate the initial amount invested to the
ending redeemable value.

The performance data contained in this Statement of Additional Information is
based on the fees and charges for the flexible payment Contracts currently
offered by the Company. Prior Contracts, single premium contracts, and certain
group plans have different fees and charges; therefore these performance
calculations are not valid for those contracts.

UNDERWRITER

HMLIC offers and sells the Contract on a continuous basis through its licensed
life insurance sales personnel who are also registered representatives of Horace
Mann Investors, Inc. ("Investors"), a broker/dealer registered with the
Securities and Exchange Commission and a member of the National Association of
Securities Dealers, Inc. (NASD). HMLIC contracts with Investors, principal
underwriter of the Account, to distribute the variable contracts of HMLIC.
Investors, located at One Horace Mann Plaza, Springfield, Illinois 62715-0001,
is an affiliate of HMLIC and a wholly-owned subsidiary of HMEC.

Commissions paid to Investors were $3,879,547, $5,781,260,and $7,465,597 for the
years ended 1996, 1997 and 1998, respectively. Investors does not retain any of
these commissions. Commissions received by Investors are paid to registered
representatives who sell contracts offered by this Prospectus.

FINANCIAL STATEMENTS

KPMG LLP, independent auditors for the Account and HMLIC, has
offices at 303 East Wacker Drive, Chicago, Illinois 60601. KPMG LLP
representatives perform an audit of the financial statements of the Account
annually and provide accounting advice and services related to Securities and
Exchange Commission filings throughout the year and perform an annual audit of
the statutory financial statements of HMLIC.

The financial statements of the Account, including the auditors' reports
thereon, are incorporated herein by reference from the Annual Report for the
Account for the year ended December 31, 1998. A copy of this Annual Report
accompanies the Statement of Additional Information. Additional copies may be
obtained, upon request and without charge, by contacting Horace Mann Life
Insurance Company, P.O. Box 4657, Springfield, Illinois 62708-4657, or by
telephoning (217) 789-2500 or (800) 999-1030 (toll-free). The statutory
financial statements for HMLIC, including the auditors' reports thereon, which
are included herein, should be considered only as bearing upon the ability of
HMLIC to meet its obligations under the Contracts.

<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Statutory Financial Statements

December 31, 1998 and 1997

(With Independent Auditors' Report Thereon)

<PAGE>

Independent Auditors' Report

The Board of Directors
Horace Mann Life Insurance Company:

We have audited the accompanying statutory statements of admitted assets,
liabilities and capital and surplus of Horace Mann Life Insurance Company as of
December 31, 1998 and 1997, and the related statutory statements of operations,
capital and surplus, and cash flow for each of the years in the three-year
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.

As described more fully in notes 1 and 7 to the statutory financial statements,
the Company prepared these statutory financial statements using accounting
practices prescribed or permitted by the Department of Insurance of the State of
Illinois, which practices differ from generally accepted accounting principles.
The effects on the statutory financial statements of the variances between the
statutory basis of accounting and generally accepted accounting principles,
although not reasonably determinable, are presumed to be material.

In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of Horace Mann Life Insurance Company as of December 31, 1998
and 1997, or the results of its operations or its cash flows for each of the
years in the three-year period ended December 31, 1998.

Also, in our opinion, the financial statements referred to above present fairly,
in all material respects, the admitted assets, liabilities and capital and
surplus of Horace Mann Life Insurance Company as of December 31, 1998 and 1997,
and the results of its operations and its cash flow for each of the years in the
three-year period ended December 31, 1998, on the basis of accounting described
in note 1.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
the accompanying Schedule is presented for purposes of additional analysis and
is not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

April 9, 1999

KPMG, LLP

<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Statutory Financial Statements

December 31, 1998 and 1997

(With Independent Auditors' Report Thereon)

<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Statutory Statements of Admitted Assets,
Liabilities and Capital and Surplus

December 31, 1998 and 1997

(In thousands)
- --------------------------------------------------------------------------------
Admitted Assets 1998 1997
- --------------------------------------------------------------------------------

Cash and investments:
Bonds $2,009,455 $1,958,250
Common stocks 78 806
Mortgage loans on real estate 38,429 45,136
Real estate 173 5,530
Policy loans 54,027 48,640
Cash 4,166 1,157
Short-term investments 101,439 88,144
Receivable for securities 3,305 1,016
Other invested assets 70 71
- --------------------------------------------------------------------------------

Total cash and investments 2,211,142 2,148,750

Life insurance premiums deferred
and uncollected 43,218 41,238

Accident and health premiums due
and unpaid 797 1,103

Investment income due and accrued 29,706 32,227

Other assets 4,576 3,368

Variable annuity assets 1,122,739 959,760
- --------------------------------------------------------------------------------

Total admitted assets $3,412,178 $3,186,446
- --------------------------------------------------------------------------------

See accompanying notes to statutory financial statements.

7
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Statutory Statements of Admitted Assets,
Liabilities and Capital and Surplus

December 31, 1998 and 1997

(In thousands, except share data)
- --------------------------------------------------------------------------------

Liabilities and Capital and Surplus 1998 1997
- --------------------------------------------------------------------------------

Policy liabilities:
Aggregate reserves:
Life and annuity $1,856,379 $1,822,379
Accident and health 17,619 17,497
Unpaid benefits:
Life 6,822 6,163
Accident and health 1,227 4,521
Policyholder funds on deposit 116,012 111,977
Policyholder dividends payable
in the following year 80 100
Remittances not allocated 2,901 1,742
- --------------------------------------------------------------------------------

Total policy liabilities 2,001,040 1,964,379

Accrued expenses 2,764 6,432
Asset valuation reserve 16,153 16,484
Interest maintenance reserve 18,619 15,331
Federal income tax payable - 1,105
Funds held for loaned securities 87,217 56,438
Payable to parent, subsidiaries and affiliates - 5,810
Transfer from separate accounts (9,451) (8,033)
Other liabilities 7,760 7,282
Variable annuity liabilities 1,118,890 956,253
- --------------------------------------------------------------------------------

Total liabilities 3,242,992 3,021,481
- --------------------------------------------------------------------------------

Capital and surplus:
Capital stock, $1 par value.
Authorized 5,000,000 shares,
2,500,000 shares outstanding 2,500 2,500
Additional paid-in and contributed surplus 22,704 22,704
Special surplus fund - contingent
variable annuity reserve 625 625
Unassigned surplus 143,357 139,136
- --------------------------------------------------------------------------------

Total capital and surplus 169,186 164,965
- --------------------------------------------------------------------------------

Total liabilities and capital and surplus $3,412,178 $3,186,446
- --------------------------------------------------------------------------------

See accompanying notes to statutory financial statements.

8
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Statutory Statements of Operations

Years ended December 31, 1998, 1997 and 1996

(In thousands)
<TABLE>
<CAPTION>

- ---------------------------------------------------------------------------------------------------
1998 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Premiums, annuity and supplementary
contract considerations:
Life $107,863 $104,684 $101,618
Annuity 223,325 199,189 166,870
Accident and health 12,108 32,395 50,258
Supplementary contracts 32,832 30,455 26,655
- ---------------------------------------------------------------------------------------------------

Total premiums, annuity and supplementary
contract considerations 376,128 366,723 345,401

Net investment income 152,416 156,570 152,786
Amortization of interest maintenance
reserve 2,592 2,581 2,898
Management fee income from Separate Accounts 14,015 - -
Other 481 916 468
- ---------------------------------------------------------------------------------------------------

Total revenue 545,632 526,790 501,553
- ---------------------------------------------------------------------------------------------------

Benefits and expenses:
Provisions for claims and benefits:
Life 89,651 86,110 85,758
Annuity 281,411 250,910 220,833
Accident and health 9,978 32,228 45,998
Supplementary contracts 45,097 42,643 37,687
- ---------------------------------------------------------------------------------------------------

Total claims and benefits 426,137 411,891 390,276

Commissions 28,868 26,864 24,436
General and other expenses 49,775 55,742 50,861
- ---------------------------------------------------------------------------------------------------

Total benefits and expenses 504,780 494,497 465,573
- ---------------------------------------------------------------------------------------------------

Net gain before dividends to policyholders
and federal income tax 40,852 32,293 35,980
Dividends to policyholders 254 (540) 1,335
- ---------------------------------------------------------------------------------------------------

Net gain before federal income tax 40,598 32,833 34,645
Federal income tax expense 17,788 10,549 17,140
- ---------------------------------------------------------------------------------------------------

Net gain from operations 22,810 22,284 17,505
Realized investment losses
net of tax and transfers to IMR (3,256) (1,241) (1,193)
- ---------------------------------------------------------------------------------------------------
Net income $ 19,554 $ 21,043 $ 16,312
- ---------------------------------------------------------------------------------------------------

See accompanying notes to statutory financial statements.

9
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Statutory Statements of Capital and Surplus

Years ended December 31, 1998, 1997 and 1996

(In thousands)

Capital stock $ 2,500 $ 2,500 $ 2,500
- ---------------------------------------------------------------------------------------------------

Additional paid-in capital and
contributed surplus 22,704 22,704 22,704
- ---------------------------------------------------------------------------------------------------

Special surplus fund-
contingent variable annuity reserve 625 625 625
- ---------------------------------------------------------------------------------------------------

Unassigned surplus :
Balance at beginning of year 139,136 122,797 108,009
Net income 19,554 21,043 16,312
Change in net unrealized
capital gains 2,079 2,706 1,150
Change in non-admitted assets 14 (237) (79)
Change in reserve valuation
basis (note 1) - (2,020) 11,361
Change in asset valuation reserves 331 10,440 845
Surplus contributed to Separate
Accounts - (3,100) -
Other changes in surplus in Separate
Account Statement 343 3,507 -
Dividends to parent (18,100) (16,000) (16,000)
Change in separate account
reserve valuation basis (note 1) - - 4,799
Exhibit 8A tax impact (note 1) - - (3,600)
- ---------------------------------------------------------------------------------------------------

Balance at end of year 143,357 139,136 122,797
- ---------------------------------------------------------------------------------------------------

Total capital and surplus $169,186 $164,965 $148,626
- ---------------------------------------------------------------------------------------------------

See accompanying notes to statutory financial statements.

10
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Statutory Statements of Cash Flow

Years ended December 31, 1998, 1997 and 1996

(In thousands)

Cash from operations:
Revenue received:
Premiums, considerations
and deposits $ 374,448 $ 367,166 $ 341,994
Investment income 151,124 152,195 151,862
Management fee income from Separate Accounts 13,715 - -
Other income 482 916 468
- ---------------------------------------------------------------------------------------------------

Total revenue received 539,769 520,277 494,324
- ---------------------------------------------------------------------------------------------------

Benefits and expenses paid:
Claims, benefits and
net transfers 391,531 416,022 341,546
Expenses 82,334 82,078 75,160
Dividends to policyholders 278 622 1,381
Federal income taxes 18,038 11,541 15,398
- ---------------------------------------------------------------------------------------------------

Total benefits and expenses paid 492,181 510,263 433,485
- ---------------------------------------------------------------------------------------------------

Net cash from operations 47,588 10,014 60,839
- ---------------------------------------------------------------------------------------------------

Cash from investments:
From investments sold or matured:
Bonds 1,131,927 1,291,350 1,042,070
Common and preferred stock 748 - 1,554
Mortgage loans 5,034 4,799 32,981
Real estate and other 5,608 1,628 4,325
- ---------------------------------------------------------------------------------------------------

Total investment proceeds 1,143,317 1,297,777 1,080,930
Tax on capital gains (losses) 2,807 903 (176)
- ---------------------------------------------------------------------------------------------------

Total from investment proceeds 1,140,510 1,296,874 1,081,106
- ---------------------------------------------------------------------------------------------------

Cost of investments acquired:
Bonds 1,171,384 1,265,726 1,145,362
Mortgage loans 404 186 641
Real estate and other 26 1,301 562
- ---------------------------------------------------------------------------------------------------

Total investments acquired 1,171,814 1,267,213 1,146,565
Net increase in policy loans 5,387 4,918 3,824
- ---------------------------------------------------------------------------------------------------
Total from investments acquired 1,177,201 1,272,131 1,150,389

Net cash from investments (36,691) 24,743 (69,283)
- ---------------------------------------------------------------------------------------------------

11
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Statutory Statements of Cash Flow

Years ended December 31, 1998, 1997 and 1996

(In thousands)
- ---------------------------------------------------------------------------------------------------

1998 1997 1996
- ---------------------------------------------------------------------------------------------------

Cash from financing and miscellaneous:
Cash provided:
Securities lending 30,779 56,438 -
Other cash 3,053 8,743 10,261
- ---------------------------------------------------------------------------------------------------

Total cash provided 33,832 65,181 10,261
- ---------------------------------------------------------------------------------------------------

Cash applied:
Dividends to parent 18,100 16,000 16,000
Other applications 10,325 7,614 978
- ---------------------------------------------------------------------------------------------------

Total cash applied 28,425 23,614 16,978
- ---------------------------------------------------------------------------------------------------

Net cash from financing
and miscellaneous 5,407 41,567 (6,717)
- ---------------------------------------------------------------------------------------------------

Net change in cash and
short-term investments 16,304 76,324 (15,161)
Cash and short-term investments
at beginning of year 89,301 12,977 28,138
- ---------------------------------------------------------------------------------------------------

Cash and short-term investments
at end of year $105,605 $ 89,301 $ 12,977
- ---------------------------------------------------------------------------------------------------

See accompanying notes to statutory financial statements.

</TABLE>
12
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

December 31, 1998, 1997 and 1996

(In thousands)
- --------------------------------------------------------------------------------

(1) Significant Accounting Policies

Organization

Horace Mann Life Insurance Company (the Company) is a wholly owned
subsidiary of Allegiance Life Insurance Company (ALIC). The Company's
ultimate parent is Horace Mann Educators Corporation (HMEC).

The Company sells and underwrites tax-qualified retirement annuities,
individual life, group disability income, and group life insurance
products primarily to educators and other employees of public schools
and their families. In December 1996, the Company announced its
strategic decision to withdraw from the group medical insurance business
over the following two years. The Company terminated 95% of that
business by December 1997 and terminated the remaining group medical
insurance policies by September, 1998.

Basis of Presentation

The accompanying statutory financial statements have been prepared in
conformity with the accounting practices prescribed or permitted by the
Department of Insurance of the State of Illinois and the National
Association of Insurance Commissioners (NAIC), which differ materially
in some respects from generally accepted accounting principles as more
fully discussed in note 7. The significant statutory accounting
practices follow.

Prescribed and Permitted Statutory Accounting Practices

Prescribed statutory accounting practices include state laws,
regulations, and general administrative rules, as well as a variety of
publications of the NAIC. Permitted statutory accounting practices
encompass all accounting practices that are not prescribed; such
practices differ from state to state, may differ from company to company
within a state, and may change in the future. All statutory accounting
practices of the Company are prescribed.

In March 1998, the NAIC adopted the codification of Statutory Accounting
Principles (Codification) as the NAIC supported basis of accounting.
Codification will likely change the definitions of what comprises
prescribed versus permitted statutory accounting practices, and may
result in changes to the accounting policies that insurance enterprises
use to prepare their statutory financial statements. The implementation
date is ultimately dependent on an insurer's state of domicile and has
not yet been announced. The Company is currently evaluating the impact
of the Codification on their statutory financial statements.

(Continued)

13
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Investments

Investments are valued in accordance with the requirements of the NAIC.
Bonds are generally carried at amortized cost. Common stocks are carried
at market. Mortgage loans are carried at the unpaid principal balance
less unamortized discount and were issued at a value of no more than 75%
of the appraised value of the mortgaged property. No significant new
commercial mortgage loans have been issued since 1988. Real estate is
carried at the lower of fair market value or cost. Policy loans are
carried at the unpaid principal balance.

The Company does not have any investments in derivative financial
instruments.

Asset Valuation Reserve

The Asset Valuation Reserve (AVR) was calculated as prescribed and
required by the NAIC. This reserve is maintained for the purpose of
stabilizing surplus against the effects of fluctuations in the value of
certain bond, stock, mortgage loan and real estate investments. Changes
in the AVR reserve are charged or credited to surplus.

The balance of the AVR by component as of December 31, 1998 and 1997, is
as follows:
- --------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------

Bonds, preferred stock and
short-term investments $16,102 $15,141
Mortgage loans 2 485
Common stock 22 242
Real estate and other investments 27 616
- --------------------------------------------------------------------------------
Total AVR $16,153 $16,484
- --------------------------------------------------------------------------------

The AVR is held at a level equal to 96.2% of the maximum reserve level
allowed by the NAIC.

Interest Maintenance Reserve

The Interest Maintenance Reserve (IMR) was calculated as prescribed by the
NAIC. This reserve is designed to capture the realized capital gains and
losses which result from changes in the overall level of interest rates and
amortize them into income over the approximate remaining life of the
investment sold.

Cash and Short-Term Investments

Amounts represent cash and short-term securities having a maturity of 30
days or less. Short-term investments are carried at cost which approximates
market value.

