FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C, 485APOS, 1996-02-28

FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C
485APOS, 1996-02-28

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1933 Act Registration No. 2-74459
1940 Act Registration No. 811-3289

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM N-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.

Post-Effective Amendment No. 20

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 18

FRANKLIN LIFE MONEY MARKET
VARIABLE ANNUITY FUND C
(Exact Name of Registrant)

The Franklin Life Insurance Company
(Name of Insurance Company)

#1 Franklin Square, Springfield, Illinois 62713
(Address of Insurance Company's Principal Executive Offices) (Zip Code)

Insurance Company's Telephone Number, including Area Code: (217) 528-2011

STEPHEN P. HORVAT, JR., ESQ.
Senior Vice President,
Secretary and General Counsel
THE FRANKLIN LIFE INSURANCE COMPANY
#1 Franklin Square
Springfield, Illinois 62713
(Name and Address of Agent for Service)

Copy to:
PETER K. INGERMAN, ESQ.
CHADBOURNE & PARKE LLP
30 Rockefeller Plaza
New York, New York 10112

It is proposed that this filing will become effective (check appropriate box)

/ / immediately upon filing pursuant to paragraph (b)

/ / on April 30, 1996 pursuant to paragraph (b)

/ / 60 days after filing pursuant to paragraph (a) (i)

/x/ on April 30, 1996 pursuant to paragraph (a) (i)

/ / 75 days after filing pursuant to paragraph (a) (ii)

/ / on April 30, 1996 pursuant to paragraph (a) (ii) of
Rule 485.

If appropriate, check the following box:

/ / this post-effective amendment designates a new effective
date for a previously filed post-effective amendment

<PAGE>

FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C

Post-Effective Amendment No. 20
Cross Reference Sheet Required by Rule 495(a)

Registration Item Location in Prospectus ("P") or Statement
of Additional Information ("SAI")

Part A INFORMATION REQUIRED IN PROSPECTUS

Item 1. Cover Page . . . . . . . . . . . . . . . . Cover Page (P)
Item 2. Definitions. . . . . . . . . . . . . . . . Special Terms
Item 3. Synopsis or Highlights . . . . . . . . . . Table of Deductions and
Charges; Summary
Item 4. Condensed Financial Information. . . . . . Per Unit Income and Changes
in Accumulation Unit Value
Item 5. General Description of Registrant and
Insurance Company. . . . . . . . . . . . . Cover Page (P); Summary;
Introduction; Description
of the Separate Account;
Investment Policies and
Restrictions of the Fund
Item 6. Management . . . . . . . . . . . . . . . . Management (P)
Item 7. Deductions and Expenses. . . . . . . . . . Summary; Deductions and
Charges under the Contracts
Item 8. General Description of Variable
Annuity Contracts. . . . . . . . . . . . . Summary; Introduction;
Deductions and Charges
under the Contracts-
Transfers to and from Other
Contracts; The Contracts;
Voting Rights; Fundamental
Changes
Item 9. Annuity Period . . . . . . . . . . . . . . Summary; Introduction; The
Contracts-Deferred Variable
Annuity Accumulation
Period; Annuity Period
Item 10. Death Benefit . . . . . . . . . . . . . . The Contracts-Deferred
Variable Annuity
Accumulation Period
Item 11. Purchases and Contract Value. . . . . . . Summary; Deductions and
Charges Under The
Contracts; The Contracts-
General-Deferred Variable
Annuity Accumulation
Period; Distribution of the
Contracts
Item 12. Redemptions . . . . . . . . . . . . . . . Summary; The Contracts-
General-Deferred Variable
Annuity Accumulation Period
Item 13. Taxes . . . . . . . . . . . . . . . . . . Cover Page (P); Summary;
Introduction; Deductions
and Charges Under the
Contracts-Premium Taxes;
The Contracts; Federal
Income Tax Status; Other
Variable Annuity Contracts;
Effect of Non-
Qualification; Limitations
on Settlement Options (SAI)
Item 14. Legal Proceedings . . . . . . . . . . . . Not Applicable
Item 15. Table of Contents of the Statement
of Additional Information . . . . . . . . Table of Contents of the
Statement of Additional
Information

Part B INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION

Item 16. Cover Page. . . . . . . . . . . . . . . . Cover Page (SAI)
Item 17. Table of Contents . . . . . . . . . . . . Table of Contents (SAI)
Item 18. General Information and History . . . . . General Information
Item 19. Investment Objectives and Policies. . . . Investment Policies and
Restrictions of the Fund
(P); Investment Objectives
Item 20. Management. . . . . . . . . . . . . . . . Management (SAI)
Item 21. Investment Advisory and Other Services. . Summary (P); Deductions and
Charges under the Contracts
(P); Management (P);
Management (SAI);
Investment Advisory and
Other Services
Item 22. Brokerage Allocation. . . . . . . . . . . Portfolio Turnover and
Brokerage
Item 23. Purchase and Pricing of Securities
Being Offered . . . . . . . . . . . . . . Summary (P); Introduction
(P); Deductions and Charges
under the Contracts-
Administration Deductions
(P); Distribution of the
Contracts (SAI)
Item 24. Underwriters. . . . . . . . . . . . . . . Summary (P); Deductions and
Charges Under the Contracts
(P); Distribution of the
Contracts (P); Distribution
of the Contracts (SAI)
Item 25. Calculation of Performance Date . . . . . Yield Information
Item 26. Annuity Payments. . . . . . . . . . . . . The Contracts-Annuity
Period (P)
Item 27. Financial Statements. . . . . . . . . . . Per Unit Income and Changes
in Accumulation UnitValues
(P); Financial Statements;
Experts (SAI)

<PAGE>

EXPLANATORY STATEMENT

The Prospectus Supplement set forth on the next page will be attached to the
Prospectus when it is used to offer contracts to participants in the Texas
Optional Retirement Program, as codified in Chapter 830 of Title 8 of the
Government Code of the State of Texas, and is authorized by an order of the
Commission pursuant to Section 6(c) of the Investment Company Act, dated January
8, 1982 (Investment Company Act Release No. 12150).

<PAGE>

SUPPLEMENT DATED APRIL 30, 1996 TO PROSPECTUS
OF FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C
DATED APRIL 30, 1996

The contracts offered by this Prospectus to participants in the Texas Optional
Retirement Program, as codified in Chapter 830 of Title 8 of the Government Code
of the State of Texas, contain restrictions on redemption in addition to those
set forth in the Prospectus under the heading captioned "Deferred Variable
Annuity Accumulation Period-5. Redemption." In accordance with such Chapter,
redemption of contracts required by a participant in the Texas Optional
Retirement Program will not be permitted prior to such participant's termination
of employment in the Texas public institutions of higher education, retirement,
death or attainment of age 70-1/2.

<PAGE>

FRANKLIN LIFE MONEY MARKET

VARIABLE ANNUITY FUND C

PROSPECTUS INDIVIDUAL VARIABLE ANNUITY CONTRACTS

#1 Franklin Square
Springfield, Illinois 62713
Telephone (217) 528-2011

THIS PROSPECTUS OFFERS INDIVIDUAL VARIABLE ANNUITY CONTRACTS FOR USE AS
INDIVIDUAL RETIREMENT ANNUITIES OR IN CONNECTION WITH TRUSTS AND RETIREMENT OR
DEFERRED COMPENSATION PLANS WHICH MAY OR MAY NOT QUALIFY FOR SPECIAL FEDERAL TAX
TREATMENT UNDER THE INTERNAL REVENUE CODE (SEE "FEDERAL INCOME TAX STATUS" ON
PAGES 31-35 FOR MORE INFORMATION). THE BASIC PURPOSE OF THE VARIABLE CONTRACTS
IS TO PROVIDE ANNUITY PAYMENTS WHICH WILL VARY WITH THE INVESTMENT PERFORMANCE
OF FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C (THE "FUND").

THE PRIMARY INVESTMENT OBJECTIVE OF THE FUND IS LONG-TERM COMPOUNDING OF
INCOME THROUGH RETENTION AND REINVESTMENT OF INCOME FROM INVESTMENTS IN A
DIVERSIFIED PORTFOLIO OF SHORT-TERM MONEY MARKET SECURITIES YIELDING A HIGH
LEVEL OF CURRENT INCOME TO THE EXTENT CONSISTENT WITH THE PRESERVATION OF
CAPITAL AND THE MAINTENANCE OF LIQUIDITY. THERE IS NO ASSURANCE THAT THIS
OBJECTIVE WILL BE ATTAINED.

THIS PROSPECTUS SETS FORTH INFORMATION ABOUT THE FUND THAT A PROSPECTIVE
INVESTOR OUGHT TO KNOW BEFORE INVESTING AND SHOULD BE KEPT FOR FUTURE REFERENCE.
ADDITIONAL INFORMATION ABOUT THE FUND AND THE FRANKLIN IS CONTAINED IN A
STATEMENT OF ADDITIONAL INFORMATION, DATED APRIL 30, 1996, WHICH HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST. A STATEMENT OF ADDITIONAL INFORMATION MAY BE OBTAINED
FROM THE EQUITY ADMINISTRATION DEPARTMENT OF THE FRANKLIN BY WRITING TO THE
ADDRESS OR CALLING THE TELEPHONE NUMBER SET FORTH ABOVE OR BY RETURNING THE
REQUEST FORM ON THE BACK COVER OF THIS PROSPECTUS. CERTAIN INFORMATION CONTAINED
IN THE STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED HEREIN BY REFERENCE.
THE TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION IS SET FORTH ON
PAGE 39 OF THIS PROSPECTUS.

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED
BY THE UNITED STATES GOVERNMENT.

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

THE DATE OF THIS PROSPECTUS IS APRIL 30, 1996.

<PAGE>

TABLE OF CONTENTS

Page

Special Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table of Deductions and Charges. . . . . . . . . . . . . . . . . . . . . 5
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Per-Unit Income and Changes in Accumulation Unit Value . . . . . . . . . 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Description of the Separate Account. . . . . . . . . . . . . . . . . . . 11
Deductions and Charges Under the Contracts . . . . . . . . . . . . . . . 11
A. Administration Deductions. . . . . . . . . . . . . . . . . . . . 11
B. Premium Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 12
C. Mortality and Expense Risk Charge. . . . . . . . . . . . . . . . 12
D. Investment Management Service Charge . . . . . . . . . . . . . . 12
E. Contingent Deferred Sales Charge . . . . . . . . . . . . . . . . 12
F. Transfers to and from Other Contracts. . . . . . . . . . . . . . 13
G. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
B. Deferred Variable Annuity Accumulation Period. . . . . . . . . . 16
C. Annuity Period . . . . . . . . . . . . . . . . . . . . . . . . . 23
Investment Policies and Restrictions of the Fund . . . . . . . . . . . . 25
Federal Income Tax Status. . . . . . . . . . . . . . . . . . . . . . . . 31
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
The Franklin. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
The Contracts: Qualified Plans. . . . . . . . . . . . . . . . . . . 31
A. Qualified Pension, Profit-Sharing and Annuity Plans . . . . . 32
B. H. R. 10 Plans (Self-Employed Individuals). . . . . . . . . . 32
C. Section 403(b) Annuities. . . . . . . . . . . . . . . . . . . 32
D. Individual Retirement Annuities . . . . . . . . . . . . . . . 33
The Contracts: Non-Qualified Plans. . . . . . . . . . . . . . . . . 34
Aggregation of Contracts. . . . . . . . . . . . . . . . . . . . . . 34
Income Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . 35
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Distribution of the Contracts. . . . . . . . . . . . . . . . . . . . . . 37
State Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Reports to Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Fundamental Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . 38
Other Variable Annuity Contracts; Effect of Non-Qualification. . . . . . 38
Yield Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Table of Contents of Statement of Additional Information . . . . . . . . 39
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH AN OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON HAS BEEN AUTHORIZED BY THE
FRANKLIN LIFE INSURANCE COMPANY, FRANKLIN FINANCIAL SERVICES CORPORATION OR
FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C TO MAKE ANY REPRESENTATIONS
IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN ANY AUTHORIZED SUPPLEMENTAL SALES MATERIAL.

<PAGE>

SPECIAL TERMS

The following is a glossary of certain terms used in this Prospectus:

ACCUMULATION UNIT-A measure used to determine the value of a Contract Owner's
interest in the Fund prior to the initial Annuity Payment Date.

ANNUITY PAYMENT DATE-The date the first monthly Annuity Payment is to be made to
the Variable Annuitant, and the same day of each month thereafter so long as the
annuity is due. Depending on the Settlement Option elected, Annuity Payment
Dates may occur on a periodic basis other than monthly.

ANNUITY PAYMENTS-Periodic payments made to a Variable Annuitant pursuant to a
Contract. In certain circumstances, Annuity Payments may be paid to a
Beneficiary after the death of a Variable Annuitant.

