MFS VARIABLE ACCOUNT, 497J, 1997-09-10

MFS VARIABLE ACCOUNT
497J, 1997-09-10

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<PAGE>

NATIONWIDE LIFE INSURANCE COMPANY

HOME OFFICE
P.O. BOX 16609
COLUMBUS, OHIO 43216-6609
1-800-848-7529, TDD 1-800-238-3035

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY THE MFS VARIABLE ACCOUNT OF
NATIONWIDE LIFE INSURANCE COMPANY

The Individual Deferred Variable Annuity Contracts described in this
prospectus are flexible Purchase Payment contracts (collectively referred to as
the "Contracts"). The Contracts are sold to individuals for use in retirement
plans which may qualify for special federal tax treatment under the Internal
Revenue Code (the "Code"). Annuity payments under the Contracts are deferred
until a selected later date.

Purchase payments are allocated to the MFS Variable Account ("Variable
Account"), a separate account of Nationwide Life Insurance Company (the
"Company"). The Variable Account uses its assets to purchase shares at net asset
value in one or more of the following series of the underlying Mutual Fund
options:

<TABLE>
<S> <C>
MFS-Registered Trademark- Bond Fund - Class A (FORMERLY MFS-Registered Trademark- Total Return Fund - Class A (FORMERLY
MASSACHUSETTS FINANCIAL BOND FUND) MASSACHUSETTS FINANCIAL TOTAL RETURN TRUST)

MFS-Registered Trademark- Growth Opportunities Fund - Class A MFS-Registered Trademark- World Governments Fund - Class A
(FORMERLY MFS-Registered Trademark- CAPITAL DEVELOPMENT FUND) (FORMERLY MFS-Registered Trademark- WORLDWIDE GOVERNMENTS TRUST)

MFS-Registered Trademark- Emerging Growth Fund - Class A MFS-Registered Trademark- Series Trust IV
(FORMERLY MASSACHUSETTS FINANCIAL EMERGING GROWTH TRUST) MFS-Registered Trademark- Money Market Fund
(FORMERLY MASSACHUSETTS CASH
MANAGEMENT TRUST - MFS-Registered Trademark- MONEY
MARKET FUND)

MFS-Registered Trademark- High Income Fund - Class A Massachusetts Investors Growth Stock Fund - Class A
(FORMERLY MASSACHUSETTS FINANCIAL HIGH
INCOME TRUST-I) Massachusetts Investors Trust - Class A

MFS-Registered Trademark- Research Fund - Class A Nationwide Separate Account Trust-
Money Market Fund
</TABLE>

This prospectus provides you with the basic information you should know
about the Individual Deferred Variable Annuity Contracts issued by the Variable
Account before investing. You should read it and keep it for future reference. A
Statement of Additional Information dated May 1, 1997, containing further
information about the Contracts and the Variable Account has been filed with the
Securities and Exchange Commission. You can obtain a copy without charge from
Nationwide Life Insurance Company by calling the number listed above, or writing
P. O. Box 16609, Columbus, Ohio 43216-6609.

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

THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1997, IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 48 OF THE PROSPECTUS.

THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.

<PAGE>

GLOSSARY OF SPECIAL TERMS

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

ANNUITANT- The person designated to receive annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
The Annuitant is named on the Data Page of the Contract unless changed. No
change of Annuitant may be made without the prior consent of the Company. This
person must be age 78 or younger at the time of contract issuance.

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

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

ANNUITY COMMENCEMENT DATE-The date on which annuity payments are scheduled to
commence. The Annuity Commencement Date is shown on the Data Page of the
Contract and is subject to change by the Owner.

ANNUITY PAYMENT OPTION-The chosen form of annuity payments. Several options are
available under this Contract. The Annuity Payment Option is named in the
application, unless changed.

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

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

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

COMPANY- Nationwide Life Insurance Company.

CONTINGENT BENEFICIARY- The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Designated Annuitant.

CONTINGENT DESIGNATED ANNUITANT- The Contingent Designated Annuitant may be the
recipient of certain rights or benefits under this Contract when the Designated
Annuitant dies before the Annuitization Date. If a Contingent Annuitant is
designated, and the Designated Annuitant dies before the Annuitization Date, the
Contingent Designated Annuitant becomes the Designated Annuitant. The Owner's
right to name a Contingent Designated Annuitant may be restricted under the
provisions of any retirement or deferred compensation plan for which this
Contract is issued.

CONTINGENT OWNER- A Contingent Owner succeeds to the right of the Contract Owner
upon the Contract Owner's death before Annuitization. The Owner's right to name
a Contingent Owner may be restricted under the provisions of the retirement or
deferred compensation plan for which this Contract is issued. For Contracts
issued in the state of New York, references throughout this prospectus to
"Contingent Owner" shall mean "Owner's Beneficiary."

CONTRACT- The Individual Deferred Variable Annuity Contract described in this
prospectus.

CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of the Contract.

CONTRACT OWNER (OWNER)-The Contract Owner is the person who possesses all rights
under the Contract, including the right to designate and change any designations
of the Owner, Contingent Owner, Designated Annuitant, (the Annuitant can not be
changed without the consent of the Company), Contingent Designated Annuitant,
Beneficiary, Contingent Beneficiary, Annuity Payment Option, and the Annuity
Commencement Date. If a Joint Owner is named, references to "Contract Owner" or
"Owner" in this prospectus, unless otherwise indicated, will apply to both the
Owner and Joint Owner. The Contract Owner is the person named on the
application, unless changed.

CONTRACT VALUE-The sum of the value of all Accumulation Units attributable to
the Contract plus any amount held under the Contract in the Fixed Account.

CONTRACT YEAR- Each year the Contract remains in force commencing with the Date
of Issue.

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

<PAGE>

DEATH BENEFIT- The benefit payable upon the death of the Designated Annuitant
(or the Contingent Designated Annuitant, if applicable). The benefit does not
apply upon the death of the Contract Owner when the Owner and Designated
Annuitant are not the same person. If the Annuitant dies after the
Annuitization Date, any benefit that may be payable shall be as specified in the
Annuity Payment Option elected.

DESIGNATED ANNUITANT- The person designated prior to the Annuitization Date to
receive annuity payments. No change of Designated Annuitant may be made without
the prior consent of the Company.

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

ERISA- The Employee Retirement Income Security Act of 1974, as amended.

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

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

HOME OFFICE- The main office of the Company located in Columbus, Ohio.

INDIVIDUAL RETIREMENT ANNUITY (IRA)-An annuity which qualifies for favorable tax
treatment under Section 408 of the Code.

MUTUAL FUND (FUND)-A registered management investment company in which the
assets of the Sub-Accounts of the variable account will be invested.

NON-QUALIFIED CONTRACT -A Contract which does not qualify for favorable tax
treatment under Sections 401, 408, or 403(b) of the Code.

PURCHASE PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers between the Variable Account and the Fixed
Account, or among the Sub-Accounts.

QUALIFIED CONTRACT- A Contract issued to a Qualified Plan.

QUALIFIED PLAN- Retirement plans which receive favorable tax treatment under the
provisions, Sections 401 or 403(a) of the Code.

SEP IRA- A retirement plan which receives favorable tax treatment under the
provisions of Section 408(k) of the Code.

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

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

UNIFIED BILLING AUTHORITY- A program established to collect, and electronically
forward to the Company, Purchase Payments from multiple employers whose
employees have authorized regular Purchase Payments to Tax Sheltered Annuity
Contracts pursuant to a payroll deduction authorization, resulting in the
systematic updating of each Contract Owner's Contract Value and record of
Purchase Payments on a predetermined basis. Unified Billing Authorities may be
established (on a statewide basis) on behalf of school districts and school
district employees within certain states.

VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the Variable Account underlying Mutual Fund shares that the
current net asset value of its Accumulation Units might be materially affected.

VALUATION PERIOD- The period of time commencing at the close of business of a
Valuation Date and ending at the close of business for the next succeeding
Valuation Date.

VARIABLE ACCOUNT-The MFS Variable Account, a separate investment account of the
Company into which Variable Account Purchase Payments are allocated. The
Variable Account is divided into Sub-Accounts, each of which invests in shares
of a separate underlying Mutual Fund.

VARIABLE ANNUITY- An annuity providing for payments which vary in amount with
the investment experience of the Variable Account.

<PAGE>

TABLE OF CONTENTS

GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF CONTRACT EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES . . . . . . . . . . . . . . . . . . . . 6
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
CONDENSED FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .11
NATIONWIDE LIFE INSURANCE COMPANY. . . . . . . . . . . . . . . . . . . . . . .26
THE VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Underlying Mutual Fund Options . . . . . . . . . . . . . . . . . . . . .26
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS. . . . . . .28
Mortality Risk Charge. . . . . . . . . . . . . . . . . . . . . . . . . .28
Expense Risk Charge. . . . . . . . . . . . . . . . . . . . . . . . . . .28
Contingent Deferred Sales Charge . . . . . . . . . . . . . . . . . . . .29
Waiver of Contingent Deferred Sales Charge . . . . . . . . . . . . . . .29
Contract Maintenance Charge. . . . . . . . . . . . . . . . . . . . . . .30
Premium Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Expenses of Variable Account . . . . . . . . . . . . . . . . . . . . . .30
Investments of the Variable Account. . . . . . . . . . . . . . . . . . .31
Right to Revoke. . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Loan Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Beneficiary Provisions . . . . . . . . . . . . . . . . . . . . . . . . .33
Ownership Provisions . . . . . . . . . . . . . . . . . . . . . . . . . .34
Substitution of Securities . . . . . . . . . . . . . . . . . . . . . . .34
Contract Owner Inquiries . . . . . . . . . . . . . . . . . . . . . . . .34
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT. . . . . . . . . . . . . . . . . . . .34
Value of an Annuity Unit . . . . . . . . . . . . . . . . . . . . . . . .35
Assumed Investment Rate. . . . . . . . . . . . . . . . . . . . . . . . .35
Frequency and Amount of Annuity Payments . . . . . . . . . . . . . . . .35
Annuity Commencement Date. . . . . . . . . . . . . . . . . . . . . . . .35
Change in Annuity Commencement Date. . . . . . . . . . . . . . . . . . .35
Annuity Payment Options. . . . . . . . . . . . . . . . . . . . . . . . .35
Death of Contract Owner. . . . . . . . . . . . . . . . . . . . . . . . .36
Death Benefit Prior to the Annuitization Date. . . . . . . . . . . . . .37
Death Benefit After the Annuitization Date . . . . . . . . . . . . . . .37
Required Distribution for Qualified Plans or Tax Sheltered Annuities . .37
Required Distributions for Individual Retirement Annuities and SEP-IRA's38
Generation-Skipping Transfers. . . . . . . . . . . . . . . . . . . . . .39
GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Contract Owner Services. . . . . . . . . . . . . . . . . . . . . . . . .39
Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . .40
Allocation of Purchase Payments and Contract Value . . . . . . . . . . .40
Value of an Accumulation Unit. . . . . . . . . . . . . . . . . . . . . .41
Net Investment Factor. . . . . . . . . . . . . . . . . . . . . . . . . .41
Valuation of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . .41
Determining the Contract Value . . . . . . . . . . . . . . . . . . . . .41
Surrender (Redemption) . . . . . . . . . . . . . . . . . . . . . . . . .42
Surrenders Under a Qualified Plan or Tax Sheltered Annuity Contract. . .42
Federal Tax Considerations . . . . . . . . . . . . . . . . . . . . . . .43
Non-Qualified Contracts - Natural Persons as Owners. . . . . . . . . . .43
Non-Qualified Contracts - Non-Natural Persons as Owners. . . . . . . . .45
Qualified Plans, Individual Retirement Annuities, and
Tax Sheltered Annuities. . . . . . . . . . . . . . . . . . . . . . . .45
Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Non-Resident Aliens. . . . . . . . . . . . . . . . . . . . . . . . . . .46

<PAGE>

Federal Estate, Gift and Generation Skipping Transfer Taxes . . . . . . . .46
Charge for Tax Provisions . . . . . . . . . . . . . . . . . . . . . . . . .47
Diversification. . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Tax Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . .48

<PAGE>

SUMMARY OF CONTRACT EXPENSES

CONTRACT OWNER TRANSACTION EXPENSES

Maximum Contingent Deferred Sales Charge(1) . . . . . . . . . . . 5%

ANNUAL CONTRACT MAINTENANCE CHARGE(2). . . . . . . . . . . . . . . . . $30

VARIABLE ACCOUNT ANNUAL EXPENSES

Mortality and Expense Risk Charges. . . . . . . . . . . . . . . . 1.30%
Administration Charge . . . . . . . . . . . . . . . . . . . . . . .00%
Total Variable Account Annual Expenses. . . . . . . . . . . . . . 1.30%

(1) Starting with the second year, after a Purchase Payment has been made, the
Contract Owner may withdraw without a Contingent Deferred Sales Charge
(CDSC), the greater of (a) an amount equal to 10% of that Purchase Payment,
or (b) any amount withdrawn in order for the Contract to meet minimum
distribution requirements under the Code. Withdrawals may be restricted
for Contracts issued pursuant to the terms of a Tax Sheltered Annuity or
other Qualified Plan. This CDSC-free withdrawal is non-cumulative; that
is, free amounts not taken during any given Contract Year cannot be taken
as free amounts in a subsequent Contract Year. (see "Contingent Deferred
Sales Charge" for additional provisions).

(2) The annual Contract Maintenance Charge is deducted on each Contract
Anniversary and in any year in which the entire Contract Value is
surrendered on the date of Surrender (see "Contract Maintenance Charge").
For Tax Sheltered Annuity Contracts issued on or after the later of May 1,
1997, or the date on which state insurance authorities approve applicable
contractual modifications, the Contract Maintenance Charge shall be waived
in those states in which a Unified Billing Authority Program, or any such
similar program, is being utilized to process Purchase Payments.