(Continued)

14
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Variable Annuities Assets and Liabilities

Assets held in trust for purchasers of variable annuity contracts and the
related liabilities are included in the statutory statements of admitted
assets, liabilities and capital and surplus. Variable annuity assets,
carried at market value, and liabilities represent tax-qualified variable
annuity funds invested in the Horace Mann mutual funds.

During 1997 the Company introduced three new mutual funds - a small cap
growth fund, an international equity fund, and a "socially
responsible" fund.

Variable annuity assets were invested in the Horace Mann mutual funds as
follows:

- --------------------------------------------------------------------------------
December 31, 1998 1997

Horace Mann Growth Fund $ 605,803 $532,086
Horace Mann Balanced Fund 427,368 386,247
Horace Mann Socially Responsible Fund 35,368 9,117
Horace Mann Small Cap Growth Fund 28,629 16,321
Horace Mann Income Fund 13,952 9,651
Horace Mann International Equity Fund 10,290 5,137
Horace Mann Short-Term Fund 1,329 1,201
- --------------------------------------------------------------------------------
Total $1,122,739 $959,760
- --------------------------------------------------------------------------------

The investment income, gains and losses of these accounts accrue directly to
the policyholders and are not included in the operations of the Company.

Aggregate Reserves

Applicable state insurance laws require that the Company set up reserves in
accordance with statutory regulations, carried as liabilities to meet future
obligations under outstanding policies. These reserves are the amount that,
with the additional premiums to be received and interest thereon compounded
annually at certain rates, is calculated to be sufficient to meet the
various policy and contract obligations as they occur.

In 1997, the Company changed the basis of valuation for supplementary
contracts with life contingencies from guarantee of payments at issue to
guarantee of current payments. The change in valuation basis increased
supplementary contracts with life contingencies reserves and decreased
surplus by $2,020.

In 1996, with the approval of the Department of Insurance of the State of
Illinois, the Company changed its reserve methodology for deferred annuities
from full account value to Commissioners Annuity Reserve Valuation Method
(CARVM). The change in method of valuation decreased fixed reserves by
$11,361; decreased variable reserves by $4,799; and increased surplus
$12,560, net of $3,600 tax.

(Continued)

15
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Aggregate reserves for life policies, annuity contracts, and supplementary
contracts with life contingencies are based on statutory mortality tables
and interest assumptions using either the net level, or commissioners'
reserve valuation method or CARVM. The annuity reserves include the current
declared interest rates through the valuation date. The composition of these
liabilities at December 31 was as follows:

- --------------------------------------------------------------------------------
Aggregate reserves Mortality Interest
1998 1997 table rate
- --------------------------------------------------------------------------------

Life $ 410,557 $ 370,049 1980 CSO 4.0-7.0%
7,193 6,785 1958 CET 2.5-5.5
168,893 169,898 1958 CSO 2.5-4.5
28,202 28,556 Various 2.5-5.5
10,010 10,170 1941 CSO 2.5-3.0

Annuity 1,026,991 1,028,319 1971 IAM 3.0-5.5
108,707 118,586 1949 PAT 3.0-5.5
1,393 1,488 1937 SAT 3.0
5,048 4,318 Various 3.0

Supplementary
contracts with
life contingencies 81,790 75,662 1983a 6.5-11.0
5,269 5,832 1971 IAM 4.5-11.25
2,326 2,716 1937 SAT 3.5
- --------------------------------------------------------------------------------
Total $1,856,379 $1,822,379
- --------------------------------------------------------------------------------

Aggregate reserves for accident and health policies include the present
value of amounts not yet due on existing claims and unearned premiums at
December 31 as follows:

- --------------------------------------------------------------------------------
Aggregate reserves
1998 1997
- --------------------------------------------------------------------------------

Present value of amounts not yet
due on claims (3% interest rate) $16,223 $16,042
Additional contract reserves 1,087 1,163
Unearned premiums and other 309 292

- --------------------------------------------------------------------------------
Aggregate accident and health reserves $17,619 $17,497
- --------------------------------------------------------------------------------

(Continued)

16
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Unpaid Benefits

Unpaid benefits consists of case basis reserves and estimates of losses
incurred but not reported. Estimates for losses incurred but not
reported are based on prior experience modified for current trends.

Accident and health claim reserves and liabilities include the
following:
<TABLE>
<CAPTION>

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

1998 1997 1996

<S> <C> <C> <C>
Aggregate reserves for accident
and health $17,619 $17,497 $21,606
Unpaid benefits accident and health 1,227 4,521 7,453
Less: Reserve for rate credits - 29 (3,776)
Additional contract reserves (1,087) (1,163) (1,262)
Unearned premiums and other (309) (321) (532)
- ---------------------------------------------------------------------------------------------------

Accident and health claim reserves
and liabilities $17,450 $20,563 $23,489
- ---------------------------------------------------------------------------------------------------

The following table sets forth an analysis of accident and health claim
reserves and liabilities and provides a reconciliation of beginning and
ending reserves for the periods indicated.

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

1998 1997 1996
- ---------------------------------------------------------------------------------------------------

Net balance at January 1 $20,563 $23,489 $24,407

Incurred related to:
Current year 11,429 34,827 45,638
Prior years (1,392) 1,516 335
- ---------------------------------------------------------------------------------------------------

Total incurred 10,037 36,343 45,973
- ---------------------------------------------------------------------------------------------------

Paid related to:
Current year 6,981 27,591 34,556
Prior years 6,169 11,678 12,335
- ---------------------------------------------------------------------------------------------------
Total paid 13,150 39,269 46,891

- ---------------------------------------------------------------------------------------------------
Net balance at December 31 $17,450 $20,563 $23,489
- ---------------------------------------------------------------------------------------------------

</TABLE>

(Continued)

17
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

Reserves for Supplementary Contracts
Without Life Contingencies

This reserve represents the present value of future payments discounted
with interest only. At December 31, 1998 and 1997 this liability was
$111,816 and $107,606, respectively, based on average credited interest
rates of 5.7% in 1998 and 1997, and is included in "policyholder funds
on deposit."

Premiums

Life premiums are reflected as earned on the policy anniversary date.
Annuity and supplementary contract premiums are reflected as earned when
collected. Accident and health premiums are reported as revenue when due
and earned on a pro rata basis over the period covered by the policy.

Deferred life premiums represent modal premiums (other than annual) to
be billed in the year subsequent to the commencement of the policy year.
Uncollected premiums represent premiums due less accident and health
premiums over 90 days past due.

Management Fee Income from Separate Accounts

Effective beginning in 1998, the NAIC requires the reporting of
management fee income from separate account as a revenue rather than as
a reduction to annuity benefits in the statutory statements of
operations. Restatement of prior period financial statements to show
consistent presentation in earlier years is not permitted.

Income Taxes

Income taxes were provided based upon the calculation of income taxes
currently payable or benefits recoverable. The Company is included in
the consolidated federal income tax return of its ultimate parent, HMEC.

Acquisition Expenses

The cost of acquiring new business, principally commissions,
underwriting salaries, and related expenses, is charged to expense as
incurred.

Non-admitted Assets

Assets prescribed by the Illinois Insurance Code as "non-admitted"
(principally over 90-day accident and health due and unpaid premiums)
are charged to unassigned surplus.

Use of Estimates

The preparation of statutory financial statements requires management to
make estimates and assumptions that affect the reported financial
statements balances as well as the disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.

(Continued)

18
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

(2) Investments

Net Investment Income

The components of net investment income are as follows:
<TABLE>
<CAPTION>

<S> <C> <C> <C>
Interest on bonds $145,743 $148,451 $144,770
Interest on mortgage loans 4,310 5,601 6,359
Interest on short-term investments 1,698 1,591 1,502
Interest on policy loans 3,298 2,945 2,729
Real estate income 404 602 449
Miscellaneous investment income (17) 11 52
- ---------------------------------------------------------------------------------------------------

Gross investment income 155,436 159,201 155,861
Investment expenses 3,020 2,631 3,075
- ---------------------------------------------------------------------------------------------------

Net investment income $152,416 $156,570 $152,786
- ---------------------------------------------------------------------------------------------------

Realized Investment Gains (Losses) Net of Tax and Transfers to IMR

Realized investment gains and losses are determined on the basis of
specific identification. Realized investment gains on most fixed income
securities are transferred on an after tax basis to IMR and amortized
into income over the average remaining lives of the assets sold. Only
realized investment gains (losses) which result from changes in the
overall level of interest rates are transferred to IMR. These gains
(losses) are not included in net income in the year they occurred.

The IMR at December 31 is as follows:
- ---------------------------------------------------------------------------------------------------

1998 1997 1996
- ---------------------------------------------------------------------------------------------------

Reserve balance, beginning of year $15,331 $15,882 $17,622
Current year capital gains (losses),
net of tax 5,880 2,030 1,158
Amortization of interest maintenance
reserve (2,592) (2,581) (2,898)
- ---------------------------------------------------------------------------------------------------

Reserve balance, end of year $18,619 $15,331 $15,882
- ---------------------------------------------------------------------------------------------------

(Continued)

19
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Realized investment gains (losses) reported in the statutory statement
of operations net of tax and transfers to IMR are as follows:

Bonds $ 8,162 $ 3,092 $ 758
Real estate (2,551) (1,904) (1,804)
Common stock 747 (6) 992
Mortgage Loans (2,290) - -
Short-term investments - 31 -
Other (31) - -
- ---------------------------------------------------------------------------------------------------

4,037 1,213 (54)

Less federal income tax 1,413 424 (19)
Transferred to interest maintenance
reserve (5,880) (2,030) (1,158)
- ---------------------------------------------------------------------------------------------------

Realized investment losses
net of tax and transfers to IMR $(3,256) $(1,241) $(1,193)
- ---------------------------------------------------------------------------------------------------

Change in Net Unrealized Capital Losses

Certain investments are required to be carried at market. The resulting
change in the unrealized gains or losses are reflected as credits or
charges to unassigned surplus, as follows:
- ---------------------------------------------------------------------------------------------------

1998 1997 1996
- ---------------------------------------------------------------------------------------------------

Unrealized capital losses
Beginning of period $(2,001) $(4,707) $(5,857)
End of period 78 (2,001) (4,707)
- ---------------------------------------------------------------------------------------------------

Decrease for the period $ 2,079 $ 2,706 $ 1,150
- ---------------------------------------------------------------------------------------------------

</TABLE>

(Continued)

20
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Bonds

At December 31, 1998 and 1997, 4.9% and 5.5%, respectively, of the total
bond portfolio (at amortized cost) consisted of private placement bonds.
The market value of private placement bonds is estimated based upon
factors including credit quality, interest rates and maturity dates.

The carrying value and estimated market value of investments in bonds as
of December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>

- ---------------------------------------------------------------------------------------------------
Carrying Unrealized Unrealized Market
December 31, 1998 value gains losses value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and
agency obligations:
Mortgage-backed
securities $ 426,086 $13,778 $ (23) $ 439,841
Other 175,110 6,685 (244) 181,551
Municipal bonds 36,941 3,338 - 40,279
Foreign government bonds 21,829 2,827 (706) 23,950
Corporate bonds 1,011,087 48,555 (9,248) 1,050,394
Other mortgage-backed
securities 338,402 8,291 (1,074) 345,619
- ---------------------------------------------------------------------------------------------------

Total $2,009,455 $83,474 $(11,295) $2,081,634
- ---------------------------------------------------------------------------------------------------

Carrying Unrealized Unrealized Market
December 31, 1997 value gains losses value
- ---------------------------------------------------------------------------------------------------

U.S. government and
agency obligations:
Mortgage-backed
securities $ 426,533 $14,027 $ (215) $ 440,345
Other 200,223 4,849 (34) 205,038
Municipal bonds 27,118 2,137 - 29,255
Foreign government bonds 26,397 1,714 (442) 27,669
Corporate bonds 1,027,178 48,396 (2,113) 1,073,461
Other mortgage-backed
securities 250,801 5,455 (176) 256,080
- ---------------------------------------------------------------------------------------------------

Total $1,958,250 $76,578 $(2,980) $2,031,848
- ---------------------------------------------------------------------------------------------------

</TABLE>

(Continued)

21
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

At December 31, 1998, 2.8% of the Company's investment portfolio was
invested in collateralized mortgage obligations ("CMOs") excluding
mortgage obligations of United States governmental agencies. The average
credit quality rating of the Company's investment in CMOs was AAA and
NAIC 1 -the highest ratings. The market value of CMOs at December 31,
1998 was $134,845 compared to a $129,935 carrying value. The average
duration of the Company's investment in CMOs was 2.5 years at December
31, 1998.

The carrying value and estimated market value of bonds by contractual
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
- --------------------------------------------------------------------------------

Estimated
Carrying market
December 31, 1998 value value
- --------------------------------------------------------------------------------

Due in one year or less $ 161,403 $ 162,123
Due after one year through five years 529,669 539,002
Due after five years through ten years 584,396 603,504
Due after ten years 733,987 777,005
- --------------------------------------------------------------------------------

Total bonds $2,009,455 $2,081,634
- --------------------------------------------------------------------------------

Proceeds from sales of investments in bonds during 1998, 1997 and 1996
were $838,908, $1,102,340 and $887,663, respectively. Gross gains of
$10,194, $9,115 and $9,343 and gross losses of $4,977, $7,412 and $9,024
were realized on those sales for 1998, 1997 and 1996, respectively.

Deposits

The carrying value of securities on deposit with governmental
authorities, as required by law, as of December 31 were as follows:

- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------

Held for all policyholders $1,685 $1,685 $1,671
Held for policyholders in certain states 591 611 612
- --------------------------------------------------------------------------------
$2,276 $2,296 $2,283
- --------------------------------------------------------------------------------

Securities Lending

Beginning in 1997, the Company entered into a securities lending program
whereby fixed income securities are loaned to third parties, primarily
major brokerage firms. Fixed maturities with a fair value of $87,217 and
$56,438 were loaned as of December 31, 1998 and 1997 respectively.
Proceeds from securities lending program are held in short term
investments. At December 31, 1998 and 1997 the Company was in compliance
with agreements with custodian banks facilitating the lending program
that require a minimum of 100% of the value of the loaned securities to
be separately maintained as collateral for each loan.

(Continued)

22
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Investments in Entities Exceeding 10% of Capital and Surplus

The names of entities (other than the U.S. Government and government
agencies and authorities) in which the total amount invested exceeds 10%
of total capital and surplus at December 31, 1998 is as follows:
- --------------------------------------------------------------------------------
Standard & Poors Carrying
Bonds: rating: value
- --------------------------------------------------------------------------------
Associates Corp of North America A/AA- $26,067
DLJ Mortgage Acceptance AAA 24,372
Salomon Brothers A 21,011
First Union Corporation A/A- 20,084
Lehman Brothers Holdings A 18,972
Mellon Financial A+/A- 18,774
Time Warner Entertainment BBB 17,261
- --------------------------------------------------------------------------------

(3) Related Party Transactions

The Company has common management and shares office facilities with
HMEC and other affiliates and is a party to several intercompany
service agreements. Under these agreements, the Company paid $78,326,
$76,826, and $71,098 for management, administrative, data processing,
commissions and agency services, utilization of personnel, and
investment advisory services in 1998, 1997 and 1996, respectively.

The Company had balances payable to affiliates of $1,663 and $1,693
at December 31, 1998 and 1997, respectively included in "accrued
expenses" and "other liabilities" in the statutory statements of
admitted assets, liabilities and capital and surplus. Also, the
Company had balances receivable from affiliates of $888 at December
31, 1998, which were included in "other assets". Balances payable to
parent, separately reported in the financial statement, was $5,810 at
December 31, 1997.

ALIC reinsures all of the Company's life insurance business in the
state of Arizona. In 1998, with the approval of the Illinois
Department of Insurance the Company entered into an assumptive
reinsurance agreement with ALIC whereby the Company assumed all life
insurance policies written by ALIC (See Note 8).

(Continued)

23
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

(4) Federal Income Taxes

The Company is included in the consolidated federal income tax return
of its parent, ALIC and its ultimate parent, HMEC and its
subsidiaries. Tax sharing agreements between the Company and HMEC, as
approved by the Board of Directors of the Company, provides that tax
on operating income is charged to the Company as if it were filing a
separate federal income tax return. The Company receives the benefits
of any losses or tax credits to the extent utilized in the
consolidated return. Intercompany tax balances are settled quarterly
with a subsequent final annual settlement.

Deferred income taxes are not provided on temporary differences
between financial statement and tax bases of assets and liabilities.

The following is a reconciliation of federal income tax expense on
income from operations with income tax computed by applying the
federal corporate rate of 35% for 1998, 1997 and 1996:
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------

"Expected" federal income tax expense
on reported income from operations $14,209 $11,491 $12,126

Add (deduct) tax effects of:
Reserve adjustments 2,971 (1,853) 3,920
Policy acquisition costs 753 707 677
Other, net (145) 204 417
- --------------------------------------------------------------------------------
Federal income tax expense $17,788 $10,549 $17,140
- --------------------------------------------------------------------------------

(Continued)

24
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

(5) Restrictions of Surplus

The amount of dividends which can be paid by Illinois insurance
companies without prior approval of the State Insurance Commissioner is
subject to restrictions relating to profitability and statutory surplus.
Dividends which may be paid by the Company during 1999 without prior
approval are approximately $19,500. Dividend payments were $18,100,
$16,000 and $16,000 in 1998, 1997 and 1996, respectively.

