LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C, 497, 1997-05-06

LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
497, 1997-05-06

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<PAGE>

LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
INDIVIDUAL VARIABLE ANNUITY CONTRACTS

issued by:
Lincoln National Life Insurance Co.
1300 South Clinton Street
Fort Wayne, Indiana 46802

Account C

This Prospectus describes individual variable annuity contracts issued by
Lincoln National Life Insurance Co. (Lincoln Life). They are for use with the
following retirement plans qualified for special tax treatment (qualified
contracts) under the Internal Revenue Code of 1986, as amended (the code):

1. Public school systems and 501(c)(3) tax-exempt organizations (403(b));
2. Qualified corporate employee pension and profit-sharing trusts and qualified
annuity plans;
3. Corresponding plans of self-employed individuals (H.R. 10 or Keogh);
4. Individual retirement annuities (IRA);
5. Government deferred compensation plans (457); and
6. Simplified employee pension plans (SEP).
7. SIMPLE IRA (consult your representative as to the availability of this
contract for SIMPLE IRAs).

The contracts described in this Prospectus are also offered to plans
established by persons who are not entitled to participate in one of the
previously mentioned plans (nonqualified contracts).

This Prospectus offers you, as contractowner, contracts of the following types:

1. Single premium deferred annuity;
2. Flexible premium deferred annuity (Multi Fund(R) 2, 3 and 4); and
3. Periodic premium deferred annuity (Multi Fund(R) 1).

The contracts offer you the accumulation of contract value and payment of
periodic annuity benefits. These benefits may be paid on a variable or fixed
basis or a combination of both. Benefits start at an annuity commencement date
which you select. If the annuitant dies before the annuity commencement date, a
death benefit will be paid to the beneficiary.

The minimum initial purchase payment for each of the three types of contract
is:

1. Single premium deferred contract: $1,000 for IRAs and SEPs; $3,000 for all
others;
2. Flexible premium deferred contract: $1,000 for IRAs and SEPs; $3,000 for all
others (subsequent purchase payments: $100); and
3. Periodic premium deferred contract: $600 per contract year (minimum $25 per
purchase payment).

All investments (purchase payments) for benefits on a variable basis will be
placed in Lincoln National Variable Annuity Account C (variable annuity account
[VAA]). The VAA is a segregated investment account of Lincoln Life, which is
the Depositor. Based upon your instructions, the VAA invests purchase payments
(at net asset value) in specified mutual funds (the fund or funds and series).
Both the value of a contract before the annuity commencement date and the
amount of payouts afterward will depend upon the investment performance of the
fund(s) or series selected. Investments in these funds and series are neither
insured nor guaranteed by the U.S. Government or by any other person or entity.

Purchase payments for benefits on a fixed basis will be placed in the fixed
side of the contract, which is part of our general account. However, this
Prospectus deals only with those elements of the contracts relating to the VAA,
except where reference to the fixed side is made.

We may not offer a contract continuously or in every state. THE MULTI FUND(R) 4
CONTRACT AND THE ENHANCED GUARANTEED MINIMUM DEATH BENEFIT ARE EXPECTED TO BE
AVAILABLE AFTER JUNE 1997. PLEASE CONSULT YOUR REPRESENTATIVE AS TO THE
AVAILABILITY IN YOUR STATE.

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

This Prospectus details the information regarding the VAA that you should know
before investing. This Prospectus is printed in a booklet that also includes a
current Prospectus for each of the following funds: Lincoln National Aggressive
Growth Fund, Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital
Appreciation Fund, Inc., Lincoln National Equity-Income Fund, Inc., Lincoln
National Global Asset Allocation Fund, Inc., Lincoln National Growth and Income
Fund, Inc., Lincoln National International Fund, Inc., Lincoln National Managed
Fund, Inc., Lincoln National Money Market Fund, Inc., Lincoln National Social
Awareness Fund, Inc., and Lincoln National Special Opportunities Fund, Inc. and
a current Prospectus for the Delaware Group Premium Fund, Inc., which contains
information regarding the Equity/Income Series, Global Bond Series and the
Emerging Growth Series. All Prospectuses should be read carefully and kept for
future reference.

A statement of additional information (SAI), dated May 1, 1997, concerning the
VAA has been filed with the SEC and is incorporated by this reference into this
Prospectus. If you would like a free copy, write, Lincoln National Life
Insurance Co., P.O. Box 2340, Fort Wayne, Indiana 46801, or call 1-800-4LINCOLN
(454-6265). A table of contents for the SAI appears on the last page of this
Prospectus.

This Prospectus is dated May 1, 1997.

1
<PAGE>

Account C
FOR YOUR INFORMATION:
IF YOU SURRENDER YOUR CONTRACT OR WITHDRAW CONTRACT VALUE, A SURRENDER CHARGE
OF UP TO 8% MAY BE DEDUCTED. THE AMOUNT OF THE SURRENDER CHARGE DEPENDS ON THE
TYPE OF CONTRACT AND ITS DURATION. HOWEVER, NO SURRENDER CHARGE IS ASSESSED
WHEN ANNUITY PAYOUTS BEGIN OR AT THE ANNUITANT'S DEATH. SEE CHARGES AND OTHER
DEDUCTIONS.

ALSO, YOU MAY BE SUBJECT TO A PENALTY TAX UNDER SECTION 72 (Q) OF THE CODE (SEE
FEDERAL TAX STATUS) SHOULD YOU WITHDRAW CONTRACT VALUE OR SURRENDER THE
CONTRACT BEFORE THE ANNUITY COMMENCEMENT DATE.

THESE CONTRACTS CONTAIN A FREE-LOOK PROVISION. SEE RETURN PRIVILEGE.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
- ----------------------------------------------------------------------
<S> <C>
Special terms 3
- ----------------------------------------------------------------------
Expense tables 4
- ----------------------------------------------------------------------
Condensed financial information for the variable annuity account 7
- ----------------------------------------------------------------------
Financial statements 9
- ----------------------------------------------------------------------
Lincoln National Life Insurance Co. 9
- ----------------------------------------------------------------------
Variable annuity account (VAA) 9
- ----------------------------------------------------------------------
Investments of the variable annuity account 9
- ----------------------------------------------------------------------
Charges and other deductions 12
- ----------------------------------------------------------------------
The contracts 14
- ----------------------------------------------------------------------
Annuity payouts 18
- ----------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Page
- --------------------------------------------------------------
<S> <C>
Federal tax status 19
- --------------------------------------------------------------
Voting rights 20
- --------------------------------------------------------------
Distribution of the contracts 21
- --------------------------------------------------------------
Return privilege 21
- --------------------------------------------------------------
State regulation 21
- --------------------------------------------------------------
Restrictions under the Texas Optional Retirement Program 21
- --------------------------------------------------------------
Records and reports 21
- --------------------------------------------------------------
Other information 22
- --------------------------------------------------------------
Statement of additional information
table of contents for VAA 22
- --------------------------------------------------------------
</TABLE>

2
<PAGE>

Account C
SPECIAL TERMS

(Throughout this Prospectus, in order to make the following documents more
understandable to you, we have italicized the special terms.)

Account or variable annuity account (VAA) -- The segregated investment account,
Account C, into which Lincoln Life sets aside and invests the assets for the
variable annuity contracts offered in this Prospectus.

Accumulation unit -- A measure used to calculate contract value for the
variable side of the contract before the annuity commencement date. See The
contracts.

Advisor or investment advisor -- Lincoln Investment Management, Inc. (Lincoln
Investment), which provides investment management services to each of the
funds. See Investment advisor.

Annuitant -- The person upon whose life the annuity benefit payments made after
the annuity commencement date will be based.

Annuity commencement date -- The valuation date when the funds or series are
withdrawn or converted into annuity units or fixed dollar payout for payment of
annuity benefits under the annuity payout option selected. For purposes of
determining whether an event occurs before or after the annuity commencement
date, the annuity commencement date is deemed to begin at the valuation period.

Annuity option -- One of the optional forms of payout of the annuity available
within the contract. See Annuity payouts.

Annuity payout -- An amount paid after the annuity commencement date at regular
intervals under one of several options available to the annuitant and/or any
other payee. This amount may be paid on a variable or fixed basis, or a
combination of both.

Annuity unit -- A measure used to calculate the amount of annuity payouts after
the annuity commencement date. See Annuity payouts.

Beneficiary -- The person whom you designate to receive the death benefit, if
any, in case of the annuitant's death.

Cash surrender value -- Upon surrender, the contract value less any applicable
charges, fees, and taxes.

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

Contract (variable annuity contract) -- The agreement between you and us
providing a variable annuity.

Contractowner (you, your owner) -- The person who has the ability to exercise
the rights within the contract (decides on investment allocations, transfers,
payout options; designates the beneficiary, etc.). Usually, but not always, the
owner is also the annuitant.

Contract value -- At a given time, the total value of all accumulation units
for a contract plus the value of the fixed side of the contract.

Contract year -- Each one-year period starting with the effective date of the
contract and starting with each contract anniversary after that.

Death benefit -- The amount payable to your designated beneficiary if the
annuitant dies before the annuity commencement date. See The contracts.

Enhanced Guaranteed Minimum Death Benefit (EGMDB)--The EGMDB is the greater of:
(1) the contract value at the end of the valuation period when the death claim
is approved for payment by Lincoln Life or (2) the higher of:
a. the contract value at the end of the valuation period when the EGMDB becomes
effective and;
b. the highest contract value at the end of the valuation period that includes
any contract anniversary date up to and including age 75 following election
of the EGMDB;

increased by purchase payments and decreased by any withdrawals,
annuitizations, and premium taxes incurred after the contract anniversary or
EGMDB effective date the highest contract value occurred. See The contracts.

Delaware Management -- Delaware Management Company, Inc.

Flexible premium deferred contract (Multi Fund(R) 2, 3, and 4) -- An annuity
contract with an initial purchase payment, allowing additional purchase
payments to be made, and with annuity payouts beginning at a future date.

Fund -- Any of the eleven individual Lincoln National underlying investment
options in which your purchase payments are invested.

Home office -- The headquarters of Lincoln National Life Insurance Co., located
at 1300 South Clinton Street, Fort Wayne, Indiana 46802.

Lincoln Investment -- Lincoln Investment Management, Inc.

Lincoln Life (we, us, our) -- Lincoln National Life Insurance Co.

Lump sum -- A one-time purchase payment of $5,000 or more ($1,000 for IRAs and
SEPs) made to a periodic premium deferred contract.

Periodic premium deferred contract (Multi Fund(R) 1) -- An annuity contract
with purchase payments due periodically and with annuity payouts beginning at a
future date.

Purchase payments -- Amounts paid into the contract to purchase an annuity.

Qualified plan -- A retirement plan qualified for special tax treatment under
the Code, as amended, including Sections 401, 403, 408 and 457.

Series -- Any of the three underlying portfolios of the Delaware Group Premium
Fund, Inc., in which your purchase payments are invested.

Single premium deferred contract -- An annuity contract with a single purchase
payment and with annuity payouts beginning at a future date.

Statement of additional information (SAI) -- A document required by the SEC to
be provided upon request to a prospective purchaser of a contract, you. This
free document gives more information about Lincoln Life, the VAA, and the
variable annuity contract.

Subaccount -- That portion of the VAA that reflects investments in accumulation
and annuity units of a particular fund and series. There is a separate
subaccount which corresponds to each fund.

Surrender -- A contract right that allows you to terminate your contract and
receive your cash surrender value. See The contracts.

Surrender charge -- The term that refers to what is known in the industry as a
contingent deferred sales charge. See Charges and other deductions.

Valuation date -- Each day the New York Stock Exchange (NYSE) is open for
trading.

Valuation period -- The period starting at the close of trading (currently 4:00
p.m. New York time) on each day that the NYSE is open for trading and ending at
the close of such trading on the next valuation date.

Withdrawal -- A contract right that allows you to obtain a portion of your cash
surrender value.

3
<PAGE>

Account C
EXPENSE TABLES

CONTRACTOWNER TRANSACTION EXPENSES-SINGLE PREMIUM AND PERIODIC PREMIUM DEFERRED
CONTRACTS:

Surrender charge (as a percentage of contract value surrendered/withdrawn):

7% (single premium)

8% (periodic premium)

(Note: Upon the first withdrawal of contract value in any contract year, up to
15% of contract value may be withdrawn free of this charge.)

REDUCED SURRENDER CHARGES OVER TIME:

The surrender charge percentages listed above are the maximum percentages
charged as a percentage of contract value withdrawn. The later a
surrender/withdrawal occurs, the lower the surrender charge percentage applied,
according to the following table:

<TABLE>
<CAPTION>
Contract type Contract year
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8 9 10 11+
Single premium 7% 6 5 4 3 2 1 0 0 0 0
Periodic premium 8% 8 8 8 8 4 4 4 4 4 0
</TABLE>

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

CONTRACTOWNER TRANSACTION EXPENSES-FLEXIBLE PREMIUM DEFERRED CONTRACT:

Surrender charge (as a percentage of purchase payments
surrendered/withdrawn) 7% (flexible premium)

(Note: Upon the first withdrawal of purchase payments in any contract year, up
to 15% of those purchase payments may be withdrawn free of this charge.)

REDUCED SURRENDER CHARGE OVER TIME:

The surrender charge percentage listed above is the maximum percentage charged
as a percentage of purchase payments withdrawn. This charge is calculated
separately for each contract year's purchase payments. The later a
surrender/withdrawal occurs, the lower the surrender charge percentage applied,
according to the following table:

<TABLE>
<CAPTION>
Completed contract years between
date of purchase payments and date
Contract type of surrender/withdrawal
- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 1 2 3 4 5 6 7+
Flexible premium 7% 6 5 4 3 2 1 0
</TABLE>

ANNUAL CONTRACT FEE:

$-0-(single premium and flexible premium Multi Fund(R) 3 and 4)

$25 (periodic and flexible premium Multi Fund(R) 2) This fee is a single charge
assessed against contract value on the last valuation date of each contract
year and upon full surrender; it is NOT a separate charge for each subaccount.

VAA ANNUAL EXPENSES
(as a percentage of average account value for each subaccount)*:

<TABLE>
<CAPTION>
Contracts with EGMDB Contracts without EGMDB
<S> <C> <C>
Mortality and expense risk fees 1.00% 1.00%
EGMDB charge .30 --
---- ----
Total Account C annual expenses 1.30% 1.00%
</TABLE>

*The VAA is divided into 14 separately-named subaccounts, each of which, in
turn, invests purchase payments in its respective fund or series.

4
<PAGE>

Account C

ANNUAL EXPENSES OF THE FUNDS AND SERIES FOR THE YEAR ENDED 1996
(as a percentage of each fund's and series' average net assets):

<TABLE>
<CAPTION>
Management Other Total
fees + expenses = expenses
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Aggressive Growth (AG) .75% .07% .82%
- -----------------------------------------------------------------------------
2. Bond (B) .46 .05 .51
- -----------------------------------------------------------------------------
3. Capital Appreciation (CA) .80 .13 .93
- -----------------------------------------------------------------------------
4. Equity-Income (EI) .95 .13 1.08
- -----------------------------------------------------------------------------
5. Global Asset Allocation (GAA) .73 .27 1.00
- -----------------------------------------------------------------------------
6. Growth and Income (GI) .33 .03 .36
- -----------------------------------------------------------------------------
7. International (I) .82 .37 1.19
- -----------------------------------------------------------------------------
8. Managed (M) .39 .04 .43
- -----------------------------------------------------------------------------
9. Money Market (MM) .48 .09 .57
- -----------------------------------------------------------------------------
10. Social Awareness (SA) .42 .04 .46
- -----------------------------------------------------------------------------
11. Special Opportunities (SO) .40 .04 .44
- -----------------------------------------------------------------------------
12. Delaware Emerging Growth (DEG)* .70* .10 .80
- -----------------------------------------------------------------------------
13. Delaware Equity/Income (DE/I)* .54* .13 .67
- -----------------------------------------------------------------------------
14. Delaware Global Bond (DGB)* .36* .44 .80
</TABLE>
- --------------------------------------------------------------------------------
*The investment advisors for these series currently voluntarily waive
management fees to the extent necessary to maintain the series total expense
ratio at a maximum of .80%. The management fees and total expenses, absent the
waiver, would have been .75% and .85% for DEG, .60% and .73% for DE/I and .75%
and 1.19% for DGB. Should they cease to waive those amounts in the future,
these management fee percentages and total expenses may be higher in future
years.