UNDERLYING MUTUAL FUND ANNUAL EXPENSES(3)
(AFTER EXPENSE REIMBURSEMENT)

<TABLE>
<CAPTION>
TOTAL PORTFOLIO
MANAGEMENT OTHER 12B-1 COMPANY
FEES EXPENSES FEES EXPENSES
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- BOND FUND - CLASS A 0.40% 0.33% 0.30% 1.03%
MFS-Registered Trademark- GROWTH OPPORTUNITIES FUND - CLASS A 0.43% 0.29% 0.15% 0.87%
MFS-Registered Trademark- EMERGING GROWTH FUND - CLASS A 0.75% 0.28% 0.25% 1.28%
MFS-Registered Trademark- HIGH INCOME FUND - CLASS A 0.45% 0.34% 0.26% 1.05%
MFS-Registered Trademark- RESEARCH FUND - CLASS A 0.36% 0.23% 0.34% 0.93%
MFS-Registered Trademark- TOTAL RETURN FUND - CLASS A 0.38% 0.20% 0.35% 0.93%
MFS-Registered Trademark- WORLD GOVERNMENTS FUND - CLASS A 0.90% 0.36% 0.25% 1.51%
MFS-Registered Trademark- SERIES TRUST IV
MFS-Registered Trademark- MONEY MARKET FUND 0.48% 0.31% 0.00% 0.79%
MASSACHUSETTS INVESTORS GROWTH STOCK FUND - CLASS A 0.31% 0.23% 0.19% 0.73%
MASSACHUSETTS INVESTORS TRUST - CLASS A 0.26% 0.20% 0.32% 0.78%
NATIONWIDE SEPARATE ACCOUNT TRUST - MONEY MARKET FUND 0.50% 0.03% 0.00% 0.53%
</TABLE>

(3) The Mutual Fund expenses shown above are assessed at the underlying Mutual
Fund level and are not direct charges against separate account assets or
reductions from contract values. These underlying Mutual Fund expenses are
taken into consideration in computing each underlying Mutual Fund's net
asset value, which is the share price used to calculate the unit values of
the Variable Account. The following funds are subject to fee waivers or
expense reimbursement arrangements:

6
<PAGE>

FUND EXPENSES WITHOUT REIMBURSEMENT OR WAVIER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
MFS -Registered Trademark- Bond Fund - Class A The Fund has an expense offset arrangement which reduces the Fund's
custodian fee based upon the amount of cash maintained by the Fund
with its custodian and dividend disbursing agent, and may enter
into other such arrangements and directed brokerage arrangements
(which would also have the effect of reducing the Fund's expenses).
Any such fee reductions are not reflected under "Other Expenses."
- ------------------------------------------------------------------------------------------------------------------------------------
MFS -Registered Trademark- Growth Opportunities Fund - Class A The Fund has adopted a Distribution Plan which provides that it
will pay certain distribution/service fees aggregating up to 0.35%
per annum of the average daily net assets. Currently, 0.10% of the
distribution/service fee is being waived. Additionally, absent any
expense reductions, the Fund's total operating expenses would have
been 0.96%.
- ------------------------------------------------------------------------------------------------------------------------------------
MFS -Registered Trademark- Emerging Growth Fund - Class A The Fund has an expense offset arrangement which reduces the Fund's
custodian fee based upon the amount of cash maintained by the Fund
with its custodian and dividend disbursing agent, and may enter
into other such arrangements and directed brokerage arrangements
(which would also have the effect of reducing the Fund's expenses).
Any such fee reductions are not reflected under "Other Expenses."
- ------------------------------------------------------------------------------------------------------------------------------------
MFS -Registered Trademark- High Income Fund - Class A The Fund has an expense offset arrangement which reduces the Fund's
custodian fee based upon the amount of cash maintained by the Fund
with its custodian and dividend disbursing agent, and may enter
into other such arrangements and directed brokerage arrangements
(which would also have the effect of reducing the Fund's expenses).
Any such fee reductions are not reflected under "Other Expenses."
- ------------------------------------------------------------------------------------------------------------------------------------
MFS -Registered Trademark- Research Fund - Class A The Fund has adopted a Distribution Plan which provides that it
will pay certain distribution/service fees aggregating up to 0.35%
per annum of the average daily net assets. The 0.35% per annum
distribution/service fee is reduced to 0.25% per annum for shares
which were purchased prior to March 1, 1991. Distribution
expenses paid under this Plan, together with the initial sales
charge, may cause long-term shareholders to pay more than the
maximum sales charge that would have been permissible if imposed
entirely as an initial sales charge.
- ------------------------------------------------------------------------------------------------------------------------------------
MFS -Registered Trademark- Total Return Fund - Class A The Fund has adopted a Distribution Plan which provides that it
will pay certain distribution/service fees aggregating up to 0.35%
per annum of the average daily net assets. The 0.35% per annum
distribution/service fee is reduced to 0.25% per annum for shares
which were purchased prior to October 1, 1989. Distribution
expenses paid under this Plan, together with the initial sales
charge, may cause long-term shareholders to pay more than the
maximum sales charge that would have been permissible if imposed
entirely as an initial sales charge.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7
<PAGE>

The information relating to the underlying Mutual Fund expenses was provided by
the underlying Mutual Fund and was not independently verified by the Company.

<PAGE>

EXAMPLE

The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 initial Purchase Payment and 5% annual
return. These dollar figures are illustrative only and should not be considered
a representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below. The expense amounts shown below are derived from
a formula which allows the $30 Contract Maintenance Charge to be expressed as a
percentage of the average contract account size for existing contracts. Since
the average contract account size for contracts issued under this prospectus is
greater than $1000, the expense effect of the Contract Maintenance Charge is
reduced accordingly.

IF YOU SURRENDER YOUR CONTRACT IF YOU DO NOT SURRENDER YOUR IF YOU ANNUITIZE YOUR CONTRACT
AT THE END OF THE APPLICABLE CONTRACT AT THE END OF THE AT THE END OF THE APPLICABLE
TIME PERIOD APPLICABLE TIME PERIOD TIME PERIOD
--------------------------------- --------------------------------- ---------------------------------
1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MFS-Registered Trademark-
Bond Fund-Class A 72 114 158 253 22 69 118 253 * 69 118 253
- ------------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark-
Growth Opportunities
Fund-Class A 72 113 157 251 22 68 117 251 * 68 117 251
- ------------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark-
Emerging Growth Fund-
Class A 75 123 173 284 25 78 133 284 * 78 133 284
- ------------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark-
High Income Fund-Class A 73 116 161 259 23 71 121 259 * 71 121 259
- ------------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark-
Research Fund-Class A 71 109 150 237 21 64 110 237 * 64 110 237
- ------------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark-
Total Return Fund-Class A 71 109 150 236 21 64 110 236 * 64 110 236
- ------------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark-
World Governments Fund-
Class A 78 130 185 308 28 85 145 308 * 85 145 308
- ------------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark-
Series Trust IV -
MFS-Registered Trademark-
Money Market Fund 73 116 161 259 23 71 121 259 * 71 121 259
- ------------------------------------------------------------------------------------------------------------------------------------
Mass. Investors Growth
Stock Fund-Class A 70 108 148 232 20 63 108 232 * 63 108 232
- ------------------------------------------------------------------------------------------------------------------------------------
Mass. Investors Trust-
Class A 69 105 143 223 19 60 103 223 * 60 103 223
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate
Account- Money Market Fund 70 107 147 231 20 62 107 231 * 62 107 231
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* The Contracts sold under this prospectus do not permit Annuitization during
the first two Contract years.

The purpose of the Summary of Contract Expenses and Example are to assist
the Contract Owner in understanding the various costs and expenses that
will be borne directly or indirectly. The expenses of the MFS Variable
Account as well as those of the underlying Mutual Funds are reflected in
the table. For more complete descriptions of the expenses of the Variable
Account, see "Variable Account Charges, Purchase Payments, and Other
Deductions." For more complete information regarding expenses paid out of
the assets of a particular underlying Mutual Fund option, see the
underlying Mutual Fund's prospectus. Deductions for premium taxes may also
apply but are not reflected in the Example shown on the previous page (see
"Premium Taxes").

9
<PAGE>

SYNOPSIS

The Company does not deduct a sales charge from Purchase Payments made for
these Contracts. However, if any part of the Contract Value of such Contracts is
surrendered, the Company will, with certain exceptions, deduct from the Contract
Owner's Contract Value a Contingent Deferred Sales Charge equal to 5% of the
lesser of the total of all Purchase Payments made within 96 months prior to the
date of the request to surrender, or the amount surrendered. This charge, when
applicable, is imposed to permit the Company to recover sales expenses which
have been advanced by the Company (see "Contingent Deferred Sales Charge").

In addition, on each Contract Anniversary the Company will deduct an annual
Contract Maintenance Charge of $30 from the Contract Value of the Contracts.
The $30 Contract Maintenance Charge will be waived if the Purchase Payments made
under a Tax Sheltered Annuity Contract are processed through a Unified Billing
Authority. (This waiver is available for Tax Sheltered Annuity Contracts issued
on or after the later of May 1, 1997 or the date on which the insurance
authorities in a state having a Unified Billing Authority approve applicable
contract modifications.) This charge is to reimburse the Company for
administrative expenses related to the issue and maintenance of the Contracts.
The Company does not expect to recover from these charges an amount in excess of
accumulated administrative expenses (see "Contract Maintenance Charge").

The Company deducts a Mortality Risk Premium equal to an annual rate of
0.80% of the daily net asset value of the Variable Account for mortality risk
assumed by the Company (see "Mortality Risk Premium").

The Company deducts an Expense Risk Charge equal to an annual rate of 0.50%
of the daily net asset value of the Variable Account as compensation for the
Company's risk in undertaking not to increase administrative charges on the
Contracts regardless of the actual administrative costs (see "Expense Risk
Charge").

The initial first year Purchase Payment must be at least $1,500 for Non-
Qualified Contracts. However, if periodic payments are expected by the Company,
this initial first year minimum may be satisfied by Purchase Payments made on an
annualized basis. The cumulative total of all Purchase Payments under Contracts
issued on the life of any one Designated Annuitant may not exceed $1,000,000
without the prior consent of the Company (see "Allocation of Purchase Payments
and Contract Value").

Upon Annuitization the selected Annuity Payment Option will begin (see
"Annuity Payment Option"). However, if the net amount to be applied to any
Annuity Payment Option the Annuitization Date is less than $500, the Contract
Value may be distributed in one lump sum in lieu of annuity payments. If any
annuity payment would be less than $20, the Company shall have the right to
change the frequency of payments to such intervals as will result in payments of
at least $20. In no event, however, will annuity payments be made less
frequently than annually (see "Frequency and Amount of Annuity Payments").

Premium taxes payable to any governmental entity will be charged against
the Contracts. If any such premium taxes are payable by the Company at the time
Purchase Payments are made, an equal premium tax deduction may be made from the
Contract prior to the allocation of any Purchase Payment to any underlying
Mutual Fund option (see "Premium Taxes").

To be sure that the Contract Owner is satisfied with the Contract, the
Contract Owner has a ten day free look. Within ten days of the day the Contract
is received, it may be returned to the Home Office of the Company, at the
address shown on page 1 of this prospectus. If the Contract is returned to the
Company in a timely manner, the Company will void the Contract and refund the
Contract Value in full, unless otherwise required by state and/or federal law.
State and/or federal law may provide additional free look privileges. All
Individual Retirement Annuity refunds will be a return of Purchase Payments (see
"Right to Revoke").

10
<PAGE>

CONDENSED FINANCIAL INFORMATION

Accumulation Unit Values (For an accumulation unit outstanding throughout
the period)

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Series Trust IV 33.101565 34.325389 0 1996
- - MFS-Registered Trademark- Money Market 31.765828 33.101565 0 1995
Fund-Q* 30.994333 31.765828 0 1994
30.575287 30.994333 0 1993
29.974326 30.575287 0 1992
28.674122 29.974326 0 1991
26.882238 28.674122 0 1990
24.951768 26.882238 0 1989
23.537669 24.951768 0 1988
22.391979 23.537669 258 1987
-----------------------------------------------------------------------------
MFS Series Trust IV 33.966291 35.222087 4,058 1996
- - MFS-Registered Trademark- Money Market 32.595660 33.966291 5,703 1995
Fund-NQ* 31.804010 32.595660 8,788 1994
31.374016 31.804010 10,894 1993
30.757355 31.374016 21,348 1992
29.423184 30.757355 22,044 1991
27.584489 29.423184 34,393 1990
25.603588 27.584489 35,921 1989
24.152548 25.603588 47,516 1988
22.976926 24.152548 38,413 1987
-----------------------------------------------------------------------------
MFS Series Trust IV 29.055232 30.037656 1,343,440 1996
- - MFS-Registered Trademark- Money Market 27.967294 29.055232 1,630,393 1995
Fund-QS* 27.370768 27.967294 2,012,165 1994
27.082782 27.370768 2,386,518 1993
26.631168 27.082782 3,346,894 1992
25.553415 26.631168 4,316,381 1991
24.029764 25.553415 5,619,586 1990
22.371742 24.029764 6,212,230 1989
21.167833 22.371742 7,703,094 1988
20.198699 21.167833 8,942,048 1987
- --------------------------------------------------------------------------------------------------------------------------------

</TABLE>

* The 7-day yield on the MFS Series Trust IV - MFS-Registered Trademark-
Money Market Fund as of December 31, 1996 was 3.37%.

11
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Series Trust IV 29.075421 30.058530 615,505 1996
- - MFS-Registered Trademark- Money Market 27.986728 29.075421 597,925 1995
Fund-NQS* 27.389788 27.986728 823,383 1994
27.101602 27.389788 962,484 1993
26.649674 27.101602 1,251,049 1992
25.571172 26.649674 1,661,279 1991
24.046461 25.571172 2,007,134 1990
22.387287 24.046461 2,137,971 1989
21.182540 22.387287 3,088,244 1988
20.212734 21.182540 4,195,980 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Bond Fund-Class 48.229836 49.627094 0 1996
A-Q 40.103391 48.229836 0 1995
42.399834 40.103391 254 1994
37.614804 42.399834 255 1993
35.745806 37.614804 255 1992
30.588668 35.745806 256 1991
28.810284 30.588668 261 1990
25.635091 28.810284 261 1989
23.902587 25.635091 460 1988
24.281790 23.902587 835 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Bond Fund-Class 50.922705 52.397975 3,321 1996
A-NQ 42.342529 50.922705 596 1995
44.767184 42.342529 450 1994
39.714988 44.767184 1,068 1993
37.741633 39.714988 1,400 1992
32.296567 37.741633 2,161 1991
30.418889 32.296567 2,290 1990
27.066400 30.418889 4,117 1989
25.237169 27.066400 3,385 1988
25.637550 25.237169 16,179 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

12
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- Bond Fund-Class 43.808005 44.939826 509,516 1996
A-QS 36.536936 43.808005 613,426 1995
38.746280 36.536936 715,452 1994
34.477915 38.746280 873,520 1993
32.864457 34.477915 1,019,209 1992
28.208302 32.864457 1,231,635 1991
26.649337 28.208302 1,282,139 1990
23.784006 26.649337 1,684,129 1989
22.243883 23.784006 1,982,290 1988
22.665333 22.243883 1,903,237 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- 43.772192 44.903088 208,403 1996
Bond Fund-Class A-NQS 36.507070 43.772192 267,129 1995
38.714601 36.507070 278,445 1994
34.449725 38.714601 341,506 1993
32.837584 34.449725 395,096 1992
28.185248 32.837584 416,135 1991
26.627561 28.185248 423,448 1990
23.764566 26.627561 571,151 1989
22.225695 23.764566 653,935 1988
22.646797 22.225695 772,335 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Bond Fund-Class 43.943375 45.078692 1,597 1996
A-NQS 36.649839 43.943375 4,145 1995
(81-225) 38.865999 36.649839 4,892 1994
34.584435 38.865999 10,550 1993
32.965982 34.584435 10,644 1992
28.295444 32.965982 13,375 1991
26.731671 28.295444 13,709 1990
23.857482 26.731671 21,797 1989
22.312590 23.857482 26,355 1988
22.735342 22.312590 40,610 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