The Company is required by the Maryland Insurance Department to provide
a minimum reserve of $625 for guaranteed minimum death benefits under
variable annuity contracts issued by the Company.

Under applicable Illinois insurance laws and regulations, the Company is
required to maintain a minimum capital and surplus of $1,500.

(6) Fair Value of Financial Instruments

Generally accepted accounting principles require that the Company
disclose estimated fair values for certain financial instruments. The
following methods and assumptions were used to estimate the fair value
of financial instruments.

Investments - For fixed maturities and short-term investments, fair
value equals quoted market price, if available. If a quoted market price
is not available, fair value is estimated using quoted market prices for
similar securities, adjusted for differences between the quoted
securities and the securities being valued. The fair value of mortgage
loans is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with
similar credit ratings and the same remaining maturities. The fair value
of policy loans is based on estimates using discounted cash flow
analysis and current interest rates being offered for new loans. The
carrying value of real estate is an estimate of fair value based on
discounted cash flow from operations.

(Continued)

25
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Annuity Contract Liabilities and Policyholder Account Balances on
Interest-sensitive Life Contracts - The fair values of annuity contract
liabilities and policyholder account balances on interest-sensitive life
contracts are equal to the discounted estimated future cash flows (using
the Company's current interest rates earned on its investments)
including an adjustment for risk that the timing or amount of cash flows
will vary from management's estimate.

Other Policyholder Funds - Other policyholder funds are supplementary
contract reserves and dividend accumulations which represent deposits
that do not have defined maturities. The carrying value of these funds
is used as a reasonable estimate of fair value.

The carrying amounts and fair values of financial instruments at
December 31, 1998 consisted of the following:
- --------------------------------------------------------------------------------
Carrying Fair
amount value
- --------------------------------------------------------------------------------

Financial Assets
Bonds $2,009,455 $2,081,634
Mortgage loans 38,429 39,833
Real estate 173 173
Short-term investments 101,439 101,439
Policy loans and other 54,175 54,732
- --------------------------------------------------------------------------------

Total investments $2,203,671 $2,277,811
Asset valuation reserve 16,153 -
- --------------------------------------------------------------------------------

Total investments less asset
valuation reserve $2,187,518 $2,277,811
Cash 4,166 4,166
- --------------------------------------------------------------------------------

Financial Liabilities
Policyholder account
balances on interest-sensitive
life contracts $ 91,719 $ 89,576
Annuity contract liabilities 1,231,524 1,142,859
Other policyholder funds 116,186 116,186
- --------------------------------------------------------------------------------

Fair value estimates shown above are dependent upon subjective
assumptions and involve significant uncertainties resulting in
variability in estimates with changes in assumptions. Fair value
assumptions are based upon subjective estimates of market conditions and
perceived risks of financial instruments at a certain point in time. The
disclosed fair values do not reflect any premium or discount that could
result from offering for sale at one time an entire holding of a
particular financial instrument. In addition, potential taxes and other
expenses that would be incurred in an actual sale or settlement are not
reflected in amounts disclosed.

(Continued)

26
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

(7) Differences Between Generally Accepted Accounting
Principles and Statutory Accounting Practices

Statutory accounting practices differ in some respects from generally
accepted accounting principles. Under generally accepted accounting
principles, the following applies:

(a) Aggregate reserves for future life benefits are computed on the
net level premium method using estimates of future investment
yield, mortality, and withdrawal.

(b) Aggregate reserve for annuity contracts are carried at
accumulated policyholder values without reduction for potential
surrender or withdrawal charges.

(C) Policyholder dividends, based on dividend scales in effect at the
time the policies were issued, are accrued ratably over the
premium paying period of the policies.

(d) Life premiums are reflected as earned when due. Annuity
considerations and other fund deposits are reflected as deposits
rather than revenue.

(e) Acquisition costs are deferred and amortized generally over the
premium paying period for individual life contracts and the
estimated contract life for interest-sensitive life and
investment contracts.

(f) Deferred income taxes are provided on all significant temporary
differences between values of assets and liabilities for book and
tax reporting purposes.

(g) Non-admitted assets less applicable allowance accounts are
restored to the balance sheet.

(h) Asset valuation and interest maintenance reserves are not
provided.

(I) The assets and liabilities are revalued as of the date of
acquisition of HMEC and its subsidiaries in August, 1989.

(j) Realized investment gains (losses) resulting from changes in
interest rates are recognized in income when the related security
is sold.

(k) Reinsurance ceded credits are recognized as assets in GAAP basis
financial statements.

(l) Fixed maturity investments (bonds) are categorized as available
for sale. Such investments are carried at market with changes in
market value charged or credited to unassigned surplus, net of
deferred income taxes.

The aggregate effect of the foregoing differences has not been determined
separately for the Company.

(Continued)

27
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

(8) Reinsurance

Information with respect to reinsurance ceded and assumed by the Company
is set forth below.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
1998 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Life insurance premiums ceded:
To ALIC $1,170 $1,147 $1,057
To other companies 1,331 1,066 924
Life insurance reserves ceded:
To ALIC 7,495 6,933 6,375
To other companies 2,220 1,983 1,436
Life insurance premiums assumed:
From ALIC 790 - -
From other companies - - 1
Group accident and health premiums ceded:
To other companies 709 1,228 1,587
Individual accident and health premiums assumed:
From ALIC 6 - -
Amounts recoverable from reinsurers
on paid losses 70 197 482
- ------------------------------------------------------------------------------------------------------
</TABLE>

The maximum amount of direct ordinary insurance retained on any standard
life is $200. Amounts in excess of $200 are ceded on a yearly renewable
term basis of reinsurance. The Company reinsures on a treaty basis for
each accident and health claim up to $1 million over a prescribed
retention amount. Although reinsurance agreements transfer risk for
amounts over a certain retention limit, the Company has not relieved its
primary obligation to the policyholders. For the years ended December
31, 1998, 1997 and 1996, the accident and health retention amount was
$300 each year.

(9) Pension Plans and Other Postretirement Benefits

The Company is a member of the Horace Mann group of insurance companies.
All the Company's personnel are employees of Horace Mann Service
Corporation ("HMSC"), an affiliated company. Salaries, pension and
related benefits are allocated to the Company for these services.

Pension Plans

All employees are covered under a defined benefit plan and a defined
contribution plan, and certain employees participate in supplemental
retirement plans.

Benefits under the defined benefit and supplemental retirement plans are
based on employees' years of service and compensation for the highest 36
consecutive months of earnings under the plan. Under the defined
contribution plan, contributions are made to employees' accounts based
on a percentage of compensation that is determined by employees' years
of service. Retirement benefits to employees are paid first from their
accumulated accounts under the defined contribution plan with the
balance funded by the defined benefit and supplemental retirement plans.

(Continued)

28
<PAGE>

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)
- --------------------------------------------------------------------------------

Employees are also eligible to participate in the Supplemental
Retirement and Savings Plan, a 401(k) plan, and may generally contribute
up to 10% of eligible compensation on a before tax basis. The employer
contributes an amount equal to 50% of the first 6% of eligible
compensation contributed each month by participating employees.

Total allocated pension expense was $3,997, $3,934 and $3,642 for 1998,
1997 and 1996, respectively.

Postemployment Benefits

In addition to providing pension benefits, HMSC also provides certain
health care and life insurance benefits to retired employees and
eligible dependents. Employees with ten years of service are eligible to
receive these benefits upon retirement. The allocated cost of these
benefits totaled $993, $803, and $647 for the years ended December 31,
1998, 1997, and 1996, respectively.

(10) Risk-Based Capital

The insurance departments of various states, including the Company's
domiciliary state of Illinois impose risk-based capital (RBC)
requirements on insurance enterprises. The RBC calculation serves as a
benchmark for the regulation of life insurance companies by state
insurance regulators. The requirements apply various weighted factors to
financial balances or activity levels based on their perceived degree of
risk.

The RBC guidelines define specific capital levels where regulatory
intervention is required based on the ratio of the Company's actual
total adjusted capital (sum of capital and surplus and AVR) to control
levels determined by the RBC formula. At December 31, 1998, the
Company's actual total adjusted capital was $185,380 and the authorized
control level risk-based capital was $26,151.

29
<PAGE>

Schedule I

HORACE MANN LIFE INSURANCE COMPANY
SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>

Amount
shown in
Balance
Type of investments Cost(1) Market Value Sheet
<S> <C> <C> <C>
Debt securities:
Bonds:
U.S. Government and government
agencies and authorities $ 601,196 $ 621,392 $ 601,196
State, municipalities and
political subdivisions 36,941 40,279 36,941
Foreign government bonds 21,829 23,950 21,829
Public utilities 4,659 5,231 4,659
Other corporate bonds 1,344,830 1,390,782 1,344,830
---------- ---------- ----------

Total debt securities $2,009,455 $2,081,634 $2,009,455
========== ========== ==========

Equity securities:

Common stocks:
Industrial and miscellaneous - 78 78
---------- -------- ---------

Total equity securities - $ 78 78
---------- ========= ---------

Mortgage loans on real estate 38,429 XXX 38,429
Real estate 173 XXX 173
Policy loans 54,027 XXX 54,027
Short-term investments 101,439 XXX 101,439
Other investments 70 XXX 70
--------- ----------

Total investments $2,203,593 XXX $2,203,671
========== ==========
</TABLE>

(1)Debt securities are carried at amortized cost or investment values prescribed
by the National Association of Insurance Commissioners. (2) Real estate acquired
in satisfaction of indebtedness is $0. (3)Differences between cost and amounts
shown in the balance sheet for investments, other than equity securities,
represent non-admitted investments.

See accompanying independent auditors' report

30
<PAGE>
Schedule III

HORACE MANN LIFE INSURANCE COMPANY
SUPPLEMENTARY INSURANCE INFORMATION
For the years ended December 31, 1998, 1997 and 1996
(Amounts in thousands)

As of December 31,
Future policy Premium revenue
Deferred benefits Other policy and annuity,
policy losses, claims claims and pension and
acquisition and loss Unearned benefits other contract
Segment cost(1) expenses(3) premiums(3) payable considerations

1998:
<S> <C> <C> <C>
Life $ 629,924 $ 4,179 $107,863
Annuity 1,143,472 80 223,325
Supplementary
Contracts 89,805 111,816 32,832
Accident and
Health 18,846 17 12,108
-------- ---------- -------- -------- ------

Total $1,882,047 $116,092 $376,128
======== ========== ======== ======== ========

1997:
Life $ 590,132 $ 4,338 $104,684
Annuity 1,153,739 100 199,189
Supplementary
Contracts 84,670 107,606 30,455
Accident and
Health 22,018 33 32,395
-------- ---------- -------- -------- -------

Total $1,850,559 $112,077 $366,723
======== ========== ======== ======== ========

1996:
Life $ 551,328 $ 5,656 $101,618
Annuity 1,197,563 103 166,870
Supplementary
Contracts 77,954 102,681 26,655
Accident and
Health 29,059 97 50,258
-------- ---------- -------- -------- --------

Total $1,855,904 $108,537 $345,401
======== ========== ======== ======== ========

</TABLE>

For the years ended December 31,
Amortization
Benefits, of deferred
Net claims, losses policy Other
investment and settlement acquisition operating Premiums
Segment income expenses costs(1) expenses written(2)

1998:
<S> <C> <C> <C> <C> <C>
Life $ 42,918 $ 89,651 $ 45,279
Annuity 93,681 281,411 24,653
Supplementary
Contracts 13,999 45,097 1,470
Accident and
Health 1,818 9,978 7,241
-------- ------ -------- ------ -------

Total $152,416 $426,137 $78,643
======== ======== ======== ======= =======

1997:
Life $ 41,237 $ 86,110 $ 48,476
Annuity 100,663 251,455 22,556
Supplementary
Contracts 12,464 42,098 725
Accident and
Health 2,206 32,228 10,849
-------- ------- -------- ------- -------

Total $156,570 $411,891 $82,606
======== ======== ======== ======= =======

1996:
Life $ 38,695 $ 85,758 $ 44,202
Annuity 99,235 220,833 18,062
Supplementary
Contracts 12,256 37,687 620
Accident and
Health 2,600 45,998 12,413
-------- -------- -------- ------- -------

Total $152,786 $390,276 $75,297
======== ======== ======== ======= =======

</TABLE>

(1) Does not apply to financial statements of life insurance companies which are
prepared on a statutory basis.

(2) Does not apply to life insurance.

(3) Unearned premiums and other deposit funds are included in future policy
benefits, losses, claims and loss expenses.

See accompanying independent auditors' report

31
<PAGE>
Schedule IV

HORACE MANN LIFE INSURANCE COMPANY
REINSURANCE
For the years ended December 31, 1998, 1997 and 1996
(Amounts in thousands)

Percentage
Ceded to Assumed of amount
Gross other from other Net assumed
amount companies assumed amount To net

<S> <C> <C> <C> <C> <C>
1998: Life insurance in force $11,796,537 $762,100 $ 2,076 $11,036,513 0.0%
=========== ======== ======== =========== ====

Premiums and annuity,
pension and other contract
considerations:
Life insurance $ 109,574 $ 2,501 $ 790 $ 107,863 0.0%
Annuity 223,325 - - 223,325 0.0%
Supplementary contracts 32,832 - - 32,832
Accident and health 12,811 709 6 12,108 0.0%
----------- -------- -------- ----------- ----

Total premiums $ 378,542 $ 3,210 $ 796 $ 376,128 0.0%
=========== ======== ======== =========== ====

1997: Life insurance in force $11,287,605 $528,096 $ - $10,759,509 0.0%
=========== ======== ======== =========== ====

Premiums and annuity,
pension and other
contract considerations:
Life insurance $ 106,897 $ 2,213 $ - $ 104,684 0.0%
Annuity 199,189 - - 199,189 0.0%
Supplementary contracts 30,455 - - 30,455
Accident and health 33,623 1,228 - 32,395 0.0%
----------- -------- -------- ----------- ----

Total premiums $ 370,164 $ 3,441 $ - $ 366,723 0.0%
=========== ======== ======== =========== ====

1996: Life insurance in force $10,736,338 $418,521 $ - $10,317,817 0.0%
=========== ======== ======== =========== ====

Premiums and annuity,
pension and other
contract considerations:
Life insurance $ 103,598 $ 1,980 $ - $ 101,618 0.0%
Annuity 166,870 - - 166,870 0.0%
Supplementary contracts 26,655 - - 26,655
Accident and health 51,845 1,587 - 50,258 0.0%
----------- -------- -------- ----------- ----

Total premiums $ 348,968 $ 3,567 $ - $ 345,401 0.0%
=========== ======== ======== =========== ====

</TABLE>

See accompanying independent auditors' report

32
<PAGE>

PART C

OTHER INFORMATION

HORACE MANN LIFE INSURANCE COMPANY SEPARATE ACCOUNT

Item 24. Financial Statements and Exhibits
- - -------------------------------------------

(a) Financial Statements
-------------------------

Part A
Condensed financial information of the Account
Part B

Financial statements of the Account:
the Annual Report for the
Registrant, filed March 8, 1999 is incorporated by reference
into this Post-Effective Amendment #65
-Report of Independent Auditors
-Statements of Net Assets - December 31, 1998
-Statements of Operations - For the Year Ended December 31, 1998

-Statements of Changes in Net Assets For the Year Ended December
31, 1998
-Statements of Changes in Net Assets For the Year Ended December
31, 1997
-Notes to Financial Statements - December 31, 1998
Financial statements for Horace Mann Life Insurance Company
-Report of Independent Auditors
-Statutory Statements of Admitted Assets, Liabilities
and Capital and Surplus - As of December 31, 1998 and
1997
-Statutory Statements of Operations - For the Years Ended
December 31, 1998, 1997 and 1996
-Statutory Statements of Capital and Surplus - For the
Years Ended December 31, 1998, 1997 and 1996
-Statutory Statements of Cash Flow - For the Years
Ended December 31, 1998, 1997 and 1996
-Notes to Statutory Financial Statements - December 31,
1998, 1997 and 1996

(b) Exhibits
-------------------------

( 1) Resolution of Board of Directors........... Post Effective Amendment 63
( 2) Agreements for custody.................................. Not Applicable
( 3) Underwriting Agreement..................... Post Effective Amendment 63
( 4) Form of Variable Annuity Contract....................... Filed herewith
( 5) Form of application.........................Post Effective Amentment 63
( 6) Certificate of incorporation and bylaws..Initial Registration Statement
( 7) Contract of Reinsurance................................. Not Applicable
( 8) Other Contracts......................................... Not Applicable
( 9) Opinion and Consent of Counsel.......................... Not Applicable
(10) Consent of Independent Auditors......................... Filed herewith
(11) Financial Statement Schedules for Horace Mann Life
Insurance Company and the Independent Auditors' Report
thereon..................................................Filed herewith
(12) Agreement regarding initial capital......Initial Registration Statement
(13) Performance Quotation Computations........ Post-Effective Amendment #57
(14) Power of Attorney....................................... Not Applicable
(15) Horace Mann Educators Corporation
and its Subsidiaries...................... Post-Effective Amendment #57
(16) Financial Data Schedule................................. Filed Herewith

C-1

<PAGE>

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

The directors and officers of Horace Mann Life Insurance Company, who are
engaged directly or indirectly in activities relating to the registrant or the
variable annuity contracts offered by the registrant, are listed below. Their
principal business address is One Horace Mann Plaza, Springfield, Illinois
62715.