EXAMPLES
(reflecting expenses of the VAA, the funds and series):

If you surrender your contract at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment, assuming a 5% annual
return:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
Flexible Flexible Flexible Flexible Flexible Flexible
Multi Multi Multi Multi Multi Multi
Fund(R) Fund(R) Fund(R) Fund(R) Fund(R) Fund(R)
Single 2 3 & 4 Periodic Single 2 3 & 4 Periodic Single 2 3 & 4 Periodic Single
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. AG $91 $89 $89 $101 $112 $101 $107 $145 $134 $128 $129 $192 $214
- --------------------------------------------------------------------------------------------------------------------------
2. B 88 85 85 98 103 98 98 136 118 112 112 177 180
- --------------------------------------------------------------------------------------------------------------------------
3. CA 92 90 90 102 115 111 111 148 139 134 134 197 226
- --------------------------------------------------------------------------------------------------------------------------
4. EI 93 91 91 103 120 115 115 152 147 142 142 204 241
- --------------------------------------------------------------------------------------------------------------------------
5. GAA 92 90 90 103 117 113 113 150 143 138 138 200 233
- --------------------------------------------------------------------------------------------------------------------------
6. GI 86 84 84 97 99 93 93 132 110 104 105 170 164
- --------------------------------------------------------------------------------------------------------------------------
7. I 94 92 92 104 123 119 119 155 152 147 148 209 253
- --------------------------------------------------------------------------------------------------------------------------
8. M 87 85 85 97 101 95 95 134 114 108 108 173 172
- --------------------------------------------------------------------------------------------------------------------------
9. MM 88 86 86 99 105 100 100 138 121 116 116 180 187
- --------------------------------------------------------------------------------------------------------------------------
10. SA 87 85 85 98 102 96 96 135 116 110 110 175 175
- --------------------------------------------------------------------------------------------------------------------------
11. SO 87 85 85 98 101 96 96 134 115 109 109 174 173
- --------------------------------------------------------------------------------------------------------------------------
12. DEG 91 88 88 101 112 107 107 144 133 127 128 191 212
- --------------------------------------------------------------------------------------------------------------------------
13. DE/I 89 87 87 100 108 103 103 141 126 121 121 185 198
- --------------------------------------------------------------------------------------------------------------------------
14. DGB 91 88 88 101 112 107 107 144 133 127 128 191 212
<CAPTION>
Flexible Flexible
Multi Multi
Fund(R) Fund(R)
2 3 & 4 Periodic
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. AG $213 $214 $268
- --------------------------------------------------------------------------------------------------------------------------
2. B 180 180 236
- --------------------------------------------------------------------------------------------------------------------------
3. CA 225 226 225
- --------------------------------------------------------------------------------------------------------------------------
4. EI 241 241 294
- --------------------------------------------------------------------------------------------------------------------------
5. GAA 232 233 286
- --------------------------------------------------------------------------------------------------------------------------
6. GI 163 164 220
- --------------------------------------------------------------------------------------------------------------------------
7. I 252 253 304
- --------------------------------------------------------------------------------------------------------------------------
8. M 171 172 228
- --------------------------------------------------------------------------------------------------------------------------
9. MM 186 187 242
- --------------------------------------------------------------------------------------------------------------------------
10. SA 174 175 231
- --------------------------------------------------------------------------------------------------------------------------
11. SO 172 173 229
- --------------------------------------------------------------------------------------------------------------------------
12. DEG 211 212 266
- --------------------------------------------------------------------------------------------------------------------------
13. DE/I 197 198 252
- --------------------------------------------------------------------------------------------------------------------------
14. DGB 211 212 266
</TABLE>
- --------------------------------------------------------------------------------

5
<PAGE>

Account C
If you do not surrender your contract, (whether single, flexible or periodic),
or if you annuitize, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return:

<TABLE>
<CAPTION>
5 years 10 years
Single, Single,
Flexible Periodic, Flexible Periodic,
Multi Flexible Multi Flexible
Fund(R) Multi Fund(R) Multi
1 year 3 years 3 and 4 Fund(R) 2 3 and 4 Fund(R) 2
- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. AG $19 $57 $ 99 $ 98 $214 $213
- --------------------------------------------------------------
2. B 15 48 82 82 180 180
- --------------------------------------------------------------
3. CA 20 61 104 104 226 225
- --------------------------------------------------------------
4. EI 21 65 112 112 241 241
- --------------------------------------------------------------
5. GAA 20 63 108 108 233 232
- --------------------------------------------------------------
6. GI 14 43 75 74 164 163
- --------------------------------------------------------------
7. I 22 69 118 117 253 252
- --------------------------------------------------------------
8. M 15 45 78 78 172 171
- --------------------------------------------------------------
9. MM 16 50 86 86 187 186
- --------------------------------------------------------------
10. SA 15 46 80 80 175 174
- --------------------------------------------------------------
11. SO 15 46 79 79 173 172
- --------------------------------------------------------------
12. DEG 18 57 98 97 212 211
- --------------------------------------------------------------
13. DE/I 17 53 91 91 198 197
- --------------------------------------------------------------
14. DGB 18 57 98 97 212 211
</TABLE>
- --------------------------------------------------------------------------------

This table is provided to assist you in understanding the various costs and
expenses that you will bear directly or indirectly. The table reflects expenses
of the VAA, the 11 funds and the three series for the year ended December 31,
1996. For more complete descriptions of the various costs and expenses
involved, see Charges and other deductions in this Prospectus, and Management
of the funds in the Appendix to the funds' Prospectuses and the Prospectus for
Delaware Group Premium Fund, Inc. Premium taxes may also be applicable,
although they do not appear in the table. In addition, we reserve the right to
impose a charge on transfers between subaccounts as well as to and from the
fixed account, although we do not currently do so. THE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
MORE OR LESS THAN THOSE SHOWN. This table is unaudited.

These examples reflect expenses assuming that the EGMDB is NOT in effect. If
the EGMDB is in effect, these examples will be higher.

6
<PAGE>

CONDENSED FINANCIAL INFORMATION FOR THE VAA

Account C

ACCUMULATION UNIT VALUES
The following information relating to accumulation unit values and number of
accumulation units for each of the 10 years in the period ended December 31,
1996 comes from the VAA's financial statements. It should be read in
conjunction with the VAA's financial statements and notes which are all
included in the SAI.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth
subaccount
Accumulation unit value
. Beginning of period $ 1.196 .896 1.000 1.000*
. End of period $ 1.384 1.196 .896 1.000* trading began in 1994.
Number of accumulation
units
. End of period (000's
omitted) 172,630 114,518 67,547 110
- ------------------------------------------------------------------------------------------------------------
Bond subaccount
Accumulation unit value
. Beginning of period $ 4.228 3.585 3.780 3.398 3.181 2.737 2.591 2.312 2.162 2.156
. End of period $ 4.283 4.228 3.585 3.780 3.398 3.181 2.737 2.591 2.312 2.162
Number of accumulation
units
. End of period (000's
omitted) 62,709 62,644 57,900 62,765 52,842 46,830 40,983 37,671 28,146 25,879
- ------------------------------------------------------------------------------------------------------------
Capital Appreciation
subaccount
Accumulation unit value
. Beginning of period $ 1.294 1.017 1.000 1.000*
. End of period $ 1.520 1.294 1.017 1.000* trading began in 1994.
Number of accumulation
units
. End of period (000's
omitted) 174,073 98,067 52,125 110
- ------------------------------------------------------------------------------------------------------------
Equity-Income subaccount
Accumulation unit value
. Beginning of period $ 1.391 1.046 1.000 1.000*
. End of period $ 1.663 1.391 1.046 1.000* trading began in 1994.
Number of accumulation
units
. End of period (000's
omitted) 275,632 171,817 75,383 110
- ------------------------------------------------------------------------------------------------------------
Global Asset Allocation
subaccount
Accumulation unit value
. Beginning of period $ 2.013 1.642 1.689 1.453 1.378 1.174 1.175 1.005 .914 1.000*
. End of period $ 2.302 2.013 1.642 1.689 1.453 1.378 1.174 1.175 1.005 .914*
trading
Number of accumulation began
units in 1987.
. End of period (000's
omitted) 140,242 126,558 122,061 92,778 67,873 57,199 50,149 39,835 27,750 23,120
- ------------------------------------------------------------------------------------------------------------
Growth and Income
subaccount
Accumulation unit value
. Beginning of period $ 6.292 4.593 4.579 4.084 4.050 3.125 3.126 2.611 2.436 2.130
. End of period $ 7.453 6.292 4.593 4.579 4.084 4.050 3.125 3.126 2.611 2.436
Number of accumulation
units
. End of period (000's
omitted) 332,885 291,063 253,621 226,072 188,659 144,515 114,974 96,161 81,066 73,488
- ------------------------------------------------------------------------------------------------------------
International subaccount
Accumulation unit value
. Beginning of period $ 1.368 1.271 1.243 .901 .990 1.000*
. End of period $ 1.488 1.368 1.271 1.243 .901 .990* trading began in 1991.
Number of accumulation
units
. End of period (000's
omitted) 294,570 261,509 248,639 129,551 50,718 21,088
- ------------------------------------------------------------------------------------------------------------
</TABLE>

* These values do not reflect a full year's experience because they are
calculated for the period from the beginning of investment activity of the
subaccounts, through December 31.

7
<PAGE>

Account C
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Managed subaccount
Accumulation unit value
. Beginning of period $ 3.515 2.747 2.827 2.558 2.492 2.065 2.015 1.737 1.609 1.495
. End of period $ 3.913 3.515 2.747 2.827 2.558 2.492 2.065 2.015 1.737 1.609
Number of accumulation units
. End of period (000's omitted) 178,496 172,789 167,184 162,485 139,606 115,929 104,011 95,285 84,586 78,432
- ----------------------------------------------------------------------------------------------------------------
Money Market subaccount
Accumulation unit value
. Beginning of period $ 2.235 2.137 2.079 2.044 1.996 1.907 1.783 1.651 1.553 1.472
. End of period $ 2.324 2.235 2.137 2.079 2.044 1.996 1.907 1.783 1.651 1.553
Number of accumulation units
. End of Period (000's omitted) 40,057 35,136 37,106 39,763 46,993 77,812 57,377 53,287 37,890 37,132
- ----------------------------------------------------------------------------------------------------------------
Social Awareness subaccount
Accumulation unit value
. Beginning of period $ 2.843 2.005 2.021 1.796 1.750 1.285 1.357 1.042 1.000*
. End of period $ 3.638 2.843 2.005 2.021 1.796 1.750 1.285 1.357 1.042* trading
began
in 1988
Number of accumulation units
. End of period (000's omitted) 175,970 106,204 83,069 69,006 50,838 30,735 19,486 7,127 1,984
- ----------------------------------------------------------------------------------------------------------------
Special Opportunities subaccount
Accumulation unit value
. Beginning of period $ 5.618 4.303 4.392 3.740 3.519 2.481 2.710 2.054 1.997 1.867
. End of period $ 6.505 5.618 4.303 4.392 3.740 3.519 2.481 2.710 2.054 1.997
Number of accumulation units
. End of period (000's omitted) 97,744 88,993 73,673 62,314 51,056 37,798 33,837 27,789 31,068 29,240
- ----------------------------------------------------------------------------------------------------------------
DE Emerging Growth subaccount
Accumulation unit value
. Beginning of period $ 1.000*
. End of period $ 0.991* trading began in 1996
Number of accumulation units
. End of period (000's omitted) 23,508
- ----------------------------------------------------------------------------------------------------------------
DE Equity/Income subaccount
Accumulation unit value
. Beginning of period $ 1.000*
. End of period $ 1.126* trading began in 1996
Number of accumulation units
. End of period (000's omitted) 12,220
- ----------------------------------------------------------------------------------------------------------------
DE Global Bond subaccount
Accumulation unit value
. Beginning of period $ 1.000*
. End of period $ 1.111* trading began in 1996
Number of accumulation units
. End of period (000's omitted) 7,613
</TABLE>
- --------------------------------------------------------------------------------

*These values do not reflect a full year's experience because they are
calculated for the period from the beginning of investment activity of
the subaccounts, through December 31.

ADDITIONAL INFORMATION FOR THE MONEY MARKET SUBACCOUNT:
Seven-day yield: 3.71%; Length of base period-7 days; Date of last day of base
period: December 31, 1996.

8
<PAGE>

Account C

PERFORMANCE DATA:
At times the VAA may advertise the Money Market subaccount's yield. The yield
refers to the income generated by an investment in the subaccount over a seven-
day period. This income is then annualized. The process of annualizing results
when the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. THE YIELD FIGURE IS BASED ON HISTORICAL EARNINGS
AND IS NOT INTENDED TO INDICATE FUTURE PERFORMANCE.

The VAA advertises the annual performance of the subaccounts for the funds and
series on both a standardized and nonstandardized basis.

The standardized calculation measures average annual total return. This is
based on a hypothetical $1,000 payment made at the beginning of a one-year, a
five-year, and a 10-year period. This calculation reflects all fees and charges
that are or could be imposed on all contractowner accounts.

The nonstandardized calculation compares changes in accumulation unit values
from the beginning of the most recently completed calendar year to the end of
that year. It may also compare changes in accumulation unit values over shorter
or longer time periods. This calculation reflects mortality and expense risk
fees. It also reflects management fees and other expenses of the fund. It does
not include surrender charges or the account charge; if included, they would
decrease the performance.

For additional information about performance calculations, please refer to the
SAI.

FINANCIAL STATEMENTS

The financial statements for the VAA and Lincoln Life are located in the SAI.
You may obtain a free copy by writing Lincoln National Life Insurance Co., P.O.
Box 2340, Fort Wayne, Indiana 46801 or calling
1-800-4LINCOLN (454-6265).

LINCOLN NATIONAL LIFE INSURANCE CO.

Lincoln Life was founded in 1905 and is organized under Indiana law. We are one
of the largest stock life insurance companies in the United States. We serve as
the principal underwriter for the contracts. We are owned by Lincoln National
Corp. (LNC) which is also organized under Indiana law. LNC's primary businesses
are insurance and financial services.

VARIABLE ANNUITY ACCOUNT (VAA)

On June 3, 1981, the VAA was established as an insurance company separate
account under Indiana law. It is registered with the SEC as a unit investment
trust under the provisions of the Investment Company Act of 1940 (1940 Act).
The SEC does not supervise the VAA or Lincoln Life. The VAA is a segregated
investment account, meaning that its assets may not be charged with liabilities
resulting from any other business that we may conduct. Income, gains and
losses, whether realized or not, from assets allocated to the VAA are, in
accordance with the applicable annuity contracts, credited to or charged
against the VAA. They are credited or charged without regard to any other
income, gains or losses of Lincoln Life. The VAA satisfies the definition of
separate account under the federal securities laws. We do not guarantee the
investment performance of the VAA. Any investment gain or loss depends on the
investment performance of the funds and series. YOU ASSUME THE FULL INVESTMENT
RISK FOR ALL AMOUNTS PLACED IN THE VAA.

INVESTMENTS OF THE VARIABLE ANNUITY ACCOUNT

You decide the subaccount(s) to which you allocate purchase payments. There is
a separate subaccount which corresponds to each fund and series. You may change
your allocations without penalty or charges. Shares of the funds and series
will be sold at net asset value (See the Appendix to the funds' Prospectuses
for an explanation of net asset value) to the VAA in order to fund the
contracts. The funds and series are required to redeem their shares at net
asset value upon our request. We reserve the right to add, delete or substitute
funds and series.