13
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Investors 101.007177 125.889283 16 1996
Trust-Class A-Q 73.217470 101.007177 16 1995
74.716077 73.217470 17 1994
68.591640 74.716077 17 1993
64.520969 68.591640 17 1992
51.047405 64.520969 17 1991
51.615906 51.047405 17 1990
38.300069 51.615906 17 1989
35.047213 38.300069 181 1988
32.943205 35.047213 343 1987
- --------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 95.313498 118.793035 0 1996
Trust-Class A-NQ 69.090265 95.313498 0 1995
70.504398 69.090265 0 1994
64.725197 70.504398 33 1993
60.883987 64.725197 33 1992
48.169920 60.883987 0 1991
48.706376 48.169920 0 1990
36.141141 48.706376 727 1989
33.071646 36.141141 727 1988
31.086228 33.071646 8,861 1987
- --------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 81.308640 101.029680 331,572 1996
Trust-Class A-QS 59.116939 81.308640 350,277 1995
60.509797 59.116939 373,587 1994
55.718475 60.509797 402,085 1993
52.571200 55.718475 438,578 1992
41.719131 52.571200 470,627 1991
42.312382 41.719131 447,641 1990
31.491587 42.312382 448,766 1989
28.904326 31.491587 481,558 1988
27.251667 28.904326 614,029 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

14
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Investors 72.953374 90.647891 96,073 1996
Trust-Class A-NQS 53.042089 72.953374 100,239 1995
54.291825 53.042089 87,519 1994
49.992851 54.291825 95,048 1993
47.168983 49.992851 107,558 1992
37.432067 47.168983 390,819 1991
37.964354 37.432067 388,337 1990
28.255508 37.964354 411,620 1989
25.934117 28.255508 408,442 1988
24.451286 25.934117 483,763 1987
- --------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 77.505736 96.304396 2,037 1996
Trust-Class A-NQS 56.351973 77.505736 2,696 1995
(81-225) 57.679687 56.351973 4,013 1994
53.112457 57.679687 7,320 1993
50.112374 53.112457 8,418 1992
39.767862 50.112374 8,657 1991
40.333366 39.767862 8,698 1990
30.018672 40.333366 9,643 1989
27.552431 30.018672 11,011 1988
25.977075 27.552431 11,213 1987
- --------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 101.860531 123.869113 0 1996
Growth Stock Fund-Class 80.166185 101.860531 0 1995
A-Q 86.815888 80.166185 0 1994
76.611479 86.815888 0 1993
72.701980 76.611479 582 1992
49.712553 72.701980 583 1991
52.714394 49.712553 584 1990
39.228702 52.714394 584 1989
38.061552 39.228702 585 1988
36.324086 38.061552 586 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Investors 77.839871 94.658415 498 1996
Growth Stock Fund-Class 61.261465 77.839871 1,043 1995
A-NQ 66.343035 61.261465 1,043 1994
58.545028 66.343035 2,615 1993
55.557463 58.545028 2,874 1992
37.989389 55.557463 3,000 1991
40.283347 37.989389 2,248 1990
29.977822 40.283347 4,948 1989
29.085907 29.977822 2,751 1988
27.758162 29.085907 3,063 1987
- --------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 82.628565 100.175691 297,134 1996
Growth Stock Fund-Class 65.227303 82.628565 333,893 1995
A-QS 70.852048 65.227303 375,617 1994
62.713932 70.852048 411,227 1993
59.694705 62.713932 450,956 1992
40.942088 59.694705 472,708 1991
43.546733 40.942088 457,230 1990
32.504355 43.546733 499,859 1989
31.632940 32.504355 526,502 1988
30.280685 31.632940 702,181 1987
- --------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 70.114570 85.004193 86,801 1996
Growth Stock Fund-Class 55.348697 70.114570 102,114 1995
A-NQS 60.121583 55.348697 116,628 1994
53.215976 60.121583 132,123 1993
50.654002 53.215976 154,986 1992
34.741451 50.654002 119,500 1991
36.951616 34.741451 124,361 1990
27.581591 36.951616 152,198 1989
26.842147 27.581591 148,306 1988
25.694695 26.842147 234,983 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

16
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Investors 76.380777 92.601102 5,470 1996
Growth Stock Fund-Class 60.295273 76.380777 5,945 1995
A-NQS 65.494712 60.295273 2,505 1994
(81-225) 57.971950 65.494712 3,382 1993
55.181022 57.971950 7,430 1992
37.846336 55.181022 6,225 1991
40.254029 37.846336 6,677 1990
30.046604 40.254029 9,992 1989
29.241076 30.046604 14,248 1988
27.991066 29.241076 23,815 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Research Fund- 126.019031 155.285363 0 1996
Class A-Q 91.844201 126.019031 0 1995
92.760008 91.844201 0 1994
77.006871 92.760008 0 1993
69.993098 77.006871 0 1992
53.307836 69.993098 0 1991
57.290901 53.307836 0 1990
45.882915 57.290901 0 1989
42.019162 45.882915 0 1988
40.283065 42.019162 80 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Research Fund- 100.977005 124.427653 110 1996
Class A-NQ 73.593263 100.977005 599 1995
74.327082 73.593263 599 1994
61.704356 74.327082 807 1993
56.084333 61.704356 600 1992
42.714695 56.084333 660 1991
45.906255 42.714695 663 1990
36.765224 45.906255 768 1989
33.669260 36.765224 2,107 1988
32.278146 33.669260 2,381 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

17
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- Research Fund- 100.013750 122.865333 283,320 1996
Class A-QS 73.111959 100.013750 270,229 1995
74.064821 73.111959 285,624 1994
61.673295 74.064821 262,270 1993
56.226647 61.673295 278,528 1992
42.952906 56.226647 308,259 1991
46.303111 42.952906 341,148 1990
37.195214 46.303111 406,916 1989
34.166322 37.195214 490,200 1988
32.854259 34.166322 598,337 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Research Fund- 87.388917 107.355935 105,263 1996
Class A-NQS 63.882963 87.388917 100,973 1995
64.715547 63.882963 97,012 1994
53.888228 64.715547 87,152 1993
49.129110 53.888228 77,535 1992
37.530937 49.129110 81,372 1991
40.458230 37.530937 87,510 1990
32.500035 40.458230 123,218 1989
29.853469 32.500035 163,490 1988
28.707029 29.853469 249,792 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Research Fund- 98.846334 121.431177 1,676 1996
Class A-NQS 72.258548 98.846334 1,591 1995
(81-225) 73.200301 72.258548 1,727 1994
60.953415 73.200301 1,975 1993
55.570339 60.953415 1,996 1992
42.451540 55.570339 2,041 1991
45.762638 42.451540 5,210 1990
36.761058 45.762638 5,773 1989
33.767510 36.761058 8,143 1988
32.470754 33.767510 10,087 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

18
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- Total Return Fund- 79.840336 90.602325 131 1996
Class A-Q 63.581031 79.840336 131 1995
65.964662 63.581031 132 1994
57.871052 65.964662 132 1993
53.108093 57.871052 132 1992
44.107591 53.108093 132 1991
45.615581 44.107591 133 1990
37.441206 45.615581 133 1989
32.875946 37.441206 544 1988
32.075563 32.875946 134 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Total Return Fund- 78.457598 89.033201 0 1996
Class A-NQ 62.479885 78.457598 87 1995
64.822235 62.479885 87 1994
56.868802 64.822235 317 1993
52.188320 56.868802 712 1992
43.343699 52.188320 534 1991
44.825581 43.343699 535 1990
36.792773 44.825581 1,456 1989
32.306577 36.792773 2,385 1988
31.520064 32.306577 2,431 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Total Return Fund- 73.411912 83.053566 671,118 1996
Class A-QS 58.638949 73.411912 782,272 1995
61.021714 58.638949 902,191 1994
53.697197 61.021714 998,970 1993
49.427627 53.697197 977,013 1992
41.175343 49.427627 950,358 1991
42.712979 41.175343 942,653 1990
35.164779 42.712979 1,082,672 1989
30.970695 35.164779 1,047,263 1988
30.308462 30.970695 1,161,132 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

19
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- Total Return Fund- 71.060281 80.393080 167,776 1996
Class A-NQS 56.760546 71.060281 199,257 1995
59.066983 56.760546 224,713 1994
51.977095 59.066983 272,164 1993
47.844295 51.977095 229,777 1992
39.856354 47.844295 216,586 1991
41.344744 39.856354 234,543 1990
34.038338 41.344744 299,175 1989
29.978604 34.038338 310,907 1988
29.337595 29.978604 385,086 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Total Return Fund- 72.697711 82.245565 1,979 1996
Class A-NQS 58.068470 72.697711 1,863 1995
(81-225) 60.428053 58.068470 2,258 1994
53.174791 60.428053 3,580 1993
48.946754 53.174791 3,681 1992
40.774760 48.946754 2,990 1991
42.297442 40.774760 3,950 1990
34.822674 42.297442 7,074 1989
30.669397 34.822674 9,076 1988
30.013610 30.669397 9,443 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Growth 140.810582 169.873726 0 1996
Opportunities Fund- 105.450698 140.810582 0 1995
Class A-Q 111.450698 105.450698 0 1994
96.886717 111.450698 0 1993
90.866062 96.886717 59 1992
74.980776 90.866062 60 1991
79.192602 74.980776 60 1990
62.255086 79.192602 60 1989
57.676664 62.255086 61 1988
56.051797 57.676664 119 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

20
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- Growth 103.553065 124.926291 2,724 1996
Opportunities Fund- 77.773322 103.553065 2,642 1995
Class A-NQ 81.961605 77.773322 2,807 1994
71.251149 81.961605 2,923 1993
66.823526 71.251149 3,217 1992
55.141372 66.823526 3,285 1991
58.238773 55.141372 3,209 1990
45.782811 58.238773 4,173 1989
42.415808 45.782811 5,496 1988
41.220874 42.415808 8,031 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Growth 96.595726 116.177967 822,246 1996
Opportunities Fund- 72.767772 96.595725 920,477 1995
Class A-QS 76.918993 72.767772 1,029,309 1994
67.070484 76.918993 1,187,377 1993
63.094003 67.070484 1,351,519 1992
52.221717 63.094003 1,533,160 1991
55.323366 52.221717 1,718,069 1990
43.622463 55.323366 2,056,593 1989
40.536877 43.622463 2,481,997 1988
39.514677 40.536877 3,061,737 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Growth 82.052560 98.686554 182,479 1996
Opportunities Fund- 61.812074 82.052560 206,611 1995
Class A-NQS 65.338300 61.812074 214,829 1994
56.972537 65.338300 241,558 1993
53.594751 56.972537 284,420 1992
44.359372 53.594751 319,081 1991
46.994048 44.359372 322,668 1990
37.054798 46.994048 420,211 1989
34.433775 37.054798 547,737 1988
33.565477 34.433775 741,946 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

21
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- Growth 90.535764 108.889502 14,732 1996
Opportunities Fund- 68.202665 90.535764 15,064 1995
Class A-NQS 72.093454 68.202665 16,083 1994
(81-225) 62.862782 72.093454 20,590 1993
59.135771 62.862782 23,039 1992
48.945558 59.135771 26,387 1991
51.852634 48.945558 32,466 1990
40.885800 51.852634 43,143 1989
37.993791 40.885800 63,217 1988
37.035722 37.993791 82,010 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- High Income Fund- 57.498253 64.068571 0 1996
Class A-Q 49.574586 57.498253 0 1995
51.425517 49.574586 0 1994
43.507773 51.425517 0 1993
37.547955 43.507773 0 1992
25.471529 37.547955 0 1991
30.899937 25.471529 0 1990
31.842604 30.899937 0 1989
28.627030 31.842604 0 1988
28.833132 28.627030 471 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- High Income Fund- 57.870879 64.483775 358 1996
Class A-NQ 49.895862 57.870879 359 1995
51.758789 49.895862 359 1994
43.789729 51.758789 721 1993
37.791286 43.789729 360 1992
25.636591 37.791286 360 1991
31.100170 25.636591 697 1990
32.048950 31.100170 698 1989
28.812532 32.048950 699 1988
29.019971 28.812532 5,039 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

22
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- High Income Fund- 50.886631 56.528677 408,255 1996
Class A-QS 44.007083 50.886631 488,470 1995
45.788518 44.007083 561,209 1994
38.856280 45.788518 709,698 1993
33.635599 38.856280 764,118 1992
22.886614 33.635599 797,975 1991
27.848883 22.886614 914,811 1990
28.785308 27.848883 1,535,254 1989
25.956938 28.785308 1,979,053 1988
26.223147 25.956938 2,331,207 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- High Income Fund- 50.114634 55.671087 176,997 1996
Class A-NQS 43.339456 50.114634 188,820 1995
45.093866 43.339456 200,368 1994
38.266802 45.093866 252,674 1993
33.125330 38.266802 263,452 1992
22.539408 33.125330 268,775 1991
27.426394 22.539408 301,912 1990
28.348616 27.426394 494,597 1989
25.563163 28.348616 708,091 1988
25.825328 25.563163 968,782 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- High Income Fund- 50.886631 56.528677 6,379 1996
Class A-NQS 44.007083 50.886631 6,442 1995
(81-225) 45.788518 44.007083 6,622 1994
38.856280 45.788518 9,385 1993
33.635599 38.856280 9,545 1992
22.886614 33.635599 9,353 1991
27.848883 22.886614 10,384 1990
28.785308 27.848883 25,607 1989
25.956938 28.785308 31,809 1988
26.223147 25.956938 37,240 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

23
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS-Registered Trademark- World 48.914346 50.880072 143,438 1996
Governments Fund- 42.911877 48.914346 184,796 1995
Class A-QS 46.532702 42.911877 229,107 1994
39.821939 46.532702 272,388 1993
39.811131 39.821939 260,769 1992
35.563134 39.811131 271,803 1991
30.561450 35.563134 315,655 1990
28.837079 30.561450 304,967 1989
27.989113 28.837079 371,673 1988
22.769485 27.989113 478,189 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- World 47.688325 49.604787 22,367 1996
Governments Fund- 41.836304 47.688325 36,927 1995
Class A-NQS 45.366368 41.836304 44,619 1994
38.823817 45.366368 57,120 1993
38.813287 38.823817 42,828 1992
34.671762 38.813287 35,166 1991
29.795448 34.671762 54,896 1990
28.114297 29.795448 40,122 1989
27.287568 28.114297 62,275 1988
22.198779 27.287568 102,749 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- World 48.838310 50.800980 1,811 1996
Governments Fund- 42.845163 48.838310 2,763 1995
Class A-NQS 46.460353 42.845163 3,284 1994
(81-225) 39.760030 46.460353 3,684 1993
39.749239 39.760030 4,274 1992
35.507853 39.749239 5,904 1991
30.513949 35.507853 7,450 1990
28.792251 30.513949 8,327 1989
27.945600 28.792251 16,716 1988
22.734095 27.945600 18,919 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