Name Position & Office with Depositor
- - ---- --------------------------------

Larry K. Becker Director and Executive Vice President,
Chief Financial Officer

Ann M. Caparros Director, Vice President, General Counsel &
Corporate Secretary

Valerie A. Chrisman Director and Senior Vice President

Paul J. Kardos Director and President & Chief Executive Officer

Michael R. Vignola Senior Vice President

George J. Zock Director and Executive Vice President

A. Thomas Arisman Senior Vice President

Roger W. Fisher Senior Vice President

Bret A. Conklin Vice President & Controller

J. Michael Henderson Vice President & Treasurer

John H. Leitermann Vice President & Life Actuary

William J. Kelly Vice President

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

The Registrant is a separate account of Horace Mann Life Insurance Company.
Horace Mann Life Insurance Company is a wholly owned subsidiary of Allegiance
Life Insurance Company. Allegiance Life Insurance Company and Horace Mann
Investors, Inc., principal underwriter of the Registrant, are wholly-owned
subsidiaries of Horace Mann Educators Corporation, a publicly held corporation.
See Exhibit No. 15.

Item 27. Number of Contract Owners
- - -----------------------------------

As of March, 1999, the number of Contract Owners of Horace Mann Life
Insurance Company Separate Account was 66,828 of which 63,024 were qualified
Contract Owners and 3,804 were non-qualified Contract Owners.

C-2

<PAGE>

Item 28. Indemnification
- - -------------------------

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

Item 29. Principal Underwriters
- - --------------------------------

Horace Mann Investors, Inc., the underwriter of Horace Mann Life Insurance
Company Separate Account, acts as principal underwriter for Horace Mann Life
Insurance Company Separate Account B and Horace Mann Life Insurance Company
Allegiance Separate Account A.

The following are the directors and officers of Horace Mann Investors, Inc.
Their principal business address is One Horace Mann Plaza, Springfield, Illinois
62715.

Name Position with Underwriter
- - ---- -------------------------

A. Thomas Arisman Director and President

Larry K. Becker Director

George J. Zock Director

Ann M. Caparros Secretary

Roger W. Fisher Controller

William J. Kelly Treasurer and Broker/dealer Compliance
Officer

Diane M. Barnett Tax Compliance Officer

Richard D. Wilson Marketing Officer

The following is a listing of the commissions and other compensation
received by the principal underwriter from the Registrant during the fiscal year
ended December 31, 1998:

Net Underwriting Compensation on
Name of Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation
- - ----------------- ------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Horace Mann $7,465,597 N/A N/A N/A
Investors, Inc.
</TABLE>

C-3

<PAGE>

Item 30. Location of Accounts and Records
- - -------------------------------------------

Horace Mann Investors, Inc., underwriter of the Registrant, is located at
One Horace Mann Plaza, Springfield, Illinois 62715. It maintains those accounts
and records associated with its duties as underwriter required to be maintained
pursuant to Section 31(a) of the Investment Company Act and the rules
promulgated thereunder.

Horace Mann Life Insurance Company, the depositor, is located at One Horace Mann
Plaza, Springfield, Illinois 62715. It maintains those accounts and records
required to be maintained pursuant to Section 31(a) of the Investment Company
Act of 1940 and the rules promulgated thereunder that are not maintained by
Horace Mann Investors, Inc.

Item 31. Management Services
- - -----------------------------

Not applicable.

Item 32. Undertakings
- - ----------------------

(a) Registrant undertakes to file a Post-Effective Amendment to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under variable annuity Contracts may be accepted.

(b) Registrant undertakes to include a written communication in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.

(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form N-4 promptly upon written or oral request.

(d) Horace Mann Life Insurance Company and the Registrant are relying on a
no-action letter from the Securities and Exchange Commission that was issued to
the American Council of Life Insurance and made publicly available on November
28, 1988. That letter outlines conditions that must be met if a company offering
registered annuity contracts imposes the limitations on surrenders and
withdrawals on section 403(b) contracts as required by the Internal Revenue
Code. Horace Mann Life Insurance Company and the Registrant are in compliance
with the conditions of that no-action letter.

(e) Horace Mann Life Insurance Company represents that the fees and charges
deducted under the Variable Annuity Contract in the aggregrate are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the insurance company.

C-4

<PAGE>

INDEX TO EXHIBITS
-----------------
Exhibit
Number Title
- -------- -----

( 1) Resolution of Board of Directors............Post Effective Amendment 63
( 2) Agreements for custody.................................. Not Applicable
( 3) Underwriting Agreement......................Post Effective Amendment 63
( 4) Form of Variable Annuity Contract........................Filed herewith
( 5) Form of application.........................Post Effective Amendment 63
( 6) Certificate of incorporation and bylaws..Initial Registration Statement
( 7) Contract of Reinsurance..................................Not Applicable
( 8) Other Contracts..........................................Not Applicable
( 9) Opinion and Consent of Counsel...........................Not Applicable
(10) Consent of Independent Auditors..........................Filed herewith
(11) Financial Statement Schedules for Horace Mann Life
Insurance Company and the Independent Auditors' Report
thereon.................................................Filed herewith
(12) Agreement regarding initial capital......Initial Registration Statement
(13) Performance Quotation Computations.........Post-Effective Amendment #57
(14) Power of Attorney........................................Not Applicable
(15) Horace Mann Educators Corporation
and its Subsidiaries......................Post-Effective Amendment #57
(16) Financial Data Schedule..................................Filed Herewith

C-5

<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned,thereto duly authorized in the City of Springfield
and State of Illinois, on this 27th day of April, 1999.
HORACE MANN INSURANCE COMPANY SEPARATE ACCOUNT

By: Horace Mann Life Insurance Company
-----------------------------------
(Depositor)

Attest: s/ANN M. CAPARROS By: s/PAUL J. KARDOS
--------------------------- ----------------------------
Ann M. Caparros Paul J. Kardos, President and Chief
Corporate Secretary Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.

SIGNATURE TITLE DATE
--------- ----- ----

s/PAUL J. KARDOS Director, President and April 27, 1999
- - ---------------------- --------------
Paul J. Kardos Chief Executive Officer

Director, Executive Vice
s/LARRY K. BECKER President and Chief April 27, 1999
- - ---------------------- --------------
Larry K. Becker Financial Officer

Director, Vice President,
s/ANN M. CAPARROS General Counsel and April 27, 1999
- - ---------------------- --------------
Ann M. Caparros Corporate Secretary

s/ VALERIE A. CHRISMAN Director, April 27, 1999
- - ---------------------- Senior Vice President --------------
Valerie A. Chrisman

s/ROGER W. FISHER Senior Vice President April 27, 1999
- - ---------------------- --------------
Roger W. Fisher Officer

C-6

<PAGE>

SIGNATURE TITLE DATE
--------- ----- ----

/s/ GEORGE J. ZOCK Director and Executive April 27, 1999
- - ---------------------- Vice President --------------
George J. Zock

/s/ THOMAS A. ARISMAN Senior Vice President April 27, 1999
- - ---------------------- --------------
Thomas A. Arisman

C-7

HOME OFFICE: 1 Horace Mann Plaza
Springfield, Illinois 62715-0001
1-800-999-1030

MAILING ADDRESS: P. O. Box 4657
Springfield, IL 62708-4657

INDIVIDUAL FLEXIBLE PREMIUM DEFERRED
FIXED AND VARIABLE RETIREMENT ANNUITY CONTRACT

NONPARTICIPATING - DIVIDENDS NOT PAID
ANY PAYMENTS AND VALUES UNDER THIS CONTRACT WHICH ARE BASED ON INVESTMENT
RESULTS OF THE SEPARATE ACCOUNT ARE VARIABLE AND NOT GUARANTEED.

We agree to provide the benefits described in this contract. Signed for the
Company at Springfield, Illinois, as of the Contract Date.

President Countersigned Corporate Secretary

RIGHT TO CANCEL - YOU MAY CANCEL THIS CONTRACT BY DELIVERING OR MAILING A
WRITTEN NOTICE TO US OR TO THE AGENT FROM WHOM YOU PURCHASED IT WITHIN 30 DAYS
AFTER IT IS DELIVERED TO YOU. WE WILL REFUND ALL PURCHASE PAYMENTS MADE TO THE
FIXED ACCOUNT AND THE VARIABLE ACCOUNT VALUE WITHIN 10 DAYS AFTER WE RECEIVE
NOTICE OF CANCELLATION AND THE RETURNED CONTRACT. ANY APPLICABLE PREMIUM TAX
WILL BE DEDUCTED FROM THE PURCHASE PAYMENTS. UPON RETURN OF THE CONTRACT, IT
SHALL BE VOID AS IF NONE HAD BEEN ISSUED.

IC-429000
<PAGE>

This is a legal contract between the contract Owner and your insurance company.

This page provides a brief outline of some of the important features of your
contract. It is not part of the insurance contract. Only the actual contract
provisions will control. The contract sets forth in detail the rights and
obligations of both you and your insurance company. It is IMPORTANT THAT YOU
READ YOUR CONTRACT CAREFULLY.

This Individual Flexible Premium Deferred Fixed and Variable Retirement
Annuity Contract provides for accumulation of value for income payments. Key
contract fees, charges and guaranteed rates are shown on your Contract
Data pages.

TABLE OF CONTENTS PAGE
Section 1. Contract Data..................................................2
Section 2. Fixed Account table of guaranteed values.......................3
Section 3. Definitions of certain terms ..................................4
Section 4. General provisions.............................................6
Section 5. Ownership and beneficiary provisions...........................6
Section 6. Payments to the Company........................................7
Section 7. Death benefit..................................................8
Section 8. The Fixed Account..............................................8
Section 9. The Variable Account...........................................9
Section 10. Withdrawal and surrender provisions..........................10
Section 11. Annuity income options.......................................11
Section 12. Annuity income option tables.................................16
Additional benefit provisions or restrictions, if any, and a copy of the
application follow the annuity income option tables.

<PAGE>

HOME OFFICE: 1 Horace Mann Plaza
Springfield, Illinois 62715-0001
1-800-999-1030

MAILING ADDRESS: P.O. Box 4657
Springfield, IL 62708-4657

INDIVIDUAL FLEXIBLE PREMIUM DEFERRED
FIXED AND VARIABLE RETIREMENT ANNUITY CONTRACT
NONPARTICIPATING - DIVIDENDS NOT PAID
ANY PAYMENTS AND VALUES UNDER THIS CONTRACT WHICH ARE BASED ON INVESTMENT
RESULTS OF THE SEPARATE ACCOUNT ARE VARIABLE AND NOT GUARANTEED.

<PAGE>

SECTION 1 - CONTRACT DATA

<S> <C>

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]
CONTRACT DATE: [05/01/1999]
MATURITY DATE: [05/01/2034]
SCHEDULED UPDATE: [05/01/2004]
INVESTMENT PERIOD: [05]
AGE AT ISSUE: [05]
SEX: [MALE]

OWNER: [JOHN DOE]

INCOME PAYMENTS: INCOME PAYMENTS
WILL BEGIN ON THE MATURITY
DATE IF THE ANNUITANT IS THEN
LIVING. THESE INCOME PAYMENTS
ARE DETERMINED BY APPLYING
THE TOTAL ACCUMULATION VALUE
OF THE CONTRACT IN ACCORDANCE
WITH THE CONTRACT PROVISIONS.
THE FACTORS IN SECTION 12 ARE
GUARANTEED THROUGH THE
MATURITY DATE.

PURCHASE PAYMENT(S):

MINIMUM INITIAL DEPOSIT: $50,000.00

INITIAL PAYMENT $[ 50,000.00]. SEE APPLICATION FOR DETAILS OF ALLOCATIONS.

SUBSEQUENT PAYMENT(S) $[ 2,400.00] PER
YEAR, PAYABLE IN [12]
INSTALLMENT(S), TO BE
ALLOCATED AS FOLLOWS:

FIXED ACCOUNT: [100.00]%

VARIABLE ACCOUNT:
HM BALANCED FUND [ 0.00]%
HM INCOME FUND [ 0.00]%
HM SHORT-TERM INVESTMENT FUND [ 0.00]%
HM GROWTH FUND [ 0.00]%
HM SOCIALLY RESPONSIBLE FUND [ 0.00]%
HM INTERNATIONAL EQUITY FUND [ 0.00]%
HM SMALL CAP GROWTH FUND [ 0.00]%
TOTAL 100.00%

GUARANTEED INTEREST RATE:
FIXED ACCOUNT: 3.25% PER YEAR PRIOR TO THE START OF INCOME PAYMENTS.
VARIABLE ACCOUNT: NONE.

SURRENDER CHARGE RATES: FIXED ACCOUNT AND VARIABLE ACCOUNT:
DURING CONTRACT YEAR % CHARGED
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
THEREAFTER 0%

SECTION 1 (CONTINUED) - CONTRACT DATA

<S> <C>

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]

ANNUAL MORTALITY RISK AND EXPENSE RISK FEE:

FIXED ACCOUNT: NONE.

VARIABLE ACCOUNT: 1.15% PER YEAR.

GUARANTEED ANNUITY INCOME OPTION RATE:

FIXED INCOME OPTIONS: 3.0% PER YEAR

VARIABLE INCOME OPTIONS: NONE.

INVESTMENT MULTIPLIER: .996617

DEATH BENEFIT: THE BENEFICIARY WILL RECEIVE THE GREATER OF:
1) TOTAL ACCUMULATION VALUE LESS ANY APPLICABLE PREMIUM TAX; OR
2) THE SUM OF ALL PURCHASE PAYMENTS LESS ANY PARTIAL WITHDRAWALS; OR
3) PURCHASE PAYMENTS LESS ANY APPLICABLE PREMIUM TAX, OUTSTANDING LOAN
BALANCES AND/OR WITHDRAWALS, INCREASED BY 3% IF THE DEATH OCCURS PRIOR
TO THE MATURITY DATE OR AGE 70, WHICHEVER IS EARLIER.
SEE SECTION 7 OF THE CONTRACT FOR COMPLETE DETAILS.

SECTION 2 - FIXED ACCOUNT'S TABLE OF GUARANTEED MONTHLY INCOME AT MATURITY AND
MINIMUM ACCUMULATION AND SURRENDER VALUES*

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]

CONTRACT MINIMUM MINIMUM GUARANTEED
ANNIVERSARY ATTAINED GUARANTEED GUARANTEED MONTHLY INCOME
DATE AGE ACCUM VALUE SURRENDER VALUE AT MATURITY

1 [56] $ [ 54,067.04] $ [ 50,823.02]
2 [57] $ [ 58,266.26] $ [ 55,352.95]
3 [58] $ [ 62,601.96] $ [ 59,471.86]
4 [59] $ [ 67,078.57] $ [ 63,724.64]
5 [60] $ [ 71,700.67] $ [ 71,700.67]

6 [61] $ [ 76,472.99] $ [ 72,649.34]
7 [62] $ [ 81,400.41] $ [ 77,330.39]
8 [63] $ [ 86,487.97] $ [ 82,163.57]
9 [64] $ [ 91,740.87] $ [ 87,153.83]
10 [65] $ [ 97,164.49] $ [ 97,164.49] [499.42]

11 [66] $ [102,764.38] $ [ 97,626.16]
12 [67] $ [108,546.27] $ [103,118.96]
13 [68] $ [114,516.07] $ [108,790.27]
14 [69] $ [120,679.89] $ [114,645.90]
15** [70] $ [127,044.03] $ [127,044.03] [744.47]

</TABLE>

* THIS ASSUMES THE INITIAL PURCHASE PAYMENT AND SUBSEQUENT PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT ARE PAID WHEN DUE, THAT ONLY GUARANTEED
INTEREST IS CREDITED AND THAT NO PARTIAL WITHDRAWALS OR TRANSFERS TO OR
FROM THE VARIABLE ACCOUNT HAVE BEEN MADE.

GUARANTEED MONTHLY INCOME AT MATURITY IS BASED ON THE 10 YEAR CERTAIN AND
LIFE ANNUITY INCOME OPTION.

** THIS DATE REFERS TO THE MATURITY DATE.

THIS TABLE DOES NOT REFLECT ANY VALUES ALLOCATED TO THE VARIABLE ACCOUNT.

<PAGE>

SECTION 3. DEFINITIONS OF CERTAIN TERMS

"Annuitant" is the person insured in this contract as shown on the Contract
Data pages.

"Annuity income option" is the method by which income payments are made at
the Maturity Date or upon the Annuitant's death.

"Beneficiary" is the person to whom the death benefit will be paid in the event
of the death of the Annuitant prior to the election of an annuity income option.

"Company," "we," "us" and "our" refer only to the Horace Mann Life Insurance
Company.

"Contract anniversary" is the same day and month as the Contract Date for each
succeeding year of this contract.

"Contract Date" is the effective date of this contract. It is the date from
which purchase payment due dates, contract years and contract anniversaries
are determined.