ANNUITY UNIT-A measure used to determine the value of Annuity Payments.

BANK DRAFT-A draft preauthorized by the Contract Owner and a bank of his or her
selection in the amount of a periodic Stipulated Payment, which, at the time
each periodic Stipulated Payment is due, is submitted by The Franklin directly
to such bank for payment.

BENEFICIARY-The person or persons designated by the Contract Owner to whom any
payment due on death is payable.

CASH VALUE-The value of all Accumulation Units or Annuity Units attributable to
a Contract.

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

CONTRACT-An individual variable annuity contract issued by Franklin Life Money
Market Variable Annuity Fund C that is offered by this Prospectus.

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

CONTRACT OWNER-Except in cases where the Contract is issued to a trustee of a
qualified employees' trust or pursuant to a qualified annuity plan, the Contract
Owner is the individual Variable Annuitant to whom the Contract is issued. In
cases where the Contract is issued to a trustee of a qualified employees' trust
or pursuant to a qualified annuity plan, the Contract Owner will be respectively
the trustee or the employer establishing such trust or plan, and the employee
named as the Variable Annuitant of such Contract is referred to herein as the
employee. When the term "Contract Owner" is used in the context of voting
rights, it includes the owners of all contracts which depend in whole or in part
on the investment performance of the Fund.

CONTRACT YEAR-Each year starting with the Effective Date and each Contract
Anniversary thereafter.

DEFERRED VARIABLE ANNUITY-An annuity contract which provides for Annuity
Payments to commence at some future date. Included are periodic payment deferred
contracts and single payment deferred contracts.

EFFECTIVE DATE-The date shown on the Schedule Page of the Contract as the date
the first Contract Year begins.

FIXED-DOLLAR ANNUITY-An annuity contract which provides for Annuity Payments
which remain fixed as to dollar amount throughout the Annuity Payment period.

<PAGE>

HOME OFFICE-The Home Office of The Franklin located at #1 Franklin Square,
Springfield, Illinois 62713.

IMMEDIATE VARIABLE ANNUITY-An annuity contract which provides for Annuity
Payments to commence immediately rather than at some future date.

INDIVIDUAL RETIREMENT ANNUITY-An annuity contract described in Section 408(b) of
the Code. Individual Retirement Annuities may also qualify as Simplified
Employee Pensions.

NON-QUALIFIED CONTRACTS-Contracts issued under Non-Qualified Plans.

NON-QUALIFIED PLANS-Retirement or deferred compensation plans or arrangements
which do not receive favorable tax treatment under the Code.

PERIODIC STIPULATED PAYMENT CONTRACT-An annuity contract which provides that
payments made to purchase the contract will be made in periodic instalments
rather than in a single sum.

QUALIFIED CONTRACTS-Contracts issued under Qualified Plans.

QUALIFIED PLANS-Retirement plans which receive favorable tax treatment under the
Code and which are described on page 10, below.

ROLLOVER CONTRIBUTION-A transfer pursuant to Sections 402(c)(1), 402(c)(9),
403(a)(4), 403(b)(8) or 408(d)(3) of the Code.

SETTLEMENT OPTION OR OPTIONS-Alternative terms under which payment of the
amounts due in settlement of the Contracts may be received.

SIMPLIFIED EMPLOYEE PENSION-An Individual Retirement Annuity which meets the
additional requirements of Section 408(k) of the Code.

SINGLE STIPULATED PAYMENT CONTRACT-An annuity contract which provides that the
total payment to purchase the contract will be made in a single sum rather than
in periodic instalments. Included are single payment immediate contracts and
single payment deferred contracts.

STIPULATED PAYMENTS-The payment or payments provided to be made to The Franklin
under a Contract.

THE FRANKLIN-The Franklin Life Insurance Company, an Illinois legal reserve
stock life insurance company.

VALUATION DATE-Each date as of which the Accumulation Unit value is determined.
This value is determined on each day (other than a day during which no Contract
or portion thereof is tendered for redemption and no order to purchase or
transfer a Contract is received by the Fund) in which there is a sufficient
degree of trading in the securities in which the Fund invests that the value of
an Accumulation Unit might be materially affected by changes in the value of the
Fund's investments, as of the close of trading on that day.

VALUATION PERIOD-The period commencing on a Valuation Date and ending on the
next Valuation Date.

VARIABLE ANNUITANT-Any natural person with respect to whom a Contract has been
issued and a Variable Annuity has been, will be or (but for death) would have
been effected thereunder. In certain circumstances, a Variable Annuitant may
elect to receive Annuity Payments on a fixed-basis or a combination of a fixed
and variable basis.

VARIABLE ANNUITY-An annuity contract which provides for a series of periodic
annuity payments, the amounts of which may increase or decrease as a result of
the investment experience of a separate account.

<PAGE>

TABLE OF DEDUCTIONS AND CHARGES

Contract Owner Transaction Expenses

Deferred Sales Load (as a percentage of the lesser of (i) the Cash Value of
the part of the Contract surrendered or (ii) the Stipulated Payments made
during the immediately preceding 72 months represented by the part of the
Contract surrendered (or the Stipulated Payment in the case of a Single
Stipulated Payment Contract))

Contract Total Partial
Year Redemption Redemption
-------------------------------------
<S> <C> <C> <C>
Single Stipulated Payment Contract 1 6.00% 6.00%
2 6.00% 6.00%
3 4.00% 4.00%
4 2.00% 4.00%
5 and thereafter 0.00% 4.00%

Periodic Stipulated Payment Contract 1 8.00% 8.00%
2 8.00% 8.00%
3 8.00% 8.00%
4 6.00% 6.00%
5 4.00% 4.00%
6 2.00% 4.00%
7 and thereafter 0.00% 4.00%
</TABLE>

Administration Fee (as a charge against
purchase payments)

<TABLE>

<S> <C>
Single Stipulated Payment Contract $100

Periodic Stipulated Payment Contract $20 per Contract Year plus $1 per Stipulated Payment
($.50 if by Bank Draft or by employer or military
preauthorized automatic deduction)
</TABLE>

Annual Expenses
(as a percentage of average net assets)

<TABLE>

<S> <C>
Management Fees 0.38%

Mortality and Expense Risk Fees
Mortality Fees 0.90%
Expense Risk Fees 0.17%
-----

Total Annual Expenses 1.44%

</TABLE>

Example

If you surrender your contract at the
end of the applicable time period: 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming 5% annual
return on assets:

<PAGE>

Single Stipulated Payment Contract $ 169 $ 181 $ 171 $ 255

Periodic Stipulated Payment Contracts: $ 181 $ 191 $ 221 $ 359

If you do not surrender your contract: 1 year 3 years 5 years 10 years

You would pay the following expenses
on a $1,000 investment, assuming 5%
annual return on assets:

Single Stipulated Payment Contract $ 113 $ 141 $ 171 $ 255

Periodic Stipulated Payment Contracts: $ 36 $ 106 $ 177 $ 359

</TABLE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The Table of Deductions and Charges is intended to assist Contract Owners in
understanding the various fees and expenses that they bear directly or
indirectly. Additional deductions may be made from Stipulated Payments for any
premium taxes payable by The Franklin on the consideration received from the
sale of the Contracts. See "Premium Taxes," p. 12, below. For a more detailed
description of such fees and expenses, see "Deductions and Charges under the
Contracts," pp. 11-14, below. The example assumes that a single Stipulated
Payment of $1,000 is made at the beginning of the periods shown. (It should be
noted that The Franklin will not actually issue a Single Stipulated Payment
Contract unless the single payment is at least $2,500.) This assumption applies
even with respect to Periodic Stipulated Payment Contracts, which would normally
require additional payments. The example also assumes a constant investment
return of 5% and the expenses might be different if the return of the Fund
averaged 5% over the periods shown but fluctuated during such periods. The
amounts shown in the example represent the aggregate amounts that would be paid
over the life of a Contract if the Contract were surrendered at the end of the
applicable time periods.

<PAGE>

SUMMARY
THE CONTRACTS

The individual variable annuity contracts (the "Contracts") being offered by
this Prospectus are for use as Individual Retirement Annuities or in connection
with trusts and retirement or deferred compensation plans which may or may not
qualify for special tax treatment under the Code. See "Federal Income Tax
Status," pp. 31-35, below. The basic purpose of the Contracts is to provide
Annuity Payments which will vary with the investment performance of Franklin
Life Money Market Variable Annuity Fund C (the "Fund"). The Contracts provide
Annuity Payments for life commencing on an initial Annuity Payment Date selected
by the Contract Owner; other Settlement Options are provided. See
"Introduction," p. 10, and "The Contracts," pp. 14-25, below. At any time
within 10 days after receipt of a Contract, the Contract Owner may return the
Contract and receive a refund of any premium paid on the Contract. See "Right to
Revocation of Contract," p. 16, below.

THE FUND AND ITS INVESTMENT OBJECTIVES

The Fund is an open-end diversified management investment company. The
primary investment objective of the Fund is long-term compounding of income
through retention and reinvestment of income from investments in a diversified
portfolio of short-term money market securities, yielding a high level of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity. There is no assurance that this objective will be
attained. In keeping with the primary investment objective of investing in
short-term money market securities, at least 80% of the Fund's portfolio will be
invested in securities with maturities or remaining maturities of one year or
less and not more than 20% will be invested in securities with maturities or
remaining maturities of between one and two years. While preservation of capital
is a primary investment objective of the Fund and the money market securities in
which the Fund invests generally are considered to have low principal risk, such
securities are not completely risk-free. There is the risk of the failure of
issuers to meet their principal and interest obligations. Commercial paper
generally carries the highest risk of money market securities. The Fund may
invest in Eurodollar C.D.'s and in securities issued by the Government of Canada
and Canadian banks, which involve certain risks relating to marketability,
possible adverse political and economic developments and possible restrictions
on international currency transactions. See "Investment Policies and
Restrictions of the Fund," pp. 25-30, below.

SPECIAL INVESTMENT CONSTRAINTS

It is anticipated that the combination of the restrictions on the amount that
the Fund may invest in the securities of any one issuer and the relatively small
and decreasing size of the Fund's assets will make it more difficult for the
Fund's investment adviser to secure appropriate commercial paper investments,
which have historically constituted a substantial portion of the Fund's
investments. It is possible that the shrinking pool of commercial paper
investments available to the Fund due to its size may impair the future
investment performance of the Fund. See "Investment Policies and Restrictions
of the Fund - Special Investment Contraints," p. 30, below.

INVESTMENT ADVISER; PRINCIPAL UNDERWRITER

The Franklin Life Insurance Company ("The Franklin"), an Illinois legal
reserve stock life insurance company, acts as investment adviser to the Fund.
The Franklin is engaged in the writing of ordinary life policies, annuities and
income protection policies. Franklin Financial Services Corporation, a wholly-
owned subsidiary of The Franklin, is the principal underwriter for the Fund. The
Franklin is a wholly-owned subsidiary of American General Corporation. See
"Investment Management Service Charge," p. 12, and "Distribution of the
Contracts," p. 37, below.

DEDUCTIONS AND CHARGES

The deductions and charges applicable to a Contract are illustrated in the
Table of Deductions and Charges that appears immediately before this summary.
There are no deductions for sales charges made from Stipulated Payments under
the Contracts. However, a contingent deferred sales charge, applied against the
lesser of the Cash Value or Stipulated Payments made during the immediately
preceding 72 months, is deducted in the event of certain redemptions. In the
case of Periodic Stipulated Payment Contracts, such charges for total
redemptions start at 8% for the first three Contract Years and then decline by
2% increments per year through the sixth Contract Year, with no

<PAGE>

such charge being imposed after the end of the sixth Contract Year. In the case
of Single Stipulated Payment Contracts, such charges for total redemptions start
at 6% for the first two Contract Years and then decline by 2% increments per
year through the fourth Contract Year, with no such charge being imposed after
the end of the fourth Contract Year. The contingent deferred sales charges
applied to partial redemptions are identical to those applied to total
redemptions, except that such charges remain at a constant 4% subsequentto the
fifth Contract Year in the case of Periodic Stipulated Payment Contracts, and
the third Contract Year in the case of Single Stipulated Payment Contracts.
Contingent deferred sales charges are waived in the case of partial redemptions
of an amount in any 12-month period up to 10% of Cash Value as of the date of
the first partial redemption during such 12-month period, death of the Variable
Annuitant and where proceeds of a total redemption are used to purchase another
Variable Annuity, Fixed-Dollar Annuity or life insurance contract issued by The
Franklin. See "Contingent Deferred Sales Charge," pp. 12-13, "Redemption," p.
18, and "Transfers to and from Other Contracts," pp. 13-14, below.