24
<PAGE>

CONDENSED FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AT BEGINNING AT END UNITS AT END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nationwide Separate 21.961256 22.783414 55,730 1996
Account Trust Money 21.058716 21.961256 60,928 1995
Market Fund-QS*** 20.538004 21.058716 72,621 1994
20.250996 20.538004 98,132 1993
19.842272 20.250996 126,024 1992
18.996144 19.842272 148,883 1991
17.809654 18.996144 178,554 1990
16.542684 17.809654 219,694 1989
15.617124 16.542684 233,421 1988
14.865508 15.617124 279,386 1987
- --------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate 21.975540 22.798231 32,499 1996
Account Trust Money 21.072414 21.975540 36,289 1995
Market Fund-NQS*** 20.551361 21.072414 41,143 1994
20.264167 20.551361 57,208 1993
19.855177 20.264167 63,453 1992
19.008499 19.855177 71,910 1991
17.821238 19.008499 92,012 1990
16.553443 17.821238 121,035 1989
15.627283 16.553443 150,709 1988
14.875184 15.627283 180,554 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Emerging Growth 30.247061 34.264981 437,204 1996
Trust-Class A-QS 21.706658 30.247061 424,049 1995
20.977470 21.706658 400,564 1994
16.755110 20.977490 285,804 1993
15.782125 16.755110 288,500 1992
9.396802 15.782125 222,326 1991
10.753988 9.396802 112,582 1990
8.662733 10.753988 172,308 1989
7.647091 8.662733 183,533 1988
10.000000 7.647091 149,255 1987
- --------------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Emerging Growth 30.247061 34.264981 675 1996
Trust-Class A-NQS 21.706658 30.247061 474 1995
(81-225) 20.977490 21.706658 474 1994
16.755110 20.977490 1,237 1993
15.782125 16.755110 762 1992
9.396802 15.782125 1,140 1991
10.753988 9.396802 0 1990
8.662733 10.753988 2,575 1989
7.647091 8.662733 775 1988
10.000000 7.647091 1,521 1987
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

***The 7-day yield on the Nationwide Separate Account Trust-Money Market Fund as
of December 31, 1996, was 3.64%.

25
<PAGE>

NATIONWIDE LIFE INSURANCE COMPANY

The Company is a stock life insurance company organized under the laws of
the State of Ohio in March, 1929. The Company is a member of the "Nationwide
Insurance Enterprise", with its Home Office at One Nationwide Plaza, Columbus,
Ohio 43216-6609. The Company offers a complete line of life insurance, including
annuities and accident and health insurance. It is admitted to do business in
all states, the District of Columbia, and Puerto Rico.

The Company is ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's, and A.M. Best Company. The purpose
of these ratings is to reflect the financial strength or claims-paying ability
of the Company. The ratings are not intended to reflect the investment
experience or financial strength of the Variable Account. The Company may
advertise these ratings in sales literature from time to time.

THE VARIABLE ACCOUNT

The Variable Account was established by the Company on March 3, 1976,
pursuant to the provisions of Ohio law. The Company has caused the Variable
Account to be registered with the Securities and Exchange Commission as a Unit
Investment Trust pursuant to the provisions of the Investment Company Act of
1940. Such registration does not involve supervision of the management of the
Variable Account or the Company by the Securities and Exchange Commission.

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

Purchase payments are allocated within the Variable Account among one or
more Sub-Accounts made up of shares in the underlying Mutual Funds, as
designated by the Contract Owner. There are two or more Sub-Accounts within the
Variable Account for each of the underlying Mutual Fund options which may be
designated by the Contract Owner. Some of these Sub-Accounts contain the
underlying Mutual Fund shares attributable to Accumulation Units under Qualified
Contracts and other Sub-Accounts contain the underlying Mutual Fund shares
attributable to Accumulation Units under Non-Qualified Contracts.

UNDERLYING MUTUAL FUND OPTIONS

Contract Owners may choose from among a number of different underlying
Mutual Fund options. More detailed information may be found in the current
prospectus for each underlying Mutual Fund offered. Such a prospectus for the
underlying Mutual Fund option(s) should be read in conjunction with this
prospectus. A copy of each prospectus may be obtained without charge from
Nationwide Life Insurance Company by calling 1-800-848-7529, TDD 1-800-238-3035
or writing P.O. Box 16609, Columbus, Ohio 43216-6609.

The Investment Adviser for all of the underlying Mutual Fund, except the
Nationwide Separate Account Trust Money Market Fund, is Massachusetts Financial
Service Company, 500 Boylston Street, Boston, Massachusetts 02116.

- - MFS-Registered Trademark- BOND FUND-CLASS A (FORMERLY MASSACHUSETTS
FINANCIAL BOND FUND)

INVESTMENT OBJECTIVE: To provide a high level of current income for
distribution to investors as is believed to be consistent with prudent
investment risk. An additional objective is to seek protection of investor's
capital.

- - MFS-Registered Trademark- GROWTH OPPORTUNITIES FUND-CLASS A (FORMERLY
MFS-Registered Trademark- CAPITAL DEVELOPMENT FUND)

INVESTMENT OBJECTIVE: To seek growth of capital. The selection of
securities is made solely on the basis of potential for capital appreciation.
Dividend income, if any, is incidental to the objective of growth capital.

<PAGE>

- - MFS-Registered Trademark- EMERGING GROWTH FUND-CLASS A (FORMERLY MASSACHUSETTS
FINANCIAL EMERGING GROWTH TRUST)

INVESTMENT OBJECTIVE: To seek long-term growth of capital. The selection of
securities is made solely on the basis of potential for growth of capital.
Dividend and interest income from portfolio securities, if any, is incidental to
the investment objective of long-term growth of capital.

The Contract Owner may allocate to the Fund either new Purchase Payments or
Contract Values attributable to Purchase Payments made on or after January 1,
1981.

- - MFS-Registered Trademark- HIGH INCOME FUND-CLASS A (FORMERLY MASSACHUSETTS
FINANCIAL HIGH INCOME TRUST-SERIES I)

INVESTMENT OBJECTIVE: To seek high current income by investing primarily in
a professionally managed diversified portfolio of fixed income securities, some
of which may involve equity features. Securities offering the high current
income sought by the Fund are ordinarily in the lower rating categories of
recognized rating agencies or are unrated and generally involve greater
volatility of price and risk of principal and income than securities in the
higher rating categories. Capital growth is a consideration incidental to the
investment objective of high current income.

- - MFS-Registered Trademark- RESEARCH FUND-CLASS A

INVESTMENT OBJECTIVE: To provide long-term growth of capital and future
income. As a secondary objective the Fund will attempt to provide more current
dividend income than is normally obtainable from a portfolio of growth stocks
only.

- - MFS-Registered Trademark- TOTAL RETURN FUND-CLASS A (FORMERLY MASSACHUSETTS
FINANCIAL TOTAL RETURN TRUST)

INVESTMENT OBJECTIVE: To obtain above-average income consistent with what
management believes to be prudent employment of capital. While current income is
the primary objective, the Fund believes that there also should be a reasonable
opportunity for growth of capital and income, since many securities offering a
better-than-average yield may possess growth potential.

- - MFS-Registered Trademark- WORLD GOVERNMENTS FUND-CLASS A (FORMERLY
MFS-Registered Trademark- WORLDWIDE GOVERNMENTS TRUST)

INVESTMENT OBJECTIVE: To seek not only preservation, but also growth of
capital, together with moderate current income through a professionally managed
internationally diversified portfolio consisting primarily of debt securities
and, to a lesser extent, equity securities. The Fund is designed for investors
who wish to diversify their investments beyond the United States and who are
prepared to accept the risks entailed in such investments which may be higher
than those associated with certain U.S. investments. See "Special
Considerations" section in the MFI-B Prospectus.

- - MFS SERIES TRUST IV - MFS-Registered Trademark- MONEY MARKET FUND (FORMERLY
MASSACHUSETTS CASH MANAGEMENT TRUST)

INVESTMENT OBJECTIVE: To seek as high a level of current income as is
considered consistent with the preservation of capital and liquidity. The Fund
intends to invest in money market instruments, including United States
government securities, obligations of the larger banks, prime commercial paper
and high-grade, short-term corporate obligations.

- - MASSACHUSETTS INVESTORS GROWTH STOCK FUND-CLASS A

INVESTMENT OBJECTIVE: To provide long-term growth of capital and future
income rather than current income return. To achieve this objective it is the
policy of the Fund to keep its assets invested, except for working cash
balances, in the common stocks, or securities convertible into common stocks, of
companies believed by the management to possess better-than-average prospects
for long-term growth. Emphasis is placed on the selection of progressive, well-
managed companies.

- - MASSACHUSETTS INVESTORS TRUST-CLASS A

INVESTMENT OBJECTIVE: To provide reasonable current income and long-term
growth of capital and income. The Fund is believed to constitute a conservative
medium for that portion of an investor's capital which he wishes to have
invested in common stocks considered to be high or improving investment quality.

Each of the above Mutual Funds receives investment advice from
Massachusetts Financial Services Company, which is paid for its services by the
Mutual Funds.

<PAGE>

- - NATIONWIDE SEPARATE ACCOUNT TRUST-MONEY MARKET FUND

Nationwide Separate Account Trust is a diversified open-end management
investment company created under the laws of Massachusetts. The Nationwide
Separate Account Trust Money Market Fund is managed by Nationwide Financial
Services, Inc. of One Nationwide Plaza, Columbus, Ohio 43215, a wholly-owned
subsidiary of the Company. The Fund offers shares in four separate Mutual Funds,
one being the Money Market Fund.

INVESTMENT OBJECTIVE: To seek as high a level of current income as is
considered consistent with the preservation of capital and liquidity by
investing primarily in money market instruments.

The Fund receives investment advice from Nationwide Advisory Services,
Inc., which is paid for its services by the Fund.

VOTING RIGHTS

Voting rights under the Contracts apply ONLY with respect to Purchase
Payments or accumulated amounts allocated to the Variable Account.

In accordance with its view of present applicable law, the Company will
vote the shares of the underlying Mutual Funds held in the Variable Account at
regular and special meetings of the shareholders of the underlying Mutual Funds.
These shares will be voted in accordance with instructions received from
Contract Owners who have an interest in the Variable Account. If the Investment
Company Act of 1940 or any regulation thereunder should be amended or if the
present interpretation thereof should change, and as a result the Company
determines that it is permitted to vote the shares of the underlying Mutual
Funds in its own right, it may elect to do so.

The Contract Owner shall be the person who has the voting interest under
the Contract. The number of underlying Mutual Fund shares attributable to each
Contract Owner is determined by dividing the Contract Owner's interest in each
respective Sub-Account of the Variable Account by the net asset value of the
underlying Mutual Fund corresponding to the Sub-Account. The number of shares
which a person has the right to vote will be determined as of the date to be
chosen by the Company not more than 90 days prior to the meeting of the
underlying Mutual Fund. Each person having a voting interest will receive
periodic reports relating to the underlying Mutual Fund, proxy material and a
form with which to give such voting instructions.

Voting instructions will be solicited by written communication at least 21
days prior to such meeting. Underlying Mutual Fund shares held in the Variable
Account as to which no timely instructions are received will be voted by the
Company in the same proportion as the voting instructions which are received
with respect to all Contracts participating in the Variable Account.

VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS

MORTALITY RISK CHARGE

The Company assumes a "mortality risk" by virtue of annuity rates
incorporated into the Contract which cannot be changed regardless of the death
rates of persons receiving annuity payments or of the general population.

For assuming this mortality risk, the Company assesses a Mortality Risk
Charge through the daily unit value calculation. This amount is equal to an
annual rate of 0.80% of the daily net asset value of the Variable Account. The
Company expects to generate a profit through assessing this charge.

EXPENSE RISK CHARGE

The Company will not increase charges for administration of the Contracts
regardless of its actual expenses. For assuming this expense risk, the Company
assesses an Expense Risk Charge through the daily unit value calculation. This
amount is equal to an annual rate of 0.50% of the daily net asset value of the
Variable Account. The Company expects to generate a profit through assessing
this charge.

<PAGE>

CONTINGENT DEFERRED SALES CHARGE

No deduction for a sales charge is made from the Purchase Payments for
these Contracts. However, if any part of the Contract Value of such Contracts is
surrendered, the Company will, with certain exceptions (see "Waiver of
Contingent Deferred Sales Charge" section), deduct a Contingent Deferred Sales
Charge not to exceed 5% of the lesser of the total of all Purchase Payments made
within 96 months prior to the date of the request to surrender or the amount
surrendered. The Contingent Deferred Sales Charge, when it is applicable, will
be used to cover expenses relating to the sale of the Contracts, including
commissions paid to sales personnel, the costs of preparation of sales
literature and other promotional activity. The Company expects to recover most
of its distribution costs relating to the sale of the Contracts from the
Contingent Deferred Sales Charge. Any shortfall will be made up from the General
Account of the Company, which may indirectly include portions of the Mortality
and Expense Risk since the Company expects to generate a profit through these
charges. Gross Distribution Allowances which may be paid on the sale of these
Contracts are not more than 5.11% of the Purchase Payments.

The Contingent Deferred Sales Charge is calculated by multiplying the
applicable Contingent Deferred Sales Charge percentages noted below by the
Purchase Payments that are surrendered. For Purposes of calculating the
Contingent Deferred Sales Charge, surrenders are considered to come first from
the oldest Purchase Payment and so forth. For tax purposes, a surrender is
usually treated as a withdrawal of earnings first.

(a) For all Purchase Payments made after January 1, 1981, the Contract Owner
may, after the first year from the date of each such Purchase Payment,
withdraw without a Contingent Deferred Sales Charge up to 5% of that
Purchase Payment for each year that the Purchase Payment has remained on
deposit on a cumulative basis (less the amount of such Purchase Payment
previously surrendered free of charge).

(b) For Contracts issued prior to July 17, 1981, starting with the third
Contract Year, the Contract Owner may withdraw without a Contingent
Deferred Sales Charge up to 10% of cumulative Purchase Payments made under
the Contract within 96 months immediately prior to the date that the
request for surrender is received by the Company. Once surrenders equal to
10% of cumulative Purchase Payments made within such 96-month period have
been made, the Contingent Deferred Sales Charge will apply to all amounts
surrendered in excess thereof.