"Current interest rate" is the effective annual interest rate we will credit
to the Fixed Account. It will be greater than or equal to the guaranteed
interest rate.

"Death benefit" is the amount paid in the event of the death of an Annuitant
prior to the election of an annuity income option.

"Division" is a part of the Separate Account in which money is invested in
shares of a corresponding mutual fund. The Annuitant may direct payments to
any or all divisions of the Separate Account. Divisions for each mutual fund
are shown on the Contract Data pages.

"Fixed Account" is an interest-bearing account set up to receive net payments
and transfers allocated to it.

"Fixed Account value" refers to the dollar value of the Fixed Account prior to
the time annuity income payments begin.

"Guaranteed interest rate" is the minimum interest to be credited to the Fixed
Account.

"Guaranteed annuity income option rate" is the minimum interest rate to
be credited to a fixed income option and is used in the calculation of the
investment multiplier for variable income options.

"Home Office" is our executive office at 1 Horace Mann Plaza, Springfield,
Illinois, 62715-0001.

"Income payments" are payments we make to the payee.

"Mutual funds" are open-end diversified management investment companies
registered under the Investment Company Act of 1940, as amended. These
companies are shown on the Contract Data page and are referred to as variable
accounts. Each mutual fund has a specific investment objective as stated in
its prospectus. You should read the prospectus for complete details.

"Net payment" is the purchase payment less any applicable premium tax.

<PAGE>

"Owner" (referred to in this contract as "you" and "your") is the Annuitant
unless otherwise stated in the application.

"Payee" is any person entitled to receive income payments under any annuity
income option benefit. If the Owner is not the payee, the Owner would incur the
tax liability.

"Present value" is a lump sum payment made instead of future periodic income
payments.

"Purchase payment" is a dollar amount paid to us in return for the benefits
described in this contract.

"Separate Account" is the segregated asset account which receives and invests
net payments allocated to it. The Separate Account consists of various mutual
funds which are shown on the Contract Data pages. You may direct payments to
any or all of the mutual funds. You should read the prospectus for complete
details of the specific mutual fund's investment objective.

"Supplemental contract" is an agreement setting forth the terms of the annuity
income option elected.

"Surrender charge" is a portion of your total accumulation value charged when
you make a withdrawal from or surrender the contract for its total accumulation
value.

"Surrender value" is the total accumulation value less the applicable surrender
charge or early withdrawal penalty, if any.

"Total accumulation value" is the sum of the Fixed Account value and the
Variable Account value prior to the time annuity income payments begin.

"Valuation date" is any day on which the New York Stock Exchange is open
for trading and on which the net value of each share of the mutual fund(s) is
determined. See prospectus for details.

"Valuation period" is the period from the end of a valuation date to the end
of the next valuation date, excluding the day the period begins and including
the day it ends.

"Variable Account" is your portion of the Separate Account set up to receive
the net payments and transfers allocated to it.

"Variable Account value" refers to the dollar value of the Variable Account
prior to the time annuity income payments begin.

"Variable accumulation unit" is a measure used to determine the value of a
particular division on or before the contract's Maturity Date. The value of a
variable accumulation unit in a division depends on the investment experience
of the corresponding mutual fund.

"Variable retirement unit" is a measure used to determine the amount payable
from a particular division for a variable income payment. The value of a
variable retirement unit in a division depends on the investment experience
of the corresponding mutual fund.

<PAGE>

SECTION 4. GENERAL PROVISIONS

ENTIRE CONTRACT - The contract is issued in consideration of your application
and receipt of the purchase payments. Your application is attached to and made a
part of this contract.

All statements made in your application in the absence of fraud will be
treated as representations and not as warranties. If we challenge a claim or
attempt to void this contract, we agree to use only written statements made in
this contract.

CHANGE OF CONTRACT PROVISIONS - We have the right to change the provisions of
this contract for continued compliance under any federal or state laws that
affect this contract. This contract shall be deemed to include any provisions
required by the state where it was issued. No person other than our president,
vice president, or the corporate secretary can change or waive any condition or
provision of this contract. Such change or waiver must be made in writing and
signed by one of the officers named above.

INCONTESTABILITY - This contract shall be incontestable from the Contract Date.

MATURITY DATE - The Maturity Date is the date you select for the payee to begin
receiving annuity income payments. It is shown on the Contract Data pages. The
Maturity Date is the contract anniversary following the Annuitant's 70th
birthday or the tenth contract anniversary, whichever is later. You may choose a
different date if we agree. Income payments must begin no later than specified
in the Internal Revenue Code.

ASSIGNMENT - You may assign or transfer this contract unless it is prohibited
by the Internal Revenue Code. We will not be responsible for the validity of
any assignment. It must be filed in writing at our Home Office. Until received,
we will not be considered to have knowledge of it.

PERIODIC REPORTS - During each contract year prior to the Maturity Date, we
will periodically send you reports which show your total accumulation value,
purchase payment(s) and other contract transactions. At any time, you may
request a statement of the contract's total accumulation value. We will send any
other information or legally required reports to you at your last known address.

MINIMUM VALUES - All values and benefits for this contract are not less than the
minimum required by the laws of the state in which it is delivered.

PREMIUM TAX - Any premium tax deducted will be determined by the Annuitant's
place of residence.

EXCHANGE OF CONTRACT - You may exchange this contract for another annuity
contract we issue if we approve it.

SECTION 5. OWNERSHIP AND BENEFICIARY PROVISIONS

OWNERSHIP - The Owner of this contract is the Annuitant listed on the Contract
Data pages unless another Owner is named. Unless you provide otherwise, the
Owner may exercise all rights and privileges granted by this contract during the
Annuitant's lifetime.

<PAGE>

BENEFICIARY - The beneficiary is named in the application; however, you may
change it.

For payment purposes, we will assume that the beneficiary's death occurred prior
to the Annuitant's death if the beneficiary:

1. dies before or on the same date as the Annuitant; or

2. dies within 15 days after the Annuitant.

CHANGE OF BENEFICIARY - You may change the beneficiary of this contract during
the lifetime of the Annuitant unless you have made an irrevocable beneficiary
designation. You must request the change in writing on a form satisfactory to
us. You must send the request to our Home Office. A change is valid only when we
receive it at our Home Office. Upon receipt and approval, it is effective as of
the date you signed the written request. All changes are subject to any payments
we make or other action we take before receipt of the written request.

SECTION 6. PAYMENTS TO THE COMPANY

PURCHASE PAYMENT - Your purchase payment is shown on the Contract Data pages. It
is payable on or before the Contract Date. You may increase or decrease the
payments. The payments may not be increased to an amount greater than allowed by
the Internal Revenue Code. Payments may be stopped at any time, if needed. The
payment will be allocated to the Fixed Account and/or Variable Account as you
elected in your most recent allocation instructions.

GRACE PERIOD - A grace period of 31 days shall be allowed for every purchase
payment due after the first purchase payment.

PAID-UP VALUE - If any purchase payment of this contract is not paid within
the grace period, the contract shall be considered paid-up. The paid-up value
is the total accumulation value of the contract.

REINSTATEMENT - If the purchase payment has not been paid within the grace
period and the contract has not been surrendered or canceled, it may be
reinstated during the lifetime of the Annuitant and before the contract
Maturity Date by resuming payments.

CONTRACT CANCELLATION - We reserve the right to cancel this contract if:

1. you have not made any purchase payments for two years; and

2. the total accumulation value of this contract is less
than that needed to purchase a $20 monthly income
payment at maturity.

We will send you a notice of our intent to cancel. When this contract is
canceled, we will pay you the total accumulation value of the contract.
Thereafter, we will be free of any contract liability for this canceled
contract.

<PAGE>

SECTION 7. DEATH BENEFIT

PAYMENT AT ANNUITANT'S DEATH - The Death benefit shall be paid upon the
Annuitant's death if this contract has not been surrendered or an annuity income
option has not been elected. The beneficiary may receive the Death benefit by
electing an annuity income option or a lump sum payment.

Proof of the Annuitant's death must be sent to our Home Office. Proof of death
includes a certified death certificate and a completed claimant's statement.
As of the date we receive such proof, we will pay the beneficiary the Death
benefit, which is the greater of:

1. the total accumulation value of this contract less any
applicable premium tax; or

2. the sum of all purchase payments paid under this
contract less any partial withdrawals; or

3. if the Annuitant dies prior to the Maturity Date or
attainment of age 70, whichever is earlier, the
beneficiary will receive the purchase payments paid under
the contract, less any applicable premium tax, outstanding
loan balances and/or withdrawals, increased by 3 percent
compounded annually to the date of death.

SECTION 8. THE FIXED ACCOUNT

ALLOCATION AND CREDITS TO FIXED ACCOUNT - The Fixed Account will receive the net
payments allocated to it and dollar amounts transferred from the Variable
Account.

As of the date we receive your purchase payment for the Fixed Account, we will
allocate the net payment to this account. As of the date we receive your
request to transfer an amount from the Variable Account, we will deposit such
amount to the Fixed Account. We must receive the purchase payment at the Home
Office.

GUARANTEED INTEREST RATE - Guaranteed interest will be credited on a
daily basis to the Fixed Account. This interest will be credited from the date
we receive the purchase payment. The guaranteed interest rate for the Fixed
Account value is shown on the Contract Data pages. This rate will never be
changed throughout the lifetime of the contract.

CURRENT INTEREST RATE - We may pay interest in excess of the guaranteed amount.
The current interest rate is declared in advance and will be credited on a
daily basis to the Fixed Account. Any excess interest paid, as we determine,
will be applied on an equitable basis and credited to the classes in this
contract.

<PAGE>

TRANSFERS - You may transfer money from the Fixed Account to various divisions
of the Variable Account. The Company may set minimum amounts that may be
transferred from the Fixed Account value and the minimum amount allowed to
maintain an account. Transfers may be made as often as you choose; however, no
transfers between accounts are allowed after income payments commence. You must
send your transfer request to the Home Office. We will make an approved transfer
as of the date we receive your request or as of a requested future date.

GUARANTEED RETURN OF PAYMENTS - We guarantee the return of the net payment(s)
allocated to the Fixed Account upon surrender of this contract if:

1. this contract has been in force more than two years; and

2. no withdrawals or transfers have been made from the
Fixed Account.

SECTION 9. THE VARIABLE ACCOUNT

ALLOCATIONS TO VARIABLE ACCOUNT - The Variable Account will receive the net
payments allocated to it and dollar amounts transferred from the Fixed Account.
We will allocate these amounts, as you instruct, to the division(s) of our
Separate Account. These are processed as of the date we receive your payment or
the transfer request at the Home Office.

Within each division, the value of a variable accumulation unit is determined by
valuing daily the underlying securities within that division with a reduction
for operating expenses and then dividing the result by the outstanding number of
all variable accumulation units of that division. The value of each divisions
variable accumulation unit depends on the investment experience of the
corresponding mutual fund.

All dividends and other distributions paid by a mutual fund to a division shall
be used to purchase additional shares of the same fund.

The increase or decrease in the number of variable accumulation units for a
particular transaction is determined by dividing the dollar amount of the
transaction by the unit value of the appropriate division.

The number of units the Annuitant has in a particular division on any date is
equal to the sum of variable accumulation units that have been added through
net payments, dividend distributions, and transfers minus the sum of variable
accumulation units that have been withdrawn or transferred.

If shares of a mutual fund are no longer available for investment by the
Separate Account or if we determine further investments in a mutual fund
are inappropriate in view of the objectives of the contract issued, we may
substitute shares of another mutual fund for fund shares already purchased and
apply your future purchase payments to the purchase of shares of the substitute
mutual fund or other securities. No substitutions will be made until prior
approval has been received from the Securities and Exchange Commission and we
receive prior favorable vote of a majority of the votes entitled to be cast by
persons having a voting interest in the mutual fund shares.

<PAGE>

TRANSFERS - You may transfer money from the Variable Account to the Fixed
Account or between the various divisions of the Variable Account. The Company
may set minimum amounts that may be transferred from the Variable Account value
and the minimum amount allowed to maintain an account. You may request transfers
as often as you choose; however, no transfers are allowed after income payments
commence. You must send your transfer request to the Home Office. We will make
an approved transfer as of the date we receive your request or as of a requested
future date.

MAXIMUM SURRENDER CHARGE - In no case will the surrender charge applied to the
Variable Account value be greater than 8.5 percent of the purchase payments
attributable to the amount surrendered from the Variable Account.

ANNUAL MORTALITY RISK AND EXPENSE RISK FEE - To cover the mortality risk and
expense risk, we will charge your Variable Account a fee equivalent to the
amount shown on the Contract Data pages. Further details of this fee are in
the prospectus.

VOTING RIGHTS - We will vote shares held in the Separate Account according to
your instructions. We will send the notices and instructions to the person
having voting rights under this contract. We will cast votes for which we do not
receive instructions in the same proportion as the votes for which we have
received instructions.

SECTION 10. WITHDRAWAL AND SURRENDER PROVISIONS

CASH WITHDRAWAL AND SURRENDER PRIVILEGE - You may at any time during the
Annuitant's lifetime and prior to the Maturity Date, elect to withdraw part or
surrender all of the total accumulation value. Any one withdrawal must be for an
amount not less than the minimum set by the Company. We will send you the amount
due.

We will calculate the total accumulation value of your contract as of the
date we receive your written request at the Home Office. The written request
must be on a form satisfactory to us. The payment from the Fixed Account is
usually paid within 30 days. However, we reserve the right to postpone payment
for not more than six months from the date we receive your request. If payment
is deferred after the 30 days, we will continue to credit the current interest
rate. We will send you the Variable Account surrender or withdrawal amount
within seven calendar days after we receive your request.

SURRENDER CHARGE - The surrender charge is a portion of the total accumulation
value we keep if you make a withdrawal from or surrender the Fixed Account or
Variable Account. The rate varies by contract year as shown on the Contract
Data pages.

<PAGE>

WAIVER OF SURRENDER CHARGES AND PENALTIES - No surrender charge or early
withdrawal penalty will be made on a partial withdrawal or surrender from the
Fixed Account or Variable Account:

1. on this contract's Fixed Account value or Variable
Account value applied to the payment of either annuity
income Options 1, 2, 6 or 7; or

2. on or after the Maturity Date if this contract has been
in force for at least 10 years; or

3. if annuity income payments are selected to be made in
equal installments over a period of at least five years
(during such period the elected annuity benefit cannot
be surrendered); or

4. if an Annuitant is disabled continuously for three months
as defined by IRC Section 72(m)(7) and satisfactory
proof of such disability is sent to the Home Office; or

In addition, neither the surrender charge nor the early withdrawal penalty is
applicable if:

1. a partial withdrawal is made after the contract has been
in force two years; and

2. it is more than 12 months since the last withdrawal was
made; and

3. the amount withdrawn is not more than 15 percent of the
total accumulation value.

SECTION 11. ANNUITY INCOME OPTIONS

APPLICATION OF TOTAL ACCUMULATION VALUE - On the Maturity Date or the date we
receive proof of the Annuitant's death at the Home Office, the total
accumulation value shall be applied to the payment of the annuity income option
elected.

If the total accumulation value to be applied under any one fixed or
variable annuity income option is less than $2,000 or would provide less than a
$20 monthly annuity income payment, we will pay the total accumulation value in
a lump sum to the payee.

Prior to the payment of any annuity income option selected, we reserve the
right to verify the age of the payee and to make any adjustments necessary to
reflect the accurate payment for the correct age.

OPTION TO PURCHASE ADDITIONAL ANNUITY BENEFITS AT MATURITY - You may purchase an
additional annuity benefit at the Maturity Date which would increase your total
accumulation value. To do so, you must send a written request to the Home
Office. We must receive this request along with a payment for the benefit before
the Maturity Date. The premium tax, if any, will be deducted from this payment.

<PAGE>

ELECTION OF OPTION - At least 30 days prior to the Maturity Date, you may elect
by written request an annuity income option or change a previous election. We
must receive the written request at the Home Office. If the Annuitant dies
before the Maturity Date, the beneficiary may elect an annuity income option.
This election must be made within 60 days after we receive proof of the
Annuitant's death.

ABSENCE OF ELECTION - If no valid election has been made, the total
accumulation value, if any, will be paid as follows:

1. the Fixed Account value will be paid in the form of a
fixed life income with 10-year period certain
(see Option 1 for details); and

2. the Variable Account value will be paid in the form of a
variable life income with 10-year period certain
(see Option 6 for details).

MISSTATEMENT OF AGE - If the age of the Annuitant or any other payee has been
misstated, the annuity income payments under this contract will be that amount
which the purchase payments would have provided at the correct age. We will
require proof of the correct age.

If the income payments were too large because of a misstatement, we will
deduct the difference with interest from the benefits falling due until
totally repaid. If such payments were too small, we will add the difference
with interest to the next benefit due. The interest rate will not exceed 6
percent per year.

PROOF OF SURVIVAL - We may require proper proof that a payee, beneficiary, or
an Annuitant is living when payment depends upon such person's survival.
Proof includes a dated and witnessed signature.

SUPPLEMENTAL CONTRACT - We will issue a supplemental contract for each
annuity income option chosen.