INVESTMENT ADVISOR
Lincoln Investment (owned by LNC) is the advisor for each of the funds and is
primarily responsible for the investment decisions affecting the funds. The
services it provides are explained in the Prospectuses of the funds. Under an
advisory agreement with each fund, Lincoln Investment provides portfolio
management and investment advice to that fund, subject to the supervision of
the fund's Board of Directors.

Additionally, Lincoln Investment currently has six sub-advisory agreements in
which the sub-advisor may perform some or substantially all of the investment
advisory services required by those respective funds.

No additional compensation from the assets of those funds will be assessed as a
result of the sub-advisory agreements.

9
<PAGE>

Account C

Following is a chart that shows the fund names and the six sub-advisors under
Lincoln Investment (the advisor):

<TABLE>
<CAPTION>
Sub-advisor Fund
- ------------------------------------------------------------------------------
<S> <C>
Clay Finlay Inc. International
- ------------------------------------------------------------------------------
Fidelity Management Trust Co. Equity-Income
- ------------------------------------------------------------------------------
Janus Capital Corp. Capital Appreciation
- ------------------------------------------------------------------------------
Lynch & Mayer, Inc. Aggressive Growth
- ------------------------------------------------------------------------------
Putnam Investment
Management, Inc. Global Asset Allocation
- ------------------------------------------------------------------------------
Vantage Global Growth and Income; Managed
Advisors, Inc. (for stock portfolio);
Social Awareness; and
Special Opportunities
- ------------------------------------------------------------------------------
</TABLE>

The Bond and Money Market Funds do not have sub-advisors.

Delaware Management, an indirect subsidiary of LNC, is the advisor for the
series and is primarily responsible for the investment decisions affecting the
series. Delaware International Advisers Limited (Delaware International), an
affiliate of Delaware Management, furnishes investment management services to
the Global Bond series.

Additional information about Delaware Management and Delaware International may
be found in the Delaware Group Premium Fund, Inc. Prospectus enclosed in this
booklet under Management of the Fund.

FUNDS/SERIES
Following are brief summaries of the investment objectives and policies of the
funds. The year in which each fund started trading is in parentheses. There is
more detailed information in the current Prospectuses for the funds, which are
included in this booklet.

All of the funds with the exception of the Special Opportunities Fund are
diversified, open-end management investment companies. Diversified means not
owning too great a percentage of the securities of any one company. An open-end
company is one which, in this case, permits Lincoln Life to sell its shares
back to the fund or series when you make a withdrawal, surrender the contract
or transfer from one fund to another. Management investment company is the
legal term for a mutual fund. The Special Opportunities Fund is open-end, but
is non-diversified. Non-diversified means the fund may own a larger percentage
of the securities of particular companies than will a diversified company.
These definitions are very general. The precise legal definitions for these
terms are contained in the 1940 Act. PLEASE BE ADVISED THAT THERE IS NO
ASSURANCE THAT ANY OF THE FUNDS OR SERIES WILL ACHIEVE ITS STATED OBJECTIVES.

FUNDS
1. AGGRESSIVE GROWTH FUND (1994) -- The investment objective is to maximize
capital appreciation. The fund invests in stocks of smaller, lesser-known
companies which have a chance to grow significantly in a short time.

2. BOND FUND (1981) -- The investment objective is maximum current income
consistent with prudent investment strategy. The fund invests primarily in
medium-and long-term corporate and government bonds.

3. CAPITAL APPRECIATION FUND (1994) -- The investment objective is long-term
growth of capital in a manner consistent with preservation of capital. The
fund primarily buys stocks in a large number of companies of all sizes if
the companies are competing well and if their products or services are in
high demand. It may also buy some money market securities and bonds,
including junk (high-risk) bonds.

4. EQUITY-INCOME FUND (1994) -- The investment objective is to achieve
reasonable income by investing primarily in income-producing equity
securities. The fund invests mostly in high-income stocks and some high-
yielding bonds (including junk bonds).

5. GLOBAL ASSET ALLOCATION FUND (1987) -- The investment objective is long-
term total return consistent with preservation of capital. The fund
allocates its assets among several categories of equity and fixed-income
securities, both of U.S. and foreign issuers.

6. GROWTH AND INCOME FUND (1981) -- The investment objective is long-term
capital appreciation. The fund buys stocks of established companies.

7. INTERNATIONAL FUND (1991) -- The investment objective is long-term capital
appreciation. The fund trades in securities issued outside the United
States--mostly stocks, with an occasional bond or money market security.

8. MANAGED FUND (1983) -- The investment objective is maximum long-term total
return (capital gains plus income) consistent with prudent investment
strategy. The fund invests in a mix of stocks, bonds, and money market
securities, as determined by an investment committee.

10
<PAGE>

Account C

9. MONEY MARKET FUND (1981) -- The investment objective is maximum current
income consistent with the preservation of capital. The fund invests in
short-term obligations issued by U.S. corporations; the U.S. Government;
and federally-chartered banks and U.S. branches of foreign banks.

10. SOCIAL AWARENESS FUND (1988) -- The investment objective is long-term
capital appreciation. The fund buys stocks of established companies which
adhere to certain specific social criteria.

11. SPECIAL OPPORTUNITIES FUND (1981) -- The investment objective is maximum
capital appreciation. The fund primarily invests in mid-size companies
whose stocks have significant growth potential. Current income is a
secondary consideration.

SERIES
Following are brief summaries of the investment objectives and policies of the
three series being offered by Delaware Group Premium Fund, Inc. More detailed
information may be obtained from the current prospectus for those series,
which is included in this booklet. PLEASE BE ADVISED THAT THERE IS NO
ASSURANCE THAT ANY OF THE SERIES WILL ACHIEVE ITS STATED OBJECTIVES.

1. EQUITY/INCOME -- seeks the highest possible total rate of return by
selecting issues that exhibit the potential for capital appreciation while
providing higher than average dividend income. This series has the same
objective and investment disciplines as the Decatur Total Return Fund of
Delaware Group Decatur Fund, Inc., a separate Delaware Group fund, in that
it invests generally, but not exclusively, in common stocks and income-
producing securities convertible into common stocks, consistent with the
series' objective.

2. EMERGING GROWTH -- seeks long-term capital appreciation by investing
primarily in small-cap common stocks and convertible securities of emerging
and other growth-oriented companies. These securities will have been judged
to be responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. This series
has the same objective and investment disciplines as Delaware Group Trend
fund, Inc., a separate Delaware Group fund.

3. GLOBAL BOND -- seeks current income consistent with preservation of
principal by investing primarily in fixed income securities that may also
provide the potential for capital appreciation. This series is a global
fund. As such, at least 65% of the series' assets will be invested in fixed
income securities of issuers organized or having a majority of their assets
in or deriving a majority of their operating income in at least three
different countries, one of which may be the United States. This series has
the same objective and investment disciplines as the Global Bond Series of
Delaware Group Global & International Funds, Inc., a separate Delaware
Group fund.

Shares of the funds and series are sold to Lincoln Life for investment of the
assets of the VAA and of Lincoln Life Flexible Premium Variable Life Account
K, for variable life insurance contracts. Shares of some, but not all, of the
funds are also sold to Lincoln Life for investment of the assets of Lincoln
Life Flexible Premium Variable Life Accounts D and G, also to fund variable
life insurance contracts. In addition, shares of the Delaware Group Premium
Fund, Inc. are sold to separate accounts of life insurance companies other
than Lincoln Life. See Other information. Shares of the funds and series are
not sold directly to the general public.

We will purchase shares of the funds and series at net asset value and direct
them to the appropriate subaccounts of the VAA. We will redeem sufficient
shares of the appropriate funds and series to pay annuity payouts, death
benefits, surrender/ withdrawal proceeds or for purposes described in the
contract. If you desire to transfer all or part of your investment from one
subaccount to another, we may redeem shares held in the first and purchase
shares for the other subaccount. The shares are retired, but they may be
reissued later.

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
All of the investment objectives of the funds and series are fundamental which
means that no changes may be made without the affirmative vote of a majority
of the outstanding voting securities of each respective fund or series. The
extent to which the particular investment policies, practices or restrictions
for each fund or series are fundamental or nonfundamental depends on the
particular fund or series. If they are nonfundamental, they may be changed by
the Board of Directors of the funds or series without shareholder approval.

You are urged to consult the Prospectuses in this booklet and SAIs for each
individual fund or series for additional information regarding the fundamental
and non-fundamental policies, practices and restrictions of each of the funds
and series.

REINVESTMENT
All dividend and capital gain distributions of the funds and series are
automatically reinvested in shares of the distributing funds and series at
their net asset value on the date of distribution. Dividends are not paid out
to contractowners as additional units, but are reflected in changes in unit
values.

11
<PAGE>

Account C

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
We reserve the right, within the law, to make additions, deletions and
substitutions for the funds and series held by the VAA. (We may substitute
shares of another series or of other funds for shares already purchased, or to
be purchased in the future, under the contract. This substitution might occur
if shares of a fund and series should no longer be available, or if investment
in any fund's and series' shares should become inappropriate, in the judgement
of our management, for the purposes for the contract.) No substitution of the
shares attributable to your account may take place without notice to you and
prior approval of the SEC, in accordance with the 1940 Act.

CHARGES AND OTHER DEDUCTIONS

DEDUCTIONS FROM PURCHASE PAYMENTS
There are no front-end deductions for sales charges made from purchase
payments. However, we will deduct premium taxes, when applicable.

ACCOUNT CHARGE
There is no account charge for single premium deferred contracts and flexible
premium deferred contracts, Multi Fund(R) 3 and 4. For periodic and flexible
premium, Multi Fund(R) 2 deferred contracts, we will deduct $25 from the
contract value on the last valuation date of each contract year to compensate
us for the administrative services provided to you; this $25 account charge
will also be deducted from the contract value upon surrender. Administrative
services include processing applications; issuing contracts; processing
purchase and redemptions of fund shares; maintaining records; administering
annuity payouts; providing accounting, valuation, regulatory and reporting
services.

SURRENDER CHARGES
There are charges associated with the surrender of a contract or the withdrawal
of contract value (or of purchase payments, for flexible contracts) before the
annuity commencement date. The surrender charges associated with surrender or
withdrawal are paid to us to compensate us for the loss we experience on
contract distribution costs when contractowners surrender or withdraw before
distribution costs have been recovered. Charges are the same for
surrenders/withdrawals except that, for the first withdrawal in a contract
year, up to 15% of contract value (purchase payments for flexible contracts)
may be withdrawn free of charges. This 15% withdrawal exception does not apply
to a surrender of a contract.

A. PERIODIC PREMIUM DEFERRED CONTRACT

For the first withdrawal in a contract year in excess of 15%, for any
subsequent withdrawals in the same contract year, or for surrender of the
contract, there will be a surrender charge of 8% for years 1-5; 4% in years 6-
10; and no charge after the contract has been in force for 10 years. In
addition, as explained previously, an account charge will be deducted for a
surrender.

Surrender charges will be waived in the event of the death of the annuitant. If
between the effective date of the contract and the annuitant's 65th birthday,
the annuitant should become totally and permanently disabled [as defined in
Section 22(e)(3) of the code], surrender charges will also be waived. In
addition, for 403(b) and 457 contracts only, surrender charges will be waived
in the event the annuitant: (1) has terminated employment with the employer
that sponsored the contract; and (2) has been in the contract for at least five
years (the five year date beginning either November 1, 1991 or the date of the
contract, whichever is later); and (3) is at least age 55.

B. SINGLE PREMIUM DEFERRED CONTRACT OR NONRECURRING LUMP SUM PAYMENT TO
PERIODIC PREMIUM DEFERRED CONTRACT

For a single premium deferred contract or a nonrecurring lump sum payment made
to a periodic premium deferred contract, the surrender/withdrawal charges (when
applicable as described previously) will be:

<TABLE>
<CAPTION>
Contract year in which surrender/withdrawal
occurs
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8+
Charge as a percent
of proceeds withdrawn 7% 6 5 4 3 2 1 0
</TABLE>

Investment gains attributable to a nonrecurring lump sum payment made to a
periodic premium deferred contract will be subject to surrender charges of 8%
in years 1-5, 4% in years 6-10, and no charge after the contract has been in
force for 10 years.

Lump sum payments may be deposited into a periodic premium deferred contract
within 12 months of the effective date of the contract. After the 12-month
period, a new contract must be established for a lump sum payment.

For periodic premium deferred contracts under which a nonrecurring lump sum has
been received, withdrawals will be made first from any amount subject to the
lowest charge until that amount is gone.

12
<PAGE>

Account C

C. FLEXIBLE PREMIUM DEFERRED CONTRACT

For a flexible premium deferred contract, the surrender/withdrawal charges
(when applicable as described previously) will be:

<TABLE>
<CAPTION>
Completed contract years
between date of purchase
payments and date of
surrender/withdrawal*
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 1 2 3 4 5 6 7+
Charge as a percent of
total purchase payments surrendered/withdrawn
in a contract year 7% 6 5 4 3 2 1 0
</TABLE>

*The surrender charge is calculated separately for each contract year's
purchase payments.

For the first withdrawal of purchase payments in each contract year, up to 15%
of purchase payments will be free of these charges. In addition, as explained
previously, an account charge will be deducted for a surrender on Multi Fund(R)
2 flexible premium contracts.

The surrender charge is calculated separately for each contract year's purchase
payments to which a charge applies. (FOR PURPOSES OF CALCULATING THIS CHARGE,
WE ASSUME THAT PURCHASE PAYMENTS ARE WITHDRAWN ON A FIRST IN-FIRST OUT BASIS,
AND THAT ALL PURCHASE PAYMENTS ARE WITHDRAWN BEFORE ANY EARNINGS ARE
WITHDRAWN.) The surrender charges associated with surrender or withdrawal are
paid to us to compensate us for the loss we experience on contract
distributions costs when contractowners surrender or withdraw before
distribution costs have been recovered.

ADDITIONAL INFORMATION
Participants in the Texas Optional Retirement Program should refer to
Restrictions under the Texas Optional Retirement Program, later in this
Prospectus booklet.

The charges associated with surrender/withdrawal are paid to us to compensate
us for the cost of distributing the contracts. As required by the National
Association Securities Dealers, in no event will the aggregate surrender
charges under a contract exceed 8.5% of your total purchase payments.

The surrender and account charges described previously may be reduced or
eliminated for any particular contract. However these charges will be reduced
only to the extent that we anticipate lower distribution and/or administrative
expenses or that we perform fewer sales or administrative services than those
originally contemplated in establishing the level of those charges. Lower
distribution and administrative expenses may be the result of economies
associated with (1) the use of mass enrollment procedures, (2) the performance
of administrative or sales functions by the employer, (3) the use by an
employer of automated techniques in submitting deposits or information related
to deposits on behalf of its employees, or (4) any other circumstances which
reduce distribution or administrative expenses. The exact amount of surrender
and account charges applicable to a particular contract will be stated in that
contract.

DEDUCTIONS FROM THE VAA FOR ASSUMPTION OF MORTALITY AND EXPENSE RISKS
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate of 1.002% of the daily net asset value, to compensate us for our
assumption of certain risks described below. This charge is made up of two
parts: (1) our assumption of mortality risks (0.900%) and (2) our assumption of
expense risks (0.102%). The level of this charge is guaranteed not to change.

Our assumption of mortality risks guarantees that the annuity payouts made to
our contractowners will not be affected by the mortality experience (life span)
either of persons receiving those payouts or of the general population. We
assume this mortality risk through guaranteed annuity rates incorporated into
the contract which cannot be changed. We also assume the risk that the charges
for administrative expenses, which cannot be changed by us, will be
insufficient to cover actual administrative costs.

If the 1.002% charge proves insufficient to cover underwriting and
administrative costs in excess of the charges made for administrative expenses,
we will absorb the loss. However, if the amount deducted proves more than
sufficient, we will keep the profit.