For Contracts issued prior to July 17, 1981, the amount which may be
surrendered at any time without charge is the greater of the amounts determined
under (a) and (b) above. No sales charges are deducted on redemption proceeds
that are transferred to the Fixed Account option of this annuity. The Contract
Owner may be subject to a tax penalty if the Contract Owner withdraws Purchase
Payments prior to age 59 1/2; please refer to "Non-Qualified Contracts" to
determine when the penalty will apply.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

The amount of Contingent Deferred Sales Charges on the Contracts may be
eliminated when sales of the Contracts are made to a trustee, employer or
similar entity pursuant to a retirement plan or when sales are made in a similar
arrangement where offering the Contracts to a group of individuals under such a
program results in savings of sales expenses. The entitlement to such an
elimination in Contingent Deferred Sales Charges will be determined by the
Company in the following manner:

1. The size of the group to which such sales are to be made will be
considered. Generally, the sales expenses for a larger group are smaller
than for a smaller group because of the ability to implement a larger
number of Contracts with fewer sales contacts.

2. The total amount of Purchase Payments to be received from a group and the
manner in which Purchase Payments are remitted will be considered. Per
Contract sales expenses are likely to be less on larger Purchase Payments
than on smaller ones. Likewise, sales expenses are usually lower when
Purchase Payments are remitted on a payroll deduction plan.

3. The purpose for which the Contracts are being purchased will be considered.
Certain types of Qualified Plans are more likely to be stable than are
others. Such stability reduces the number of sales contacts required,
reduces sales administration, and results in fewer Contract terminations.
As a result, sales expenses can be reduced.

<PAGE>

4. The nature of the group for which the Contracts are being purchased will be
considered. Certain types of employee and professional groups are more
likely to continue Contract participation for longer periods than are other
groups with more mobile membership. If fewer Contracts are surrendered in a
given group, the Company's sales expenses are reduced.

5. The cost to the Company of the distribution effort will be considered.
Sales without commissions or other standard distribution expenses can
result in eliminated sales charge.

6. There may be other circumstances of which the Company is not presently
aware, which could result in reduced sales expenses.

If, after consideration of the foregoing factors, the Company determines
that a group purchase would result in reduced sales expenses, such a group would
be entitled an elimination of Contingent Deferred Sales Charges.

When a Contract described in this prospectus is exchanged for another
Contract issued by the Company, of the type and class which the Company
determined is eligible for such exchange, the Company will waive the Contingent
Deferred Sales Charge on the first Contract.

The amount of Contingent Deferred Sales Charges will be eliminated when the
Contracts are issued to an officer, director, partner or employee of Clarendon
Insurance Agency, Inc., the general distributor of the Contracts, and an
affiliate of Massachusetts Financial Services Company, or an officer, director,
partner or employee of any firm affiliated with Clarendon Insurance Agency, Inc.

In no event will the elimination of Contingent Deferred Sales Charges be
permitted where such elimination will be unfairly discriminatory to any person,
or where it is prohibited by state law.

CONTRACT MAINTENANCE CHARGE

Each year on the Contract Anniversary (and on the date of surrender in any
year in which the entire Contract Value is surrendered), the Company deducts an
annual Contract Maintenance Charge of $30 from the Contract Value to reimburse
it for administrative expenses relating to the issuance and maintenance of the
Contract. This charge is designed only to reimburse the Company for
administrative expenses and it does not expect to recover from this charge any
amount in excess of accumulated expenses. In any Contract Year when a Contract
is surrendered for its full value on other than the Contract Anniversary, the
Contract Maintenance Charge will be deducted at the time of such surrender. The
Contract Maintenance Charge will be allocated to the Fixed and Variable Account
in the same percentages as the Purchase Payment allocations are made. The amount
of the Contract Maintenance Charge may not be increased by the Company. The
amount of the Contract Maintenance Charge may, however, be decreased by the
Company in accordance with the considerations set forth in the preceding section
entitled "Elimination of Contingent Deferred Sales Charge."

PREMIUM TAXES

The Company will charge against the Contract Value the amount of any
premium taxes levied by a state or any other governmental entity upon Purchase
Payments received by the Company. Premium taxes currently imposed by certain
jurisdictions range from 0% to 3.5%. This range is subject to change. The
method used to recoup premium tax expense will be determined by the Company at
its sole discretion and in compliance with applicable state law. The Company
currently deducts such charges from a Contract Owner's Contract Value either:
(1) at the time the Contract is surrendered, (2) at Annuitization, or (3) in
those states which require, at the time Purchase Payments are made to the
Contract.

EXPENSES OF VARIABLE ACCOUNT

The Variable Account is responsible for the following types of expenses:
(1) administrative expenses relating to the issuance and maintenance of the
contracts; (2) mortality risk charge associated with guaranteeing the annuity
purchase rates at issue for the life of the Contracts; and (3) expense risk
charge associated with guaranteeing that the Mortality Risk, Expense Risk,
Contract Maintenance and Administration Charges described in this prospectus
will not be changed regardless of actual expenses. If these charges are
insufficient to cover these expenses, the loss will be borne by the Company.

<PAGE>

For 1996, the Variable Account incurred total expenses equal to 1.44% of
its average net assets relating to the administrative, sales, mortality and
expense risk charges described above for all Contracts outstanding during that
year. Deductions from and expenses paid out of the assets of the underlying
Mutual Fund options are described in each underlying Mutual Funds prospectus.

INVESTMENTS OF THE VARIABLE ACCOUNT

At the time of application each Contract Owner elects to have Purchase
Payments attributable to his or her participation in the Variable Account
allocated among one or more of the Sub-Accounts which consist of shares in the
underlying Mutual Fund options. Shares of the respective underlying Mutual Fund
options specified by the Contract Owner are purchased at net asset value for the
respective Sub-Account(s) and converted into Accumulation Units. The Contract
Owner may change the election as to allocation of Purchase Payments or may elect
to exchange amounts among the Sub-Account Options pursuant to such terms and
conditions applicable to such transactions as may be imposed by each of the
underlying Mutual Fund options, in addition to those set forth in the Contracts.

RIGHT TO REVOKE

Unless otherwise required by state and/or federal law, the Contract Owner
may revoke the Contract at any time between 10 days after receipt of the
Contract and receive a refund of the Contract Value unless otherwise required by
state and/or federal law. All Individual Retirement Annuity refunds will be a
return of Purchase Payments. In order to revoke the Contract, it must be mailed
or delivered to the Home Office of the Company at the mailing address shown on
page 1 of this prospectus. Mailing or delivery must occur on or before 10 days
after receipt of the Contract for revocation to be effective. In order to revoke
the Contract, if it has not been received, written notice must be mailed or
delivered to the Home Office of the Company at the mailing address shown on
page 1 of this prospectus.

The liability of the Variable Account under this provision is limited to
the Contract Value in each Sub-Account on the date of revocation. Any additional
amounts refunded to the Contract Owner will be paid by the Company.

TRANSFERS

Transfers between the Fixed and Variable Account must be made prior to the
Annuitization Date. The Contract Owner may request a transfer of up to 100% of
the Variable Account Contract Value to the Fixed Account without penalty or
adjustment. The Company reserves the right to restrict transfers from the
Variable Account to the Fixed Account to 25% of the Contract Value for any 12
month period. All amounts transferred to the Fixed Account must remain on
deposit in the Fixed Account until the expiration of the Interest Rate Guarantee
Period. In addition, transfers from the Fixed Account may not be made prior to
the end of the then current Interest Rate Guarantee Period. The Interest Rate
Guarantee Period for any amount allocated to the Fixed Account expires on the
final day of a calendar quarter during which the one year anniversary of the
allocation to the Fixed Account occurs. For all transfers involving the
Variable Account, the Contract Owner's value in each Sub-Account will be
determined as of the date the transfer request is received in the Home Office in
good order.

The Contract Owner may at the maturity of an Interest Rate Guarantee Period
transfer a portion of the value of the Fixed Account to the Variable Account..
The amount that may be transferred from the Fixed Account to the Variable
Account will be determined by the Company at its sole discretion, but will not
be less than 10% of the total value of the portion of the Fixed Account that is
maturing. The amount that may be transferred will be declared upon the
expiration date of the then current Interest Rate Guarantee Period. Transfers
from the Fixed Account must be made within 45 days after the expiration date of
the then current Interest Rate Guarantee Period. Owners who have entered into a
Dollar Cost Averaging Agreement with the Company (see "Dollar Cost Averaging")
may transfer from the Fixed Account to the Variable Account under the terms of
that agreement.

Transfers may be made either in writing or, in states allowing such
transfers, by telephone. This telephone exchange privilege is made available to
Contract Owners automatically without the Contract Owner's election. The
Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include the
following: requesting identifying information, such as name, contract number,
Social Security Number, and/or personal identification number; tape recording
all telephone transactions; and providing written confirmation thereof to both
the Contract Owner and any agent of record, at the last address of record; or
such other procedures as the Company may deem reasonable. The Company will not
be liable for following instructions communicated by telephone which it
reasonably believes to be genuine. Any losses incurred pursuant to actions
taken by the Company in reliance on telephone instructions reasonably

<PAGE>

believed to be genuine shall be borne by the Contract Owner. The Company may
withdraw the telephone exchange privilege upon 30 days' written notice to
Contract Owners.

ASSIGNMENT

Where permitted, the Contract Owner may assign some or all of the rights
under the Contract at any time during the lifetime of the Designated Annuitant
prior to the Annuitization Date. Such assignment will take effect upon receipt
and recording by the Company at its Home Office of a written notice thereof
executed by the Contract Owner. The Company is not responsible for the validity
or tax consequences of any assignment. The Company shall not be liable as to any
payment or other settlement made by the Company before recording of the
assignment. Where necessary for the proper administration of the terms of the
Contract, an assignment will not be recorded until the Company has received
sufficient direction from the Contract Owner and assignee as to the proper
allocation of Contract rights under the assignment.

If this Contract is a Non-Qualified Contract, any portion of Contract Value
attributable to Purchase Payments made after August 13, 1982, which is pledged
or assigned after August 13, 1982, shall be treated as a Distribution and shall
be included in gross income to the extent that the cash value exceeds the
investment in the Contract, for the taxable year in which it was pledged or
assigned. In addition, any Contract Values assigned may, under certain
conditions, be subject to a tax penalty equal to 10% of the assigned amount
which is included in gross income. Assignment of the entire Contract Value may
cause the portion of the Contract Value which exceeds the total investment in
the Contract and previously taxed amounts to be included in gross income for
federal income tax purposes each year that the assignment is in effect.
Individual Retirement Annuities, Tax Sheltered Annuities and Qualified Contracts
may not be assigned, pledged or otherwise transferred except under such
conditions as may be allowed by applicable law.

LOAN PRIVILEGE

Prior to the Annuitization Date, the Owner of a Qualified Contract or Tax
Sheltered Annuity Contract may receive a loan from the Contract Value, subject
to the terms of the Contract, the Plan, and the Code, which may impose
restrictions on loans.

Loans from Qualified Contracts or Tax Sheltered Annuities are available
beginning 30 days after the Date of Issue. The Contract Owner may borrow a
minimum of $1,000. In non-ERISA plans, for Contract Values up to $20,000, the
maximum loan balance which may be outstanding at any time is 80% of the Contract
Value, but not more than $10,000. If the Contract Value is $20,000 or more, the
maximum loan balance which may be outstanding at any time is 50% of the Contract
Value, but not more than $50,000. For ERISA plans, the maximum loan balance
which may be outstanding at any time is 50% of the Contract Value, but not more
than $50,000. The $50,000 limit will be reduced by the highest loan balance owed
during the prior one-year period. Additional loans are subject to the contract
minimum amount. The aggregate of all loans may not exceed the Contract Value
limitations stated above.

For salary reduction Tax Sheltered Annuities, loans may only be secured by
the Contract Value. For loans from Qualified Contracts and other Tax Sheltered
Annuities, the Company reserves the right to limit a loan to 50% of the Contract
Value subject to the acceptance by the Contract Owner of the Company's loan
agreement. Where permitted, the Company may require other named collateral where
the loan from a Contract exceeds 50% of the Contract Value.

All loans are made from a collateral fixed account. An amount equal to the
principal amount of the loan will be transferred to the collateral fixed
account. Unless instructed to the contrary by the Contract Owner, the Company
will first transfer to the collateral fixed account the Variable Account units
from the Contract Owner's investment options in proportion to the assets in each
option until the required balance is reached or all such variable units are
exhausted. The remaining required collateral will next be transferred from the
Fixed Account. No withdrawal charges are deducted at the time of the loan, or on
the transfer from the Variable Account to the collateral fixed account.

<PAGE>

Until the loan has been repaid in full, that portion of the collateral
fixed account equal to the outstanding loan balance shall be credited with
interest at a rate 2.25% less than the loan interest rate fixed by the Company
for the term of the loan. However, the interest rate credited to the collateral
fixed account will never be less than 3.0%. Specific loan terms are disclosed
at the time of loan application or loan issuance.

Loans must be repaid in substantially level payments, not less frequently
than quarterly, within five years. Loans used to purchase the principal
residence of the Contract Owner must be repaid within 15 years. During the loan
term, the outstanding balance of the loan will continue to earn interest at an
annual rate as specified in the loan agreement. Loan repayments will consist of
principal and interest in amounts set forth in the loan agreement. Loan
repayments will be allocated between the Fixed and Variable Accounts in the same
manner as a purchase payment. Both loan repayments and purchase payments will
be allocated to the Contract in accordance with the most current allocation,
unless the Contract Owner and the Company agree otherwise on a case by case
basis.

If the Contract is surrendered while the loan is outstanding, the surrender
value will be reduced by the amount of the loan outstanding plus accrued
interest. If the Contract Owner/Annuitant dies while the loan is outstanding,
the Death Benefit will be reduced by the amount of the loan outstanding plus
accrued interest. If a Contract Owner who is not the Annuitant dies prior to
the Annuitization Date and while the loan is outstanding, the Distribution will
be reduced by the amount of the loan outstanding plus accrued interest. If
annuity payments start while the loan is outstanding, the Contract Value will be
reduced by the amount of the outstanding loan plus accrued interest. Until the
loan is repaid, the Company reserves the right to restrict any transfer of the
Contract which would otherwise qualify as a transfer as permitted in Section
1035 of the Code.

If a loan payment is not made when due, interest will continue to accrue.
A grace period may be available under the terms of the loan agreement. If a
loan payment is not made when due, or by the end of the applicable grace period,
then that payment, which may be a single periodic payment or payment of the
entire loan, will be treated as a deemed Distribution, as permitted by law, may
be taxable to the borrower, and may be subject to the early withdrawal tax
penalty. Interest which subsequently accrues on defaulted amounts may also be
treated as additional deemed Distributions each year. Any defaulted amounts,
plus accrued interest , will be deducted from the Contract when the participant
becomes eligible for a Distribution of at least that amount, and this amount may
again be treated as a Distribution where required by law. Additional loans may
not be available while a previous loan remains in default.