A deduction of $20 per Contract Year (subject to increase by The Franklin to
a maximum of $30 per Contract Year) and a transaction fee of $1.00 per
Stipulated Payment ($.50 if by Bank Draft or by employer or military
preauthorized automatic deduction from compensation) in the case of Periodic
Stipulated Payment Contracts, and a one-time deduction of $100 in the case of
Single Stipulated Payment Contracts, is made from Stipulated Payments for
administrative expenses. However, administration deductions are waived with
respect to funds transferred to a Contract from another totally redeemed
Variable Annuity or Fixed-Dollar Annuity issued by The Franklin. Any applicable
state or local premium taxes on the Stipulated Payments (currently up to 5%) are
also deducted from the single or periodic Stipulated Payments. The amount
remaining after all such deductions and fees is allocated to the Fund. See
"Redemption," p. 18, "Administration Deductions," p. 11, "Contingent Deferred
Sales Charge," p. 12, and "Premium Taxes," p. 12, below.

The charges for annuity rate and mortality assurances, expense assurances and
investment management services currently aggregate 1.440% on an annual basis and
are made daily against the net asset value of the Fund. These charges consist of
.900% for The Franklin's assurance of annuity rates or mortality factors, .165%
(subject to increase by The Franklin up to a maximum of .850%) for The
Franklin's assurances of expense factors, and .375% (subject to increase by The
Franklin up to a maximum of .500%) for investment management services by The
Franklin. See "Mortality and Expense Risk Charge," p. 12, and "Investment
Management Service Charge," p. 12, below.

MINIMUM PERMITTED INVESTMENT

Subject to limited exceptions, the minimum single Stipulated Payment is
$2,500. The minimum Periodic Stipulated Payment Contract sold is one under which
the annual payments are $360 and each monthly Stipulated Payment is $30. See
"Purchase Limits," pp. 15-16, below.

REDEMPTION

A Contract Owner under a Deferred Variable Annuity Contract, prior to the
death of the Variable Annuitant and prior to the Contract's initial Annuity
Payment Date, may, subject to any limitations on early settlement contained in
an applicable Qualified Plan and subject to limitations on early withdrawals
imposed in connection with Section 403(b) annuity purchase plans (see "Federal
Income Tax Status," pp. 31-35, below), redeem all or part of the Contract and
receive the Cash Value (equal to the number of Accumulation Units credited to
the part of the Contract redeemed times the value of an Accumulation Unit at the
end of the Valuation Period in which the request for redemption is received)
less any applicable contingent deferred sales charge, unpaid administration
deductions, and federal income tax withholding. Partial redemptions must be in
amounts not less than $500. For information as to Accumulation Units, see "Value
of the Accumulation Unit," p. 17, below. Subject to certain limitations, the
Contract Owner may elect to have all or a portion of the amount due upon a total
redemption of a Contract applied under certain Settlement Options or applied
toward the purchase of other annuity or insurance products offered by The
Franklin. Federal tax penalties may apply to certain redemptions. See
"Redemption," p. 18, "Contingent Deferred Sales Charge," pp. 12-13, "Transfers
to and from Other Contracts," pp. 13-14, "Settlement Options," pp. 20-23, and
"Federal Income Tax Status," pp. 31-35, below.

TERMINATION BY THE FRANKLIN

The Franklin reserves the right to terminate Contracts if Stipulated Payments
are less than $360 in each of three consecutive Contract Years (excluding the
first Contract Year) and if the Cash Value is less than $500 at the end of such
three-year period. Different termination provisions apply in the case of
Individual Retirement Annuities. See "Termination by The Franklin," p. 16,
below.

<PAGE>

FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C
SUPPLEMENTARY INFORMATION

Per-Unit Income and Changes in Accumulation Unit Value
(Selected data and ratios for an Accumulation Unit
outstanding throughout each year)

The financial information in this table for the year ended December 31, 1995 has
been audited by Ernst & Young LLP, independent auditors. The financial
information in this table for each of the seven years in the period ended
December 31, 1994 was audited by Coopers & Lybrand L.L.P., independent
accountants. The financial information in this table for each of the two years
in the period ended December 31, 1987 was audited by Ernst & Young LLP,
independent auditors. This table should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information.

YEAR ENDED DECEMBER 31
- ----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income $ 1.203 $ .846 $ .617 $ .746 $ 1.140 $ 1.501 $ 1.542 $ 1.186 $ 1.001 $ .956

Expenses .309 .303 .294 .286 .278 .265 .244 .230 .218 .233
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income .894 .543 .323 .460 .862 1.236 1.298 .956 .783 .723
Net increase in
accumulation unit value .894 .543 .323 .460 .862 1.236 1.298 .956 .783 .723
Accumulation unit value:
Beginning of year 21.136 20.593 20.270 19.810 18.948 17.712 16.414 15.458 14.675 13.952
End of year $22.030 $21.136 $20.593 $20.270 $19.810 $18.948 $17.712 $16.414 $15.458 $14.675
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------

Ratio of expenses to
average net assets 1.44% 1.44% 1.44% 1.44% 1.44% 1.44% 1.44% 1.44% 1.44% 1.63%
Ratio of net investment
income to average net assets 4.17% 2.58% 1.58% 2.32% 4.46% 6.71% 7.65% 5.98% 5.18% 5.07%
Number of accumulation
units outstanding at end of
year 104,641 132,646 159,929 210,310 247,150 270,271 307,850 362,718 426,830 539,687
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

FINANCIAL STATEMENTS

The financial statements for the Fund and The Franklin and the reports of the
independent auditors and accountants for the Fund and The Franklin are included
in the Statement of Additional Information.

<PAGE>

INTRODUCTION

FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C

INDIVIDUAL VARIABLE ANNUITY CONTRACTS ISSUED BY
THE FRANKLIN LIFE INSURANCE COMPANY

The Qualified and Non-Qualified Contracts offered by this Prospectus are
designed primarily to assist in retirement planning for individuals. The
Contracts provide Annuity Payments for life commencing on a selected Annuity
Payment Date; other Settlement Options are available. The amount of the Annuity
Payments will vary with the investment performance of the assets of the Fund, a
separate account which has been established by The Franklin under Illinois
insurance law. For the primary investment objective of the Fund, see "Investment
Policies and Restrictions of the Fund," pp. 25-30, below.

The Qualified Contracts described in this Prospectus will not knowingly be
sold other than for use:

(1) in connection with 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;

(2) in connection with qualified pension, profit-sharing and annuity plans
established by self-employed persons ("H.R. 10 Plans");

(3) in connection with annuity purchase plans adopted by public school
systems and certain tax-exempt organizations pursuant to Section 403(b) of the
Code; or

(4) as Individual Retirement Annuities described in Section 408(b) of the
Code, including Simplified Employee Pensions described in Section 408(k) of the
Code.

Pursuant to this Prospectus, The Franklin offers two types of Qualified and
Non-Qualified Contracts: those under which Annuity Payments to the Variable
Annuitant commence immediately-"Immediate Variable Annuities" - and those under
which Annuity Payments to the Variable Annuitant commence in the future-
"Deferred Variable Annuities." Deferred Variable Annuities may be purchased
either with periodic Stipulated Payments or with a single Stipulated Payment,
while Immediate Variable Annuities may only be purchased with a single
Stipulated Payment. Periodic Stipulated Payment Contracts are written to provide
various agreed periods during which the Stipulated Payments are to be made, with
a minimum of two years.

The Franklin is a legal reserve stock life insurance company organized under
the laws of the State of Illinois in 1884. The Franklin issues individual life
insurance, annuity and accident and health insurance policies, group annuities
and group life and health insurance and offers a variety of whole life, life,
retirement income and level and decreasing term insurance plans. Its Home Office
is located at #1 Franklin Square, Springfield, Illinois 62713.

On January 31, 1995, American General Corporation ("American General")
through its wholly-owned subsidiary, AGC Life Insurance Company, acquired The
Franklin from American Brands, Inc. American General is one of the nation's
largest diversified financial services organizations with assets of $61
billion and shareholders' equity of $5.8 billion. Founded in 1926 and
headquartered in Houston, it is a leading provider of retirement annuities,
consumer loans, and life insurance. The address of American General is 2929
Allen Parkway, Houston, Texas 77019-2155.

The discussion of Contract terms herein in many cases summarizes those terms.
Reference is made to the full text of the Contract forms, which are filed with
the Securities and Exchange Commission as exhibits to the Registration Statement
under the Securities Act of 1933 and the Investment Company Act of 1940 of which
this Prospectus is a part. The exercise of certain of the Qualified Contract
rights herein described may be subject to the terms and conditions of any
Qualified Plan under which such Qualified Contract may be purchased. This
Prospectus contains no information concerning any such Qualified Plan. Further
information relating to some Qualified Plans may be obtained from the disclosure
documents required to be distributed to employees under the Employee Retirement
Income Security Act of 1974.

<PAGE>

DESCRIPTION OF THE SEPARATE ACCOUNT

The Fund was established as a separate account on July 23, 1981 by resolution
of the Board of Directors of The Franklin pursuant to the provisions of the
Illinois Insurance Code. The Fund is an open-end diversified management
investment company registered with the Securities and Exchange Commission under
the Investment Company Act of 1940. Such registration does not involve
supervision of the management or investment practices or policies of the Fund or
of The Franklin by the Commission. The Board of Managers of the Fund must be
elected annually by Contract Owners. A majority of the members of the Board of
Managers are persons who are not otherwise affiliated with The Franklin. See
"Management," pp. 35-36, below. The Fund meets the definition of a "Separate
Account" under the federal securities laws.

Under the provisions of the Illinois Insurance Code, the income, gains or
losses of the Fund are credited to or charged against the amounts allocated to
the Fund in accordance with the terms of the Contracts, without regard to the
other income, gains or losses of The Franklin. The assets of the Fund are not
chargeable with liabilities arising out of The Franklin's other business
activities, including liabilities of any other separate account which may be
established. These assets are held with relation to the Contracts described in
this Prospectus and such other Variable Annuity contracts as may be issued by
The Franklin and designated by it as participating in the Fund. All obligations
arising under the Contracts, including the promise to make Annuity Payments, are
general corporate obligations of The Franklin. Accordingly, all of The
Franklin's assets (except those allocated to other separate accounts which have
been or may be established) are available to meet its obligations and expenses
under the Contracts participating in the Fund.

The Franklin is taxed as a "life insurance company" under the Code. The Fund
is subject to tax as part of The Franklin for federal income tax purposes.
However, the operations of the Fund are considered separately from the other
operations of The Franklin in computing The Franklin's tax liability and the
Fund is not affected by federal income taxes paid by The Franklin with respect
to its other operations. The operations of the Fund are treated separately from
the other operations of The Franklin for accounting and financial statement
purposes. Under existing law, no federal income tax is payable by The Franklin
on investment income and realized capital gains of the Fund. See "Federal Income
Tax Status," pp. 31-35, below.

DEDUCTIONS AND CHARGES UNDER THE CONTRACTS

A. ADMINISTRATION DEDUCTIONS

Deductions from Stipulated Payments will be made as follows for
administrative expenses with respect to the Contracts and the Fund such as
preparation of the Contracts, custodial and transfer fees, salaries, rent,
postage, telephone and legal, accounting and periodic reporting fees:

(1) Under Single Stipulated Payment Contracts, a one-time deduction of $100.

(2) Under Periodic Stipulated Payment Contracts, a deduction of $20 per
Contract Year (subject to increase at any time by The Franklin to a maximum of
$30 per Contract Year) and a transaction fee of $1.00 per Stipulated Payment
($.50 if by Bank Draft or by employer or military preauthorized automatic
deduction from compensation).

The above deductions for administrative expenses, and charges for mortality
and expense risk assurances discussed under "Mortality and Expense Risk Charge,"
p. 12, below, are made pursuant to an Administration Agreement dated December 3,
1981 between the Fund and The Franklin. The Administration Agreement is
described under "Investment Advisory and Other Services" in the Statement of
Additional Information.

The administration deductions are designed to cover the actual expenses of
administering the Contracts and the Fund, and The Franklin does not expect to
realize a profit by virtue of these deductions. The aggregate dollar amounts of
the administration deductions for the fiscal years ended December 31, 1993, 1994
and 1995 were $2,560, $1,600 and $1,060, respectively.

<PAGE>

B. PREMIUM TAXES

At the time any premium taxes are payable by The Franklin on the
consideration received from the sale of the Contracts, the amount thereof will
be deducted from the Stipulated Payments. Premium taxes ranging up to 5% as of
February 7, 1996 are charged by various jurisdictions in which The Franklin is
transacting business and in which it may, after appropriate qualification, offer
Contracts.