DEDUCTIONS FOR PREMIUM TAXES
Any premium tax or other tax levied by any governmental entity as a result of
the existence of the contracts or the VAA will be deducted from the contract
value when incurred, or at another time of our choosing.

The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation, or by judicial action. These premium taxes will
generally depend upon the law of your state of residence. The tax ranges from
0.5% to 4.0%.

DEDUCTION FOR THE EGMDB
When the EGMDB becomes effective, we will begin deducting from the VAA an
amount, computed daily, which is equal to an annual rate of 0.30% of the daily

13
<PAGE>

Account C
net asset value. This charge will start at the beginning of the next valuation
period. This charge will continue for all future contract years unless the
owner elects to discontinue the EGMDB. If the EGMDB is discontinued, the 0.30%
annual charge will cease at the end of the valuation period when the EGMDB is
terminated. See The contracts--Death benefit before the annuity commencement
date.

OTHER CHARGES AND DEDUCTIONS
There are deductions from and expenses paid out of the assets of the eleven
funds and the three series that are described later in this booklet in the
Appendix to the funds' Prospectuses and in the Prospectus for the series
respectively.

THE CONTRACTS

PURCHASE OF CONTRACTS
If you wish to purchase a contract, you must apply for it through one of our
authorized sales representatives. The completed application is sent to us and
we decide whether to accept or reject it. If the application is accepted, a
contract is prepared and executed by our legally authorized officers. The
contract is then sent to you through your sales representative. See
Distribution of the contracts.

If a completed application and all other information necessary for processing a
purchase order are received, an initial purchase payment will be priced no
later than two business days after we receive the order. While attempting to
finish an incomplete application, we may hold the initial purchase payment for
no more than five business days. If the incomplete application cannot be
completed within those five days, you will be informed of the reasons, and the
purchase payment will be returned immediately (unless you specifically
authorize us to keep it until the application is complete). Once the
application is complete, the initial purchase payment must be priced within two
business days.

WHO CAN INVEST
To apply for a periodic premium deferred contract, you must be of legal age in
a state where the contracts may be lawfully sold and also be eligible to
participate in any of the qualified or nonqualified plans for which the
contracts are designed. The annuitant cannot be older than age 74.

To apply for a flexible premium deferred contract, a single premium deferred
contract or to make a nonrecurring lump sum payment to a periodic premium
deferred contract, you must meet the same requirements as for an application of
a periodic premium deferred contract, except that the annuitant cannot be older
than age 84.

PURCHASE PAYMENTS
Purchase payments are payable to us at a frequency and in an amount selected by
you in the application. The minimum purchase payment for a single premium
deferred contract is $3,000 ($1,000 for IRAs and SEPs). The minimum initial
purchase payment for a flexible premium deferred contract is $3,000 ($1,000 for
IRAs and SEPs), and subsequent purchase payments must be at least $100. For a
periodic premium deferred contract, the minimum amount of any scheduled
purchase payment is $25, and the scheduled purchase payments must total at
least $600 per year. Purchase payments in any one contract year which exceed
twice the amount of purchase payments made in the first contract year may be
made only with our permission. Purchase payments in total may not exceed $1
million for each annuitant. If you stop making purchase payments, the contract
will remain in force as a paid-up contract as long as the total contract value
is at least $600. Payments may be resumed at any time until the annuity
commencement date, the maturity date, the surrender of the contract, or payment
of any death benefit, whichever comes first.

VALUATION DATE
Accumulation and annuity units will be valued once daily as of the close of
trading (currently 4:00 p.m., New York time) on each day that the NYSE is open
for trading (valuation date). On any date other than a valuation date, the
accumulation unit value and the annuity unit value will not change.

ALLOCATION OF PURCHASE PAYMENTS
Purchase payments are placed into the VAA's subaccounts, each of which invests
in shares of its corresponding fund or series, according to your instructions.

The minimum amount of any purchase payment which can be put into any one
subaccount is $20 under periodic premium deferred contracts, $1,000 under
single premium deferred contracts and $100 under flexible premium deferred
contracts. Upon allocation to the appropriate subaccount, purchase payments are
converted into accumulation units. The number of accumulation units credited is
determined by dividing the amount allocated to each subaccount by the value of
an accumulation unit for that subaccount on the valuation date on which the
purchase payment is received at the home office if received before 4:00 p.m.,
New York time. If the purchase payment is received at or after 4:00 p.m., New
York time, we will use the accumulation unit value computed on the next
valuation date. The number of accumulation units determined in this way shall
not be changed by any subsequent change in the value of an accumulation unit.
However, the dollar value of an accumulation unit will vary depending not only
upon how well the investments perform, but also upon the related expenses of
the VAA and the underlying funds and series.

VALUATION OF ACCUMULATION UNITS
Accumulation units for each subaccount are valued separately. Initially, the
value of each accumulation unit was set at $1.00. Thereafter, the value of an
accumulation unit in any subaccount on any valuation date

14
<PAGE>

Account C
equals the value of an accumulation unit in that subaccount as of the preceding
valuation date multiplied by the net investment factor of that subaccount for
the current valuation period.

The net investment factor is an index used to measure the investment
performance of a subaccount from one valuation date to the next. The net
investment factor for any subaccount for any valuation date reflects the change
in the net asset value per share of the fund held in the subaccount from one
valuation period to the next, adjusted for the daily deduction of the
administrative and mortality and expense risk charges from assets in the
subaccount. If any ex-dividend date occurs during the valuation period, the per
share amount of any dividend or capital gain distribution is taken into
account. Also, if any taxes need to be reserved, a per share charge or credit
for any taxes reserved for, which is determined by us to have resulted from the
operations of the subaccount, is taken into account.

Because a different daily charge is made for contracts with the EGMDB than for
those without, a different net investment factor is calculated for each of the
two types of contracts, resulting in different corresponding accumulation unit
values on any given day.

TRANSFERS ON OR BEFORE THE ANNUITY COMMENCEMENT DATE
You may transfer all or a portion of your investment from one subaccount to
another. A transfer involves the surrender of accumulation units in one
subaccount and the purchase of accumulation units in the other subaccount. A
transfer will be done using the respective accumulation unit values as of the
valuation date immediately following receipt of the transfer request.

Transfers between subaccounts are restricted to once every 30 days; although,
we reserve the right to waive this 30-day period. The minimum amount which may
be transferred between subaccounts is $500 or the entire amount in the
subaccount, if less than $500. If the transfer from a subaccount would leave
you with less than $100 in the subaccount, we may transfer the total balance of
the subaccount. (We have the right to reduce these minimum amounts.)

A transfer may be made by writing to the home office or, if a Telephone
Exchange Authorization form (available from us) is on file with us, by a toll-
free telephone call. In order to prevent unauthorized or fraudulent telephone
transfers, we may require a contractowner to provide certain identifying
information before we will act upon their instructions. We may also assign the
contractowner a Personal Identification Number (PIN) to serve as
identification. We will not be liable for following telephone instructions we
reasonably believe are genuine. Telephone tranfer requests may be recorded and
written confirmation of all transfer requests will be mailed to the
contractowner on the next valuation date. Telephone transfers will be processed
on the valuation date that they are received when they are received at our
customer service center before 4:00 PM New York time.

You may also transfer all or any part of the contract value from the
subaccount(s) to the fixed side of the contract. Transfers from the fixed side
of the contract to the various subaccount(s) are allowed subject to the
following restrictions: (1) the sum of the percentages of the fixed value
transferred is limited to 25% of the value of the fixed side in any 12 month
period; and (2) the minimum amount which can be transferred is $500 or the
amount in the fixed account. We reserve the right to waive any of these
restrictions.

When thinking about a transfer of contract value, you should consider the
inherent risk involved. Frequent transfers based on short-term expectations may
increase the risk that a transfer will be made at an inopportune time.

There is no charge to you for a transfer. However, we reserve the right to
impose a charge in the future for any transfers.

TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE
You may transfer all or a portion of your investment in one subaccount to
another subaccount or to the fixed side of the contract. Those transfers will
be limited to three times per contract year. HOWEVER, AFTER THE ANNUITY
COMMENCEMENT DATE, NO TRANSFERS ARE ALLOWED FROM THE FIXED SIDE OF THE CONTRACT
TO THE SUBACCOUNTS.

DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE
You may designate a beneficiary during the life of the annuitant and change the
beneficiary by filing a written request with the home office. Each change of
beneficiary revokes any previous designation. We reserve the right to request
that you send us the contract for endorsement of a change of beneficiary.

If the annuitant dies before the annuity commencement date and the EGMDB is not
in effect, a death benefit equal to the contract value will be paid to your
designated beneficiary.

An optional EGMDB is available for nonqualified and IRA flexible premium
deferred annuity contracts, for annuitants up to age 75. (Please check with
your representative for availability to current contractowners.) The EGMDB will
take effect on the valuation date when the EGMDB election form is approved at
our home office, if before 4:00 p.m. New York time. The owner may discontinue
the EGMDB at any time. If discontinued, the EGMDB will terminate on the
valuation date written notice is received at our home office, if before 4:00
p.m. New York time. If after 4:00 p.m. New York time, the EGMDB election or
termination will be effective with

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the next valuation date. The owner may not reelect the EGMDB once it is
discontinued. As of the annuity commencement date the EGMDB will be
discontinued and the charge for the EGMDB will cease. See Charges and other
deductions--Deduction for the EGMDB.

If the annuitant dies before the annuity commencement date and the EGMDB is in
effect, the death benefit paid to your designated beneficiary will be the
greater of:

1. the contract value at the end of the valuation period when the death claim
is approved for payment by Lincoln Life, or

2. the higher of:

(a) the contract value at the end of the valuation period when the EGMDB
becomes effective and;

(b) the highest contract value, at the end of the valuation period, on any
contract anniversary date up to and including age 75 following election
of the EGMDB;

increased by purchase payments and decreased by any withdrawals,
annuitizations, and premium taxes incurred after the contract anniversary or
EGMDB effective date the highest contract value occurred.

The contract value available upon death is the value of the contract at the end
of the valuation period during which the death claim is approved for payment by
Lincoln Life. The approval of the death claim payment will occur after receipt
of: (1) proof, satisfactory to us, of the death of the annuitant; (2) written
authorization for payment; and (3) our receipt of all required claim forms
fully completed.

The EGMDB may not be elected on or after the annuity commencement date.

At any time during a 60-day period the beneficiary may elect to receive payment
either in the form of a lump sum settlement or an annuity payout.

If a lump sum settlement is requested and the amount of the settlement is
$10,000 or more, a SecureLine(R) account will be established in the name of the
beneficiary for that amount. If the lump sum amount is less than $10,000, it
will be sent to the beneficiary. In either event, the proceeds will be
disbursed within seven days of receipt of satisfactory claim documentation, as
discussed previously, subject to the laws and regulations governing payment of
death benefits. If an election has not been made by the end of the 60-day
period, a lump sum settlement will be made at that time using SecureLine(R) if
the amount is $10,000 or more; if the amount is under $10,000 it will be sent
to the beneficiary. This payment may be postponed as permitted by the 1940 Act.

SecureLine(R) is an interest-bearing checking account established in the name
of the beneficiary which is administered by State Street Bank and Trust Company
of Boston, MA. Once the SecureLine(R) account is established, only the
beneficiary can authorize check drawn on the account. SecureLine(R) is expected
to be available after June 1997.

Annuity payouts will be made in accordance with applicable laws and regulations
governing payment of death benefits.

Unless otherwise provided in the beneficiary designation, one of the following
procedures will take place on the death of a beneficiary:

1. If any beneficiary dies before the annuitant, that beneficiary's interest
will go to any other beneficiaries named, according to their respective
interests. There are no restrictions on the beneficiary's use of the
proceeds; and/or

2. If no beneficiary survives the annuitant, the proceeds will be paid to the
contractowner or to his/her estate, as applicable.

JOINT/CONTINGENT OWNERSHIP
If joint owners are named in the application, the joint owners shall be treated
as having equal undivided interests in the contract. Either owner,
independently of the other, may exercise any ownership rights in this contract.
Only the spouse can be a joint owner on Multi Fund(R) 4, flexible premium
deferred annuity contracts.

A contingent owner may exercise ownership rights in this contract only after
the contractowner dies.

DEATH OF CONTRACTOWNER
If the contractowner of a nonqualified contract dies before the annuity
commencement date, then, in compliance with the code, the cash surrender value
of the contract will be paid as follows:

1. Upon the death of a non-annuitant contractowner, the proceeds shall be paid
to any surviving joint or contingent owner(s). If no joint or contingent
owner has been named, then the cash surrender value shall be paid to the
annuitant named in the contract; and

2. Upon the death of a contractowner, who is also the annuitant, the death will
be treated as death of the annuitant and the provisions of this contract
regarding death of annuitant will control. If the recipient of the proceeds
is the surviving spouse of the contractowner, the contract may be continued
in the name of that spouse as the new contractowner.

The code requires that any distribution be paid within five years of the death
of the contractowner unless the beneficiary begins receiving, within one year
of the contractowner's death, the distribution in the form of a life annuity or
an annuity for a period certain not exceeding the beneficiary's life
expectancy.

SURRENDERS AND WITHDRAWALS
Before the annuity commencement date, we will allow the surrender of the
contract or a withdrawal of the contract value upon your written request,
subject to the rules below.

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Special restrictions on surrenders/withdrawals apply if your contract is
purchased as part of a retirement plan of a public school system or Section
501(c)(3) organization under Section 403(b) of the code. Beginning January 1,
1989, in order for a contract to retain its tax-qualified status, Section
403(b) prohibits a withdrawal from a Section 403(b) contract of post-1988
contributions (and earnings on those contributions) pursuant to a salary
reduction agreement. However, this restriction does not apply if the annuitant
attains age (a) 59 1/2 (b) separates from service, (c) dies, (d) becomes
totally and permanently disabled and/or (e) experiences financial hardship (in
which event the income attributable to those contributions may not be
withdrawn).

A surrender/withdrawal after the annuity commencement date depends upon the
annuity option selected.

Pre-1989 contributions and earnings through December 31, 1988, are not subject
to the previously stated restriction.

The contract value available upon surrender/withdrawal is the cash surrender
value at the end of the valuation period during which the written request for
surrender/withdrawal is received at the home office. Unless a request for
withdrawal specifies otherwise, withdrawals will be made from all subaccounts
within the VAA and from the general account in the same proportion that the
amount of withdrawal bears to the total contract value. The minimum amount
which can be withdrawn is $100, and the remaining contract value must be at
least $300. Where permitted by contract, surrender/withdrawal payments will be
mailed within seven days after we receive a valid written request at the home
office. The payment may be postponed as permitted by the 1940 Act. You may
specify that the charges be deducted from the amount you request withdrawn or
from the remaining contract value.

There are charges associated with surrender of a contract or withdrawal of
contract value before the annuity commencement date. See Charges and other
deductions.

The tax consequences of a surrender/withdrawal are discussed later in this
booklet. See Federal tax status.

If the total contract value is less than $600, and if no purchase payments have
been made for at least two years, we reserve the right to terminate the
contract.

REINVESTMENT PRIVILEGE
You may elect to make a reinvestment purchase with any part of the proceeds of
a surrender/withdrawal, and we will recredit the surrender/withdrawal charges
previously deducted. This election must be made within 30 days of the date of
the surrender/withdrawal, and the repurchase must be of a contract covered by
this Prospectus. In the case of a qualified contract, a representation must be
made that the proceeds being used to make the purchase have retained their tax-
favored status under an arrangement for which the contracts offered by this
Prospectus are designed. The number of accumulation units which will be
credited when the proceeds are reinvested will be based on the value of the
accumulation unit(s) on the next valuation date. This computation will occur
following receipt of the proceeds and request for reinvestment at the home
office. You may utilize the reinvestment privilege only once. For tax reporting
purposes, we will treat a surrender/withdrawal and a subsequent reinvestment
purchase as separate transactions. You should consult a tax advisor before you
request a surrender/withdrawal or subsequent reinvestment purchase.