Each income payment shall be made as of the first business day of the month.
For Options 1, 2, 3, 4, 6 and 7 the first payment will be made on or before
the 15th business day of the month following receipt of your request and the
Maturity Date. Subsequent income payments for options will be made as of the
first business day of each succeeding month unless another mode of payment is
selected and has been approved by us. For Option 5, the income payment will be
made as of the first business day after the end of the payment period.

If the original payee dies after income payments begin, the beneficiary of
such payee will be paid:

1. under Options 1 and 6, the rest of the annuity income
payments during the period certain, if any; or

2. under Options 3 and 4, the rest of the annuity income
payments due, if any; or

3. under Option 5, the present value plus unpaid interest,
if any.

If no beneficiary is living at the time of the payee's death, the present value,
if any, of the remaining income payments will be paid in a lump sum to the
estate of such payee. If the payee dies and the option elected does not provide
for continued payments, the supplemental contract will terminate.

Under the supplemental contract, the present value of any option will be
figured at the interest

<PAGE>

rate used to determine the income payment. In no case will a lump sum
distribution be allowed under Options 1, 2, 6 and 7 during the lifetime of the
original payee(s).

Unless you elect otherwise, the payee will have the right under Options 3, 4 and
5 to terminate the supplemental contract. In this case the payee will receive
the present value in one lump sum payment.

VARIABLE INCOME PAYMENTS - The total accumulation value applied to the
variable income payments is allocated to the division(s) as you instructed.
The dollar amount of the first monthly payment of each division to be made
under a variable annuity option will be determined by applying the amount of
the total accumulation value allocated to that division to the appropriate
rate in the annuity income option tables.

The variable income payment of each division is determined by multiplying the
number of variable retirement units by the value of such unit for the
corresponding division.

Within each division, the number of variable retirement units is determined by
dividing the:

- amount of the first monthly payment; by

- the value of a variable retirement unit in the
appropriate division on the valuation date coincident
with the date that the accumulation value was applied
toward the variable annuity option(s).

The number of such units will not change when figuring the second and subsequent
income payments. Under Option 7 such units will be reduced upon the death of the
first payee to the survivor percentage previously elected.

The second and subsequent payments will be based on the investment experience
of the corresponding mutual fund(s). The value of each variable retirement
unit for each division was initially set at $10 as of the date income payments
were first figured. Subsequent variable retirement unit values of any division
are determined by multiplying the previous variable retirement unit value by the
current net investment factor.

The net investment factor for each division is computed by dividing (a) by
(b) and multiplying by (c) where:

(a) is the current net asset value per share on the last valuation
date plus any dividends or other distributions in the current
valuation period;

(b) is the net asset value of such shares on the last valuation
date of the preceding valuation period; and

(c) is the investment multiplier which is shown on the Contract
Data pages and reflects the guaranteed annuity income option rate
and the mortality and expense risk fee.

The value of the net assets in the Separate Account shall be taken at their fair
market value, or where there is no readily available market, their fair value as
determined in accordance with generally accepted accounting practice and
applicable laws and regulations. The value of each share for each division is
determined by dividing the net assets of each division by the number of shares
outstanding for each respective division.

<PAGE>

FIXED ANNUITY INCOME OPTIONS -

OPTION 1. FIXED LIFE INCOME WITH OR WITHOUT PERIOD CERTAIN - We will pay an
income based on the attained age of the payee for the period certain elected;
thereafter, we will pay income for the remaining lifetime of the payee. The
period certain may be 10, 15 or 20 years. If no period certain is requested, we
will pay an income during the lifetime of the payee. See Table 1.

OPTION 2. JOINT LIFE AND SURVIVOR ANNUITY - We will pay an income for as long
as either or both payees live. The income will be based on the ages of the two
payees. Upon the death of one payee, future payments will be reduced to the
survivor percentage elected. Income payments will cease following the death
of the surviving payee. See Tables 2, 3 and 4.

OPTION 3. INCOME FOR A FIXED PERIOD - We will pay an income for a specified
number of years, one through 30 years. But, income payments cannot extend beyond
the life expectancy of the payee, as defined by the Internal Revenue Code. The
payments will be made in equal installments. See Table 5.

OPTION 4. INCOME FOR A FIXED AMOUNT - We will pay an income of a specified
amount until the total accumulation value and interest are all paid out to
the payee. The income payments cannot extend beyond the life expectancy of
the payee, as defined by the Internal Revenue Code.

OPTION 5. INTEREST INCOME PAYMENTS - We will hold the total accumulation value
and pay interest at a rate we determine. Interest will be credited at the
end of each payment period. The payee may elect another option at the end of
any payment period. Subject to the restrictions imposed by the Internal
Revenue Code, the payee may withdraw the total accumulation value in whole or
in part upon written request. Distributions of both principal and interest
must begin no later than the date specified by the Internal Revenue Code.

VARIABLE ANNUITY INCOME OPTIONS -

OPTION 6. VARIABLE LIFE INCOME WITH OR WITHOUT PERIOD CERTAIN - We will pay a
variable income based on the attained age of the payee for the period certain
elected; thereafter, we will pay the variable income for the remaining lifetime
of the payee. The period certain may be 10, 15 or 20 years. If no period certain
is requested, we will pay a variable income during the lifetime of the payee.
See Table 1 for the initial payment. Subsequent payments will be based on the
investment experience of the underlying mutual fund.

OPTION 7. VARIABLE INCOME FOR JOINT LIFE AND SURVIVOR ANNUITY - We will pay a
variable income for as long as either or both payees live. The variable income
will be based on the ages of the two payees. See Table 2, 3 or 4 for the
initial payment. Subsequent payments will be based on the investment experience
of the underlying mutual fund. Upon the death of one payee, future payments
will be reduced to the survivor percentage elected. The variable income
payments will cease following the death of the surviving payee.

OTHER ANNUITY OPTIONS - Upon your request, we may make other fixed and variable
annuity options available.

BASIS OF ANNUITY INCOME OPTION TABLES - The following tables show the dollar
amount of monthly annuity income payments for the payee's attained age when
the supplemental contract is issued.

<PAGE>

The amount of each fixed income payment under Options 1, 2, and 3 will never be
less than that shown in the annuity income option tables. The guaranteed annuity
option rate used for all fixed annuity income options is shown on the Contract
Data pages. The guaranteed factors for lifetime options are based on the Annuity
2000 Mortality Table. The income payments under these options may be increased
as we determine.

The age used in the annuity income option tables is the attained age of the
payee when income payments begin. Amounts for ages not shown will be furnished
upon request. If the income payments are to be paid other than monthly, multiply
the monthly income payment by 2.992 to obtain the quarterly payment; multiply by
5.963 to obtain the semi-annual payment; and multiply by 11.838 to obtain the
annual payment.

SECTION 12. ANNUITY INCOME OPTION TABLES

TABLE 1 - OPTIONS 1 AND 6
Income payments for life with or without a period certain
Equal monthly income payments for each $1,000 of accumulation value

Attained Period certain Attained Period certain
age of age of
payee payee
- ------------- --------------------------------------- -------- ---------------------------------------
Life 10 yrs 15 yrs 20 yrs Life 10 yrs 15 yrs 20 yrs
------ ------ ------ ------ ----- ------ ------ ------

55 4.19 4.16 4.12 4.06 68 5.73 5.55 5.30

56 4.27 4.24 4.19 4.12 69 5.91 5.70 5.41

57 4.35 4.32 4.27 4.19 70 6.11 5.86 5.53

58 4.44 4.40 4.34 4.25 71 6.32 6.02 5.64

59 4.54 4.49 4.42 4.32 72 6.55 6.20

60 4.64 4.58 4.51 4.39 73 6.80 6.38

61 4.75 4.68 4.59 4.46 74 7.07 6.57

62 4.86 4.79 4.68 4.53 75 7.37 6.76

63 4.98 4.90 4.78 4.60 76 7.68 6.96

64 5.11 5.01 4.88 4.67 77 8.03 7.16

65 5.25 5.14 4.98 4.75 78 8.40 7.36

66 5.40 5.26 5.08 79 8.80 7.56

67 5.55 5.40 5.19 80 9.23

</TABLE>

TABLE 2 - OPTIONS 2 AND 7

Joint life income with 50 percent to survivor
Initial monthly income payments for each $1,000 of accumulation value

Attained ages
of 55 56 57 58 59 60 61 62 63 64 65
payees
- -------------- ------- ------ ------ ------ ------ ----- ----- ----- ----- ------ ------

55 4.19

56 4.23 4.27

57 4.27 4.31 4.35

58 4.31 4.36 4.40 4.44

59 4.36 4.40 4.44 4.49 4.54

60 4.40 4.45 4.49 4.54 4.59 4.64

61 4.45 4.50 4.54 4.59 4.64 4.69 4.75

62 4.50 4.55 4.59 4.64 4.69 4.75 4.80 4.86

64 4.61 4.65 4.70 4.75 4.81 4.86 4.92 4.98 5.04 5.11

65 4.66 4.71 4.76 4.81 4.87 4.92 4.98 5.05 5.11 5.18 5.25

66 4.72 4.77 4.82 4.87 4.93 4.99 5.05 5.11 5.18 5.25 5.32

67 4.78 4.83 4.88 4.94 5.00 5.06 5.12 5.18 5.25 5.32 5.40

68 4.84 4.89 4.95 5.00 5.06 5.12 5.19 5.26 5.33 5.40 5.48

69 4.90 4.96 5.01 5.07 5.13 5.20 5.26 5.33 5.41 5.48 5.56

70 4.97 5.03 5.08 5.14 5.21 5.27 5.34 5.41 5.49 5.56 5.65

</TABLE>

TABLE 3 - OPTIONS 2 AND 7

Joint life income with 66 2/3 percent to survivor
Initial monthly income payments for each $1,000 of accumulation value

Attained ages
of 55 56 57 58 59 60 61 62 63 64 65
payees
- --------------- ----- ----- ----- ----- ----- ----- ------ ----- ------ ------ ------

55 4.02

56 4.06 4.10

57 4.09 4.13 4.17

58 4.13 4.17 4.21 4.25

59 4.17 4.21 4.25 4.29 4.33

61 4.24 4.29 4.33 4.37 4.42 4.47 4.52

62 4.28 4.33 4.37 4.42 4.47 4.52 4.57 4.62

63 4.32 4.37 4.41 4.46 4.51 4.56 4.62 4.67 4.72

64 4.36 4.41 4.46 4.51 4.56 4.61 4.67 4.72 4.78 4.84

65 4.40 4.45 4.50 4.55 4.61 4.66 4.72 4.78 4.84 4.90 4.96

66 4.44 4.49 4.55 4.60 4.66 4.71 4.77 4.83 4.90 4.96 5.02

67 4.49 4.54 4.59 4.65 4.71 4.77 4.83 4.89 4.95 5.02 5.09

68 4.53 4.58 4.64 4.70 4.76 4.82 4.88 4.95 5.02 5.08 5.16

69 4.57 4.63 4.69 4.75 4.81 4.87 4.94 5.01 5.08 5.15 5.22

70 4.62 4.68 4.74 4.80 4.86 4.93 5.00 5.07 5.14 5.22 5.29

</TABLE>

TABLE 4 - OPTIONS 2 AND 7

Joint life income with 100 percent to survivor
Initial monthly income payments for each $1,000 of accumulation value

Attained ages
of 55 56 57 58 59 60 61 62 63 64 65
payees
- -------------- ---- ---- ----- ----- ----- ----- ------ ------ ------ ------ -----

55 3.73

56 3.75 3.78

57 3.78 3.81 3.84

58 3.81 3.84 3.87 3.91

59 3.83 3.87 3.90 3.94 3.97

60 3.86 3.89 3.93 3.97 4.01 4.04

61 3.88 3.92 3.96 4.00 4.04 4.08 4.12

62 3.90 3.94 3.99 4.03 4.07 4.12 4.16 4.20

63 3.92 3.97 4.01 4.06 4.10 4.15 4.1 4.24 4.28

64 3.94 3.99 4.04 4.09 4.13 4.18 4.23 4.28 4.33 4.37

65 3.96 4.01 4.06 4.11 4.16 4.22 4.27 4.32 4.37 4.42 4.47

66 3.98 4.03 4.08 4.14 4.19 4.25 4.30 4.36 4.41 4.47 4.52

67 4.00 4.05 4.11 4.16 4.22 4.28 4.33 4.39 4.45 4.51 4.57

68 4.01 4.07 4.13 4.18 4.24 4.30 4.37 4.43 4.49 4.55 4.62

69 4.03 4.09 4.15 4.21 4.27 4.33 4.40 4.46 4.53 4.59 4.66

70 4.04 4.10 4.16 4.23 4.29 4.36 4.424 4.49 4.56 4.63 4.71

</TABLE>

TABLE 5 - OPTION 3

Income payments for a fixed period
Equal monthly income payments for each $1,000 of accumulation value

Number of years in Monthly Number of years in Monthly Number of years in Monthly
fixed period income fixed period income fixed period income
payment payment payment
- ------------------- ------- ------------------- ------- ------------------ -------

1 84.47 11 8.86 21 5.32

2 42.86 12 8.24 22 5.15

3 28.99 13 7.71 23 4.99

4 22.06 14 7.26 24 4.84

5 17.91 15 6.87 25 4.71

6 15.14 16 6.53 26 4.59

7 13.16 17 6.23 27 4.47

8 11.68 18 5.96 28 4.37

9 10.53 19 5.73 29 4.27

10 9.61 20 5.51 30 4.18

</TABLE>

<PAGE>

HOME OFFICE: 1 Horace Mann Plaza
Springfield, Illinois 62715-0001
1-800-999-1030

MAILING ADDRESS: P.O. Box 4657
Springfield, IL 62708-4657

We agree to provide the benefits described in this contract. Signed for the
Company at Springfield, Illinois, as of the Contract Date.

President Countersigned Corporate Secretary

IC-427000
<PAGE>

This is a legal contract between the contract Owner and your insurance company.

This Individual Flexible Premium Deferred Fixed and Variable Retirement Annuity
Contract provides for accumulation of value for income payments. Key contract
fees, charges and guaranteed rates are shown on your Contract Data pages.

TABLE OF CONTENTS PAGE
Section 1. Contract Data.................................................2
Section 2. Fixed Account table of guaranteed values......................3
Section 3. Definitions of certain terms .................................4
Section 4. General provisions............................................6
Section 5. Ownership and beneficiary provisions..........................6
Section 6. Payments to the Company.......................................7
Section 7. Death benefit.................................................8
Section 8. The Fixed Account.............................................8
Section 9. The Variable Account..........................................9
Section 10. Withdrawal and surrender provisions.........................10
Section 11. Annuity income options......................................11
Section 12. Annuity income option tables................................16
Additional benefit provisions or restrictions, if any, and a copy of the
application follow the annuity income option tables.

<PAGE>

HOME OFFICE: 1 Horace Mann Plaza
Springfield, Illinois 62715-0001
1-800-999-1030

MAILING ADDRESS: P.O. Box 4657
Springfield, IL 62708-4657

SECTION 1 - CONTRACT DATA

<S> <C>

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]
CONTRACT DATE: [05/01/1999]
MATURITY DATE: [05/01/2034]
SCHEDULED UPDATE: [05/01/2004]
INVESTMENT PERIOD: [05]
AGE AT ISSUE: [35]
SEX: [MALE]

OWNER: [JOHN DOE]

PURCHASE PAYMENT(S):

MINIMUM INITIAL DEPOSIT: $100,000.00

INITIAL PAYMENT $[ 100,000.00]. SEE APPLICATION FOR DETAILS OF ALLOCATIONS.

SUBSEQUENT PAYMENT(S) $[ 2,400.00] PER
YEAR, PAYABLE IN [12]
INSTALLMENT(S), TO BE
ALLOCATED AS FOLLOWS:

FIXED ACCOUNT: [100.00]%

GUARANTEED INTEREST RATE:
FIXED ACCOUNT: 3.5% PER YEAR PRIOR TO THE START OF INCOME PAYMENTS.
VARIABLE ACCOUNT: NONE.

SURRENDER CHARGE RATES: FIXED ACCOUNT AND VARIABLE ACCOUNT:
DURING CONTRACT YEAR % CHARGED
1 6%
2 5%
3 5%
4 5%
5 5%
THEREAFTER 0%

SECTION 1 (CONTINUED) - CONTRACT DATA

<S> <C>

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]

EARLY WITHDRAWAL PENALTY RATE

FIXED ACCOUNT: DURING CONTRACT
YEARS 1 THROUGH 5 THE PENALTY
WILL BE ZERO. THEREAFTER THE
PENALTY WILL BE 5% UNTIL THE
CONTRACT ANNIVERSARY PRIOR TO
THE ANNUITANT'S ATTAINMENT OF
AGE 65. AT THAT TIME THE FEE
WILL DECREASE BY 1% PER YEAR.

VARIABLE ACCOUNT: NONE

THE EARLY WITHDRAWAL PENALTY IS WAIVED ON EACH SCHEDULED UPDATE.

ANNUAL MORTALITY RISK AND EXPENSE RISK FEE:

FIXED ACCOUNT: NONE.

VARIABLE ACCOUNT: 1.05% PER YEAR.

GUARANTEED ANNUITY INCOME OPTION RATE:

FIXED INCOME OPTIONS: 3.0% PER YEAR

VARIABLE INCOME OPTIONS: NONE.