C. MORTALITY AND EXPENSE RISK CHARGE

While Annuity Payments will reflect the investment performance of the Fund,
they will not be affected by adverse mortality experience or by any excess in
the actual expenses of the Contracts and the Fund over the maximum
administration deductions provided for in the Contracts. The Franklin assumes
the risk that Annuity Payments will continue for a longer period than
anticipated because the Variable Annuitant lives longer than expected (or the
Variable Annuitants as a class do so) and also assumes the risk that the
administration deductions may be insufficient to cover the actual expenses of
the administration of the Contracts and of the Fund (except those expenses
listed under "Investment Management Service Charge," immediately below, which
the Fund will bear). The Franklin assumes these risks for the duration of the
Contract and the annuity rate, mortality and expense risk deductions and charges
set forth herein will not be increased beyond the stated maximum with respect
thereto regardless of the actual mortality and expense experience. The mortality
risk charge is imposed regardless of whether or not the payment option selected
involves a life contingency.

For assuming these risks, The Franklin imposes a daily charge against the
value of the Accumulation Unit and the Annuity Unit. (For further information as
to the Accumulation Unit and the Annuity Unit, see "Deferred Variable Annuity
Accumulation Period" and "Annuity Period," pp. 16-23 and pp. 23-25,
respectively, below.) These charges are at the current combined annual rate of
1.065% (.002918% on a daily basis), of which .900% is for annuity rate and
mortality assurances and .165% (subject to increase at any time by The Franklin
up to a maximum of 1.750%) is for expense assurances.

During 1993, 1994 and 1995, The Franklin earned and was paid $40,329, $32,103
and $27,136, respectively, by reason of these charges. Such charges during 1995
were equal to 1.059% of average net assets.

D. INVESTMENT MANAGEMENT SERVICE CHARGE

The Franklin acts as investment manager of the Fund. For acting as such, The
Franklin makes a charge against the value of the Accumulation Unit and of the
Annuity Unit at an annual rate of up to .500%. The Franklin has agreed to forego
initially a portion of this charge and currently makes a charge against the
value of the Accumulation Unit and of the Annuity Unit at the annual rate of
.375% (.001027% on a daily basis). This charge may be increased up to .500% on
an annual basis only upon at least 30 days' prior written notice to Contract
Owners. The investment management services are rendered and the charge is made
pursuant to an Investment Management Agreement executed and dated January 31,
1995, pursuant to approval by the Contract Owners at their annual meeting held
on April 17, 1995, and to be annually renewed by a vote of the Board of Managers
of the Fund commencing in 1997. The Investment Management Agreement is described
under "Investment Advisory and Other Services" in the Statement of Additional
Information.

During 1993, 1994 and 1995, The Franklin earned and was paid $14,194, $11,299
and $9,551, respectively, under the Investment Management Agreement then in
effect.

E. CONTINGENT DEFERRED SALES CHARGE

There are no deductions for sales charges made from Stipulated Payments under
the Contracts. However, commissions on the sale of the Contracts are paid by The
Franklin to agents of Franklin Financial Services Corporation pursuant to an
Agreement dated December 3, 1981. See "Distribution of the Contracts" in the
Statement of Additional Information. In addition, Franklin Financial Services
Corporation incurs certain sales expenses, such as sales literature preparation
and related costs, in connection with the sale of the Contracts pursuant to a
Sales Agreement dated January 31, 1995. Because the Contracts are normally
purchased for the long term, it is expected that these costs will be recovered
over time. If, however, a Contract is totally or partially redeemed in certain
circumstances prior to the initial Annuity Payment Date, a means is provided for
Franklin Financial Services Corporation to recover sales expenses at that time.

<PAGE>

Upon redemption of a Periodic Stipulated Payment Contract, the charges
determined as follows will be applied against the lesser of the Cash Value of
the part of the Contract redeemed or the Stipulated Payments made during the
immediately preceding 72 months represented by that part of the Contract
redeemed:

Contract Percentage Charge
Year Total Redemption Partial Redemption
- --------------------------------------------------------------------------------
<S> <C> <C>
1 8% 8%
2 8% 8%
3 8% 8%
4 6% 6%
5 4% 4%
6 2% 4%
7 and thereafter 0% 4%

</TABLE>

Upon redemption of a Single Stipulated Payment Contract, the charges
determined as follows will be applied against the lesser of the Cash Value of
the part of the Contract redeemed or the Stipulated Payment:

Contract Percentage Charge
Year Total Redemption Partial Redemption
- --------------------------------------------------------------------------------
<S> <C> <C>
1 6% 6%
2 6% 6%
3 4% 4%
4 2% 4%
5 and thereafter 0% 4%

</TABLE>

The above charges are not, however, applied to distributions made upon the
death of the Variable Annuitant, to partial redemption of an amount in any
twelve-month period up to 10% of the Cash Value as of the date of the first
partial redemption in such twelve-month period, or to certain transfers
described below. Partial redemptions must be in amounts not less than $500.

In no event will the total amount of contingent deferred sales charges paid
under a Contract exceed 9% of total Stipulated Payments made under such Contract
in the first twelve Contract Years (or such fewer Contract Years over which
Stipulated Payments are made).

The deferred sales charges were $9,195, $1,172 and $108 during 1993, 1994 and
1995, respectively. Franklin Financial Services Corportion paid no allowances to
unaffiliated dealers in connection with the sale of the Contracts during 1993,
1994 and 1995.

F. TRANSFERS TO AND FROM OTHER CONTRACTS

Subject to any limitations in a Qualified Plan, Contracts may be redeemed
prior to the death of the Variable Annuitant and the initial Annuity Payment
Date and the Cash Value (less the required amount of federal income tax
withholding, if any) may be applied to the purchase of other Variable Annuities,
Fixed-Dollar Annuities or life insurance contracts issued by The Franklin. If a
Contract is fully redeemed and such Cash Value is immediately applied to the
purchase of such other contracts, no contingent deferred sales charge for
redeeming the Fund C Contract will apply. Any sales deductions under such other
contracts will apply to amounts transferred as if such amounts were a single
stipulated payment under such other contracts (however, total sales deductions
on the transferred funds will in no instance exceed 9% of all Stipulated
Payments made under the Fund C Contract with respect to such transferred funds);
provided, however, that if such a transfer occurs after the sixth Contract Year
in the case of Periodic Stipulated Payment Contracts or the fourth Contract Year
in the case of Single Stipulated Payment Contracts, The Franklin will waive the
sales deductions of such other contract with respect to such transferred
funds . In addition, in all instances of permitted transfers set forth
above, any administration deductions

<PAGE>

of such other contracts will be waived with respect to such transferred funds.
However, any new periodic stipulated payments made under such other contracts
will be subject to the normal sales and administration deductions applicable to
periodic stipulated payments under such other contracts.

Fund C Contracts also may be purchased with the proceeds, upon total
redemption prior to the annuity payment date thereunder, of another Variable
Annuity or Fixed-Dollar Annuity issued by The Franklin, and subject to the
minimum investment limitations of the Fund C Contract. The contingent deferred
sales charge will be waived with respect to funds so transferred to the Fund C
Contract and amounts representing the appreciated value thereof. In addition,
the administration deductions of Fund C will be waived with respect to funds so
transferred to the Fund C Contract. In calculating the contingent deferred sales
charges in such instances, transferred funds (with respect to which such charges
are waived) will be considered to have been redeemed first. Upon redemptions
under a Periodic Stipulated Payment Fund C Contract, however, a contingent
deferred sales charge will be applied as described above with respect to any new
periodic Stipulated Payments made on the Fund C Contract after such transfer is
made; such charge will be applied against the lesser of (a) the Cash Value of
the part of the Contract redeemed represented by such new periodic Stipulated
Payments or (b) the new periodic Stipulated Payments made during the immediately
preceding 72 months represented by that part of the Contract redeemed. Any new
periodic Stipulated Payments made on the Fund C Contract after such transfer is
made will be subject to the applicable administration deductions of Fund C.

It is not clear whether gain or loss will be recognized for federal income
tax purposes upon the redemption of a Fund C Contract, another annuity contract
or life insurance contract issued by The Franklin for purposes of applying the
redemption proceeds to the purchase of another contract issued by The Franklin.
Federal tax penalties may also apply to such redemptions. Since the income and
withholding tax consequences of such redemption and purchase depend on many
factors, any person contemplating redemption of a Fund C Contract or another
contract issued by The Franklin for purposes of purchasing a different contract
issued by The Franklin is advised to consult a qualified tax advisor prior to
the time of redemption.

G. MISCELLANEOUS

The Fund's total expenses for 1995 were $36,687, or 1.44% of average net
assets during 1995.

THE CONTRACTS

A. GENERAL

Certain significant provisions of the Contracts and administrative practices
of The Franklin with respect thereto are discussed in the following paragraphs.

Contract Owner inquiries may be directed to the Equity Administration
Department of The Franklin at the address or telephone number set forth on the
cover of this Prospectus.

1. ANNUITY PAYMENTS

Variable Annuity Payments are determined on the basis of (i) an annuity rate
table specified in the Contract, and (ii) the investment performance of the
Fund. The amount of the Annuity Payments will not be affected by mortality
experience adverse to The Franklin or by an increase in The Franklin's expenses
related to the Fund or the Contracts in excess of the expense deductions
provided for in the Contracts. The Variable Annuitant under an annuity with a
life contingency or one providing for a number of Annuity Payments certain will
receive the value of a fixed number of Annuity Units each month, determined as
of the initial Annuity Payment Date on the basis of the applicable annuity rate
table and the then value of his or her account. The value of Annuity Units, and
thus the amounts of the monthly Annuity Payments, will, however, reflect
investment gains and losses and investment income occurring after the initial
Annuity Payment Date, and thus the amount of the Annuity Payments will vary with
the investment experience of the Fund. See "Annuity Period," pp. 23-25, below.

<PAGE>

Court decisions, particularly ARIZONA GOVERNING COMMITTEE v. NORRIS, have
held that the use of gender-based mortality tables to determine benefits under
an employer-related retirement or benefit plan may violate Title VII of the
Civil Rights Act of 1964 ("Title VII"). These cases indicate that plans
sponsored by employers subject to Title VII generally may not provide different
benefits for similarly-situated men and women.

The Contracts described in this Prospectus incorporate annuity rate tables
which reflect the age and sex of the Variable Annuitant and the Settlement
Option selected. Such sex-distinct tables continue to be appropriate for use,
for example, under Contracts which are not purchased in connection with an
"employer-related" plan subject to NORRIS (such as individual retirement
annuities not sponsored by an employer). However, in order to enable subject
employers to comply with NORRIS, The Franklin will provide "unisex" annuity rate
tables for use under Contracts purchased in connection with "employer-related"
plans. Persons contemplating purchase of a Contract, as well as current Contract
Owners, should consult a legal advisor regarding the applicability and
implications of NORRIS in connection with their purchase and ownership of a
Contract.

2. INCREASE OR DECREASE BY CONTRACT OWNER IN AMOUNT OR NUMBER OF PERIODIC
STIPULATED PAYMENTS

The Contract Owner may increase the periodic Stipulated Payments under a
Periodic Stipulated Payment Contract (except in the case of an Individual
Retirement Annuity, which cannot be increased above the amounts described under
"Purchase Limits," immediately below) up to an amount on an annual basis equal
to twice the amount of the first Stipulated Payment on an annual basis.
Similarly, subject to the limitations described under "Purchase Limits,"
immediately below, the amount of a periodic Stipulated Payment may be decreased
by the Contract Owner on any date a Stipulated Payment is due.

The Contract Owner may continue making Stipulated Payments after the agreed
number of Stipulated Payments has been made, but The Franklin will not accept
Stipulated Payments after age 75. Submission of a Stipulated Payment in an
amount different from that of the previous payment, subject to the aforesaid
limits, will constitute notice of the election of the Contract Owner to make
such change.

3. ASSIGNMENT OR PLEDGE

A Qualified Contract may not be assigned by the Contract Owner except when
issued to a trustee in connection with certain types of plans designed to
qualify under Section 401 of the Code or when made pursuant to a qualified
domestic relations order rendered by a state court in satisfaction of family
support obligations. In general, a pledge or assignment made with respect to
certain Qualified Contracts may, depending on such factors as the amount pledged
or assigned, be treated as a taxable distribution. See "Individual Retirement
Annuities," pp. 33-34, below, for special rules applicable thereto. Moreover, in
certain instances, pledges or assignments of a Qualified Contract may result in
the imposition of certain tax penalties. See generally "The Contracts: Qualified
Plans," pp. 31-34, below.

A Non-Qualified Contract may be assigned by the Contract Owner or pledged by
him or her as collateral security as provided in the Non-Qualified Contract.
Assignments or pledges of a Non-Qualified Contract will be treated as
distributions that may be taxable. Moreover, in certain instances, pledges or
assignments of a Non-Qualified Contract may result in the imposition of certain
tax penalties. See "The Contracts: Non-Qualified Plans," p. 34, below.

Persons contemplating the assignment or pledge of a Qualified Contract or a
Non-Qualified Contract are advised to consult a qualified tax advisor concerning
the federal income tax consequences thereof.