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

Loan repayments must be identified as such or else they will be treated as
Purchase Payments, and will not be used to reduce the outstanding loan principal
or interest due. The Company reserves the right to modify the term or procedures
associated with the loan in the event of a change in the laws or regulations
relating to the treatment of loans. The Company also reserves the right to
assess a loan processing fee. Individual Retirement Annuities, SEP-IRA accounts
and Non-Qualified Contracts are not eligible for loans.

BENEFICIARY PROVISIONS

Subject to the terms of any existing assignment, the Contract Owner may
change the Beneficiary from time to time during the lifetime of the Designated
Annuitant or Annuitant, by written notice to the Company. The change will take
effect, upon receipt by the Company at its Home Office, whether or not the
Designated Annuitant or the Annuitant is living at the time of recording, but
without further liability as to any payment or settlement made by the Company
before receipt of such change.

Unless otherwise provided in the Contract or in an effective change of
Beneficiary designation, all rights and interests of any Beneficiary
predeceasing the Designated Annuitant or the Annuitant shall vest in the
Contingent Beneficiary if designated. If a Contingent Beneficiary is not
designated or predeceases the Beneficiary, all rights and interests of the
Beneficiary will vest in the Contract Owner or the Contract Owner's estate.

The Beneficiary will be the designated person or persons who survive the
Designated Annuitant, and if more than one survive, they will share equally
unless otherwise specified in the Beneficiary designation. In the event that the
Beneficiary dies before the Designated Annuitant or Annuitant, the Contingent
Beneficiary will become the Beneficiary.

<PAGE>

OWNERSHIP PROVISIONS

Unless otherwise provided, the Contract Owner has all rights under the
Contract. IF THE PURCHASER NAMES SOMEONE OTHER THAN HIMSELF OR HERSELF AS OWNER,
THE PURCHASER WILL HAVE NO RIGHTS UNDER THE CONTRACT.

If named, the Joint Owner possesses an undivided interest in the entire
Contract. Prior to the Annuitization Dates, a surviving Joint Owner shall
retain sole rights in the Contract upon the other Joint Owner's death if the
deceased Joint Owner was not also the Annuitant. If the deceased Joint Owner
was also the Annuitant, disposition of the Contract will be determined based on
the "Death Prior to the Annuitization Date" provisions. When a Joint Owner is
named, the exercise of any ownership right in the Contract shall require a
written indication, signed by both the Owner and Joint Owner, of an intent to
exercise such right, unless the Owner and Joint Owner provide in the application
that the exercise of any such ownership right may be made by either the Owner or
Joint owner independently of one another. In this latter situation, the Company
will not be liable for any loss, liability, cost of expense for acting in
accordance with the instructions of either the Owner or Joint Owner.

The Annuitant may become the Contract Owner on and after the Annuitization
Date subject to the terms elected at Annuitization. If the Owner dies prior to
the Annuitization Date, Contract Ownership will be determined in accordance with
the "Death of Contract Owner" provision. If the Designated Annuitant does not
survive the Contract Owner or if the Designated Annuitant and the Owner are the
same person, Contract Ownership will be determined in accordance with the "Death
Benefit At Death Of Designated Annuitant Prior To The Annuitization Date"
provision. After the Annuitization Date, Ownership will be determined based on
the Annuity Payment Option selected. Ownership rights under this Contract may be
restricted under the provisions of the retirement or deferred compensation plan
under which this Contract may be issued.

Prior to the Annuitization Date, the Contract Owner may name a new Contract
Owner at any time, but such change may be subject to state and federal gift
taxes. Any new choice of Contract Owner will automatically revoke any prior
choice of Contract Owner. Any request for change must be: (1) made in writing;
and (2) received by the Company at its Home Office. A request for change of
Contract Owner must be a "proper written application" and may include a
signature guarantee as specified in the "Surrender" section. The change will
become effective as of the date the written request is recorded. A new choice
of Contract Owner will not apply to any payment made or action taken by the
Company prior to the time it was received.

A change in the Designated Annuitant must comply with the following
conditions: (1) request for such change must be made by the Contract Owner; (2)
request must be made in writing on a form acceptable to the Company; (3) request
must be signed by the Contract Owner; and (4) such change is subject to
underwriting and approval by the Company.

SUBSTITUTION OF SECURITIES

If the shares of the underlying Mutual Fund options should no longer be
available for investment by the Variable Account or, if in the judgment of the
Company's management, further investment in such underlying Mutual Fund shares
should become, the Company may eliminate Sub-Accounts, combine two or more Sub-
Accounts, or substitute shares of one or more underlying Mutual Fund for other
underlying Mutual Fund shares already purchased or to be purchased in the future
with Purchase Payments under the Contract. No substitution of securities in the
Variable Account may take place without prior approval of the Securities and
Exchange Commission and under such requirements as it may impose.

CONTRACT OWNER INQUIRIES

Contract Owner inquiries may be directed to Nationwide Life Insurance
Company by writing P.O. Box 16609, Columbus, Ohio 43216-6609, or calling 1-800-
848-7529, TDD 1-800-238-3035.

ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT

At the Annuitization Date, the Variable Account Contract Value is applied
to the Annuity Payment Option elected and the amount of the first such payment
shall be determined in accordance with the Annuity Table in the Contract.

<PAGE>

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

VALUE OF AN ANNUITY UNIT

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

ASSUMED INVESTMENT RATE

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

FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS

Annuity payments will be paid as monthly installments. However, if the net
amount available to apply under any Annuity Payment Option is less than $500,
the Company shall have the right to pay such amount in one lump sum in lieu of
the payments otherwise provided for. In addition, if the payments provided for
would be or become less than $20, the Company shall have the right to change the
frequency of payments to such intervals as will result in payments of at least
$20. In no event will the Company make payments under an annuity option less
frequently than annually.

ANNUITY COMMENCEMENT DATE

The Contract Owner selects an Annuity Commencement Date at the time of
application. Such date must be the first day of a calendar month and must be at
least 2 years after the Date of Issue.

Where the Contract is issued pursuant to the terms of a Qualified Plan,
Annuitization may occur during the first two years subject to approval by the
Company.

CHANGE IN ANNUITY COMMENCEMENT DATE

The Contract Owner may, upon prior written notice to the Company, change
the Annuity Commencement Date. The date to which such a change may be made
shall be the first day of a calendar month.

If the Contract Owner requests in writing (see "Ownership Provisions"), and
the Company approves the request, the Annuity Commencement Date may be deferred.
The amount of the Death Benefit will be limited to the Contract Value if the
Annuity Commencement Date is postponed beyond the first day of the calendar
month after the Designated Annuitant's 75th birthday or such other Annuity
Commencement Date provided under the Contract Owner's Qualified Plan.

ANNUITY PAYMENT OPTIONS

The Contract Owner may, upon prior written notice to the Company, at any
time prior to the Annuitization Date, elect one of the Annuity Payment Options.

OPTION 1 - LIFE ANNUITY - An annuity payable periodically, but at least
annually, during the lifetime of the Annuitant, ceasing with the last
payment due prior to the death of the Annuitant. IT WOULD BE POSSIBLE UNDER
THIS OPTION FOR THE ANNUITANT TO RECEIVE ONLY ONE ANNUITY PAYMENT IF HE OR
SHE DIED BEFORE THE SECOND ANNUITY PAYMENT DATE, TWO ANNUITY PAYMENTS IF HE
OR SHE DIED BEFORE THE THIRD ANNUITY PAYMENT DATE, AND SO ON.

OPTION 2 - JOINT AND LAST SURVIVOR ANNUITY - An annuity payable
periodically, but at least annually, during the joint lifetimes of the
Annuitant and designated second person and continuing thereafter during the

<PAGE>

lifetime of the survivor. AS IS THE CASE UNDER OPTION 1 ABOVE, THERE IS NO
MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER THIS OPTION. PAYMENTS CEASE
UPON THE DEATH OF THE LAST SURVIVING ANNUITANT REGARDLESS OF THE NUMBER OF
PAYMENTS RECEIVED.

OPTION 3 - LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED - An
annuity payable monthly during the lifetime of the Annuitant with the
guarantee that if at the death of the Annuitant payments have been made for
fewer than 120 or 240 months, as selected, payments will be made as
follows:

(1) Any guaranteed annuity payments will be continued during the remainder
of the selected period to such recipient as chosen by the Annuitant at
the time the Annuity Payment Option was selected. In the alternative,
the recipient may, at any time, elect to have the present value of the
guaranteed number of annuity payments remaining paid in a lump sum as
specified in (2) below.

(2) If someone other than the Annuitant is payee, the present value,
computed as of the date in which notice of death is received by the
Company at its Home Office, of the guaranteed number of annuity
payments remaining after receipt of such notice and to which the
deceased would have been entitled had he or she not died, computed at
the Assumed Investment Rate effective in determining the Annuity
Tables, shall be paid in a lump sum.

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

If the Contract Owner of a Non-Qualified Contract fails to elect an Annuity
Payment Option, no Distribution will be made until an effective Annuity Payment
Option has been elected. Qualified Plans, Contracts, Tax Sheltered Annuities,
Individual Retirement Annuities and SEP-IRAs are subject to the minimum
Distribution requirements set forth in the Plan, Contract or Code.

DEATH OF CONTRACT OWNER

A. For Non-Qualified Contracts issued on or after January 19, 1985, in the
event the Contract Owner dies, the following rules will apply:

(1) In the event the Contract Owner dies prior to the Annuitization Date,
the entire interest in the Contract, less any applicable deductions
(which may include a Contingent Deferred Sales Charge), must be
distributed within 5 years after the Owner's death. In the
alternative, the Designated Annuitant or Contingent Owner (where one
is named) may elect to receive a Distribution in the form of a life
annuity or an annuity for a period certain not exceeding his or her
life expectancy and such annuity begins within one year following the
date of the Contract Owner's death. In the event the Designated
Annuitant or Contingent Owner is the Contract Owner's spouse, the
Contract may be continued by such Designated Annuitant or Contingent
Owner, treating the spouse as the Contract Owner. In the event the
Designated Annuitant does not survive the Contract Owner, or if the
Designated Annuitant and the Contract Owner are the same person a
Distribution will be made in accordance with the "Death Benefit At
Death of Designated Annuitant Prior To The Annuitization Date"
provision. If the Contract Owner and the Designated Annuitant are not
the same, no Death Benefit is payable upon the death of the Contract
Owner.

(2) In the event the Contract Owner/Annuitant dies on or after the
Annuitization Date, Distribution, if any, must be made to the
Beneficiary at least as rapidly as under the method of Distribution
being used as of the date of the Contract Owner/Annuitant's death.

If the Contract Owner is not a natural person, the death of the Annuitant
(or a change of the Annuitant) will be treated like a death of the Contract
Owner and will result in a Distribution pursuant to Section (1) above,
regardless of whether a Contingent Annuitant has also been named. The
Distribution will take the form of either:

(a) the Death Benefit described under "Death Benefit of Designated
Annuitant Prior to the Annuitization Date" (if the Annuitant has died
and there is no Contingent Annuitant), or in all other cases,

(b) the benefit described in the "Death of Contract Owner" provision
except that in the event of a change of the Annuitant, the benefit
will be paid to the Contract Owner if the Annuitant is living, or to
the Beneficiary upon the death of the Annuitant (and the Contingent
Annuitant, if any) prior to the expiration of the period described in
the "Death of Contract Owner" provision.

B. Contracts issued in connection with Qualified Plans, Individual Retirement
Annuities or Tax Sheltered Annuities will be subject to specific rules, set
forth in the Plan, Contract, or Code concerning distributions

<PAGE>

upon the death of the Owner or Designated Annuitant (see the "Required
Distribution for Qualified Plans or Tax Sheltered Annuities" provision).

DEATH BENEFIT PRIOR TO THE ANNUITIZATION DATE

The Death Benefit is payable to the Beneficiary unless the Owner has named
a Contingent Designated Annuitant. In such case, the Death Benefit is payable to
the Beneficiary upon the death of the last survivor of the Designated Annuitant
and Contingent Designated Annuitant. The value of the Death Benefit will be
determined as of the Valuation Date coincident with or next following the date
the Company receives both 1) due proof of death and 2) an election for a) a
single sum payment or b) Annuity Payment Option.

If a single sum settlement is requested, payment will be made in accordance
with any applicable laws and regulations governing the payment of Death
Benefits. If an Annuity Payment Option is desired, election may be made by the
Beneficiary during the 90-day period commencing with the date written notice is
received by the Company. If no election has been made by the end of such 90-day
period, the Death Benefit will be paid to the Beneficiary in a single sum. The
amount of the Death Benefit will be the greater of (i) the sum of all Purchase
Payments, less any amounts surrendered, or (ii) the Contract Value.

The amount of the Death Benefit will be limited to the Contract Value if
the Annuitization Date is deferred beyond the Designated Annuitant's 75th
birthday.

DEATH BENEFIT AFTER THE ANNUITIZATION DATE

If the Annuitant dies after the Annuitization Date, the Death Benefit shall
be as specified in the Annuity Payment Option elected.

REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS OR TAX SHELTERED ANNUITIES

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

A. the life of the Owner/Annuitant or the lives of the Owner/Annuitant
and the Owner/Annuitant's designated Beneficiary; or

B. a period not extending beyond the life expectancy of the
Owner/Annuitant or the life expectancy of the Owner/Annuitant and the
Owner/Annuitant's designated Beneficiary, provided that, for Tax
Sheltered Annuity Contracts, no Distributions will be required from
this Contract if Distributions otherwise required from the Contract
are being withdrawn from another Tax Sheltered Annuity Contract of the
Annuitant.

If the Owner/Annuitant's entire interest is to be distributed in equal or
substantially equal payments over a period described in A or B, such payments
will commence not later than the first day of April following the calendar year
in which the Owner/Annuitant attains age 70 1/2 (the Required Beginning Date).
In the case of a governmental plan (as defined in Code Section 414(d)) or a
church plan (as defined in Code Section 401(a)(9)(c)), the Required Beginning
Date will be the later of the dates determined under the preceding sentence or
April 1 of the calendar year following the calendar year in which the Annuitant
retires.

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

<PAGE>

(a) In the case of a Tax Sheltered Annuity the Owner names his or her surviving
spouse as the Beneficiary and such spouse elects to (i) treat the annuity
as a Tax Sheltered Annuity established for his or her benefit; or (ii)
receive Distribution of the account in nearly equal payments over his or
her life (or a period not exceeding his or her life expectancy) and
commencing not later than December 31 of the year in which the Owner would
have attained age 70 1/2; or

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

If the Owner/Annuitant dies after Distribution has commenced, Distribution
must continue at least as rapidly as under the schedule being used prior to his
or her death, except that a surviving spouse may treat a Tax Sheltered Annuity
as his or her own to the extent permitted by law.