AMENDMENT OF CONTRACT
We reserve the right to amend the contract to meet the requirements of the 1940
Act or other applicable federal or state laws or regulations. You will be
notified in writing of any changes, modifications or waivers.

COMMISSIONS
For the flexible premium deferred annuity Multi Fund(R) 2 and 3 contracts, the
maximum commission which could be paid to dealers is equal to 5.25% on each
purchase payment; plus up to 0.10% of the value of purchase payments in the
variable annuity account while the EGMDB is in effect. For flexible premium
deferred annuity Multi Fund(R) 4 contracts, the maximum commission which could
be paid to dealers is equal to 4.50% on each purchase payment; plus an annual
continuing commission up to .40% of the value of the contract purchase payments
invested for at least 15 months; plus up to 0.10% of the value of purchase
payments in the variable annuity account while the EGMDB is in effect.

For the periodic premium deferred annuity contract, the maximum commission
which could be paid to dealers is 9% on the total purchase payments received
during the first contract year and 5.25% on each purchase payment in renewal
contract years (or an equivalent schedule).

OWNERSHIP
As contractowner, you have all rights under the contract. According to Indiana
law, the assets of the VAA are held for the exclusive benefit of all
contractowners and their designated beneficiaries. The assets of the VAA are
not chargeable with liabilities arising from any other business that we may
conduct. Contracts used for qualified plans may not be assigned or transferred
except as permitted by the Employee Retirement Income Security Act (ERISA) of
1974 and upon written notification to us. We assume no responsibility for the
validity or effect of any assignment. Consult your tax advisor about the tax
consequences of an assignment.

CONTRACTOWNER QUESTIONS
The obligations to purchasers under the contracts are those of Lincoln Life.
Your questions and concerns should be directed to us at 1-800-4LINCOLN
(454-6265).

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ANNUITY PAYOUTS

When you apply for a contract, you may select any annuity commencement date
permitted by law. (PLEASE NOTE THE FOLLOWING EXCEPTION: Contracts issued under
qualified employee pension and profit-sharing trusts [described in Section
401(a) and tax exempt under Section 501(a) of the code] and qualified annuity
plans [described in Section 403(a) of the code], including H.R. 10 trusts and
plans covering self-employed individuals and their employees, provide for
annuity payouts to start at the date and under the option specified in the
plan.)

The contract provides that all or part of the contract value may be used to
purchase an annuity. Optional forms of payout of annuities (annuity options)
are available, each of which is payable on a variable basis, a fixed basis or a
combination of both. We may choose to make other annuity options available in
the future.

You may elect annuity payouts in monthly, quarterly, semiannual or annual
installments. If the payouts from any subaccount would be or become less than
$50, we have the right to reduce their frequency until the payouts are at least
$50 each. Following are explanations of the annuity options available.

ANNUITY OPTIONS
LIFE ANNUITY. This option offers a periodic payout during the lifetime of the
annuitant and ends with the last payout before the death of the annuitant. This
option offers the highest periodic payout since there is no guarantee of a
minimum number of payouts or provision for a death benefit for beneficiaries.
HOWEVER, THERE IS THE RISK UNDER THIS OPTION THAT THE ANNUITANT WOULD RECEIVE
NO PAYOUTS IF DEATH OCCURS BEFORE THE DATE SET FOR THE FIRST PAYOUT; ONLY ONE
PAYOUT IF DEATH OCCURS BEFORE THE SECOND SCHEDULED PAYOUT, AND SO ON.

LIFE INCOME WITH PAYOUTS GUARANTEED FOR DESIGNATED PERIOD. This option
guarantees periodic payouts during a designated period, usually 10 or 20 years,
and then continues throughout the lifetime of the annuitant. The designated
period is selected by the contractowner.

JOINT LIFE ANNUITY. This option offers a periodic payout during the joint
lifetime of the annuitant and a designated joint annuitant. The payouts
continue during the lifetime of the survivor.

JOINT LIFE ANNUITY WITH GUARANTEED PERIOD. This option guarantees periodic
payouts during a designated period, usually 10 or 20 years, and continues
during the joint lifetime of the annuitant and a designated joint annuitant.
The payouts continue during the lifetime of the survivor. The designated period
is selected by the contractowner.

JOINT-AND-TWO-THIRDS SURVIVOR ANNUITY. This option provides a periodic payout
during the joint lifetime of the annuitant and a designated joint annuitant.
When one of the joint annuitants dies, the survivor, during their lifetime,
receives two thirds of the periodic payout made when both were alive.

UNIT REFUND LIFE ANNUITY. This option offers a periodic payout during the
lifetime of the annuitant with the guarantee that upon death a payout will be
made of the value of the number of annuity units (see Variable annuity payouts)
equal to the excess, if any, of: (a) the total amount applied under this option
divided by the annuity unit value for the date payouts begin, divided by (b)
the annuity units represented by each payout to the annuitant multiplied by the
number of payouts paid before death. The value of the number of annuity units
is computed on the date the death claim is approved for payment by the home
office.

None of the options listed above currently provide withdrawal features,
permitting the contractowner to withdraw commuted values as a lump sum payment.
Other options may be made available by us. Options are only available to the
extent they are consistent with the requirements of the contract and Section
72(s) of the code, if applicable. The mortality and expense risk charge will be
assessed on all variable annuity payouts, including options that do not have a
life contingency and therefore no mortality risk.

The annuity commencement date is usually on or before the annuitant's 85th
birthday; however you may change the annuity commencement date, change the
annuity option, or change the allocation of the investment among subaccounts up
to 30 days before the scheduled annuity commencement date, upon written notice
to the home office. You must give us at least 30 days notice before the date on
which you want payouts to begin. If proceeds become available to a beneficiary
in a lump sum, the beneficiary may choose any annuity payout option.

Unless you select another option, the contract automatically provides for a
life with a 10 year guaranteed period annuity (on a fixed, variable or
combination fixed and variable basis, in proportion to the account allocation
at the time of annuitization), except when a joint life payout is required by
law. Under any option providing for guaranteed payouts, the number of payouts
which remain unpaid at the date of the annuitant's death (or surviving
annuitant's death in the case of a joint life annuity) will be paid to your
beneficiary as payouts become due.

The contract contains no provision under which an annuitant or a beneficiary
may surrender their contract or make a withdrawal and receive a lump-sum
settlement once annuity payouts have begun. See Surrenders and withdrawals.
Options are only available to the extent they are consistent with the
requirements of Section 72(s) of the code, if applicable.

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VARIABLE ANNUITY PAYOUTS
Variable annuity payouts will be determined using:

1. The contract value on the annuity commencement date;

2. The annuity tables contained in the contract;

3. The annuity option selected; and

4. The investment performance of the fund(s) selected.

To determine the amount of payouts, we make this calculation:

1. Determine the dollar amount of the first periodic payout; then

2. Credit the contract with a fixed number of annuity units equal to the first
periodic payout divided by the annuity unit value; and

3. Calculate the value of the annuity units each month thereafter.

We assume an investment return of 5% per year, as applied to the applicable
mortality table. The amount of each payout after the initial payout will depend
upon how the underlying fund(s) and series perform, relative to the 5% assumed
rate. There is a more complete explanation of this calculation in the SAI.

FEDERAL TAX STATUS

This section is a discussion of the Federal income tax rules applicable to the
contracts as of the date of this
Prospectus. More information is provided in the SAI. THESE DISCUSSIONS AND
THOSE IN THE SAI ARE NOT INTENDED AS TAX ADVICE. This section does not discuss
the Federal tax consequences resulting from every possible situation. No
attempt has been made to consider any applicable state, local or foreign tax
law, other than the imposition of any state premium taxes (See Charges and
other deductions). If you are concerned about the tax implications with respect
to the contracts, you should consult a tax advisor. The following discussion is
based upon our understanding of the present Federal income tax laws as they are
currently interpreted by the Internal Revenue Service (IRS). No representation
is made about the likelihood of continuation of the present Federal income tax
laws or their current interpretations by the IRS.

TAXATION OF NONQUALIFIED CONTRACTS
You are generally not taxed on increases in the value of your contract until a
distribution occurs. This distribution can be in the form of a lump sum payout
received by requesting all or part of the cash surrender value (i.e.
surrenders/withdrawals) or as annuity payouts. For this purpose, the assignment
or pledge of, or the agreement to assign or pledge, any portion of the value of
a contract will be treated as a distribution. A transfer of ownership of a
contract, or designation of an annuitant (or other beneficiary) who is not also
the contractowner, may also result in tax consequences. The taxable portion of
a distribution (in the form of a lump sum payout or an annuity) is taxed as
ordinary income. For purchase payments made after February 28, 1986, a
contractowner who is not a natural person (for example, a corporation) [subject
to limited exceptions] will be taxed on any increase in the contract's cash
value over the investment in the contract during the taxable year, even if no
distribution occurs. The next discussion applies to contracts owned by natural
persons.

In the case of a surrender under the contract or withdrawal of contract value,
generally amounts received are first treated as taxable income to the extent
that the cash value of the contract immediately before the surrender exceeds
the investment in the contract at that time. Any additional amount withdrawn is
not taxable. In the case of a surrender under a contract issued before August
14, 1982, and allocable to an investment in the contract made before that date,
amounts received are treated as taxable income only to the extent that they
exceed the investment in the contract. The investment in the contract generally
equals the portion, if any, of any purchase payment paid by or on behalf of an
individual under a contract which is not excluded from the individual's gross
income.

Even though the tax consequences may vary depending on the form of annuity
payout selected under the contract, the contractowner of an annuity payout
generally is taxed on the portion of such payout that exceeds the investment in
the contract. For variable annuity payouts, the taxable portion is determined
by a formula that establishes a specific dollar amount of each payout that is
not taxed. The dollar amount is determined by dividing the investment in the
contract by the total number of expected periodic payouts. For fixed annuity
payouts, there generally is no tax on the portion of each payout that
represents the same ratio that the investment in the contract bears to the
total expected value of payouts for the term of the annuity; the remainder of
each payout is taxable. For individuals whose annuity starting date is after
December 31, 1986, the entire distribution (whether fixed or variable) will be
fully taxable once the recipient is deemed to have recovered the dollar amount
of the investment in the contract.

There may be imposed a penalty tax on distributions equal to 10% of the amount
treated as taxable income. The penalty tax is not imposed in certain
circumstances, which generally are distributions:

1. Received on or after age 59 1/2;

2. Made as a result of death or disability of contractowner;

3. Received in substantially equal periodic payments as a life annuity (subject
to special recapture rules if the series of payouts is subsequently
modified);

4. Allocable to the investment in the contract before August 14, 1982;

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5. Under a qualified funding asset in a structured settlement;

6. Under an immediate annuity contract as defined in the code; and/or

7. Under a contract purchased in connection with the termination of certain
retirement plans.

TAXATION OF QUALIFIED CONTRACTS
The contracts may be purchased in connection with the following types of tax-
favored retirement plans:

1 Contracts purchased for employees of public school systems and certain tax-
exempt organizations, qualified under Section 403(b) of the code;

2. Pension and profit-sharing plans of self-employed individuals (H.R. 10 or
Keogh plans) or corporations, qualified under Section 401(a) or 403(a) of
the code;

3. IRAs, qualified under Section 408 of the code;

4. Deferred compensation plans of state or local governments, qualified under
Section 457 of the code; and/or

5. SEPs, qualified under Section 408(k) of the code.

The tax rules applicable to these plans, including restrictions on
contributions and benefits, taxation of distributions and any tax penalties,
vary according to the type of plan and its terms and conditions. Participants
under such plans, as well as contractowners, annuitants and beneficiaries,
should be aware that the rights of any person to any benefits under such plans
may be subject to the terms and conditions of the plans themselves, regardless
of the terms and conditions of the contracts. Purchasers of contracts for use
with any qualified plan, as well as plan participants and beneficiaries, should
consult counsel and other advisors as to the suitability of the contracts to
their specific needs, and as to applicable code limitations and tax
consequences.

MULTIPLE CONTRACTS
All contracts entered into after October 21, 1988, and issued by the same
insurance company (or its affiliates) to the same contractowner during any
calendar year will be treated as a single contract for tax purposes.

INVESTOR CONTROL
The Treasury Department has indicated that guidelines may be issued under which
a variable annuity contract will not be treated as an annuity contract for tax
purposes if the contractowner has excessive control over the investments
underlying the contract. They may consider the number of investment options or
the number of transfer opportunities available between options as relevant when
determining excessive control. The issuance of those guidelines may require us
to impose limitations on your right to control the investment. We do not know
whether any such guidelines would have a retroactive effect.

Section 817(h) of the code and the related regulation that the Treasury
Department has adopted require that assets underlying a variable annuity
contract be adequately diversified. 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 contractowner or
we pay an amount to the IRS. The amount will be based on the tax that would
have been paid by the contractowner if the income, for the period the contract
was not diversified, had been received by the contractowner. If the faulure to
diversify is not corrected in this manner, the contractowner 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. We believe, under our
interpretation of the code and regulations thereunder, that the investments
underlying this contract meet these diversification standards.

WITHHOLDING
Generally, pension and annuity distributions are subject to withholding for the
recipient's Federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Under the code, 20% income tax withholding may apply to eligible
rollover distributions. All taxable distributions from qualified plans and
Section 403(b) annuities are eligible rollover distributions, except (1)
annuities paid out over life or life expectancy, (2) installments paid for a
period spanning 10 years or more, and (3) required minimum distributions. The
code imposes a mandatory 20% income tax withholding on any eligible rollover
distribution that the contractowner does not elect to have paid in a direct
rollover to another qualified plan,
Section 403(b) annuity or individual retirement account.

Distributions from Section 457 plans are subject to the general wage
withholding rules.

VOTING RIGHTS

As required by law, we will vote the fund and series shares held in the VAA at
meetings of the shareholder of the various funds and series. The voting will be
done according to the instructions of contractowners who have interests in any
subaccounts which invest in a fund or funds and series. If the 1940 Act or any
regulation under it should be amended or if present interpretations should
change, and if as a result we determine that we are permitted to vote the fund
shares in our own right, we may elect to do so.

The number of votes which you have the right to cast will be determined by
applying your percentage interest in a subaccount to the total number of votes
attributable to the subaccount. In determining the

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number of votes, fractional shares will be recognized. After the annuity
commencement date, the votes attributable to a contract will decrease.

Fund shares held in a subaccount for which no timely instructions are received
will be voted by us in proportion to the voting instructions which are received
for all contracts participating in that subaccount. Voting instructions to
abstain on any item to be voted on will be applied on a pro rata basis to
reduce the number of votes eligible to be cast.

Maryland law and the bylaws of each fund and series allow investment companies
registered under the 1940 Act to dispense with annual meetings of shareholders
in certain cases where the meetings are only a formality. The Board of
Directors of each fund will decide each year whether or not to hold the
shareholder's annual meeting for that year.

The dispensing with annual meetings of the shareholder in effect results in
retaining the existing Directors in office. Consequently, the SEC requires the
funds to assure contractowners that a majority of those Directors have at some
point been elected by the shareholder. The SEC also requires that the funds
comply with Section 16(c) of the 1940 Act, concerning procedures by which
shareholders may remove Directors. For a more detailed explanation of this
procedure, see Description of shares in the Appendix to the Prospectuses for
the funds; also see the Prospectus for the series.

Annual meetings of each fund and of the series normally will not be held,
unless the Board of Directors decides to hold them. Special meetings of the
shareholder may be called for any valid purpose. Whenever a shareholder's
meeting is called, each person having a voting interest in a subaccount will
receive proxy voting material, reports and other materials relating to the
fund, and series involved.

DISTRIBUTION OF THE CONTRACTS

We are the distributor of the contracts. They will be sold by our registered
representatives who have been licensed by state insurance departments. The
contracts will also be sold by independent broker-dealers who have been
licensed by state insurance departments to represent us and who have selling
agreements with us. We are registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and are a member of the National
Association of Securities Dealers (NASD). Lincoln Life will offer contracts in
all states where it is licensed to do business.