4. PURCHASE LIMITS

No periodic Stipulated Payment may be less than $30 per month ($360 per
year). No single Stipulated Payment may be less than $2,500, except that in the
case of a deferred Single Stipulated Payment Contract to be used as an
Individual Retirement Annuity funded with a Rollover Contribution, the total
Stipulated Payment applicable to the Variable Annuity, prior to administration
deductions, must be at least $1,000 unless with consent of The Franklin a
smaller single Stipulated Payment is permitted. In the case of a Qualified
Contract issued for use as an Individual Retirement Annuity, annual premium
payments may not, in general, exceed $2,000. However, if the

<PAGE>

Individual Retirement Annuity is a Simplified Employee Pension, annual premium
payments may not exceed $24,500. Single Stipulated Payment Contracts are not
available as Individual Retirement Annuities except for those funded with
Rollover Contributions and except for those to be used as Simplified Employee
Pensions.

5. TERMINATION BY THE FRANKLIN

The Franklin reserves the right to terminate any Contract, other than a
Contract issued for use as an Individual Retirement Annuity, if total Stipulated
Payments paid are less than $360 in each of three consecutive Contract Years
(excluding the first Contract Year) and if the Cash Value is less than $500 at
the end of such three-year period. The Franklin must give 31 days' notice by
mail to the Contract Owner of such termination. The Franklin will not exercise
any right to terminate such Contract if the value of the Contract declines to
less than $500 as a result of a decline in the market value of the securities
held by the Fund.

The Franklin reserves the right to terminate any Contract issued for use as
an Individual Retirement Annuity if no Stipulated Payments have been received
for any two Contract Years and if the first monthly Annuity Payment, determined
at the initial Annuity Payment Date, arising from the Stipulated Payments
received prior to such two-year period would be less than $20.

Upon termination as described above, The Franklin will pay to the Contract
Owner the Cash Value of the Contract, less any unpaid administration deductions.
For certain tax consequences upon such payment, see "Federal Income Tax Status,"
pp. 31-35, below.

6. RIGHT TO REVOCATION OF CONTRACT

A Contract Owner has the right to revoke the purchase of a Contract within 10
days after receipt of the Contract, and upon such revocation will be entitled to
a return of the entire amount paid. The request for revocation must be made by
mailing or hand-delivering the Contract within such 10-day period either to The
Franklin Life Insurance Company, Cashiers Department, #1 Franklin Square,
Springfield, Illinois 62713, or to the agent from whom the Contract was
purchased. In general, notice of revocation given by mail is deemed to be given
on the date of the postmark, or, if sent by certified or registered mail, the
date of certification or registration.

B. DEFERRED VARIABLE ANNUITY ACCUMULATION PERIOD

1. CREDITING ACCUMULATION UNITS; DEDUCTION FOR ADMINISTRATIVE EXPENSES

During the accumulation period--the period before the initial Annuity Payment
Date--deductions from Stipulated Payments for administrative expenses are made
as specified under "Deductions and Charges Under the Contracts," pp. 11-14,
above. In addition, any applicable premium taxes, also as specified above
under that caption, are deducted from the Stipulated Payments. The balance of
each Stipulated Payment is credited to the Contract Owner in the form of
Accumulation Units.

The number of a Contract Owner's Accumulation Units is determined by dividing
the net amount of Stipulated Payments credited to his or her Contract by the
value of an Accumulation Unit on the day on which the Stipulated Payment is
received, except that, in the case of the original application for a Variable
Annuity Contract, the value of an Accumulation Unit within two business days
after receipt of the application will be used if the application and all
information necessary to process the application are complete upon receipt. If
the application and such information are not complete upon receipt, The
Franklin, within five days after the receipt of an original application and
initial payment at the Home Office of The Franklin, will attempt to complete the
application and will either accept the application or reject the application and
return the initial payment.

The number of Accumulation Units so determined will not be changed by any
subsequent change in the value of an Accumulation Unit, but the dollar value of
an Accumulation Unit may vary from day to day depending upon the investment
experience of the Fund.

<PAGE>

2. VALUATION OF A CONTRACT OWNER'S CONTRACT

The Cash Value of a Contract at any time prior to the initial Annuity Payment
Date can be determined by multiplying the total number of Accumulation Units
credited to the account by the current Accumulation Unit value. The Contract
Owner bears the investment risk, that is, the risk that market values may
decline. There is no assurance that the Cash Value of the Contract will equal or
exceed the Stipulated Payments made. A Contract Owner may obtain from the Home
Office of The Franklin information as to the current value of an Accumulation
Unit and the number of Accumulation Units credited to his or her Contract.

3. VALUE OF THE ACCUMULATION UNIT

The value of an Accumulation Unit was set at $10 effective July 1, 1981.
Accumulation Units currently are valued each Valuation Date (each day in which
there is a sufficient degree of trading in the securities in which the Fund
invests that the value of an Accumulation Unit might be materially affected by
changes in the value of the Fund's investments, other than a day during which no
Contract or portion thereof is tendered for redemption and no order to purchase
or transfer a Contract is received by the Fund, as of the close of trading on
that day). After the close of trading on a Valuation Date, or on a day when
Accumulation Units are not valued, the value of an Accumulation Unit is equal to
its value as of the immediately following Valuation Date. The value of an
Accumulation Unit on the last day of any Valuation Period is determined by
multiplying the value of an Accumulation Unit on the last day of the immediately
preceding Valuation Period by the Net Investment Factor (defined below) for the
current Valuation Period.

At each Valuation Date a gross investment rate for the Valuation Period then
ended is determined from the investment performance of the Fund for the
Valuation Period. Such rate is equal to (i) accrued investment income for the
Valuation Period, plus capital gains and minus capital losses for the period,
whether realized or unrealized, on the assets of the Fund (adjusted by a
deduction for the payment of any applicable state or local taxes as to the
income or capital gains of the Fund) divided by (ii) the value of the assets of
the Fund at the beginning of the Valuation Period. The gross investment rate may
be positive or negative.

The net investment rate for the Valuation Period is then determined by
deducting, currently, .003945% (1.440% on an annual basis) for each day of the
Valuation Period as a charge against the gross investment rate. This charge is
made by The Franklin for providing investment management services, annuity rate
or mortality assurances and expense assurances and may be increased by The
Franklin to a maximum of 2.250% on an annual basis. See "Deductions and Charges
Under the Contracts," pp. 11-14, above.

The net investment factor for the Valuation Period is the sum of 1.00000000
plus the net investment rate for the Valuation Period ("Net Investment Factor").

The net investment rate may be negative if the combined capital losses,
Valuation Period deductions and increase in the tax reserve exceed investment
income and capital gains. Thus, the net investment factor may be less than
1.00000000, and the value of an Accumulation Unit at the end of a Valuation
Period may be less than the value for the previous Valuation Period.

4. VALUATION OF FUND ASSETS

The value of the assets of the Fund is the value of the securities held by
the Fund plus any cash or other assets minus all liabilities.

The money market securities in which the Fund invests are traded primarily in
the over-the-counter market. Portfolio securities will be valued using the best
method currently available as determined by the Board of Managers of the Fund.
Securities with a maturity or remaining maturity of 60 days or less (including
master demand notes) are valued on an amortized cost basis. Under this method of
valuation, the security is initially valued at cost on the date of purchase (or
in the case of securities purchased with more than 60 days remaining to
maturity, the market value on the 61st day prior to maturity); thereafter the
Fund assumes a constant proportionate amortization in value until maturity of
any discount or premium, regardless of the impact of fluctuating interest rates
on the market value of the security. In periods of declining interest rates, the
daily yield on portfolio securities valued on an amortized cost basis

<PAGE>

may tend to be higher than the yield derived by using a method of valuation
based upon market prices and estimates; in periods of rising interest rates, the
daily yield on portfolio securities valued on an amortized cost basis may tend
to be lower than the yield derived by using a method of valuation based upon
market prices and estimates. For purposes of valuation, the maturity of a
variable rate certificate of deposit is deemed to be the next coupon date on
which the interest rate is to be adjusted. Securities with a remaining maturity
of more than 60 days currently are valued on each Valuation Date generally at
the mean between the most recent bid and asked prices or yield equivalent as
obtained from dealers that make markets in such securities. Investments for
which market quotations are not readily available as of the close of trading on
relevant markets on each Valuation Date are valued at prices deemed best to
reflect their fair value as determined in good faith by or under the direction
of the Board of Managers of the Fund in a manner authorized by the Board of
Managers and applied on a consistent basis. The Board of Managers of the Fund
has determined that the fair value of Eurodollar certificates of deposit
generally will be the market price thereof at the close of trading on European
exchanges, unless events between such close and the close of trading on the New
York Stock Exchange require a different valuation, in which case the Board of
Managers will promptly consider what other method of valuation should be applied
to determine fair value.

The Board of Managers monitors on an ongoing basis the methods of valuation
used to determine what action, if any, should be taken to assure that portfolio
securities of the Fund are valued at fair value as determined in good faith by
the Board of Managers.

5. REDEMPTION

A Contract Owner under a Deferred Variable Annuity Contract, prior to the
death of the Variable Annuitant and prior to the initial Annuity Payment Date,
may, subject to any limitations on early settlement contained in an applicable
Qualified Plan, redeem the Contract, in whole or in part (but, if in part, not
less than $500), by submission of the Contract and a written request for its
redemption to The Franklin's Home Office, and will receive the Cash Value of the
part of the Contract redeemed, less any applicable contingent deferred sales
charges and unpaid administration deductions referred to under "Deductions and
Charges Under the Contracts," pp. 11-14, above. Early withdrawal of certain
amounts attributable to Contracts issued pursuant to an annuity purchase plan
meeting the requirements of Code Section 403(b) may be prohibited. See "Federal
Income Tax Status," pp. 29-33, below. The Cash Value of a Contract or part
thereof redeemed prior to the initial Annuity Payment Date is the number of
Accumulation Units credited to the Contract (or that part so redeemed) times the
value of an Accumulation Unit at the end of the Valuation Period in which the
request for redemption is received. Except in limited circumstances discussed
below, the payment of the Cash Value will be made within seven days after the
date a properly completed and documented request for redemption is received by
The Franklin at its Home Office. The right of redemption may be suspended or the
date of payment postponed during any periods when the New York Stock Exchange is
closed (other than customary weekend and holiday closings); when trading in the
markets the Fund normally utilizes is restricted, or an emergency exists as
determined by the Securities and Exchange Commission so that disposal of the
Fund's investments or determination of its net asset value is not reasonably
practicable; or for such other periods as the Securities and Exchange Commission
by order may permit to protect Contract Owners.

In lieu of a single payment of the amount due upon redemption of a Contract,
the Contract Owner may elect, at any time prior to the initial Annuity Payment
Date and during the lifetime of the Variable Annuitant, to have all or any
portion of the amount due applied under any available Settlement Option. See
"Settlement Options," pp. 20-23, below. However, no Settlement Option may be
elected upon redemption without surrender of the entire Contract.

The payment of the Cash Value of a redeemed Contract either in a single
payment or under an available Settlement Option may be subject to federal income
tax withholding and federal tax penalties. See "Federal Income Tax Status," pp.
31-35, below.

<PAGE>

6. PAYMENT OF ACCUMULATED VALUE AT TIME OF DEATH

In the event of the death of the Variable Annuitant prior to the initial
Annuity Payment Date, death benefits payable to the surviving Beneficiary will
be paid by The Franklin within seven days of receipt by The Franklin of written
notice of such death. The death proceeds payable will be the Cash Value of the
Contract determined as of the date on which written notice of death is received
by The Franklin by mail if such date is a Valuation Date; if such date is not a
Valuation Date, the determination will be made on the next following Valuation
Date. There is no assurance that the Cash Value of a Contract will equal or
exceed the Stipulated Payments made. No contingent deferred sales charge is made
in the case of such death. For payment of death proceeds in the event no
Beneficiary is surviving at the death of the Variable Annuitant, see "Change of
Beneficiary or Mode of Payment of Proceeds; Death of Beneficiaries," p. 20,
below. The Code imposes certain requirements concerning payment of death
benefits payable before the initial Annuity Payment Date in the case of
Qualified Contracts issued in connection with qualified pension and profit-
sharing plans under Section 401(a) of the Code. Under those Contracts, death
benefits will be paid as specified in the governing plan documents. The terms of
such documents should be consulted to determine the death benefits and any
limitations the plan may impose.

Subject to the foregoing the Contract Owner may, at any time prior to the
initial Annuity Payment Date, elect that all or any portion of such death
proceeds be paid to the Beneficiary under any one of the available Settlement
Options. See "Settlement Options," pp. 20-23, below. If the Contract Owner has
not made such an election, the Beneficiary may do so after the death of the
Variable Annuitant. The Contract Owner or the Beneficiary, whichever selects the
method of settlement, may designate contingent Beneficiaries to receive any
other amounts due should the first Beneficiary die before completion of the
specified payments. If neither the Contract Owner nor the Beneficiary elects
payment of death proceeds under an available Settlement Option, payment will be
made to the Beneficiary in a single sum.