INVESTMENT MULTIPLIER: .996697

RETIREMENT BONUS: THE FIRST $1 MILLION OF TOTAL ACCUMULATION VALUE USED TO PURCHASE
SPECIFIC INCOME OPTIONS WILL BE INCREASED BY 1%. SEE SECTION 11 OF THE
CONTRACT FOR COMPLETE DETAILS.

SECTION 2 - FIXED ACCOUNT'S TABLE OF GUARANTEED MONTHLY INCOME AT MATURITY AND
MINIMUM ACCUMULATION AND SURRENDER VALUES*

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]

CONTRACT MINIMUM MINIMUM GUARANTEED
ANNIVERSARY ATTAINED GUARANTEED GUARANTEED MONTHLY INCOME
DATE AGE ACCUM VALUE SURRENDER VALUE AT MATURITY

1 [36] $ [105,945.26] $ [100,648.00]
2 [37] $ [112,098.60] $ [106,493.67]
3 [38] $ [118,467.31] $ [112,543.94]
4 [39] $ [125,058.93] $ [118,805.98]
5 [40] $ [131,881.25] $ [131,881.25]

6 [41] $ [138,942.35] $ [131,995.23]
7 [42] $ [146,250.59] $ [138,938.06]
8 [43] $ [153,814.62] $ [146,123.89]
9 [44] $ [161,643.39] $ [153,561.22]
10 [45] $ [169,746.17] $ [169,746.17]

11 [46] $ [178,132.55] $ [169,225.92]
12 [47] $ [186,812.45] $ [177,471.83]
13 [48] $ [195,796.15] $ [186,006.34]
14 [49] $ [205,094.28] $ [194,839.57]
15 [50] $ [214,717.84] $ [214,717.84]

16 [51] $ [224,678.23] $ [213,444.32]
17 [52] $ [234,987.23] $ [223,237.87]
18 [53] $ [245,657.04] $ [233,374.19]
19 [54] $ [256,700.30] $ [243,865.29]
20 [55] $ [268,130.07] $ [268,130.07] $ [1,126.57]

25 [60] $ [331,567.04] $ [331,567.04] $ [1,533.76]
30 [65] $ [406,910.27] $ [394,702.96] $ [2,112.43]
35** [70] $ [496,394.38] $ [496,394.38] $ [2,937.95]

</TABLE>

GUARANTEED MONTHLY INCOME AT MATURITY IS BASED ON THE 10 YEAR CERTAIN AND
LIFE ANNUITY INCOME OPTION.

** THIS DATE REFERS TO THE MATURITY DATE.

THIS TABLE DOES NOT REFLECT ANY VALUES ALLOCATED TO THE VARIABLE ACCOUNT.

<PAGE>

SECTION 3. DEFINITIONS OF CERTAIN TERMS

"Annuitant" is the person insured in this contract as shown on the Contract
Data pages.

"Annuity income option" is the method by which income payments are made at the
Maturity Date or upon the Annuitant's death.

"Beneficiary" is the person to whom the death benefit will be paid in the event
of the death of the Annuitant prior to the election of an annuity income option.

"Company," "we," "us" and "our" refer only to the Horace Mann Life Insurance
Company.

"Contract anniversary" is the same day and month as the Contract Date for each
succeeding year of this contract.

"Contract Date" is the effective date of this contract. It is the date from
which purchase payment due dates, contract years and contract anniversaries are
determined.

"Current interest rate" is the effective annual interest rate we will credit to
the Fixed Account. It will be greater than or equal to the guaranteed interest
rate.

"Death benefit" is the amount paid in the event of the death of an Annuitant
prior to the election of an annuity income option.

"Division" is a part of the Separate Account in which money is invested in
shares of a corresponding mutual fund. The Annuitant may direct payments to any
or all divisions of the Separate Account. Divisions for each mutual fund are
shown on the Contract Data pages.

"Early withdrawal penalty" is a portion of your Fixed Account value charged
after the fifth contract year when you make a withdrawal from or surrender the
Fixed Account.

"Fixed Account" is an interest-bearing account set up to receive net payments
and transfers allocated to it.

"Fixed Account value" refers to the dollar value of the Fixed Account prior to
the time annuity income payments begin.

"Guaranteed interest rate" is the minimum interest to be credited to the Fixed
Account.

"Guaranteed annuity income option rate" is the minimum interest rate to be
credited to a fixed income option and is used in the calculation of the
investment multiplier for variable income options.

"Home Office" is our executive office at 1 Horace Mann Plaza, Springfield,
Illinois, 62715-0001.

"Income payments" are payments we make to the payee.

"Investment period" is the time from one Scheduled Update until the next
Scheduled Update.

"Mutual funds" are open-end diversified management investment companies
registered under the Investment Company Act of 1940, as amended. These companies
are shown on the Contract Data page and are referred to as variable accounts.
Each mutual fund has a specific investment objective as stated in its
prospectus. You should read the prospectus for complete details.

"Net payment" is the purchase payment less any applicable premium tax.

<PAGE>

"Owner" (referred to in this contract as "you" and "your") is the Annuitant
unless otherwise stated in the application.

"Payee" is any person entitled to receive income payments under any annuity
income option benefit. If the Owner is not the payee, the Owner would incur the
tax liability.

"Present value" is a lump sum payment made instead of future periodic income
payments.

"Purchase payment" is a dollar amount paid to us in return for the benefits
described in this contract.

"Scheduled Update" is the date your investment period and current interest rate
is updated for another period of time.

"Separate Account" is the segregated asset account which receives and invests
net payments allocated to it. The Separate Account consists of various mutual
funds which are shown on the Contract Data pages. You may direct payments to any
or all of the mutual funds. You should read the prospectus for complete details
of the specific mutual funds investment objective.

"Supplemental contract" is an agreement setting forth the terms of the annuity
income option elected.

"Surrender charge" is a portion of your total accumulation value charged when
you make a withdrawal from or surrender the contract for its total accumulation
value.

"Surrender value" is the total accumulation value less the applicable surrender
charge or early withdrawal penalty, if any.

"Total accumulation value" is the sum of the Fixed Account value and the
Variable Account value prior to the time annuity income payments begin.

"Valuation date" is any day on which the New York Stock Exchange is open for
trading and on which the net value of each share of the mutual fund(s) is
determined. See prospectus for details.

"Valuation period" is the period from the end of a valuation date to the end of
the next valuation date, excluding the day the period begins and including the
day it ends.

"Variable Account" is your portion of the Separate Account set up to receive the
net payments and transfers allocated to it.

"Variable Account value" refers to the dollar value of the Variable Account
prior to the time annuity income payments begin.

<PAGE>

SECTION 4. GENERAL PROVISIONS

ENTIRE CONTRACT - The contract is issued in consideration of your application
and receipt of the purchase payments. Your application is attached to and made a
part of this contract.

All statements made in your application in the absence of fraud will be treated
as representations and not as warranties. If we challenge a claim or attempt to
void this contract, we agree to use only written statements made in this
contract.

CHANGE OF CONTRACT PROVISIONS - We have the right to change the provisions of
this contract for continued compliance under any federal or state laws that
affect this contract.

This contract shall be deemed to include any provisions required by the state
where it was issued.

No person other than our president, vice president, or the corporate secretary
can change or waive any condition or provision of this contract. Such change or
waiver must be made in writing and signed by one of the officers named above.

INCONTESTABILITY - This contract shall be incontestable from the Contract Date.

ASSIGNMENT - You may assign or transfer this contract unless it is prohibited by
the Internal Revenue Code. We will not be responsible for the validity of any
assignment. It must be filed in writing at our Home Office. Until received, we
will not be considered to have knowledge of it.

MINIMUM VALUES - All values and benefits for this contract are not less than the
minimum required by the laws of the state in which it is delivered.

PREMIUM TAX - Any premium tax deducted will be determined by the Annuitant's
place of residence.

EXCHANGE OF CONTRACT - You may exchange this contract for another annuity
contract we issue if we approve it.

SECTION 5. OWNERSHIP AND BENEFICIARY PROVISIONS

<PAGE>

BENEFICIARY - The beneficiary is named in the application; however, you may
change it.

For payment purposes, we will assume that the beneficiary's death occurred
prior to the Annuitant's death if the beneficiary:

1. dies before or on the same date as the Annuitant; or

2. dies within 15 days after the Annuitant.

CHANGE OF BENEFICIARY - You may change the beneficiary of this contract during
the lifetime of the Annuitant unless you have made an irrevocable beneficiary
designation.

You must request the change in writing on a form satisfactory to us. You must
send the request to our Home Office. A change is valid only when we receive it
at our Home Office. Upon receipt and approval, it is effective as of the date
you signed the written request. All changes are subject to any payments we make
or other action we take before receipt of the written request.

SECTION 6. PAYMENTS TO THE COMPANY

The payment will be allocated to the Fixed Account and/or Variable Account as
you elected in your most recent allocation instructions.

GRACE PERIOD - A grace period of 31 days shall be allowed for every purchase
payment due after the first purchase payment.

PAID-UP VALUE - If any purchase payment of this contract is not paid within the
grace period, the contract shall be considered paid-up. The paid-up value is the
total accumulation value of the contract.

CONTRACT CANCELLATION - We reserve the right to cancel this contract if:

1. you have not made any purchase payments for two years; and

2. the total accumulation value of this contract is less than that
needed to purchase a $20 monthly income payment at maturity.

<PAGE>

SECTION 7. DEATH BENEFIT

Proof of the Annuitant's death must be sent to our Home Office. Proof of death
includes a certified death certificate and a completed claimants statement. As
of the date we receive such proof, we will pay the beneficiary the Death
benefit, which is the greater of:

1. the total accumulation value of this contract less any applicable
premium tax; or

2. the sum of all purchase payments paid under this contract less any
partial withdrawals; or

3. if the Annuitant dies prior to the Maturity Date or attainment of age
70, whichever is earlier, the beneficiary will receive the purchase
payments paid under the contract, less any applicable premium tax,
outstanding loan balances and/or withdrawals, increased by 3 percent
compounded annually to the date of death.

SECTION 8. THE FIXED ACCOUNT

ALLOCATION AND CREDITS TO FIXED ACCOUNT - The Fixed Account will receive the net
payments allocated to it and dollar amounts transferred from the Variable
Account.

As of the date we receive your purchase payment for the Fixed Account, we will
allocate the net payment to this account. As of the date we receive your request
to transfer an amount from the Variable Account, we will deposit such amount to
the Fixed Account. We must receive the purchase payment at the Home Office.

GUARANTEED INTEREST RATE - Guaranteed interest will be credited on a daily basis
to the Fixed Account. This interest will be credited from the date we receive
the purchase payment. The guaranteed interest rate for the Fixed Account value
is shown on the Contract Data pages. This rate will never be changed throughout
the lifetime of the contract.

CURRENT INTEREST RATE - We may pay interest in excess of the guaranteed amount.
The current interest rate is declared in advance and will be credited on a daily
basis to the Fixed Account. Any excess interest paid, as we determine, will be
applied on an equitable basis and credited to the classes in this contract.

SCHEDULED UPDATE - Your investment period and current interest rate will be
automatically updated on the contract's Scheduled Update. The new investment
period will be set for a period equal to the initial investment period. You may
select a different investment period if available. The final Scheduled Update
will occur on the contract anniversary prior to the Annuitant's attainment of
age 65.

We will send you a notice 90 days prior to each Scheduled Update. This notice
will explain your options. If you choose, you may withdraw your total
accumulation value without a Company surrender charge or early withdrawal
penalty on this date. If you want a different investment period or choose to
withdraw the total accumulation value, we must receive your written request

<PAGE>

at the Home Office prior to the Scheduled Update. If we do not receive a written
request, we will automatically update your contract.

GUARANTEED RETURN OF PAYMENTS - We guarantee the return of the net payment(s)
allocated to the Fixed Account upon surrender of this contract if:

1. this contract has been in force more than two years; and

2. no withdrawals or transfers have been made from the Fixed Account.

SECTION 9. THE VARIABLE ACCOUNT

Within each division, the value of a variable accumulation unit is determined by
valuing daily the underlying securities within that division with a reduction
for operating expenses and then dividing the result by the outstanding number of
all variable accumulation units of that division. The value of each division's
variable accumulation unit depends on the investment experience of the
corresponding mutual fund.

All dividends and other distributions paid by a mutual fund to a division shall
be used to purchase additional shares of the same fund.

The number of units the Annuitant has in a particular division on any date is
equal to the sum of variable accumulation units that have been added through net
payments, dividend distributions, and transfers minus the sum of variable
accumulation units that have been withdrawn or transferred.

If shares of a mutual fund are no longer available for investment by the
Separate Account or if we determine further investments in a mutual fund are
inappropriate in view of the objectives of the contract issued, we may
substitute shares of another mutual fund for fund shares already purchased and
apply your future purchase payments to the purchase of shares of the substitute
mutual fund or other securities. No substitutions will be made until prior
approval has been received from the Securities and Exchange Commission and we
receive prior favorable vote of a majority of the votes entitled to be cast by
persons having a voting interest in the mutual fund shares.

<PAGE>

SECTION 10. WITHDRAWAL AND SURRENDER PROVISIONS

EARLY WITHDRAWAL PENALTY - The early withdrawal penalty is a portion of the
Fixed Account value we keep if any amount is withdrawn. There will be no early
withdrawal penalty for partial withdrawals or surrenders on any Scheduled
Update.

The early withdrawal penalty is established on the contract date but is not
charged until the contract has been in force for five years. This penalty, which
is shown on the Contract Data page, will not change until the contract
anniversary prior to the Annuitant's attainment of age 65. At that time the fee
will decrease by 1 percent per year.

<PAGE>

If you transfer money from the Fixed Account to the Variable Account and
withdraw or surrender within 365 days of the transfer, you will be charged the
early withdrawal penalty. The early withdrawal penalty will not be charged if:

1. the transfer occurred on a Scheduled Update; or

2. the Scheduled Update occurred between the transfer and withdrawal or
surrender date(s).

WAIVER OF SURRENDER CHARGES AND PENALTIES - No surrender charge or early
withdrawal penalty will be made on a partial withdrawal or surrender from the
Fixed Account or Variable Account:

1. on this contract's Fixed Account value or Variable Account value applied
to the payment of either annuity income Options 1, 2, 6 or 7; or

2. on or after the Maturity Date if this contract has been in force for
at least 10 years; or

3. if annuity income payments are selected to be made in equal installments
over a period of at least five years (during such period the elected
annuity benefit cannot be surrendered); or

4. if an Annuitant is disabled continuously for three months as defined by
IRC Section 72(m)(7) and satisfactory proof of such disability is sent
to the Home Office; or

5. on any Scheduled Update.

In addition, neither the surrender charge nor the early withdrawal penalty is
applicable if:

1. a partial withdrawal is made after the contract has been in force
two years; and

2. it is more than 12 months since the last withdrawal was made; and

3. the amount withdrawn is not more than 15 percent of the total
accumulation value.

SECTION 11. ANNUITY INCOME OPTIONS

If the total accumulation value to be applied under any one fixed or variable
annuity income option is less than $2,000 or would provide less than a $20
monthly annuity income payment, we will pay the total accumulation value in a
lump sum to the payee.

Prior to the payment of any annuity income option selected, we reserve the right
to verify the age of the payee and to make any adjustments necessary to reflect
the accurate payment for the correct age.

<PAGE>

RETIREMENT BONUS - If the Annuitant elects Option 1, 2, 6 or 7, we will increase
by 1 percent the total accumulation value applied to the elected option. This
bonus will apply only to the first $1 million of total accumulation value
applied to these options. The Company may elect to pay an additional bonus in
excess of the 1 percent. Any additional value will be applied on an equitable
basis and credited to the classes in this contract.

ABSENCE OF ELECTION - If no valid election has been made, the total accumulation
value, if any, will be paid as follows:

1. the Fixed Account value will be paid in the form of a fixed life income
with 10-year period certain (see Option 1 for details); and

2. the Variable Account value will be paid in the form of a variable life
income with 10-year period certain (see Option 6 for details).

If the income payments were too large because of a misstatement, we will deduct
the difference with interest from the benefits falling due until totally repaid.

If such payments were too small, we will add the difference with interest to the
next benefit due. The interest rate will not exceed 6 percent per year.

PROOF OF SURVIVAL - We may require proper proof that a payee, beneficiary, or an
Annuitant is living when payment depends upon such person's survival. Proof
includes a dated and witnessed signature.

SUPPLEMENTAL CONTRACT - We will issue a supplemental contract for each annuity
income option chosen.

Each income payment shall be made as of the first business day of the month. For
Options 1, 2, 3, 4, 6 and 7 the first payment will be made on or before the 15th
business day of the month following receipt of your request and the Maturity
Date. Subsequent income payments for options will be made as of the first
business day of each succeeding month unless another mode of payment is selected
and has been approved by us. For Option 5, the income payment will be made as of
the first business day after the end of the payment period.

If the original payee dies after income payments begin, the beneficiary of such
payee will be paid:

1. under Options 1 and 6, the rest of the annuity income payments during the
period certain, if any; or

2. under Options 3 and 4, the rest of the annuity income payments due,
if any; or

3. under Option 5, the present value plus unpaid interest, if any.