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

REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES AND SEP IRAS

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

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

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

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

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

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

No Distribution will be required from this Contract if Distributions
otherwise required from this Contract are being withdrawn from another
Individual Retirement Annuity or Individual Annuity Account of the Contract
Owner.

If the Contract Owner dies after Distribution has commenced, Distribution
must continue at least as rapidly as under the schedule being used prior to his
or her death, except to the extent that a surviving spouse who is the
beneficiary under the Annuity Payment Option, may elect to treat the Contract as
his or her own, in the same manner as described in Section (a)(i) of this
provision.

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

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

<PAGE>

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

GENERATION-SKIPPING TRANSFERS

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

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

GENERAL INFORMATION

CONTRACT OWNER SERVICES

ASSET REBALANCING - The Contract Owner may direct the automatic
reallocation of contract values to the underlying Mutual Fund options on a
predetermined percentage basis every three months. If the last day of the three
month period falls on a Saturday, Sunday, recognized holiday, or any other day
when the New York Stock Exchange is closed, the Asset Rebalancing exchange will
occur on the last business day before that day. Asset Rebalancing will not
affect future allocations of Purchase Payments. An Asset Rebalancing request
must be in writing on a form provided by the Company. Contracts issued to a
Qualified Plan or a Tax Sheltered Annuity Plan as defined by the Code may have
superseding plan restrictions with regard to the frequency of underlying Mutual
Fund exchanges and underlying Mutual Fund options. The Contract Owner may want
to contact a financial adviser in order to discuss the use of Asset Rebalancing
in his or her Contract.

The Company reserves the right to discontinue offering Asset Rebalancing
upon 30 days written notice to the Contract Owner, however, any discontinuation
will not affect Asset Rebalancing programs which have already commenced. The
Company also reserves the right to assess a processing fee for this service.

DOLLAR COST AVERAGING - The Contract Owner may direct the Company to
automatically transfer from the Money Market Sub-Account or the Fixed Account to
any other Sub-Account within the Variable Account on a monthly or as frequently
as otherwise authorized by the Company. This service is intended to allow the
Contract Owner to utilize Dollar Cost Averaging, a long-term investment program
which provides for regular, level investments over time. The Company makes no
guarantees that Dollar Cost Averaging will result in a profit or protect against
loss. To qualify for Dollar Cost Averaging there must be a minimum total
Contract Value of $15,000. Transfers for purposes of Dollar Cost Averaging can
only be made from the Money Market Sub-Account or the Fixed Account. The
minimum monthly Dollar Cost Averaging transfer is $100. In addition, Dollar
Cost Averaging monthly transfers from the Fixed Account must be equal to or less
than 1/30th of the Fixed Account value when the Dollar Cost Averaging program is
requested. Transfers out of the Fixed Account, other than for Dollar Cost
Averaging, may be subject to certain additional restrictions (see "Transfers").
A written election of this service, on a form provided by the Company, must be
completed by the Contract Owner in order to begin transfers. Once elected,
transfers from the Money Market Sub-Account or the Fixed Account will be
processed monthly until either the value in the Money Market Sub-Account or the
Fixed Account is completely depleted or the Contract Owner instructs the Company
in writing to cancel the transfers.

The Company reserves the right to discontinue offering Dollar Cost
Averaging upon 30 days written notice to Contract Owners however, any
discontinuation will not affect Dollar Cost Averaging programs already
commenced. The Company also reserves the right to assess a processing fee for
this service.

SYSTEMATIC WITHDRAWALS - A Contract Owner may elect in writing on a form
provided by the Company to take Systematic Withdrawals by surrendering a
specified dollar amount (of at least $100) on a monthly, quarterly, semi-annual,
or annual basis. The Company will process the withdrawals as directed by
surrendering on a pro-rata basis Accumulation Units from all Sub-Accounts in
which the Contract Owner has an interest, and the Fixed Account. A Contingent
Deferred Sales Charge may apply to Systematic Withdrawals in accordance with the
considerations set forth in the "Contingent Deferred Sales Charge" section. Each
Systematic Withdrawal is subject to federal income taxes on the taxable portion.
In addition, a 10% federal penalty tax may be assessed on Systematic Withdrawals
if the Contract Owner is under age 59 1/2. The Company is required to withhold
tax from certain Distributions to the extent that such Distribution would
constitute income to the Contract Owner. The Contract Owner is entitled to
elect not to have federal income tax withheld from any such Distribution, but
may be subject to penalties in the event insufficient federal income tax is
withheld during a calendar year. If

<PAGE>

directed by the Contract Owner, the Company will withhold federal income taxes
from each Systematic Withdrawal. The Contract Owner may discontinue Systematic
Withdrawals at any time by notifying the Company in writing.

The Company reserves the right to discontinue offering Systematic
Withdrawals upon 30 days written notice to Contract Owners however, any
discontinuation will not affect any Systematic Withdrawal programs already
commenced. The Company also reserves the right to assess a processing fee for
this service.

STATEMENTS AND REPORTS

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

ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE

Purchase payments are allocated to one or more Sub-Accounts within the
Variable Account in accordance with the designation of the underlying Mutual
Fund options by the Contract Owner, and converted into Accumulation Units.

The initial first year Purchase Payment must be at least $1,500 for Non-
Qualified Contracts. Subsequent Purchase Payments, if any, after the first
Contract Year must be at least $10 each. However, if periodic payments are
expected by the Company, this initial first year minimum may be satisfied by
Purchase Payments made on an annualized basis. Purchase payments, if any, after
the first Contract Year must be at least $10 each. The Contract Owner may
increase or decrease Purchase Payments or change the frequency of payment. The
Contract Owner is not obligated to continue Purchase Payments in the amount or
at the frequency elected. There are no penalties for failure to continue
Purchase Payments.

For Contracts issued on and after May 1, 1981, the cumulative total of all
Purchase Payments under Contracts issued on the life of any one Designated
Annuitant may not exceed $1,000,000 without prior consent of the Company.

THE PURCHASER IS CAUTIONED THAT INVESTMENT RETURN ON SMALL INITIAL AND
SUBSEQUENT PURCHASE PAYMENTS MAY BE LESS THAN CHARGES ASSESSED BY THE COMPANY.

The initial Purchase Payment allocated to designated Sub-Accounts of the
Variable Account will be priced not later than 2 business days after receipt of
an order to purchase, if the application and all information necessary for
processing the purchase order are complete upon receipt by the Company. The
Company may, however, retain the Purchase Payment for up to 5 business days
while attempting to complete an incomplete application. If the application
cannot be made complete within 5 days, the prospective purchaser will be
informed of the reasons for the delay and the Purchase Payment will be returned
immediately unless the prospective purchaser specifically consents to the
Company retaining the Purchase Payment until the application is made complete.
Thereafter, Purchase Payments will be prices on the basis of the Accumulation
Unit Value next computed for the appropriate Sub-Account after the additional
Purchase Payment is received.

Purchase payments will not be priced on the following nationally recognized
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.

VALUE OF AN ACCUMULATION UNIT

The value of an Accumulation Unit for each Sub-Account was arbitrarily set
initially at $10 when underlying Mutual Fund shares in that Sub-Account were
available for purchase. The value for any subsequent Valuation Period is
determined by multiplying the Accumulation Unit value for each Sub-Account for
the immediately preceding Valuation Period by the Net Investment Factor for the
Sub-Account during the subsequent Valuation

<PAGE>

Period. The value of an Accumulation Unit may increase or decrease from
Valuation Period to Valuation Period. The number of Accumulation Units will not
change as a result of investment experience.

NET INVESTMENT FACTOR

The Net Investment Factor for any Valuation Period is determined by
dividing (a) by (b) and subtracting (c) from the result where:

(a) is the net of:

(1) the net asset value per share of the underlying Mutual Fund held in
the Sub-Account determined at the end of the current Valuation Period,
plus

(2) the per share amount of any dividend or capital gain distributions
made by the underlying Mutual Fund held in the Sub-Account if the "ex-
dividend" date occurs during the current Valuation Period.

(b) is the net of:

(1) the net asset value per share of the underlying Mutual Fund held in
the Sub-Account determined at the end of the immediately preceding
Valuation Period, plus or minus

(2) the per share charge or credit, if any, for any taxes reserved for in
the immediately preceding Valuation Period (see "Charge For Tax
Provisions").

(c) is a factor representing the daily Mortality Risk Charge and Expense Risk
Charge deducted from the Variable Account. Such factor is equal to an
annual rate of 1.30% of the daily net asset value of the Variable Account.

For underlying Mutual Fund options that credit dividends on a daily basis
and pay such dividends once each month or quarter (such as money market funds
and certain bond funds), the Net Investment Factor allows for the monthly or
quarterly reinvestment of these daily dividends.

The Net Investment Factor may be greater or less than one; therefore, the
value of an Accumulation Unit may increase or decrease. It should be noted that
changes in the Net Investment Factor may not be directly proportional to changes
in the net asset value of underlying Mutual Fund shares, because of the
deduction for Mortality Risk Charge and Expense Risk Charge, and any charge or
credit for tax reserves.

VALUATION OF ASSETS

Underlying Mutual Fund shares in the Variable Account will be valued at
their net asset value.

DETERMINING THE CONTRACT VALUE

The sum of the value of all Accumulation Units attributable to the Contract
plus any amounts credited to the Fixed Account is the Contract Value. The number
of Accumulation Units credited per each Sub-Account is determined by dividing
the net amount allocated to the Sub-Account by the Accumulation Unit Value for
the Sub-Account for the Valuation Period during which the Purchase Payment is
received by the Company. If part or all of the Contract Value is surrendered or
charges or deductions are made against the Contract Value, an appropriate number
of Accumulation Units from the Variable Account and an appropriate amount from
the Fixed Account will be deducted in the same proportion that the Contract
Owner's interest in the Variable Account and Fixed Account bears to the total
Contract Value.

<PAGE>

SURRENDER (REDEMPTION)

While the Contract is in force and prior to the earlier of the
Annuitization Date or the death of the Designated Annuitant, the Company will,
upon proper written application by the Contract Owner, deemed by the Company to
be in good order, allow the Contract Owner to surrender a portion or all of the
Contract Value. "Proper written application" means that the Contract Owner must
request the surrender in writing and include the Contract. The Company may
require that the signature(s) be guaranteed by a member firm of a major stock
exchange or other depository institution qualified to give such a guaranty. In
some cases, (for example, requests by a corporation, partnership, agent,
fiduciary, or surviving spouse), the Company will require additional
documentation of a customary nature.

The Company will, upon receipt of any such written request, surrender a
number of Accumulation Units from the Variable Account and an amount from the
Fixed Account necessary to equal the gross dollar amount requested, less any
applicable Contingent Deferred Sales Charge (see "Contingent Deferred Sales
Charge"). In the event of a partial surrender, the Company will, unless
instructed to the contrary, surrender Accumulation Units from all Sub-Accounts
in which the Contract Owner has an interest, and the Fixed Account. The number
of Accumulation Units surrendered from each Sub-Account and the amount
surrendered from the Fixed Account will be in the same proportion that the
Contract Owner's interest in the Sub-Accounts and Fixed Account bears to the
total Contract Value.

The Company will pay any funds applied for from the Variable Account within
7 days of receipt of such application in the Company's Home Office. However, the
Company reserves the right to suspend or postpone the date of any payment of any
benefit or values for any Valuation Period (1) when the New York Stock Exchange
("Exchange") is closed, (2) when trading on the Exchange is restricted, (3) when
an emergency exists as a result of which disposal of securities held in the
Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets, or (4)
during any other period when the Securities and Exchange Commission, by order,
so permits for the protection of security holders; provided that applicable
rules and regulations of the Securities and Exchange Commission shall govern as
to whether the conditions prescribed in (2) and (3) exist. The Contract Value on
surrender may be more or less than the total of Purchase Payments made by a
Contract Owner, depending on the market value of the underlying Mutual Fund
shares.

With respect to Contracts issued under the Texas Optional Retirement
Program, the Texas Attorney General has ruled that withdrawal benefits are
available only in the event of a participant's death, retirement, termination of
employment due to total disability, or other termination of employment in a
Texas public institution of higher education. A participant will not, therefore,
be entitled to the right of withdrawal in order to receive the cash values
credited to such participant under the Contract unless one of the foregoing
conditions has been satisfied. The value of such Contracts may, however, be
transferred to other contracts or other carriers during the period of
participation in the Optional Retirement Program. The Company issues this
Contract to participants in the Optional Retirement Program in reliance upon,
and in compliance with, Rule 6c-7 of the Investment Company Act of 1940.

SURRENDERS UNDER QUALIFIED PLAN OR TAX SHELTERED ANNUITY CONTRACT

Except as provided below, the Contract Owner may Surrender part or all of
the Contract Value at any time this Contract is in force prior to the earlier of
the Annuitization Date or the death of the Designated Annuitant:

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

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

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

B. The surrender limitations described in A. above also applies to:

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

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

<PAGE>

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

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

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

The Contract surrender provisions may also be modified pursuant to the plan
terms and Code tax provisions when the Contract is issued to fund a Qualified
Plan.

FEDERAL TAX CONSIDERATIONS

FEDERAL INCOME TAXES

The Company does not make any guarantee regarding the tax status for any
Contract or any transaction involving the Contracts. Contract Owners should
consult a financial consultant, legal counsel or tax advisor to discuss in
detail the taxation and the use of the Contracts.

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

Distributions to participants from Qualified Contracts or Tax Sheltered
Annuities are generally taxed when received. A portion of each Distribution is
excludable from income based on the ratio between the after tax investment of
the Owner/Annuitant in the Contract and the value of the Contract at the time of
the withdrawal or Annuitization.

Distributions from Individual Retirement Annuities and Contracts owned by
Individual Retirement Accounts are also generally taxed when received. The
portion of each such payment which is excludable is based on the ratio between
the amount by which nondeductible Purchase Payments to all such Contracts
exceeds prior non-taxable Distributions from such Contracts, and the total
account balances in such Contracts at the time of the Distribution. The Owner of
such Individual Retirement Annuities or the Annuitant under Contracts held by
Individual Retirement Accounts must annually report to the Internal Revenue
Service the amount of nondeductible Purchase Payments, the amount of any
Distribution, the amount by which nondeductible Purchase Payments for all years
exceed non-taxable Distributions for all years, and the total balance in all
Individual Retirement Annuities and Accounts.

A change of the Annuitant or Contingent Annuitant may be treated by the
Internal Revenue Service as a taxable transaction.