Death proceeds may be applied to provide variable payments, fixed-dollar
payments or a combination of both.

The payment of death proceeds may be subject to federal income tax
withholding. See "Income Tax Withholding," p. 35, below

In the event of the death of the Variable Annuitant after the initial Annuity
Payment Date, payments under a Contract will be made as described in "Settlement
Options," p. 20-23, below.

7. OPTIONS UPON FAILURE TO MAKE STIPULATED PAYMENTS

Upon a failure to make a Stipulated Payment under a Periodic Stipulated
Payment Contract, subject to The Franklin's power of termination described under
"Termination by The Franklin," p. 16, above, and subject to the right of The
Franklin to pay the value of the Contract Owner's account in a single sum at the
initial Annuity Payment Date if the value on such date is less than $2,000, the
Contract Owner may elect, prior to the death of the Variable Annuitant and prior
to the initial Annuity Payment Date, either of the following options:

(a) to exercise any of the available Settlement Options described under
"Settlement Options," pp. 20-23, below, or redeem the Contract as described
under "Redemption," p. 18, above; or

(b) to have the Contract continued from the date of failure to make a
Stipulated Payment as a paid-up annuity to commence on the initial Annuity
Payment Date stated in the Contract.

If no option is elected by the Contract Owner within 31 days after failure to
make a Stipulated Payment, the Contract will automatically be continued under
the paid-up annuity option.

8. REINSTATEMENT (AS TO PERIODIC STIPULATED PAYMENT CONTRACTS)

A Contract Owner, by making one Stipulated Payment, may reinstate a Periodic
Stipulated Payment Contract as to which there has been a failure to make a
Stipulated Payment, if the Contract at the time of the payment is being
continued as a paid-up annuity. However, such reinstatement does not
automatically reinstate the benefits provided by any riders to the Contract
providing life insurance or disability benefits. Administration deductions will
not accrue during Contract Years in which no Stipulated Payments are made.

<PAGE>

9. CHANGE OF BENEFICIARY OR MODE OF PAYMENT OF PROCEEDS; DEATH OF
BENEFICIARIES

While the Contract is in force the Contract Owner may (by filing a written
request at the Home Office of The Franklin) change the Beneficiary or Settlement
Option, or, if agreed to by The Franklin, change to a mode of payment different
from one of the Settlement Options, subject to applicable limitations under the
Code and any governing Qualified Plan.

If any Beneficiary predeceases the Variable Annuitant, the interest of such
Beneficiary will pass to the surviving Beneficiaries, if any, unless otherwise
provided by endorsement. If no Beneficiary survives the Variable Annuitant and
no other provision has been made, then, upon the death of the Variable
Annuitant, the proceeds will be paid in a single sum to the Contract Owner or,
if the Variable Annuitant was the Contract Owner, to the executors or
administrators of the Contract Owner's estate.

10. SETTLEMENT OPTIONS

At any time prior to the initial Annuity Payment Date and during the lifetime
of the Variable Annuitant, the Contract Owner may elect to have all or a portion
of the amount due in settlement of the Contract applied under any of the
available Settlement Options described below. If the Contract Owner fails to
elect a Settlement Option, payment automatically will be made in the form of a
life annuity. See "First Option," p. 21, below, and "Deferred Variable Annuity
Contracts," p. 23, below.

Annuity Payments under a Settlement Option are made to the Variable Annuitant
during his or her lifetime, or for such shorter period that may apply under the
particular Settlement Option. Upon the death of the original Variable Annuitant
after the initial Annuity Payment Date, any remaining Annuity Payments that are
due under the Settlement Option elected will be continued to the Beneficiary or,
if elected by the Contract Owner (or, if so designated by the Contract Owner, by
the Beneficiary), the Cash Value of the Contract, as described under such
Settlement Option below, will be paid to the Beneficiary in one lump sum. Upon
the death of any Beneficiary to whom payments are being made under a Settlement
Option, a single payment equal to the then remaining Cash Value of the Contract,
if any, will be paid to the executors or administrators of the Beneficiary,
unless other provision has been specified and accepted by The Franklin. For a
discussion of payments if no Beneficiary is surviving at the death of the
Variable Annuitant, see "Change of Beneficiary or Mode of Payment of Proceeds;
Death of Beneficiaries," immediately above.

Payment to a Contract Owner upon redemption of a Contract, and payment of
death proceeds to a Beneficiary upon the death of the Variable Annuitant prior
to the initial Annuity Payment Date, may also be made under an available
Settlement Option in certain circumstances. See "Redemption," p. 18, above, and
"Payment of Accumulated Value at Time of Death," p. 19, above.

Available Settlement Options may be selected on a fixed or variable basis or
a combination thereof, except the Seventh Option, which is available on a fixed
basis only. Under an Option which is paid on a fixed basis, there is no sharing
in the investment experience of the Fund and, upon commencement of payments,
participation in the Fund terminates (the subject Contract will be transferred
to the general account of The Franklin). Settlement under the First, Second,
Third, Fourth or Fifth Option below is subject to satisfactory proof of age of
the person or persons to whom the Annuity Payments are to be made.

The minimum amount of proceeds which may be applied under any Settlement
Option for any person is $2,000 and proceeds of a smaller amount may be paid in
a single sum in the discretion of The Franklin, except in the case of a deferred
Single Stipulated Payment Contract funded with a Rollover Contribution not in
excess of $2,000. See "Purchase Limits," pp. 15-16, above. Further, if at any
time payments under a Settlement Option become less than $25 per payment, The
Franklin has the right to change the frequency of payment to such intervals as
will result in payments of at least $25.

In the case of Immediate Variable Annuity Contracts, the only Settlement
Options offered are the life annuity, the life annuity with 120, 180 or 240
monthly payments certain, or the joint and last survivor life annuity. See
"First Option," "Second Option" and "Fourth Option," pp. 21-22, below, and
"Immediate Variable Annuity Contracts," p. 23, below.

<PAGE>

The distribution rules which Qualified Plans must satisfy in order to be tax-
qualified under the Code may limit the utilization of certain Settlement
Options, or may make certain Settlement Options unavailable, in the case of
Qualified Contracts issued in connection therewith. Similarly, the distribution
rules which Non-Qualified Contracts must satisfy in order to qualify as "annuity
contracts" under the Code may also limit available Settlement Options under Non-
Qualified Contracts. These distribution rules could affect such factors as the
commencement of distributions and the period of time over which distributions
may be made. All Settlement Options are offered subject to the limitations of
the distribution rules.

The Statement of Additional Information describes certain limitations on
Settlement Options based on The Franklin's current understanding of the
distribution rules generally applicable to Non-Qualified Contracts and to
Qualified Contracts purchased under this Prospectus for use as Individual
Retirement Annuities or issued in connection with Section 403(b) annuity
purchase plans. See "Limitations on Settlement Options" in the Statement of
Additional Information. Persons considering the purchase of a Contract and
Contract Owners contemplating election of a Settlement Option are urged to
obtain and read the Statement of Additional Information. Various questions
exist, however, about the application of the distribution rules to distributions
from the Contracts and their effect on Settlement Option availability
thereunder. Persons contemplating the purchase of a Contract should consult a
qualified tax advisor concerning the effect of the distribution rules on the
Settlement Option or Options he or she is contemplating.

Neither this Prospectus nor the Statement of Additional Information, however,
describes limitations on Settlement Options based on applicable distribution
rules in the case of Qualified Contracts issued in connection with qualified
pension and profit-sharing plans under Section 401(a) of the Code and annuity
plans under Section 403(a) of the Code. Under those Contracts, available
Settlement Options are limited to those Options specified in the governing plan
documents. The terms of such documents should be consulted to determine
Settlement Option availability and any other limitations the plan may impose on
early redemption of the Qualified Contract, payment in settlement thereof, or
similar matters. Generally, limitations comparable to those described in the
Statement of Additional Information for Individual Retirement Annuities and
Section 403(b) annuity purchase plans also apply with respect to such qualified
pension, profit-sharing and annuity plans (including H.R. 10 Plans).

Persons contemplating election of the Fifth, Sixth or Seventh Option should
consult a qualified tax advisor to determine whether the continuing right of
redemption under any such Option might be deemed for tax purposes to result in
the "constructive receipt" of the Cash Value of the Contract or proceeds
remaining on deposit with The Franklin.

FIRST OPTION-LIFE ANNUITY. An annuity payable monthly during the lifetime of
the Variable Annuitant, ceasing with the last Annuity Payment due prior to the
death of the Variable Annuitant. This Option offers the maximum level of monthly
Annuity Payments since there is no guarantee of a minimum number of Annuity
Payments or provision for any continued payments to a Beneficiary upon the death
of the Variable Annuitant. It would be possible under this Option for the
Variable Annuitant to receive only one Annuity Payment if he or she died before
the second Annuity Payment Date, or to receive only two Annuity Payments if he
or she died after the second Annuity Payment Date but before the third Annuity
Payment Date, and so forth.

SECOND OPTION-LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN. An
annuity payable monthly during the lifetime of the Variable Annuitant including
the commitment that if, at the death of the Variable Annuitant, Annuity Payments
have been made for less than 120 months, 180 months or 240 months (as selected
by the Contract Owner in electing this Option), Annuity Payments shall be
continued during the remainder of the selected period to the Beneficiary. The
cash value under this Settlement Option is the present value of the current
dollar amount of any unpaid Annuity Payments certain.

THIRD OPTION-UNIT REFUND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the Variable Annuitant, ceasing with the last Annuity Payment due
prior to the death of the Variable Annuitant, provided that, at the death of the
Variable Annuitant, the Beneficiary will receive a payment of the then dollar
value of the number of Annuity Units equal to the excess, if any, of (a) over
(b) where (a) is the total amount applied under this Option divided by the
Annuity Unit value at the initial Annuity Payment Date and (b) is the number of
Annuity Units represented by each Annuity Payment multiplied by the number of
Annuity Payments made.

<PAGE>

For example, if $10,000 were applied on the first Annuity Payment Date to the
purchase of an annuity under this Option, the Annuity Unit value at the initial
Annuity Payment Date were $2.00, the number of Annuity Units represented by each
Annuity Payment were 30.55, 10 Annuity Payments were paid prior to the date of
the Variable Annuitant's death and the value of an Annuity Unit on the Valuation
Date following the Variable Annuitant's death were $2.05, the amount paid to the
Beneficiary would be $9,623.73, computed as follows:

$10,000
( -------- - (30.55 X 10)) X $2.05 = (5,000 - 305.5) X 2.05 = 4,694.5 X $2.05 =$9,623.73
$2.00

</TABLE>

FOURTH OPTION-JOINT AND LAST SURVIVOR LIFE ANNUITY. An annuity payable
monthly during the joint lifetime of the Variable Annuitant and a secondary
variable annuitant, and thereafter during the remaining lifetime of the
survivor, ceasing with the last Annuity Payment due prior to the death of the
survivor. Since there is no minimum number of guaranteed payments under this
Option, it would be possible under this Option to receive only one Annuity
Payment if both the Variable Annuitant and the secondary variable annuitant died
before the second Annuity Payment Date, or to receive only two Annuity Payments
if both the Variable Annuitant and the secondary variable annuitant died after
the second Annuity Payment Date but before the third Annuity Payment Date, and
so forth.

FIFTH OPTION-PAYMENTS FOR A DESIGNATED PERIOD. An amount payable monthly to
the Variable Annuitant for a number of years which may be from one to 30 (as
selected by the Contract Owner in electing this Option). At the death of the
Variable Annuitant, payments will be continued to the Beneficiary for the
remaining period. The cash value under this Settlement Option is the then
present value of the current dollar amount of any unpaid Annuity Payments
certain. A Contract under which Annuity Payments are being made under this
Settlement Option may be redeemed in whole or in part (but, if in part, not less
than $500) at any time by the Contract Owner for the aforesaid cash value of the
part of the Contract redeemed. See "Redemption," p. 18, above.

It should be noted that, while this Option does not involve a life
contingency, charges for annuity rate assurances, which include a factor for
mortality risks, are included in the computation of Annuity Payments due under
this Option. Further, although not contractually required to do so, The Franklin
currently follows a practice, which may be discontinued at any time, of
permitting persons receiving Annuity Payments under this Option to elect to
convert such payments to a Variable Annuity involving a life contingency under
the First, Second, Third or Fourth Options above if, and to the extent, such
other Options are otherwise available to such person.