<PAGE>

Under the supplemental contract, the present value of any option will be figured
at the interest rate used to determine the income payment. In no case will a
lump sum distribution be allowed under Options 1, 2, 6 and 7 during the lifetime
of the original payee(s).

VARIABLE INCOME PAYMENTS - The total accumulation value applied to the variable
income payments is allocated to the division(s) as you instructed. The dollar
amount of the first monthly payment of each division to be made under a variable
annuity option will be determined by applying the amount of the total
accumulation value allocated to that division to the appropriate rate in the
annuity income option tables.

The variable income payment of each division is determined by multiplying the
number of variable retirement units by the value of such unit for the
corresponding division.

Within each division, the number of variable retirement units is determined
by dividing the:

- amount of the first monthly payment;

- the value of a variable retirement unit in the appropriate division on
the valuation date coincident with the date that the accumulation
value was applied toward the variable annuity option(s).

The second and subsequent payments will be based on the investment experience of
the corresponding mutual fund(s). The value of each variable retirement unit for
each division was initially set at $10 as of the date income payments were first
figured. Subsequent variable retirement unit values of any division are
determined by multiplying the previous variable retirement unit value by the
current net investment factor.

The net investment factor for each division is computed by dividing (a) by (b)
and multiplying by (c) where:

(a) is the current net asset value per share on the last valuation date plus
any dividends or other distributions in the current valuation period;

(b) is the net asset value of such shares on the last valuation date of the
preceding valuation period; and

(c) is the investment multiplier which is shown on the Contract Data pages
and reflects the guaranteed annuity income option rate and the mortality and
expense risk fee.

<PAGE>

FIXED ANNUITY INCOME OPTIONS -

OPTION 2. JOINT LIFE AND SURVIVOR ANNUITY - We will pay an income for as long as
either or both payees live. The income will be based on the ages of the two
payees. Upon the death of one payee, future payments will be reduced to the
survivor percentage elected. Income payments will cease following the death of
the surviving payee. See Tables 2, 3 and 4.

OPTION 4. INCOME FOR A FIXED AMOUNT - We will pay an income of a specified
amount until the total accumulation value and interest are all paid out to the
payee. The income payments cannot extend beyond the life expectancy of the
payee, as defined by the Internal Revenue Code.

OPTION 5. INTEREST INCOME PAYMENTS - We will hold the total accumulation value
and pay interest at a rate we determine. Interest will be credited at the end of
each payment period. The payee may elect another option at the end of any
payment period. Subject to the restrictions imposed by the Internal Revenue
Code, the payee may withdraw the total accumulation value in whole or in part
upon written request. Distributions of both principal and interest must begin no
later than the date specified by the Internal Revenue Code.

VARIABLE ANNUITY INCOME OPTIONS -

<PAGE>

based on the investment experience of the underlying mutual fund. Upon the death
of one payee, future payments will be reduced to the survivor percentage
elected. The variable income payments will cease following the death of the
surviving payee.

OTHER ANNUITY OPTIONS - Upon your request, we may make other fixed and variable
annuity options available.

BASIS OF ANNUITY INCOME OPTION TABLES - The following tables show the dollar
amount of monthly annuity income payments for the payee's attained age when the
supplemental contract is issued.

15
<PAGE>
<TABLE>
<CAPTION>

SECTION 12. ANNUITY INCOME OPTION TABLES
TABLE 1 - OPTIONS 1 AND 6
Income payments for life with or without a period certain
Equal monthly income payments for each $1,000 of accumulation value

Attained Attained
age of age of
payee Period certain payee Period certain
- ------------ -------------------------------------- --------- ---------------------------------------

Life 10 yrs 15 yrs 20 yrs Life 10 yrs 15 yrs 20 yrs
---- ------ ------ ------ ---- ------ ------ ------

55 4.19 4.16 4.12 4.06 68 5.73 5.55 5.30

56 4.27 4.24 4.19 4.12 69 5.91 5.70 5.41

57 4.35 4.32 4.27 4.19 70 6.11 5.86 5.53

58 4.44 4.40 4.34 4.25 71 6.32 6.02 5.64

59 4.54 4.49 4.42 4.32 72 6.55 6.20

60 4.64 4.58 4.51 4.39 73 6.80 6.38

61 4.75 4.68 4.59 4.46 74 7.07 6.57

62 4.86 4.79 4.68 4.53 75 7.37 6.76

63 4.98 4.90 4.78 4.60 76 7.68 6.96

64 5.11 5.01 4.88 4.67 77 8.03 7.16

65 5.25 5.14 4.98 4.75 78 8.40 7.36

66 5.40 5.26 5.08 79 8.80 7.56

67 5.55 5.40 5.19 80 9.23

</TABLE>

TABLE 2 - OPTIONS 2 AND 7
Joint life income with 50 percent to survivor
Initial monthly income payments for each $1,000 of accumulation value

Attained ages
of
payees 55 56 57 58 59 60 61 62 63 64 65
- -------------- ----- ----- ------ ------ ----- ------- ----- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

55 4.19

56 4.23 4.27

57 4.27 4.31 4.35

58 4.31 4.36 4.40 4.44

59 4.36 4.40 4.44 4.49 4.54

60 4.40 4.45 4.49 4.54 4.59 4.64

61 4.45 4.50 4.54 4.59 4.64 4.69 4.75

62 4.50 4.55 4.59 4.64 4.69 4.75 4.80 4.86

63 4.55 4.60 4.65 4.70 4.75 4.80 4.86 4.92 4.98

64 4.61 4.65 4.70 4.75 4.81 4.86 4.92 4.98 5.04 5.11

65 4.66 4.71 4.76 4.81 4.87 4.92 4.98 5.05 5.11 5.18 5.25

66 4.72 4.77 4.82 4.87 4.93 4.99 5.05 5.11 5.18 5.25 5.32

67 4.78 4.83 4.88 4.94 5.00 5.06 5.12 5.18 5.25 5.32 5.40

68 4.84 4.89 4.95 5.00 5.06 5.12 5.19 5.26 5.33 5.40 5.48

69 4.90 4.96 5.01 5.07 5.13 5.20 5.26 5.33 5.41 5.48 5.56

70 4.97 5.03 5.08 5.14 5.21 5.27 5.34 5.41 5.49 5.56 5.65

</TABLE>

TABLE 3 - OPTIONS 2 AND 7
Joint life income with 66 2/3 percent to survivor
Initial monthly income payments for each $1,000 of accumulation value

Attained ages
of
payees 55 56 57 58 59 60 61 62 63 64 65
- --------------- ----- ----- ----- ------- ------ ----- ------ ------ ----- ----- -----

55 4.02

56 4.06 4.10

57 4.09 4.13 4.17

58 4.13 4.17 4.21 4.25

59 4.17 4.21 4.25 4.29 4.33

60 4.20 4.25 4.29 4.33 4.38 4.42

61 4.24 4.29 4.33 4.37 4.42 4.47 4.52

62 4.28 4.33 4.37 4.42 4.47 4.52 4.57 4.62

63 4.32 4.37 4.41 4.46 4.51 4.56 4.62 4.67 4.72

64 4.36 4.41 4.46 4.51 4.56 4.61 4.67 4.72 4.78 4.84

65 4.40 4.45 4.50 4.55 4.61 4.66 4.72 4.78 4.84 4.90 4.96

66 4.44 4.49 4.55 4.60 4.66 4.71 4.77 4.83 4.90 4.96 5.02

67 4.49 4.54 4.59 4.65 4.71 4.77 4.83 4.89 4.95 5.02 5.09

68 4.53 4.58 4.64 4.70 4.76 4.82 4.88 4.95 5.02 5.08 5.16

69 4.57 4.63 4.69 4.75 4.81 4.87 4.94 5.01 5.08 5.15 5.22

70 4.62 4.68 4.74 4.80 4.86 4.93 5.00 5.07 5.14 5.22 5.29

</TABLE>

TABLE 4 - OPTIONS 2 AND 7
Joint life income with 100 percent to survivor
Initial monthly income payments for each $1,000 of accumulation value

Attained ages
of
payees 55 56 57 58 59 60 61 62 63 64 65
- -------------- ------ ------ ----- ------ ------ ------ ------ ----- ----- ----- -----

55 3.73

56 3.75 3.78

57 3.78 3.81 3.84

58 3.81 3.84 3.87 3.91

59 3.83 3.87 3.90 3.94 3.97

60 3.86 3.89 3.93 3.97 4.01 4.04

61 3.88 3.92 3.96 4.00 4.04 4.08 4.12

62 3.90 3.94 3.99 4.03 4.07 4.12 4.16 4.20

63 3.92 3.97 4.01 4.06 4.10 4.15 4.19 4.24 4.28

64 3.94 3.99 4.04 4.09 4.13 4.18 4.23 4.28 4.33 4.37

65 3.96 4.01 4.06 4.11 4.16 4.22 4.27 4.32 4.37 4.42 4.47

66 3.98 4.03 4.08 4.14 4.19 4.25 4.30 4.36 4.41 4.47 4.52

67 4.00 4.05 4.11 4.16 4.22 4.28 4.33 4.39 4.45 4.51 4.57

68 4.01 4.07 4.13 4.18 4.24 4.30 4.37 4.43 4.49 4.55 4.62

69 4.03 4.09 4.15 4.21 4.27 4.33 4.40 4.46 4.53 4.59 4.66

70 4.04 4.10 4.16 4.23 4.29 4.36 4.424 4.49 4.56 4.63 4.71

</TABLE>

TABLE 5 - OPTION 3

Income payments for a fixed period
Equal monthly income payments for each $1,000 of accumulation value

Monthly Monthly Monthly
Number of years in income Number of years in income Number of years in income
fixed period payment fixed period payment fixed period payment
- ------------------- ------- ------------------ ------- ------------------ -------

1 84.47 11 8.86 21 5.32

2 42.86 12 8.24 22 5.15

3 28.99 13 7.71 23 4.99

4 22.06 14 7.26 24 4.84

5 17.91 15 6.87 25 4.71

6 15.14 16 6.53 26 4.59

7 13.16 17 6.23 27 4.47

8 11.68 18 5.96 28 4.37

9 10.53 19 5.73 29 4.27

10 9.61 20 5.51 30 4.18

</TABLE>

<PAGE>

HOME OFFICE: 1 Horace Mann Plaza
Springfield, Illinois 62715-0001
1-800-999-1030

MAILING ADDRESS: P.O. Box 4657
Springfield, IL 62708-4657

INDIVIDUAL FLEXIBLE PREMIUM DEFERRED
FIXED AND VARIABLE RETIREMENT ANNUITY CONTRACT
NONPARTICIPATING C DIVIDENDS NOT PAID
ANY PAYMENTS AND VALUES UNDER THIS CONTRACT WHICH ARE BASED ON INVESTMENT
RESULTS OF THE SEPARATE ACCOUNT ARE VARIABLE AND NOT GUARANTEED.

We agree to provide the benefits described in this contract. Signed for the
Company at Springfield, Illinois, as of the Contract Date.

President Countersigned Corporate Secretary

IC-428000
<PAGE>

This is a legal contract between the contract Owner and your insurance company.

This Individual Flexible Premium Deferred Fixed and Variable Retirement Annuity
Contract provides for accumulation of value for income payments. Key contract
fees, charges and guaranteed rates are shown on your Contract Data pages.

<PAGE>

HOME OFFICE: 1 Horace Mann Plaza
Springfield, Illinois 62715-0001
1-800-999-1030

MAILING ADDRESS: P.O. Box 4657
Springfield, IL 62708-4657

SECTION 1 - CONTRACT DATA

<S> <C>

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]
CONTRACT DATE: [05/01/1999]
MATURITY DATE: [05/01/2034]
SCHEDULED UPDATE: [05/01/2004]
INVESTMENT PERIOD: [05]
AGE AT ISSUE: [35]
SEX: [MALE]

OWNER: [JOHN DOE]

PURCHASE PAYMENT(S):

MINIMUM INITIAL DEPOSIT: $250,000.00

INITIAL PAYMENT $[ 250,000.00]. SEE APPLICATION FOR DETAILS OF ALLOCATIONS.

SUBSEQUENT PAYMENT(S) $[ 2,400.00] PER
YEAR, PAYABLE IN [12]
INSTALLMENT(S), TO BE
ALLOCATED AS FOLLOWS:

FIXED ACCOUNT: [100.00]%

GUARANTEED INTEREST RATE:
FIXED ACCOUNT: 3.5% PER YEAR PRIOR TO THE START OF INCOME PAYMENTS.
VARIABLE ACCOUNT: NONE.

SURRENDER CHARGE RATES: FIXED ACCOUNT AND VARIABLE ACCOUNT:
DURING CONTRACT YEAR % CHARGED
1 6%
2 5%
3 5%
4 5%
5 5%
THEREAFTER 0%

SECTION 1 (CONTINUED) - CONTRACT DATA

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]

EARLY WITHDRAWAL PENALTY RATE

VARIABLE ACCOUNT: NONE

THE EARLY WITHDRAWAL PENALTY IS WAIVED ON EACH SCHEDULED UPDATE.

ANNUAL MORTALITY RISK AND EXPENSE RISK FEE:

FIXED ACCOUNT: NONE.

VARIABLE ACCOUNT: 0.95% PER YEAR.

GUARANTEED ANNUITY INCOME OPTION RATE:

FIXED INCOME OPTIONS: 3.0% PER YEAR

VARIABLE INCOME OPTIONS: NONE.

INVESTMENT MULTIPLIER: .996777

DEATH BENEFIT: THE BENEFICIARY WILL RECEIVE THE GREATER OF:
1) THE TOTAL ACCUMULATION VALUE LESS ANY APPLICABLE PREMIUM TAX; OR
2) THE SUM OF ALL PURCHASE PAYMENTS LESS ANY PARTIAL WITHDRAWALS; OR
3) PURCHASE PAYMENTS LESS ANY APPLICABLE PREMIUM TAX, OUTSTANDING LOAN
BALANCES AND/OR WITHDRAWALS, INCREASED BY 3% IF THE DEATH OCCURS PRIOR
TO THE MATURITY DATE OR AGE 70, WHICHEVER IS EARLIER.
SEE SECTION 7 OF THE CONTRACT FOR COMPLETE DETAILS.

RETIREMENT BONUS: THE FIRST $1 MILLION OF TOTAL ACCUMULATION VALUE USED TO PURCHASE
SPECIFIC INCOME OPTIONS WILL BE INCREASED BY 1%. SEE SECTION 11 OF THE
CONTRACT FOR COMPLETE DETAILS.

SECTION 2 - FIXED ACCOUNT'S TABLE OF GUARANTEED MONTHLY INCOME AT MATURITY AND
MINIMUM ACCUMULATION AND SURRENDER VALUES*

CONTRACT NUMBER: [0579999990]
ANNUITANT: [JOHN DOE]

CONTRACT MINIMUM MINIMUM GUARANTEED
ANNIVERSARY ATTAINED GUARANTEED GUARANTEED MONTHLY INCOME
DATE AGE ACCUM VALUE SURRENDER VALUE AT MATURITY

1 [36] $ [261,195.26] $ [248,135.50]
2 [37] $ [272,782.35] $ [259,143.23]
3 [38] $ [284,774.99] $ [270,536.24]
4 [39] $ [297,187.38] $ [282,328.01]
5 [40] $ [310,034.20] $ [310,034.20]

6 [41] $ [323,330.66] $ [307,164.13]
7 [42] $ [337,092.49] $ [320,237.87]
8 [43] $ [351,335.99] $ [333,769.19]
9 [44] $ [366,078.01] $ [347,774.11]
10 [45] $ [381,336.00] $ [381,336.00]

11 [46] $ [397,128.02] $ [377,271.62]
12 [47] $ [413,472.76] $ [392,799.12]
13 [48] $ [430,389.57] $ [408,870.09]
14 [49] $ [447,898.47] $ [425,503.55]
15 [50] $ [466,020.18] $ [466,020.18]

16 [51] $ [484,776.15] $ [460,537.34]
17 [52] $ [504,188.58] $ [478,979.15]
18 [53] $ [524,280.44] $ [498,066.42]
19 [54] $ [545,075.52] $ [517,821.74]
20 [55] $ [566,598.42] $ [566,598.42] $ [2,380.61]

25 [60] $ [686,053.82] $ [686,053.82] $ [3,173.54]
30 [65] $ [827,929.34] $ [803,091.46] $ [4,297.11]
35** [70] $ [996,432.98] $ [996,432.98] $ [5,897.48]

</TABLE>

GUARANTEED MONTHLY INCOME AT MATURITY IS BASED ON THE 10 YEAR CERTAIN AND
LIFE ANNUITY INCOME OPTION.

** THIS DATE REFERS TO THE MATURITY DATE.

THIS TABLE DOES NOT REFLECT ANY VALUES ALLOCATED TO THE VARIABLE ACCOUNT.

<PAGE>

SECTION 3. DEFINITIONS OF CERTAIN TERMS

"Annuitant" is the person insured in this contract as shown on the Contract Data
pages.

"Annuity income option" is the method by which income payments are made at the
Maturity Date or upon the Annuitants death.