RETURN PRIVILEGE

Within the free-look period after you first receive the contract, you may
cancel it for any reason by delivering or mailing it postage prepaid, to the
home office at P.O. Box 2340, 1300 South Clinton Street, Fort Wayne,
Indiana, 46801. A contract canceled under this provision will be void. With
respect to the fixed portion of a contract, we will return purchase payments.
With respect to the VAA, except as explained in the following paragraph, we
will return the contract value as of the date of receipt of the cancellation,
plus any account charge and any premium taxes which had been deducted. No
surrender charge will be made. A PURCHASER WHO PARTICIPATES IN THE VAA IS
SUBJECT TO THE RISK OF A MARKET LOSS DURING THE FREE-LOOK PERIOD.

For contracts written in those states whose laws require that we assume this
market risk during the free-look period, a contract may be canceled, subject to
the conditions explained before, except that we will return only the purchase
payment(s).

STATE REGULATION

As a life insurance company organized and operated under Indiana law, we are
subject to provisions governing life insurers and to regulation by the Indiana
Commissioner of Insurance.

Our books and accounts are subject to review and examination by the Indiana
Insurance Department at all times. A full examination of our operations is
conducted by that Department at least once every five years.

RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM

Title 8, Section 830.105 of the Texas Government Code, consistent with prior
interpretations of the Attorney General of the State of Texas, permits
participants in the Texas Optional Retirement Program (ORP) to redeem their
interest in a variable annuity contract issued under the ORP only upon:

1. Termination of employment in all institutions of higher education as
defined in Texas law;

2. Retirement; or

3. Death.

Accordingly, participants in the ORP will be required to obtain a certificate
of termination from their employer(s) before accounts can be redeemed.

RECORDS AND REPORTS

As presently required by the 1940 Act and applicable regulations, we are
responsible for maintaining all records and accounts relating to the VAA. We
will mail to you, at your last known address of record at the home office, at
least semiannually after the first contract

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year, reports containing information required by the 1940 Act or any other
applicable law or regulation. We have entered into an agreement with the
Delaware Management Co., 2005 Market Street, Philadelphia, PA 19203, to provide
accounting services to the VAA.

OTHER INFORMATION

A Registration Statement has been filed with the SEC, under the Securities Act
of 1933 as amended, for the contracts being offered by this Prospectus. This
Prospectus does not contain all the information in the Registration Statement,
its amendments and exhibits. Please refer to the Registration Statement for
further information about the VAA, Lincoln Life and the contracts offered.
Statements in this Prospectus about the content of contracts and other legal
instruments are summaries. For the complete text of those contracts and
instruments, please refer to those documents as filed with the SEC.

Lincoln National Flexible Premium Variable Life Accounts D, G and K, segregated
investment accounts of ours registered under the 1940 Act, are authorized to
invest assets in the following funds and series: Bond, Growth and Income,
Managed, Money Market and Special Opportunities (for Account D); Growth and
Income and Special Opportunities (for Account G) and all funds and series for
Account K. Through the VAA and the Variable Life Accounts we are the sole
shareholder in the eleven funds. However, we are not the sole shareholder of
series shares in the Delaware Group Premium Fund, Inc. Collectively, the VAA
and the Variable Life Accounts may be referred to in this booklet and in the
SAI as the variable accounts.

Due to differences in redemption rates, tax treatment or other considerations,
the interests of contractowners under the Variable Life Accounts could conflict
with those of contractowners under the VAA. In those cases where assets from
variable life and variable annuity separate accounts are invested in the same
fund or funds or series (i.e., where mixed funding occurs), the Boards of
Directors of the funds involved will monitor for any material conflicts and
determine what action, if any, should be taken. If it becomes necessary for any
separate account to replace shares of any fund or series with another
investment, that fund or series may have to liquidate securities on a
disadvantageous basis. Refer to the Prospectus for each fund and for the series
fund for more information about mixed funding.

In the future, we may purchase shares in the funds and series for one or more
unregistered segregated investment accounts.

ADVERTISEMENTS/SALES LITERATURE
In marketing the variable annuity contracts, we and our various sales
representatives may refer to certain ratings assigned to us under the Rating
System of the A.M. Best Co., Oldwick, New Jersey. The objective of Best's
Rating System is to evaluate the various factors affecting the overall
performance of an insurance company in order to provide Best's opinion about
that company's relative financial strength and ability to meet its contractual
obligations. The procedure includes both a quantitative and qualitative review
of the insurance company. In marketing the contracts and the underlying funds
and series, we may at times use data published by other nationally-known
independent statistical services. These service organizations provide relative
measures of such factors as an insurer's claim-paying ability, the features of
particular contracts, and the comparative investment performance of the funds
and series with other portfolios having similar objectives. A few such services
are: Duff & Phelps, the Lipper Group, Moody's, Morningstar, Standard and Poor's
and VARDS. There is more information about each of these services under
Advertising and sales literature in the SAI. Marketing materials may employ
illustrations of compound interest and dollar-cost averaging; discuss automatic
withdrawal services; describe our customer base, assets, and our relative size
in the industry. They may also discuss other features of Lincoln Life, the VAA,
the funds, the series and their investment management.
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS FOR VAA

<TABLE>
<CAPTION>
Item
- ------------------------------------------------------
<S> <C>
General information and history of Lincoln Life
Special terms
Services
Purchase of securities being offered Underwriters
Calculation of performance data
</TABLE>

For a free copy of the SAI please see page one of this booklet.

<TABLE>
<CAPTION>
Item
- ---------------------------------------------------------
<S> <C>
Annuity payouts
Federal tax status
Determination of accumulation and annuity unit value
Advertising and sales literature/graphics
Financial statements
</TABLE>

22
<PAGE>

Account C
LINCOLN NATIONAL
VARIABLE ANNUITY ACCOUNT C (VAA) (REGISTRANT)

LINCOLN NATIONAL
LIFE INSURANCE COMPANY (DEPOSITOR)

STATEMENT OF ADDITIONAL INFORMATION (SAI)

This SAI should be read in conjunction with the Prospectus of the VAA dated May
1, 1997. You may obtain a copy of the VAA Prospectus on request and without
charge. Please write Lincoln National Life Insurance Co., P.O. Box 2340, Fort
Wayne, Indiana 46801 or call 1-800-4LINCOLN (454-6265).

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
- ------------------------------------------
<S> <C>
GENERAL INFORMATION AND HISTORY
OF LINCOLN LIFE B-2
- ------------------------------------------
SPECIAL TERMS B-2
- ------------------------------------------
SERVICES B-2
- ------------------------------------------
PURCHASE OF SECURITIES BEING OFFERED B-2
- ------------------------------------------
UNDERWRITERS B-2
- ------------------------------------------
CALCULATION OF PERFORMANCE DATA B-2
</TABLE>

<TABLE>
<CAPTION>
Page
- ------------------------------------------------
<S> <C>
ANNUITY PAYOUTS B- 6
- ------------------------------------------------
FEDERAL TAX STATUS B- 7
- ------------------------------------------------
DETERMINATION OF ACCUMULATION AND ANNUITY
UNIT VALUE B- 9
- ------------------------------------------------
ADVERTISING AND SALES LITERATURE/GRAPHICS B-10
- ------------------------------------------------
FINANCIAL STATEMENTS B-12
</TABLE>

SPECIAL NOTICE TO CONTRACTOWNERS ABOUT THIS YEAR'S LINCOLN LIFE FINANCIAL
STATEMENTS. Each year Lincoln Life is required by law to prepare financial
statements for different purposes. Two of the most important purposes are for
filing with state insurance departments and for inclusion in the securities
registration statements for our variable products, like this one. In the past
we have interpreted the prevailing regulations as requiring presentation of
these statements according to two different sets of accounting principles--one
for the insurance regulators (known as Statutory Accounting Principles, or
STAP) and one for the SEC (known as Generally Accepted Accounting Principles,
or GAAP).

When we create two sets of financial statements for the same insurer it
requires nearly double the time commitment of our internal accounting staff,
and two separate audits by our independent auditors. In an effort to control
costs and eliminate duplication of effort, we have reviewed the SEC's
requirements for the mode of presentation of the insurer's financial statements
in this registration statement. As a result of our review and on advice of
counsel, we shall now begin to use the STAP-basis statements (which we call
Statutory Statements) exclusively, both for the insurance regulators and for
our securities registration statements. This is consistent with the current
practice of many other insurers.

We believe that both Statutory and GAAP statements fairly present the financial
position of Lincoln Life for the periods indicated, in accordance with those
respective accounting principles. However, between the two there are some
important differences in accounting theory and financial statement
presentation. FOR THAT REASON, IN THIS TRANSITION YEAR WE INCLUDE HERE BOTH
STATUTORY AND GAAP STATEMENTS. This should permit you to evaluate the financial
position of Lincoln Life from both points of view, and should help you
understand the differences between Statutory and GAAP statements. BEGINNING
NEXT YEAR WE SHALL PRESENT ONLY THE STATUTORY STATEMENTS.

THIS SAI IS NOT A PROSPECTUS.

The date of this SAI is May 1, 1997

B-1
<PAGE>

Account C
GENERAL INFORMATION
AND HISTORY OF LINCOLN NATIONAL LIFE
INSURANCE CO. (LINCOLN LIFE)

The prior Depositor of the account, Lincoln National Pension Insurance Co., was
merged into Lincoln Life, effective January 1, 1989. Lincoln Life, organized in
1905, is an Indiana stock insurance corporation, engaged primarily in insurance
and financial services. Lincoln Life is owned by Lincoln National Corp., a
publicly held insurance holding company domiciled in Indiana.

SPECIAL TERMS

The special terms used in this SAI are the ones defined in the Prospectus. They
are italicized to make this document more understandable.

SERVICES

INDEPENDENT AUDITORS
The financial statements of the VAA and the financial statements and schedules
of Lincoln Life appearing in this SAI and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports which also appear elsewhere in this document and in the Registration
Statement. The financial statements and schedules audited by Ernst & Young LLP
have been included in this document in reliance on their report given on their
authority as experts in accounting and auditing.

KEEPER OF RECORDS
All accounts, books, records and other documents which are required to be
maintained for the VAA are maintained by Lincoln Life. No separate charge
against the assets of the VAA is made by Lincoln Life for this service. We have
entered into an agreement with Delaware Management Co., 2005 Market Street,
Philadelphia, PA 19203, to provide accounting services to the VAA.

PRINCIPAL UNDERWRITER
Lincoln Life is the principal underwriter for the variable annuity contracts.

PURCHASE OF SECURITIES BEING OFFERED

The variable annuity contracts are offered to the public through licensed
insurance agents who specialize in selling Lincoln Life products; through
independent insurance brokers; and through certain securities broker/dealers
selected by Lincoln Life whose personnel are legally authorized to sell annuity
products. There are no special purchase plans for any class of prospective
buyers. However, under certain limited circumstances described in the
Prospectus under the section Charges and other deductions, the contract and/or
the surrender charges may be waived.

There are exchange privileges between subaccounts, and between the VAA and
Lincoln Life's General Account (See Transfers of accumulation units between
subaccounts in the Prospectus.) No exchanges are
permitted between the VAA and other separate accounts.

UNDERWRITERS

Lincoln Life has contracted with some broker/dealers, and may contract with
others, to sell the variable annuity contracts through certain legally
authorized persons and organizations. These dealers are compensated under a
standard Compensation Schedule.

Lincoln Life is the principal underwriter for the variable annuity contracts.
We may not offer a contract continuously or in every state. Lincoln Life
retains no underwriting commissions from the sale of the variable annuity
contracts.

CALCULATION OF PERFORMANCE DATA

A. MONEY MARKET FUNDED SUBACCOUNTS:
1. Seven-day yield: 3.71%
Length of base period used in computing the yield: 7 days
Last Day in the base period: December 31, 1996

2. The yield reported above and in the table of condensed financial
information in the Prospectus is determined by calculating the change in
unit value for the base period (the 7-day period ended December 31,
1996); then dividing this figure by the account value at the beginning of
the period; then annualizing this result by the factor of 365/7. This
yield includes all deductions charged to the contractowner's account, and
excludes any
realized gains and losses from the sale of securities.

B-2
<PAGE>

Account C
B. OTHER SUBACCOUNTS:
1. TOTAL RETURN -- the tables below show, for the various subaccounts of the
VAA, an average annual total return as of the stated periods, based upon
a hypothetical initial purchase payment of $1,000, calculated according
to the formula set out after the table.

The first table below sets out performance data for each of the subaccounts for
contracts without the EGMDB. The second table below sets out hypothetical
performance data for each of the subaccounts for contracts with the EGMDB. The
hypothetical performance shown in the second table is based on the actual
performance of the subaccounts, but reflects the charges that hypothetically
would have been made had the EGMDB been available under the contracts for the
period indicated.
AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1996CONTRACTS WITHOUT EGMDB

<TABLE>
<CAPTION>
1-year 5-years 10-years
Single & Single & Single &
Periodic flexible Periodic flexible Periodic flexible
pymt. prem. pymt. prem. pymt. prem.
contracts contracts contracts contracts contracts contracts
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bond
Commenced Activity on
December 21, 1981 -6.87% -4.84% 5.20% 5.63% 7.01% 7.01%
- ------------------------------------------------------------------------------------
Growth and Income
Commenced Activity on
December 21, 1981 8.92% 11.29% 11.98% 12.44% 13.24% 13.24%
- ------------------------------------------------------------------------------------
International
Commenced Activity on
May 1, 1991 0.05% 2.22% 7.55% 7.99% 6.41%* 6.80%*
- ------------------------------------------------------------------------------------
Managed
Commenced Activity on
April 29, 1983 2.36% 4.58% 8.48% 8.93% 10.00% 10.00%
- ------------------------------------------------------------------------------------
Global Asset Allocation
Commenced Activity on
August 3, 1987 5.16% 7.45% 9.83% 10.28% 8.68%* 9.51%*
- ------------------------------------------------------------------------------------
Social Awareness
Commenced Activity on
May 2, 1988 17.66% 20.21% 14.74% 15.21% 15.42%* 15.96%*
- ------------------------------------------------------------------------------------
Special Opportunities
Commenced Activity on
December 21, 1981 6.47% 8.78% 12.08% 12.54% 13.19% 13.19%
- ------------------------------------------------------------------------------------
Aggressive Growth
Commenced Activity on
January 3, 1994 6.46% 8.78% * * 8.34%* 9.50%*
- ------------------------------------------------------------------------------------
Capital Appreciation
Commenced Activity on
January 3, 1994 8.01% 10.36% * * 11.76%* 12.96%*
- ------------------------------------------------------------------------------------
Equity-Income
Commenced Activity on
January 3, 1994 9.95% 12.34% * * 15.16%* 16.40%*
- ------------------------------------------------------------------------------------
DE Emerging Growth
Commenced Activity on
May 1, 1996 -8.86% -7.87%* * * * *
- ------------------------------------------------------------------------------------
DE Equity/Income
Commenced Activity on
May 1, 1996 3.56% 4.69%* * * * *
- ------------------------------------------------------------------------------------
DE Global Bond
Commenced Activity on
May 1, 1996 2.11% 3.22%* * * * *
- ------------------------------------------------------------------------------------
</TABLE>
* The lifetime of this subaccount is less than the complete period indicated.
The performance shown is for the period from commencement of activity.