SIXTH OPTION-PAYMENTS OF A SPECIFIED DOLLAR AMOUNT. The amount due will be
paid to the Variable Annuitant in equal annual, semiannual, quarterly or monthly
Annuity Payments of a designated dollar amount (not less than $75 a year per
$1,000 of the original amount due) until the remaining balance (adjusted each
Valuation Period by the Net Investment Factor for the period) is less than the
amount of one Annuity Payment, at which time such balance will be paid and will
be the final Annuity Payment under this Option. Upon the death of the Variable
Annuitant, payments will be continued to the Beneficiary until such remaining
balance is paid. The cash value under this Settlement Option is the amount of
proceeds then remaining with The Franklin. A Contract under which Annuity
Payments are being made under this Settlement Option may be redeemed at any time
by the Contract Owner for the aforesaid cash value.

Annuity Payments made under the Sixth Option may, under certain
circumstances, be converted into a Variable Annuity involving a life
contingency. See the last paragraph under the Fifth Option, above, which
applies in its entirety to the Sixth Option as well.

SEVENTH OPTION-INVESTMENT INCOME. The amount due may be left on deposit with
The Franklin in its general account and a sum will be paid annually,
semiannually, quarterly or monthly, as selected by the Contract Owner in
electing this Option, which shall be equal to the net investment rate of 3%
stipulated as payable upon fixed-dollar amounts for the period multiplied by the
amount remaining on deposit. Upon the death of the Variable Annuitant, the
aforesaid payments will be continued to the Beneficiary. The sums left on
deposit with The Franklin may be withdrawn at any time.

<PAGE>

Periodic payments received under this Option may be treated like interest for
federal income tax purposes. Interest payments are fully taxable and are not
subject to the general rules applicable to the taxation of annuities described
in "Federal Income Tax Status," pp. 31-35, below. Persons contemplating election
of this Seventh Option are advised to consult a qualified tax advisor concerning
the availability and tax effect of its election.

C. ANNUITY PERIOD

1. ELECTING ANNUITY PAYMENTS AND SETTLEMENT OPTION; COMMENCEMENT OF ANNUITY
PAYMENTS

(a) DEFERRED VARIABLE ANNUITY CONTRACTS

A Contract Owner selects a Settlement Option and an initial Annuity Payment
Date prior to the issuance of the Deferred Variable Annuity Contract, except
that Qualified Contracts issued in connection with qualified pension and profit-
sharing plans (including H.R. 10 Plans) under Section 401(a) of the Code and
annuity plans (including H.R. 10 Plans) under Section 403(a) of the Code provide
for Annuity Payments to commence at the date and under the Settlement Option
specified in the plan. The Contract Owner may defer the initial Annuity Payment
Date and continue the Contract to a date not later than the Contract Anniversary
on which the attained age of the Variable Annuitant is 75 unless the provisions
of the Code or any governing Qualified Plan require Annuity Payments to commence
at an earlier date. See "Limitations on Settlement Options" in the Statement of
Additional Information. The Franklin will require satisfactory proof of age of
the Variable Annuitant prior to the initial Annuity Payment Date.

(b) IMMEDIATE VARIABLE ANNUITY CONTRACTS

The Franklin offers three forms of Immediate Variable Annuity Contracts: the
life annuity, the life annuity with 120, 180 or 240 monthly payments certain and
the joint and last survivor life annuity. For a description of these forms of
annuity, see the First, Second and Fourth Options under "Settlement Options,"
pp. 21-22, above.

Under an Immediate Variable Annuity, the first Annuity Payment is made to the
Variable Annuitant one month after the Effective Date of the Contract, unless
the period selected by the Contract Owner for the frequency of Annuity Payments
is more than one month, in which case the first Annuity Payment will be made
after a period equal to the period so selected from the Effective Date (subject
in every case to the survival of the Variable Annuitant, except in cases where a
guaranteed payment period is provided).

2. THE ANNUITY UNIT

The Annuity Unit is a measure used to value the First Option (including the
automatic life annuity) and the Second, Third, Fourth and Fifth Options, if
elected, on a variable basis.

The value of the Annuity Unit as of July 1, 1981 was fixed at $1.00 and for
each day thereafter is determined by multiplying the value of the Annuity Unit
on the preceding day by the "Annuity Change Factor" for the Valuation Period
ending on the tenth preceding day or by 1.0 if no Valuation Period ended on the
tenth preceding day. The "Annuity Change Factor" for any Valuation Period is
equal to the amount determined by dividing the Net Investment Factor for that
Valuation Period by a number equal to 1.0 plus the interest rate for the number
of calendar days in such Valuation Period at the effective annual rate of 3-
1/2%. The division by 1.0 plus an interest factor of 3-1/2% in calculating the
Annuity Change Factor is effected in order to cancel out the assumed net
investment rate of 3-1/2% per year which is built into the annuity tables
specified in the Contract. See "Determination of Amount of First Monthly Annuity
Payment (Deferred Variable Annuity Contracts Only)," p. 24, below, and "Assumed
Net Investment Rate," p. 25, below.

Annuity Units are valued in respect of each Annuity Payment Date as of a
Valuation Date not less than 10 days prior to the Annuity Payment Date in
question in order to permit calculation of amounts of Annuity Payments and
mailing of checks in advance of their due dates.

<PAGE>

3. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT (DEFERRED
VARIABLE ANNUITY CONTRACTS ONLY)

When Annuity Payments commence under a Deferred Variable Annuity Contract,
the value of the Contract Owner's account is determined as the product of the
value of an Accumulation Unit on the first Annuity Payment Date and the number
of Accumulation Units credited to the Contract Owner's account as of such
Annuity Payment Date.

The Contract utilizes tables indicating the dollar amount of the first
monthly Annuity Payment under each Settlement Option for each $1,000 of Cash
Value of the Contract. The first monthly Annuity Payment varies according to the
Settlement Option selected (see "Settlement Options," pp. 20-23, above) and the
"adjusted age" of the Variable Annuitant. The first monthly Annuity Payment may
also vary according to the sex of the Variable Annuitant. See "Annuity
Payments," pp. 14-15, above. (The Contracts provide for age adjustment based on
the year of birth of the Variable Annuitant and any joint Variable Annuitant; a
person's actual age when Annuity Payments commence may not be the same as the
"adjusted age" used in determining the amount of the first Annuity Payment.)

For Contracts utilizing sex-distinct annuity tables, the tables are
determined from the Progressive Annuity Table assuming births in the year 1900
and a net investment rate of 3% a year. The total first monthly Annuity Payment
is determined by multiplying the number of thousands of dollars of Cash Value of
the Contract Owner's Contract by the amount of the first monthly Annuity Payment
per $1,000 of value from the tables in the Contract.

The amount of the first monthly Annuity Payment, determined as above, is
divided as of the initial Annuity Payment Date by the value of an Annuity Unit
to determine the number of Annuity Units represented by the first Annuity
Payment. Annuity Units are valued as of a Valuation Date not less than 10 days
prior to the initial Annuity Payment Date, pursuant to the procedure discussed
under "The Annuity Unit," p. 23, above. Thus, there will be a double effect of
the investment experience of the Fund during the 10-day period referred to in
the preceding sentence, since that experience will be included (as part of the
value of an Accumulation Unit) in valuing the Contract Owner's Contract on the
initial Annuity Payment Date and (as part of the changes in value of an Annuity
Unit) in determining the second monthly Annuity Payment. Also, the number of
Annuity Units (and hence the amount of Annuity Payments) will be affected by the
net asset values of the Fund approximately 10 days prior to the initial Annuity
Payment Date even though changes in those net asset values have occurred during
that 10-day period, and even though the value of the Accumulation Units used to
determine the Cash Value of the Contract will reflect those changes. See "Amount
of Second and Subsequent Monthly Annuity Payments (Deferred Variable Annuity
Contracts Only)," immediately below.

Each Contract contains a provision that the first monthly Annuity Payment
will not be less than 103% of the first monthly Annuity Payment available under
a then currently issued Immediate Variable Annuity of The Franklin if a single
Stipulated Payment were made equal to the value which is being applied under the
Contract to provide annuity benefits. This provision assures the Variable
Annuitant that if at the initial Annuity Payment Date the annuity rates then
applicable to new Immediate Variable Annuity Contracts are significantly more
favorable than the annuity rates provided in his or her Contract, the Variable
Annuitant will be given the benefit of the new annuity rates.

4. AMOUNT OF SECOND AND SUBSEQUENT MONTHLY ANNUITY PAYMENTS (DEFERRED
VARIABLE ANNUITY CONTRACTS ONLY)

The number of Annuity Units credited to a Contract on the initial Payment
Date remains fixed during the annuity period, and as of each subsequent Annuity
Payment Date the dollar amount of the Annuity Payment is determined by
multiplying this fixed number of Annuity Units by the then value of an Annuity
Unit.

5. DETERMINATION OF AMOUNT OF ANNUITY PAYMENTS (IMMEDIATE VARIABLE ANNUITY
CONTRACTS ONLY)

In the case of Immediate Variable Annuities, the number of Annuity Units per
month purchased is specified in the Contract. The number of such units is
determined by: (1) multiplying the net single Stipulated Payment (after
deductions for administrative expenses and premium taxes) by the
applicable annuity factor from the annuity

<PAGE>

tables then used by The Franklin for Immediate Variable Annuity Contracts, and
(2) dividing such product by the value of the Annuity Unit as of the date of
issue of the Contract. This number of Annuity Units remains fixed for each month
during the annuity period, and the dollar amount of the Annuity Payment is
determined as of each Annuity Payment Date by multiplying this fixed number of
Annuity Units by the value of an Annuity Unit as of each such Annuity Payment
Date.

Annuity Units are valued as of a Valuation Date not less than 10 days prior
to the Effective Date of the Contract, pursuant to the procedure discussed under
"The Annuity Unit," p. 23, above. Thus, the number of Annuity Units (and hence
the amount of the Annuity Payments) will be affected by the net asset value of
the Fund approximately 10 days prior to the Effective Date of the Contract, even
though changes in those net asset values have occurred during that 10-day
period.

As of the date of this Prospectus, The Franklin was using, in connection with
the determination of the number of Annuity Units per month purchased under
Immediate Variable Annuity Contracts, the 1955 American Annuity Table with
assumed 4-1/2% interest, the purchase rates in such table being increased by
0.5% (which percentage is decreased 0.2% for each year of age at the Effective
Date in excess of 70 years for male Variable Annuitants and in excess of 75
years for female Variable Annuitants). However, in lieu of such table, The
Franklin will provide "unisex" annuity rate tables for use under Contracts
purchased in connection with employer-related plans subject to the decision of
the Supreme Court in ARIZONA GOVERNING COMMITTEE v. NORRIS. See "Annuity
Payments," pp. 14-15, above.

The Annuity Change Factors used by The Franklin for Immediate Variable
Annuity Contracts assume a net investment rate of 3-1/2%.

6. ASSUMED NET INVESTMENT RATE

The objective of a Variable Annuity Contract is to provide level Annuity
Payments during periods when the economy, price levels and investment returns
are relatively stable and to reflect as increased Annuity Payments only the
excess investment results flowing from inflation, increases in productivity or
other factors increasing investment returns. The achievement of this objective
will depend in part upon the validity of the assumption in the annuity factor
that a 3-1/2% net investment rate would be realized in the periods of relative
stability assumed. A higher rate assumption would mean a higher initial Annuity
Payment but a more slowly rising series of subsequent Annuity Payments in the
event of a rising actual investment rate (or a more rapidly falling series of
subsequent Annuity Payments in the event of a lower actual investment rate). A
lower assumption would have the opposite effect. If the actual net investment
rate is at the annual rate of 3-1/2%, the Annuity Payments under Contracts whose
Annuity Payments are measured by Annuity Units will be level.

INVESTMENT POLICIES AND RESTRICTIONS OF THE FUND

The long-term compounding of income from investments in a diversified
portfolio of short-term money market securities yielding a high level of current
income to the extent consistent with preservation of capital and the maintenance
of liquidity is the primary investment objective of the Fund. This objective
does not necessarily require investment in long-term securities since the nature
of annuity contracts themselves connotes a long-term relationship; the continual
retention and reinvestment of proceeds from matured short-term securities
provides the long-term compounding of income. The Board of Managers of the Fund
has determined that, in keeping with the primary investment objective of
investing in short-term money market securities, at least 80% of the Fund's
portfolio will be invested in securities having maturities or remaining
maturities of one year or less and not more than 20% will be invested in
securities having maturities or remaining maturities of between one and two
years. The Board of Managers of the Fund will give consideration to the
creditworthiness of the issuers of all money market securities in which the Fund
proposes to invest prior to such investment. The Fund's investment authority is
also limited by regulations of the Securities and Exchange Commission. See
"Legal Restrictions," p. 30, below.