NON-QUALIFIED CONTRACTS - NATURAL PERSONS AS OWNERS

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

Distributions made from the Contract prior to the Annuitization Date are
taxable to the Contract Owner to the extent that the cash value of the Contract
exceeds the Contract Owner's investment at the time of the Distribution.
Distributions, for this purpose, include partial surrenders, dividends, loans,
or any portion of the Contract which is assigned or pledged; or for Contracts
issued after April 22, 1987, any portion of the Contract transferred by gift.
For these purposes, a transfer by gift may occur upon Annuitization if the
Contract Owner and the Annuitant are not the same individual. In determining
the taxable amount of a Distribution, all annuity contracts issued after October
21, 1988, by the same company to the same contract owner during any 12 month
period, will be treated as one annuity contract. Additional limitations on the
use of multiple contracts may be

<PAGE>

imposed by Treasury Regulations. Distributions prior to the Annuitization Date
with respect to that portion of the Contract invested prior to August 14, 1982,
are treated first as a recovery of the investment in the Contract as of that
date. A Distribution in excess of the amount of the investment in the Contract
as of August 14, 1982, will be treated as taxable income.

The Tax Reform Act of 1986 has changed the tax treatment of certain Non-
Qualified Contracts held by entities other than individuals. Such entities are
taxed currently on the earnings on the Contract which are attributable to
contributions made to the Contract after February 28, 1986. There are
exceptions for immediate annuities and certain Contracts owned for the benefit
of an individual. An immediate annuity, for purposes of this discussion, is a
single premium Contract on which payments begin within one year of purchase. If
this Contract is issued as the result of an exchange described in Section 1035
of the Code, for purposes of determining whether the Contract is an immediate
annuity, it will generally be considered to have been purchased on the purchase
date of the contract given up in the exchange.

Code Section 72 also provides for a penalty tax, equal to 10% of the
portion of any Distribution that is includable in gross income, if such
Distribution is made prior to attaining age 59 1/2. The penalty tax does not
apply if the Distribution is attributable to the Contract Owner's death,
disability or is one of a series of substantially equal periodic payments made
over the life or life expectancy of the Contract Owner (or the joint lives or
joint life expectancies of the Contract Owner and the beneficiary selected by
the Contract Owner to receive payment under the Annuity Payment Option selected
by the Contract Owner) or for the purchase of an immediate annuity, or is
allocable to an investment in the Contract before August 14, 1982. A Contract
Owner wishing to begin taking Distributions to which the 10% tax penalty does
not apply should forward a written request to the Company. Upon receipt of a
written request from the Contract Owner, the Company will inform the Contract
Owner of the procedures pursuant to Company policy and subject to limitations of
the Contract including but not limited to first year withdrawals. Such election
shall be irrevocable and may not be amended or changed.

In order to qualify as an annuity contract under Section 72 of the Code,
the contract must provide for Distribution of the entire contract to be made
upon the death of a Contract Owner. If a Contract Owner dies prior to the
Annuitization Date, then the Joint Contract Owner, the Contingent Owner or other
named recipient must receive the Distribution within 5 years of the Contract
Owner's death. However, the recipient may elect for payments to be made over
his/her life or life expectancy provided that such payments begin within one
year from the death of the Contract Owner. If the Joint Contract Owner,
Contingent Owner or other named recipient is the surviving spouse, such spouse
may be treated as the Contract Owner and the Contract may be continued
throughout the life of the surviving spouse. In the event the Contract Owner
dies on or after the Annuitization Date and before the entire interest has been
distributed, the remaining portion must be distributed at least as rapidly as
under the method of Distribution being used as of the date of the Contract
Owner's death (see "Required Distribution For Qualified Plans and Tax Sheltered
Annuities"). If the Contract Owner is not an individual, the death of the
Annuitant (or a change in the Annuitant) will result in a Distribution pursuant
to these rules, regardless of whether a Contingent Annuitant is named.

The Code requires that any election to receive an annuity rather than a
lump sum payment must be made within 60 days after the lump sum becomes payable
(generally, the election must be made within 60 days after the death of an Owner
or the Annuitant). If the election is made more than 60 days after the lump sum
first becomes payable, the election would be ignored for tax purposes, and the
entire amount of the lump sum would be subject to immediate tax. If the
election is made within the 60 day period, each Distribution would be taxable
when it is paid.

<PAGE>

NON-QUALIFIED CONTRACTS - NON-NATURAL PERSONS AS OWNERS

The foregoing discussion of the taxation of Non-Qualified Contracts applies
to Contracts owned (or, pursuant to Section 72(u) of the Code, deemed to be
owned) by individuals; it does not apply to Contracts where one or more non-
individuals is an Owner.

Persons"), rather than by one or more individuals, are not treated as
annuity contracts for most purposes under the Code; in particular, they are not
treated as annuity contracts for purposes of Section 72. Therefore, the
taxation rules for Distributions, as described above, do not apply to Non-
Qualified Contracts owned by Non-Natural Persons. Rather, the following rules
will apply:

The income earned under a Non-Qualified Contract that is owned by a Non-
Natural Person is taxed as ordinary income during the taxable year that it is
earned, and is not deferred, even if the income is not distributed out of the
Contract to the Owner.

The foregoing Non-Natural Person rule does not apply to all entity-owned
contracts. First, for this purpose, a Contract that is owned by a Non-Natural
Person as an agent for an individual is treated as owned by the individual.
This exception does not apply, however, to a Non-Natural Person who is an
employer that holds the Contract under a non-qualified deferred compensation
arrangement for one or more employees.

The Non-Natural Person rules also do not apply to a Contract that is (a)
acquired by the estate of a decedent by reason of the death of the decedent; (b)
issued in connection with certain qualified retirement plans and individual
retirement plans; (c) used in connection with certain structured settlements;
(d) purchased by an employer upon the termination of certain qualified
retirement plans; or (e) an immediate annuity.

QUALIFIED PLANS, INDIVIDUAL RETIREMENT ANNUITIES AND TAX SHELTERED ANNUITIES

The Contract may be purchased as a Qualified Contract, an Individual
Retirement Annuity or a Tax Sheltered Annuity. The Contract Owner should seek
competent advice as to the tax consequences associated with the use of a
Contract as an Individual Retirement Annuity.

For information regarding eligibility, limitations on permissible amounts
of Purchase Payments, and the tax consequences of distributions from Qualified
Plans, Tax Sheltered Annuities, Individual Retirement Annuities and other plans
that receive favorable tax treatment, the purchasers of such contracts should
seek competent advice. The terms of such plans may limit the rights available
under the Contracts.

Pursuant to Section 403(b)(1)(E) Code, a Contract that is issued as a Tax-
Sheltered Annuity is required to limit the amount of the Purchase Payment for
any year to an amount that does not exceed the limit set forth in Section 402(g)
of the Code ($7,000), as it is from time to time increased to reflect increases
in the cost of living. This limit may be reduced by any deposits, contributions
or payments made to any other Tax-Sheltered Annuity or other plan, contract or
arrangement by or on behalf of the Owner.

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

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

2. a required minimum distribution.

Any Distribution eligible for rollover will be subject to federal tax
withholding at a rate of twenty percent (20%) unless the Distribution is
transferred directly to an appropriate plan as described above.

The Contract is available for Qualified Plans electing to comply with
section 404(c) of ERISA. It is the responsibility of the plan and its
fiduciaries to determine and satisfy the requirements of section 404(c).

<PAGE>

WITHHOLDING

The Company is required to withhold tax from certain Distributions to the
extent that such Distribution would constitute income to the Contract Owner or
other payee. The Contract Owner or other payee is entitled to elect not to have
federal income tax withheld from any such Distribution, but may be subject to
penalties in the event insufficient federal income tax is withheld during a
calendar year. However, if the Internal Revenue Service notifies the Company
that the Contract Owner or other payee has furnished an incorrect taxpayer
identification number, or if the Contract Owner or other payee fails to provide
a taxpayer identification number, the Distributions may be subject to back-up
withholding at the statutory rate, which is presently 31%, and which cannot be
waived by the Contract Owner or other payee.

NON-RESIDENT ALIENS

Distributions to nonresident aliens (NRAs) are generally subject to federal
income tax and tax withholding, at a statutory rate of thirty percent (30%) of
the amount of income that is distributed. The Company may be required to
withhold such amount from the Distribution and remit it to the Internal Revenue
Service. Distributions to certain NRAs may be subject to lower, or in certain
instances, zero tax and withholding rates, if the United States has entered
into an applicable treaty. However, in order to obtain the benefits of such
treaty provisions, the NRA must give to the Company sufficient proof of his or
her residency and citizenship in the form and manner prescribed by the Internal
Revenue Service. In addition, for any Distribution made after December 31,
1997, the NRA must obtain an Individual Taxpayer Identification Number from the
Internal Revenue Service, and furnish that number to the Company prior to the
Distribution. If the Company does not have the proper proof of citizenship or
residency and (for Distributions after December 31, 1997) a proper Individual
Taxpayer Identification Number prior to any Distribution, the Company will be
required to withhold 30% of the income, regardless of any treaty provision.

A payment may not be subject to withholding where the recipient
sufficiently establishes to the Company that such payment is effectively
connected to the recipient's conduct of a trade or business in the United States
and that such payment is includable in the recipient's gross income for United
States federal income tax purposes. Any such Distributions will be subject to
the rules set forth in the section entitled "Withholding."

FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES

A transfer of the Contract from one Contract Owner to another, or the
payment of a Distribution under the Contract to someone other than a Contract
Owner, may constitute a gift for federal gift tax purposes. Upon the death of
the Contract Owner, the value of the Contract may be included in his or her
gross estate, even if a all or a portion of the value is also subject to federal
income taxes.

The Company may be required to determine whether the Death Benefit or any
other payment or Distribution constitutes a "direct skip" as defined in Section
2612 of the Code, and the amount of the generation skipping transfer tax, if
any, resulting from such direct skip. A direct skip may occur when property is
transferred to, or a Death Benefit or other Distribution is made to (a) an
individual who is two or more generations younger than the Owner; or (b) certain
trusts, as described in Section 2613 of the Code (generally, trusts that have no
beneficiaries who are not 2 or more generations younger than the Owner). If the
Owner is not an individual, then for this purpose only, "Owner" refers to any
person who would be required to include the Contract, Death Benefit,
Distribution, or other payment in his federal gross estate at his death, or who
is required to report the transfer of the Contract, Death Benefit, Distribution,
or other payment for federal gift tax purposes.

If the Company determines that a generation skipping transfer tax is
required to be paid by reason of such direct skip, the Company is required to
reduce the amount of such Death Benefit, Distribution, or other payment by such
tax liability, and pay the tax liability directly to the Internal Revenue
Service.

Federal estate, gift and generation skipping transfer tax consequences, and
state and local estate, inheritance, succession, generation skipping transfer,
and other tax consequences, of owning or transferring a Contract, and of
receiving a Distribution, Death Benefit, or other payment, depend on the
circumstances of the person owning or transferring the Contract, or receiving a
Distribution, Death Benefit, or other payment.

<PAGE>

CHARGE FOR TAX PROVISIONS

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

DIVERSIFICATION

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

Representatives of the Internal Revenue Service have suggested, from time
to time, that the number of underlying Mutual Funds available or the number of
transfer opportunities available under a variable product may be relevant in
determining whether the product qualifies for the desired tax treatment. No
formal guidance has been issued in this area. Should the Secretary of the
Treasury issue additional rules or regulations limiting the number of underlying
Mutual Funds, transfers between underlying Mutual Funds, exchanges of underlying
Mutual Funds or changes in investment objectives of underlying Mutual Funds such
that the Contract would no longer qualify as an annuity under Section 72 of the
Code, the Company will take whatever steps are available to remain in
compliance.

TAX CHANGES

In the recent past, the Code has been subjected to numerous amendments and
changes, and it is reasonable to believe that it will continue to be revised.
The United States Congress has, in the past, considered numerous legislative
proposals that, if enacted, could change the tax treatment of the Contracts. It
is reasonable to believe that such proposals, and other proposals will be
considered in the future, and some of them may be enacted into law. In
addition, the Treasury Department may amend existing regulations, issue new
regulations, or adopt new interpretations of existing law that may be in
variance with its current positions on these matters. In addition, current
state law (which is not discussed herein), and future amendments to state law,
may affect the tax consequences of the Contract.

The foregoing discussion, which is based on the Company's understanding of
federal tax laws as they are currently interpreted by the Internal Revenue
Service, is general and is not intended as tax advice. Statutes, regulations,
and rulings are subject to interpretation by the courts. The courts may
determine that a different interpretation than the currently favored
interpretation is appropriate, thereby changing the operation of the rules that
are applicable to annuity contracts.

Any of the foregoing may change from time to time without any notice, and
the tax consequences arising out of a Contract may be changed retroactively.
There is no way of predicting whether, when, and to what extent any such change
may take place. No representation is made as to the likelihood of the
continuation of these current laws, interpretations, and policies.

THE FOREGOING IS A GENERAL EXPLANATION AS TO CERTAIN TAX MATTERS PERTAINING TO
ANNUITY CONTRACTS. IT IS NOT INTENDED TO BE LEGAL OR TAX ADVICE, AND SHOULD NOT
TAKE THE PLACE OF YOUR INDEPENDENT LEGAL, TAX AND/OR FINANCIAL ADVISOR.

<PAGE>

LEGAL PROCEEDINGS

From time to time the Company is a party to litigation and arbitration
proceedings in the ordinary course of its business, none of which is expected to
have a material adverse effect on the Company.

In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance pricing
and sales practices. A number of these lawsuits have resulted in substantial
jury awards or settlements. In October, 1996, a policyholder of Nationwide Life
filed a complaint in Alabama state court against Nationwide Life and an agent of
Nationwide Life (WAYNE M. KING V. NATIONWIDE LIFE INSURANCE COMPANY AND DANNY
NIX) related to the sale of a whole life policy on a "vanishing premium" basis
and seeking unspecified compensatory and punitive damages. In February, 1997,
Nationwide Life was named as a defendant in a lawsuit filed in New York Supreme
Court also related to the sale of whole life policies on a "vanishing premium"
basis (JOHN H. SNYDER V. NATIONWIDE MUTUAL INSURANCE COMPANY, NATIONWIDE MUTUAL
INSURANCE CO. AND NATIONWIDE LIFE INSURANCE CO.). The plaintiff in such lawsuit
seeks to represent a national class of Nationwide Life policyholders and claims
unspecified compensatory and punitive damages. This lawsuit is in an early
state and has not been certified as a class action. Nationwide Life intends to
defend these cases vigorously. There can be no assurance that any future
litigation relating to pricing and sales practices will not have a material
adverse effect on the Company.

The General Distributor, Clarendon Insurance Agency, Inc., is not engaged
in any litigation of any material nature.

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

PAGE
General Information and History. . . . . . . . . . . . . . . . . . . . . . 1
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . . . 1
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Calculation of Yield Quotations of Money Market Sub-Accounts . . . . . . . 2
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 3