B-3
<PAGE>

Account C
AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1996CONTRACTS WITH EGMDB

<TABLE>
<CAPTION>
1-year 5-years 10-years
Single & Single & Single &
Periodic flexible Periodic flexible Periodic flexible
pymt. prem. pymt. prem. pymt. prem.
contracts contracts contracts contracts contracts contracts
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bond
Commenced Activity on
December 21, 1981 -7.15% -5.13% 4.88% 5.31% 6.69% 6.69%
- ------------------------------------------------------------------------------------
Growth and Income
Commenced Activity on
December 21, 1981 8.60% 10.95% 11.65% 12.11% 12.90% 12.90%
- ------------------------------------------------------------------------------------
International
Commenced Activity on
May 1, 1991 -0.26% 1.91% 7.22% 7.67% 6.10%* 6.48%*
- ------------------------------------------------------------------------------------
Managed
Commenced Activity on
April 29, 1983 2.05% 4.27% 8.16% 8.61% 9.67% 9.67%
- ------------------------------------------------------------------------------------
Global Asset Allocation
Commenced Activity on
August 3, 1987 4.85% 7.13% 9.50% 9.95% 8.35%* 8.83%*
- ------------------------------------------------------------------------------------
Social Awareness
Commenced Activity on
May 2, 1988 17.30% 19.85% 14.40% 14.87% 15.07%* 15.61%*
- ------------------------------------------------------------------------------------
Special Opportunities
Commenced Activity on
December 21, 1981 6.14% 8.45% 11.74% 12.20% 12.85% 12.85%
- ------------------------------------------------------------------------------------
Aggressive Growth
Commenced Activity on
January 3, 1994 6.14% 8.45% * * 8.01%* 9.18%*
- ------------------------------------------------------------------------------------
Capital Appreciation
Commenced Activity on
January 3, 1994 7.68% 10.02% * * 11.43%* 12.62%*
- ------------------------------------------------------------------------------------
Equity-Income
Commenced Activity on
January 3, 1994 9.61% 12.00% * * 14.82%* 16.06%*
- ------------------------------------------------------------------------------------
DE Emerging Growth
Commenced Activity on
May 1, 1996 -9.04% -8.05%* * * * *
- ------------------------------------------------------------------------------------
DE Equity/Income
Commenced Activity on
May 1, 1996 3.35% 4.48%* * * * *
- ------------------------------------------------------------------------------------
DE Global Bond
Commenced Activity on
May 1, 1996 1.91% 3.01%* * * * *
- ------------------------------------------------------------------------------------
</TABLE>

* The lifetime of this subaccount is less than the complete period indicated.
The performance shown is for the period from commencement of activity.

The length of the periods and the last day of each period used in the above
tables are set out in the table headings. The Average annual total return for
each period was determined by finding the average annual compounded rate of
return over each period that would equate the initial amount invested to the
ending redeemable value for that period, according to the following formula --

P (1 + T)n = ERV
Where: P = a hypothetical initial purchase payment of $1,000
T = average annual total return for the period in question
n = number of years
ERV = redeemable value (as of the end of the period in question) of a
hypothetical $1,000 purchase payment made at the beginning of the 1-year, 5-
year, or 10-year period in question (or fractional portion thereof)

The formula assumes that: 1) all recurring fees have been charged to
contractowner accounts; 2) all applicable nonrecurring charges are deducted at
the end of the period in question; and 3) there will be a complete redemption
at the end of the period in question. The performance figures shown in the
tables above relate to the contract form containing the highest level of
charges.

B-4
<PAGE>

Account C

2. NONSTANDARDIZED PERFORMANCE DATA
The VAA advertises the performance of its various subaccounts by observing how
they perform over various time periods--monthly, year-to-date, yearly (fiscal
year); and over periods of three years and more. Monthly, year-to-date and
yearly performance are computed on a cumulative basis; performance for a three-
year period and for greater periods is computed both on a cumulative and on an
annualized basis.

Cumulative quotations are arrived at by calculating the change in the
accumulation unit value between the first and last day of the base period being
measured, and expressing the difference as a percentage of the unit value at
the beginning of the base period. The calculation reflects the mortality and
expense risk fees under the contracts and the management fees and other
expenses of the fund and series. The calculation does not include surrender
charges or the account charge, which, if included, would decrease the
performance.

Annualized quotations are arrived at by applying a formula which determines the
level rate of return which, if earned over the entire base period, would
produce the cumulative return.

The tables below set out representative performance quotations, according to
the definitions above, for each of the subaccounts, for the following base
periods: 1) monthly; 2) year-to-date; 3) yearly; and 4) a three-year period.
For all quotations except 2), the end of the base period is December 31, 1996.
For quotation 2, the end of the base period is November 30, 1996. (The year-to-
date quotation would equal the yearly quotation if the end of the base period
selected for the former were December 31.) In addition, the VAA may advertise
by quotations with base periods of more than three years. These will be
calculated in an identical manner to the method used to calculate the quotation
for the three-year period; the only difference is that the base period utilized
in the formula will be longer.

NONSTANDARDIZED PERFORMANCE DATA SUBACCOUNTS OF ACCOUNT C (CONTRACTS WITHOUT
EGMDB)

<TABLE>
<CAPTION>
Type of
performance Subaccount
data AG B CA EI GAA GI I M
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Monthly
(12/31/96) -0.19% -1.30% -0.76% -1.02% -0.45% -2.24% 0.20% -1.41%
Year-to-Date
(11/30/96) 16.01 2.62 18.37 20.80 14.89 21.18 8.59 12.92
Yearly
(12/31/96) 15.79 1.29 17.47 19.57 14.37 18.46 8.81 11.32
3-Year Cumulative * 13.29 * * 36.25 62.79 19.75 38.41
3-Year Annualized * 4.25 * * 10.86 17.64 6.19 11.44
<CAPTION>
Type of
performance Subaccount
data MM SA SO DEG DEI DGB
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Monthly
(12/31/96) 0.30% -1.93% -0.04% -0.42% -1.26% -0.53%
Year-to-Date
(11/30/96) 3.68 30.48 15.84 -0.45* 14.06* 11.65*
Yearly
(12/31/96) 3.99 27.96 15.79 -0.87* 12.63* 11.06*
3-Year Cumulative 11.79 79.99 48.12 * * *
3-Year Annualized 3.79 21.64 13.99 * * *
</TABLE>

Key: AG=Aggressive Growth; B=Bond; CA=Capital Appreciation; EI=Equity-Income;
GAA=Global Asset Allocation; GI=Growth and Income; I=International; M=Managed;
MM=Money Market; SA=Social Awareness; SO=Special Opportunities; DEG=Delaware
Emerging Growth; DEI=Delaware Equity/Income; DGB=Delaware Global Bond

* The lifetime of this subaccount is less than the complete period indicated.
The performance shown is for the period from commencement of activity.

All performance quotations may be advertised on a cumulative basis; performance
quotations with a base period of two years or longer may also be advertised on
an annualized basis.

B-5
<PAGE>

Account C
NONSTANDARDIZED PERFORMANCE DATA SUBACCOUNTS OF ACCOUNT C (CONTRACTS WITH
EGMDB)

<TABLE>
<CAPTION>
Type of
performance Subaccount
data AG B CA EI GAA GI I M
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Monthly
(12/31/96) -0.22% -1.32% -0.78% -1.04% -0.47% -2.27% 0.18% -1.43%
Year-to-Date
(11/30/96) 15.69 2.34 18.04 20.47 14.57 20.84 8.29 12.60
Yearly
(12/31/96) 15.44 0.99 17.11 19.21 14.03 18.10 8.48 10.99
3-Year Cumulative * 12.28 * * 35.03 61.33 18.68 37.16
3-Year Annualized * 3.94 * * 10.53 17.28 5.87 11.11
<CAPTION>
Type of
performance Subaccount
data MM SA SO DEG DEI DGB
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Monthly
(12/31/96) 0.27% -1.96% -0.07% -0.45% -1.28% -0.56%
Year-to-Date
(11/30/96) 3.39 30.12 15.52 -0.62* 13.68* 11.45*
Yearly
(12/31/96) 3.67 27.57 15.44 -1.07* 12.40* 10.83*
3-Year Cumulative 10.79 78.37 46.79 * * *
3-Year Annualized 3.47 21.28 13.65 * * *
</TABLE>

* The lifetime of this subaccount is less than the complete period indicated.
The performance shown is for the period from commencement of activity.

All performance quotations may be advertised on a cumulative basis; performance
quotations with a base period of two years or longer may also be advertised on
an annualized basis.

ANNUITY PAYOUTS

VARIABLE ANNUITY PAYOUTS
Variable annuity payouts will be determined on the basis of: (1) the value of
the contract on the annuity commencement date; (2) the annuity tables contained
in the contract; (3) the type of annuity option selected; and (4) the
investment performance of the eligible fund(s) selected. In order to determine
the amount of variable annuity payouts, Lincoln Life makes the following
calculation: first, it determines the dollar amount of the first payout;
second, it credits the annuitant with a fixed number of annuity units based on
the amount of the first payout; and third, it calculates the value of the
annuity units each period thereafter. These steps are explained below.

The dollar amount of the first variable annuity payout is determined by
applying the total value of the accumulation units credited under the contract
valued as of the annuity commencement date (less any premium taxes) to the
annuity tables contained in the contract. The first variable annuity payout
will be paid 14 days after the annuity commencement date. This date will become
the date on which all future annuity payouts will be paid. Amounts shown in the
tables are based on the 1971 Individual Annuity Mortality Tables for the single
premium, periodic premium and flexible premium Multi Fund 2 and 3 annuity
contracts and the 1983(a) Individual Mortality Table for flexible premium
annuity contract Multi Fund 4 modified, with an assumed investment return at
the rate of 5% per annum. The first annuity payout is determined by multiplying
the benefit per $1,000 of value shown in the contract tables by the number of
thousands of dollars of contract value under the contract. These annuity tables
vary according to the form of annuity selected and the age of the annuitant at
the annuity commencement date. The 5% interest rate stated above is the
measuring point for subsequent annuity payouts. If the actual Net Investment
Rate (annualized) exceeds 5%, the payment will increase at a rate equal to the
amount of such excess. Conversely, if the actual rate is less than 5%, annuity
payouts will decrease. If the assumed rate of interest

B-6
<PAGE>

Account C
were to be increased, annuity payouts would start at a higher level but would
decrease more rapidly or increase more slowly.

Lincoln Life may use sex distinct annuity tables in contracts that are not
associated with employer sponsored plans where not prohibited by law.

At an annuity commencement date, the annuitant is credited with annuity units
for each subaccount on which variable annuity payouts are based. The number of
annuity units to be credited is determined by dividing the amount of the first
payout by the value of an annuity unit in each subaccount selected. Although
the number of annuity units is fixed by this process, the value of such units
will vary with the value of the underlying eligible funds. The amount of the
second and subsequent annuity payouts is determined by multiplying the
contractowner's fixed number of annuity units in each subaccount by the
appropriate annuity unit value for the valuation date ending 14 days before the
date that payment is due.

The value of each subaccount annuity unit was set initially at $1.00. The
annuity unit value for each subaccount at the end of any valuation date is
determined by multiplying the subaccount annuity unit value for the immediately
preceding valuation date by the product of:

a. The net investment factor of the subaccount for the valuation period for
which the annuity unit value is being determined, and

b. A factor to neutralize the assumed investment return in the annuity table.

The value of the annuity units is determined as of a valuation date 14 days
before the payout date in order to permit calculation of amounts of annuity
payouts and mailing of checks in advance of their due dates. Such checks will
normally be issued and mailed at least three days before the due date.

PROOF OF AGE, SEX AND SURVIVAL
Lincoln Life may require proof of age, sex or survival of any payee upon whose
age, sex or survival payouts depend.

FEDERAL TAX STATUS

GENERAL
The operations of the VAA form a part of, and are taxed with, the operations of
Lincoln Life under the Internal Revenue Code of 1986, as amended (the code).
Investment income and realized net capital gains on the assets of the VAA are
reinvested and taken into account in determining the accumulation and annuity
unit values. As a result, such investment income and realized net capital gains
are automatically retained as part of the reserves under the contract. Under
existing federal income tax law, Lincoln Life believes that VAA investment
income and realized net capital gains are not taxed to the extent they are
retained as part of the reserves under the contracts. Accordingly, Lincoln Life
does not anticipate that it will incur any federal income tax liability
attributable to the VAA, and therefore it does not intend to make any provision
for such taxes. However, if changes in the federal tax laws or interpretations
thereof result in Lincoln Life's being taxed on income or gains attributable to
the VAA, then Lincoln Life may impose a charge against the VAA in order to make
provision for payment of such taxes.

TAX STATUS OF NONQUALIFIED CONTRACTS
The code (Section 72(s)) provides that contracts issued after January 18, 1985,
will not be treated as annuity contracts for purposes of Section 72 unless the
contract provides that (A) if any contractowner dies on or after the annuity
starting date, but before the time the entire interest in the contract has been
distributed, the remaining portion of such interest must be distributed at
least as rapidly as under the method of distribution in effect at the time of
the contractowner's death; and (B) if any contractowner dies before the annuity
starting date, the entire interest must be distributed within five years after
the death of the contractowner. These requirements are considered satisfied to
the extent that any portion of the contractowner's interest that is payable to
or for the benefit of a designated beneficiary is distributed over that
designated beneficiary's life, or a period not extending beyond the designated
beneficiary's life expectancy, and if that distribution begins within one year
of the contractowner's death. The designated beneficiary must be a natural
person. Contracts issued after January 18, 1985 contain provisions intended to
comply with these code requirements, although regulations interpreting these
requirements have yet to be issued. Lincoln Life intends to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Section 72(s) when clarified by regulation or otherwise.

QUALIFIED CONTRACTS
The rules governing the tax treatment of contributions and distributions under
qualified plans, as set forth in the code and applicable rulings and
regulations, are complex and subject to change. These rules also vary according
to the type of plan and the terms and conditions of the plan itself. Therefore,
no attempt is made herein to provide more than general information about the
use of contracts with the various types of plans, based on Lincoln Life's
understanding of the current federal tax laws as interpreted by the Internal
Revenue Service (IRS). Purchasers of contracts for use with such a plan and
plan participants and beneficiaries should consult counsel and other competent
advisors as to the suitability of the plan and the contract to their specific
needs, and as to applicable code limitations and tax consequences. Participants
under such plans, as well as contractowners, annuitants and beneficiaries,
should

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also be aware that the rights of any person to any benefits under such plans
may be subject to the terms and conditions of the plans themselves regardless
of the terms and conditions of the contract.

Following are brief descriptions of the various types of
plans and of the use of contracts in connection therewith.

PUBLIC SCHOOL SYSTEMS AND SECTION 501(C)(3) ORGANIZATIONS (403(B))
Payments made to purchase annuity contracts by public school systems or certain
Section 501(c)(3) organizations for their employees are excludable from the
gross income of the employee to the extent that aggregate payments for the
employee do not exceed the exclusion allowance provided by Section 403(b) of
the code, the over-all limits for excludable contributions of Section 415 of
the code or the limit on elective contributions. Furthermore, the investment
results of the fund credited to the account are not taxable until benefits are
received either in the form of annuity payouts or in a single sum.

If an employee's individual account is surrendered, usually the full amount
received would be includable in income for that year at ordinary rates.

QUALIFIED CORPORATE EMPLOYEE'S PENSION AND PROFIT-SHARING TRUSTS AND QUALIFIED
ANNUITY PLANS
Payments made by a corporate employer and the increments on all payments for
qualified corporate plans are not taxable as income to the employee until
distributed. However, the employee may be required to include these amounts in
gross income before distribution if the qualified plan or trust loses its
qualification. Corporate plans qualified under Sections 401(a) or 403(a) of the
code are subject to extensive rules, including limitations on maximum
contributions or benefits.

Distributions of amounts in excess of nondeductible employee contributions
allocated to such distributions are generally taxable as ordinary income. If an
employee or beneficiary receives a lump sum distribution, that is, if the
employee or beneficiary receives in a single tax year the total amounts payable
with respect to that employee and the benefits are paid as a result of the
employee's death or separation from service or after the employee attains 59
1/2, taxable gain may be either eligible for special lump sum averaging
treatment or, if the recipient was age 50 before January 1, 1986, eligible for
taxation at a 20% rate to the extent the distribution reflects payouts made
before January 1, 1974. For plan years beginning after December 31, 1996, tax
exempt organizations (except state or local governments) may have 401(k) plans.
These special tax rules are not available in all cases.

SELF-EMPLOYED INDIVIDUALS (H.R. 10 OR KEOGH)
Under code provisions, self-employed individuals may establish plans commonly
known as H.R.10 or Keogh plans for themselves and their employees. The tax
consequences to participants under such plans depend upon the plan itself. Such
plans are subject to special rules in addition to those applicable to qualified
corporate plans, although certain of these rules have been repealed or modified
effective in 1984. Purchasers of the contracts to use with H.R. 10 plans should
seek competent advice as to suitability of plan documents and the funding
contracts.

INDIVIDUAL RETIREMENT ANNUITIES (IRA)
Under Section 408 of the code, individuals may participate in a retirement
program known as an IRA. An individual may make an annual IRA contribution of
up to the lesser of $2,000 (or $4,000 if IRAs are maintained for both the
individual and the nonworking spouse and they file a joint tax return) or 100%
of compensation. However, IRA contributions may be nondeductible in whole or in
part if (1) the individual or the spouse is an active participant in certain
other retirement programs and (2) the income of the individual (or of the
individual and the spouse) exceeds a specified amount. Distributions from
certain types of retirement plans may be rolled over to an IRA on a tax-
deferred basis if certain requirements are met. Distributions from IRA's are
subject to certain restrictions. Deductible IRA contributions and all earnings
will be taxed as ordinary income when distributed. The failure to satisfy
certain code requirements with respect to an IRA results in adverse tax
consequences.

DEFERRED COMPENSATION PLANS (457 PLANS)
Under the code provisions, employees and independent contractors (participants)
performing services for state and local governments and tax-exempt
organizations may establish deferred compensation plans. Plans of state or
local governments established on August 20, 1996, or later, must hold all
assets and income in trust (or custodial accounts or an annuity contract) for
the exclusive benefit of participants and their beneficiaries. Section 457
plans that were in existence before August 20, 1996 are allowed until January
1, 1999 to meet this requirement. While participants in such plans may be
permitted to specify the form of investment in which their plan accounts will
participate, all such investments are owned by the sponsoring employer and are
subject to the claims of its creditors. The amounts deferred under a plan which
meet the requirements of Section 457 of the code are not taxable as income to
the participant until paid or otherwise made available to the participant or
beneficiary. Deferrals are taxed as compensation from the employer when they
are actually or constructively received by the employee. As a general rule, the
maximum amount

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which can be deferred in any one year is the lesser of $7,500 (as indexed) or
33 1/3% of the participant's includable compensation. However, in the limited
circumstances, up to $15,000 may be deferred in each of the last three years
before retirement.

SIMPLIFIED EMPLOYEE PENSION PLANS (SEP)
An employer may make contributions on behalf of employees to a SEP as provided
by Section 408(k) of the code. The contributions and distribution dates are
limited by the code provisions. All distributions from the plan will be taxed
as ordinary income. For tax years after 1996, salary reduction SEP's (SAR/SEP)
may no longer be established. However, SAR/SEPs in existence prior to January
1, 1997 may continue to receive contributions.

Any distribution before the employee attains age 59 1/2 (except in the event of
death or disability) or the failure to satisfy certain other code requirements
may result in adverse tax consequences.

SAVINGS INCENTIVE MATCHED PLAN FOR EMPLOYEES (SIMPLE)
Employers with 100 or fewer employees who earned $5,000 during the proceeding
year, may establish SIMPLEs. For tax years beginning after December 31, 1996,
SIMPLE plans are available and may be in the form of an IRA or part of a 401(k)
plan. Under a SIMPLE IRA, employees are permitted to make elective
contributions to an IRA, stated as a percentage of the employees compensation,
but not to exceed $6,000 annually as indexed. Such deferrals are not subject to
income tax until withdrawn. Withdrawals made by an employee in the first two
years of the employees participation are subject to a 25% penalty. Later
withdrawals are subject to penalties applicable to IRAs. Under a SIMPLE 401(k),
employee deferrals are limited to no more than $6,000 annually. Employer
contributions are usually required for each type of SIMPLE.

TAX ON DISTRIBUTIONS FROM QUALIFIED CONTRACTS
The following rules generally apply to distributions from contracts purchased
in connection with the plans discussed previously, other than deferred
compensation plans.

The portion, if any, of any contribution under a contract made by or on behalf
of an individual which is not excluded from the employee's gross income
(generally, the employee's own nondeductible contributions) constitutes the
investment in the contract. If a distribution is made in the form of annuity
payouts, the employee's investment in the contract (adjusted for certain refund
provisions) divided by the life expectancy (or other period for which annuity
payouts are expected to be made) constitutes a tax-free return of capital each
year. The dollar amount of annuity payouts received in any year in excess of
such return is taxable as ordinary income. All distributions will be fully
taxable once the employee is deemed to have recovered the dollar amount of the
investment in the contract.

If a surrender of or withdrawal from the contract is effected and distribution
is made from the plan in a single payout, the proceeds may qualify for special
lump sum distribution treatment under certain qualified plans, as discussed
above. Otherwise, the amount by which the payment exceeds the investment in the
contract (adjusted for any prior withdrawal) allocated to that payment, if any,
will be taxed as ordinary income in the year of receipt. Rules generally
provide that all distributions which are not received as an annuity will be
taxed as a pro rata distribution of taxable and nontaxable amounts (rather than
as a distribution first of nontaxable amounts).

Distributions from qualified plans, Keoghs, SEPs, 403(b) plans and IRAs will be
subject to (1) a 10% penalty tax if made before age 59 1/2 unless certain other
exceptions apply, and (2) a 15% penalty tax on combined annual distributions in
excess of $150,000 (as indexed), which will not be imposed on distributions in
1997, 1998 and 1999, subject to various special rules. Failure to meet certain
minimum distribution requirements for the above plans, as well as for Section
457 plans, will result in a 50% excise tax. Various other adverse tax
consequences may also be potentially applicable in certain circumstances to
these types of plans.

Upon an employee's death, the taxation of benefits payable to the beneficiary
generally follows these same principles, subject to a variety of special rules.

OTHER CONSIDERATIONS
It should be understood that the foregoing comments about the federal tax
consequences under these contracts are not exhaustive and that special rules
are provided with respect to other tax situations not discussed herein.
Further, the foregoing discussion does not address any applicable state, local
or foreign tax laws. Finally, in recent years numerous changes have been made
in the federal income tax treatment of contracts and retirement plans, which
are not fully discussed above. Before an investment is made in any of the
contracts, a competent tax advisor should be consulted.

DETERMINATION OF ACCUMULATION AND ANNUITY UNIT VALUE

A description of the days on which accumulation and
annuity units will be valued is given in the Prospectus. The New York Stock
Exchange's (NYSE) most recent
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Account C
announcement (which is subject to change) states that in 1997 it will be closed
on New Year's Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day. It may also be closed on
other days.

Since the portfolios of some of the funds and series will consist of securities
primarily listed on foreign exchanges or otherwise traded outside the United
States, those securities may be traded (and the net asset value of those funds
and series and of the variable account could therefore be significantly
affected) on days when the investor has no access to those funds and series.

ADVERTISING AND SALES LITERATURE

As set forth in the Prospectus, Lincoln Life may refer to the following
organizations (and others) in its marketing materials:

A.M. BEST'S RATING SYSTEM evaluates the various factors affecting the overall
performance of an insurance company in order to provide an opinion as to an
insurance company's relative financial strength and ability to meet its
contractual obligations. The procedure includes both a quantitative and
qualitative review of each company.

DUFF & PHELPS insurance company claims paying ability (CPA) service provides
purchasers of insurance company policies and contracts with analytical and
statistical information on the solvency and liquidity of major U.S licensed
insurance companies, both mutual and stock.

EAFE Index is prepared by Morgan Stanley Capital International (MSCI). It
measures performance of securities in Europe, Australia and the Far East. The
index reflects the movements of world stock markets by representing the
evolution of an unmanaged portfolio. The EAFE Index offers international
diversification with over 1000 companies across 20 different countries.

LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a publisher
of statistical data covering the investment company industry in the United
States and overseas. Lipper is recognized as the leading source of data on
open-end and closed-end funds. Lipper currently tracks the performance of over
5,000 investment companies and publishes numerous specialized reports,
including reports on performance and portfolio analysis, fee and expense
analysis.

MOODY'S insurance claims-paying rating is a system of rating insurance
company's financial strength, market leadership and ability to meet financial
obligations. The purpose of Moody's ratings is to provide investors with a
simple system of gradation by which the relative quality of insurance companies
may be noted.

MORNINGSTAR is an independent financial publisher offering comprehensive
statistical and analytical coverage of open-end and closed-end funds and
variable annuity contracts.

STANDARD & POOR's CORP. insurance claims-paying ability rating is an assessment
of an operating insurance company's financial capacity to meet obligations
under an insurance policy in accordance with the terms. The likelihood of a
timely flow of funds from the insurer to the trustee for the bondholders is a
key element in the rating determination for such debt issues.

VARDS (Variable Annuity Research Data Service) provides a comprehensive guide
to variable annuity contract features and historical fund performance. The
service also provides a readily understandable analysis of the comparative
characteristics and market performance of funds inclusive in variable
contracts.

STANDARD & POOR'S 500 INDEX (S&P 500) -- broad-based measurement of changes in
stock-market conditions based on the average performance of 500 widely held
common stocks; commonly known as the S&P 500. The selection of stocks, their
relative weightings to reflect differences in the number of outstanding shares
and publication of the index itself are services of Standard & Poor's Corp., a
financial advisory, securities rating and publishing firm.

NASDAQ-OTC Price Index -- this index is based on the National Association of
Securities Dealers Automated Quotations (NASDAQ) and represents all domestic
over-the-counter stocks except those traded on exchanges and those having only
one market maker, a total of some 3,500 stocks. It is market value-weighted and
was introduced with a base of 100.00 on February 5, 1971.

DOW JONES INDUSTRIAL AVERAGE (DJIA) -- price-weighted average of 30 actively
traded blue chip stocks, primarily industrials but including American Express
Co. and American Telephone and Telegraph Co. Prepared and published by Dow
Jones & Co., it is the oldest and most widely quoted of all the market
indicators. The average is quoted in points, not dollars.

INTERNET -- As an electronic communications network may be used to provide
information regarding Lincoln Life performance of the subaccounts and
advertisement literature.

In its advertisements and other sales literature for the VAA and the eligible
funds, Lincoln Life intends to illustrate the advantages of the contracts in a
number of ways:

COMPOUND INTEREST ILLUSTRATIONS. These will emphasize several advantages of the
variable annuity contract. For example, but not by way of limitation, the

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Account C
literature may emphasize the potential savings through tax deferral; the
potential advantage of the variable account over the fixed side; and the
compounding effect
when a client makes regular contributions to his or her account.

DOLLAR-COST AVERAGING ILLUSTRATIONS. These illustrations will generally discuss
the price-leveling effect of making regular purchases in the same subaccounts
over a period of time, to take advantage of the trends in market prices of the
portfolio securities purchased for those subaccounts.

AUTOMATIC WITHDRAWAL SERVICE. A service provided by Lincoln Life, through which
a contractowner may take any distribution allowed by code Section 401(a)(9) in
the case of qualified contracts, or permitted under code Section 72 in the case
of nonqualified contracts, by way of an automatically generated payment.

EARNINGS SWEEP. A service provided by Lincoln Life which allows a client to
designate one of the variable subaccounts or the fixed side as a holding
account, and to transfer earnings from that side to any other variable
subaccount. The contractowner chooses a specific fund as the holding account.
At specific intervals, account value in the holding account fund that exceeds a
certain designated baseline amount is automatically transferred to another
specified fund(s). The minimum account value required for the Earnings Sweep
feature is $10,000.

LINCOLN LIFE'S CUSTOMERS. Sales literature for the VAA, the funds and series
may refer to the number of employers and the number of individual annuity
clients which Lincoln Life serves. As of February 28, 1997, Lincoln Life was
serving over 13,000 organizations and had more than 940,000 annuity clients.

LINCOLN LIFE'S ASSETS, SIZE. Lincoln Life may discuss its general financial
condition (see, for example, the reference to A.M. Best Co., above); it may
refer to its assets; it may also discuss its relative size and/or ranking among
companies in the industry or among any subclassification of those companies,
based upon recognized evaluation criteria. For example, at year-end 1995,
Lincoln Life was the 12th largest U.S. life insurance company based upon
overall assets.

Sales literature may reference the Multi Fund newsletter which is a newsletter
distributed quarterly to clients of the VAA. The contents of the newsletter
will be a commentary on general economic conditions and, on some occasions,
referencing matters in connection with the Multi Fund annuity.

Sales literature and advertisements may reference these and other similar
reports from Best's or other similar publications which report on the insurance
and financial services industries.

The graphs below compare accumulations attributable to contributions to
conventional savings vehicles such as savings accounts at a bank or credit
union, nonqualified contracts purchased with after tax contributions, and
qualified contracts purchased with pre-tax contributions under tax-favored
retirement programs.

THE POWER OF TAX DEFERRED GROWTH

The hypothetical chart below compares the results of contributing $1,200 per
year ($100 per month) during the time periods illustrated. Each graph assumes a
28% tax rate and an 8% fixed rate of return (before fees

[GRAPH APPEARS HERE]

and charges). For tax deferred annuities (TDA), the results are based on
contributing $1,666.66 ($138.88 per month) during the time periods illustrated.
The additional $38.88 per month is the amount of federal taxes paid by those
contributing to the conventional savings accounts or nonqualified contracts. In
this example, it has been invested by the contributors to the qualified
contracts. The deduction of fees and charges is also indicated in the graph.
The dotted lines represent the amount remaining after deducting any taxes due
and all fees (including surrender charges). See Charges and other deductions in
the Prospectus for discussion of charges. Additionally, a 10% tax penalty (not
included here) may apply to withdrawals before age 59 1/2.

The contributions and interest earnings on conventional savings accounts are
usually taxed currently. For nonqualified contracts contributions are usually
taxed currently, while earnings are not usually subject to income tax until
withdrawn. However, contributions to and earnings on qualified plans are
ordinarily not subject to income tax until withdrawn. Therefore, having greater
amounts re-invested in a qualified or nonqualified plan increases the
accumulation power of savings over time.

As you can see, a tax deferred plan can provide a much higher account value
over a long period of time. Therefore, tax deferral is an important component
of a retirement plan or other long-term financial goals. (The above chart is
for illustrative purposes and should not be construed as representative of
actual results, which may be more or less).

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<PAGE>

Preface/Directory
TAX BENEFITS TODAY

When you put a portion of
your salary in a tax
deferred retirement plan,
your contributions don't
appear as taxable income on
your W-2 form at the end of
the calendar year. So while
you are contributing, you
can reduce your taxes and
increase your take-home
pay.

Here's an example: Let's
assume you are single, your
taxable income is $50,000,
and you are in the 28% tax
bracket.

<TABLE>
<CAPTION>
Traditional Savings of
savings plan pre-tax dollars
- ----------------------------------------------------------------------
<S> <C> <C>
Your income $50,000 $50,000
Tax-deferred savings -0- 2,400
Taxable income 50,000 47,600
*Estimated federal income taxes 10,481 9,809
Income after taxes 39,519 37,791
After-tax savings 2,400 -0-
Remaining income after savings and taxes 37,119 37,791
</TABLE>

With a tax-deferred plan, you have $672 more
spendable income each year because you are
paying less taxes currently.

*The above chart assumes a 28% marginal
federal tax rate on conventional
contributions. TDA contributions are
generally taxed as ordinary income when
withdrawn. Federal tax penalties generally
apply to distributions before age 59 1/2.
For illustrative purposes only.

FINANCIAL STATEMENTS

Financial statements for
the VAA and the company
appear on the following
pages. For more information
about the financial
statements for the company
provided in this SAI,
please see the cover page
of this SAI.

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