The following investment policies summarize the instruments in which the Fund
may invest in order to achieve its primary investment objective, all of which
will be in United States dollar obligations:

<PAGE>

(a) OBLIGATIONS OF THE UNITED STATES GOVERNMENT AND ITS AGENCIES:
Obligations issued by or guaranteed as to principal and interest by the United
States Government, its agencies or instrumentalities. These include a variety of
securities issued by the United States Treasury which are direct obligations of
the United States Government and which differ only in their interest rates,
maturities and times of issuance. Treasury Bills have a maturity of one year or
less, Treasury Notes have maturities of one to ten years and Treasury Bonds
generally have maturities of greater than five years. These also include
securities issued or guaranteed by United States Government agencies or
instrumentalities such as the Federal Home Loan Mortgage Corporation, Federal
Home Loan Bank, Federal National Mortgage Association, Government National
Mortgage Association and the Farmers Home Administration. Some obligations of
United States Government agencies and instrumentalities are supported by the
full faith and credit of the United States Treasury; others, by the right of the
issuer or guarantor to borrow from the United States Treasury; while still
others are supported only by the credit of the agency or instrumentality.
Accordingly, depending upon the particular obligations of United States agencies
and instrumentalities purchased, at any given time the Fund's investment in
these obligations may be supported only by the credit of such agencies or
instrumentalities.

(b) BANK OBLIGATIONS: Negotiable time deposits, negotiable certificates of
deposit (including certificates of deposit issued by London branches of United
States banks- "Eurodollar C.D.'s"), bankers' acceptances, and short-term notes
of banks (domestic or Canadian) having total assets in excess of one billion
dollars (U.S.) as of the date of their most recently published financial
statements (including foreign branches of domestic banks). While normally these
large domestic banks will be members of the Federal Reserve System and have
deposits insured by the Federal Deposit Insurance Corporation, these are not
investment requirements. Accordingly, the securities purchased by the Fund and
issued by domestic banks may or may not be insured by the Federal Deposit
Insurance Corporation, or, if insured, may not be insured for the full amount
purchased. (The purchase of obligations issued by foreign branches of domestic
banks, including Eurodollar C.D.'s, and by Canadian banks involves investment
considerations that are different in some respects from those associated with
obligations of domestic issuers, including the possible imposition of
withholding taxes on interest income or exchange controls, expropriation,
confiscatory taxation, the possible adoption of foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations, limitations on the removal of funds, or other adverse
political or economic developments. In addition, it may be more difficult to
obtain and enforce a judgment against a Canadian bank or foreign branch of a
domestic bank. To the extent the Fund purchases Eurodollar C.D.'s, consideration
will be given to their marketability and possible restrictions on international
currency transactions.) Eurodollar C.D.'s will be considered to be one industry
for the purpose of the fundamental restrictions set out below, and thus no more
than 25% of the Fund's assets at the time of purchase will be invested in
Eurodollar C.D.'s.

(c) SAVINGS ASSOCIATION OBLIGATIONS: Negotiable time deposits, negotiable
certificates of deposit, and other short-term notes of domestic mutual savings
banks and savings and loan associations having total assets in excess of one
billion dollars (U.S.) as of the date of their most recently published financial
statements. The deposits of these savings associations may or may not be insured
by the Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation. Accordingly, the securities purchased by the Fund and
issued by savings associations may or may not be insured, or, if insured, may
not be insured for the full amount purchased.

(d) COMMERCIAL PAPER: Short-term obligations of domestic issuers which at
the time of investment are (i) rated A-1 or A-2 by Standard & Poor's Corporation
or Prime-1 or Prime-2 by Moody's Investors Service, Inc., or (ii) if not rated,
issued by a company which at the date of investment has any outstanding debt
securities rated at least AA by Standard & Poor's or Aa by Moody's. (See
Appendix for an explanation of these ratings.) Commercial paper obligations may
include variable amount master demand notes which are obligations that permit
the investment of fluctuating amounts by the Fund at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and the borrower.
These notes permit daily changes in the amounts borrowed. The Fund has the right
to increase the amount under the note at any time up to the full amount provided
by the note agreement, or to decrease the amount, and the borrower may repay up
to the full amount of the note without penalty. The borrower is typically a
large industrial or finance company which also issues commercial paper.
Generally these notes provide that the interest rate is set daily by the
borrower; the rate is usually the same or similar to the interest rate on
commercial paper being issued by the borrower. Because variable amount master
demand notes are direct lending arrangements between the lender and
borrower, it is not generally contemplated that such instruments will be traded,

<PAGE>

and there is no secondary market for these notes, although they are redeemable
(and thus immediately repayable by the borrower) at the face value, plus accrued
interest, at any time. Accordingly, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. In
connection with master demand note arrangements, the Fund considers earning
power, cash flow and other liquidity ratios of the issuer. The Fund will only
invest in master demand notes of domestic issuers. If master demand notes are
rated by credit rating agencies, the Fund will invest in them only if such notes
meet the Fund's rating standards for investment in all commercial paper,
described above. If master demand notes are not rated, the Fund will invest in
such notes only if the issuer thereof has, at the date of investment, any
outstanding debt securities rated at least AA by Standard & Poor's or Aa by
Moody's. The Fund does not have any specific limits on the amount it may invest
in master demand notes. (See Appendix for an explanation of these ratings.)

(e) OTHER CORPORATE DEBT SECURITIES: Other marketable, nonconvertible
corporate debt securities of domestic issuers, including bonds and debentures,
which at the time of purchase have two years or less remaining to maturity and
are rated at least AA by Standard & Poor's or Aa by Moody's. (See Appendix for
an explanation of these ratings.)

(f) CANADIAN GOVERNMENT SECURITIES: United States dollar denominated
securities, such as bonds and Treasury bills, issued or guaranteed by the
Government of Canada, a province of Canada, or their instrumentalities or
political subdivisions. Some of these securities may be supported by the full
faith and credit of the Canadian Government while others may be supported only
by the credit of the province, instrumentality or political subdivision.
Accordingly, depending upon the particular securities issued by Canadian
provinces, instrumentalities or political subdivisions purchased, at any given
time the Fund's investment in these securities may be supported only by the
credit of such provinces, instrumentalities or political subdivisions. See
"Bank Obligations" above regarding investment considerations involving Canadian
issues.

(g) REPURCHASE AGREEMENTS: A short-term investment in which the purchaser
(i.e., the Fund) acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and at a set price, thereby
determining the yield during the purchaser's holding period. Repurchase
agreements usually are for short periods, such as one week or less, but may be
longer. The Fund may enter into repurchase agreements with a member bank of the
Federal Reserve System or a United States securities dealer. The Fund will not
enter into repurchase agreements of more than one week's duration if more than
10% of its total net assets would then be so invested-considering only the
remaining days to maturity of existing repurchase agreements. Repurchase
agreements are fully collateralized by the underlying debt securities and are
considered to be loans under the Investment Company Act of 1940. The underlying
securities could be any of those described above (normally securities of the
United States Government or its agencies and instrumentalities).

In addition, the Fund may lend portfolio securities to brokers, dealers and
financial institutions provided that cash, or equivalent collateral, equal to at
least 100% of the market value of the securities loaned is maintained by the
borrower with the Fund. During the time such securities are on loan, the
borrower will pay the Fund any income accruing thereon and the Fund may invest
the cash collateral and earn additional income or the Fund may receive an
agreed-upon fee from the borrower who has delivered equivalent collateral. Loans
will be subject to termination at the Fund's or the borrower's option. The Fund
will retain all rights of beneficial ownership as to the loaned portfolio
securities, including voting rights and rights to distributions, and will have
the right to regain record ownership of loaned securities to exercise such
beneficial rights. The Fund may pay reasonable administrative and custodial fees
in connection with a loan and may pay a negotiated portion of the interest
earned on the cash or equivalent collateral to the borrower or placing broker.

The Board of Managers of the Fund has set guidelines and standards for review
of investments in repurchase agreements and the creditworthiness of the seller
thereof, and monitors the actions of the Fund's investment advisor in entering
into repurchase agreements. Repurchase agreements may involve certain risks in
the event of bankruptcy or other default by the seller, including possible
delays and expenses in liquidating the collateral, decline in collateral value
and loss of interest.

<PAGE>

The Fund will make portfolio investments primarily in anticipation of or in
response to changing economic and money market conditions and trends. Investment
yields on relatively short-term obligations such as will compromise the Fund's
portfolio are subject to substantial and rapid fluctuation. The value of the
Fund's assets generally will vary inversely to changes in interest rates. If
interest rates increase after a security is purchased, the security, if sold,
may return less than its cost. Thus, current yield levels should not be
considered representative of yields for any future period of time. Because of
the variability of interest rates and the risks inherent in investing in money
market securities, including those risks discussed above with respect to
securities of foreign branches of domestic banks and of Canadian banks, there
can be no assurance that the Fund's investment objective will be attained. In
addition, to the extent that investments are made in instruments of non-
governmental issuers (and of governmental issuers, except those instruments
backed by the full faith and credit of that government), these assets, despite
their favorable credit ratings, are subject to some risk of default. Moreover,
should many Contract Owners redeem their Contracts or transfer from the Fund to
some other annuity product of The Franklin at about the same time, the Fund
might have to sell portfolio securities at a time when it would be
disadvantageous to do so, and at a lower price than if such securities were held
to maturity. There can be no assurance that the Cash Value of the Contracts
during the years prior to the Variable Annuitant's initial Annuity Payment Date
or the aggregate amount received during the years following the initial Annuity
Payment Date will equal or exceed the Stipulated Payments made under the
Contracts.

Except as limited by the fundamental investment restrictions below, the
foregoing investment policies are not fundamental and the Board of Managers of
the Fund may change such policies without approval of the Contract Owners.
However, the primary investment objective is fundamental and may not be changed
without such approval.

The following are the fundamental investment restrictions applicable to the
Fund:

(1) The Fund will not concentrate its investments in any one industry or
group of related industries, and no more than 25% of the value of the Fund's
assets at the time of purchase will be invested in any one industry or group of
related industries, except that there is no limitation with respect to
investments in obligations issued or guaranteed by the United States Government
or its agencies or instrumentalities, or in bankers' acceptances, repurchase
agreements or certificates of deposit of domestic banks. For purposes of this
restriction, telephone, gas and electric utilities each shall be considered a
separate industry. In addition, banks, savings associations, personal credit
institutions, business credit institutions and insurance companies shall each be
considered a separate industry.

(2) The Fund will not issue senior securities, except that the Fund may
borrow money as set forth in paragraph (3), below.

(3) The Fund will not borrow money except for temporary or emergency
purposes, and any such borrowings will not be used to purchase investment
securities and will not exceed 5% of the value of the Fund's assets; provided,
however, that the Fund may borrow money up to one-third of its assets, not to
increase its income but to meet redemption requests which might otherwise
require untimely dispositions of portfolio securities. So long as such
borrowings exceed 5% of the value of the Fund's assets, the Fund will not make
any new investments. In addition, to the extent such borrowings exceed the 5%
limit and cause a subsequent reduction of the required asset coverage, the Fund
will reduce the amount of its borrowings to comply with the appropriate asset
coverage required under the Investment Company Act of 1940.

(4) The Fund will not pledge, hypothecate, mortgage or otherwise encumber
its assets except in an amount not in excess of 15% of the value of its assets
to secure borrowings made in accordance with investment restriction (3) above.

(5) The Fund will not underwrite securities of other issuers, except that
the Fund may acquire portfolio securities under circumstances where, if sold,
it might be deemed to be an underwriter for purposes of the Securities Act of
1933. No such securities will be acquired except where parties other than the
Fund shall have agreed to bear any and all costs of registration under the
Securities Act of 1933. (However, it should be noted that even though an
agreement to register has been obtained, enforcement of such an agreement may
prove unfeasible or may involve delays which could adversely affect the Fund's
ability to resell such securities or the price at which such securities might
be resold.) No more than 10% of the value of the Fund's assets will at any
time be invested in such securities.

<PAGE>

(6) The Fund will not engage in the purchase and sale of interests in real
estate, except that the Fund may engage in the purchase and sale of money market
securities secured by real estate or interests therein or securities issued by
companies that invest in real estate or interests therein.

(7) The Fund will not engage in the making of loans to other persons, except
that the Fund may acquire qualified debt obligations or other money market
securities and enter into repurchase agreements referred to above (provided,
however, that the aggregate value of repurchase agreements maturing in more than
seven days will not exceed 10% of the Fund's total assets) , and may lend its
portfolio securities (provided that such loans do not in the aggregate exceed
20% of the value of the Fund's assets) if such loans are made according to the
guidelines of the Securities and Exchange Commission and the Board of Managers
of the Fund, including maintaining collateral from the borrower equal at all
times to the current market value of the securities loaned.

(8) The Fund will not engage in the purchase or sale of commodities or
commodity contracts or invest in oil, gas or other mineral exploration or
development programs.

(9) The Fund will not purchase securities (other than under repurchase
agreements of not more than seven days' duration-considering only the remaining
days to maturity of each existing repurchase agreement-or master demand notes)
for which there exists no readily available market, or for which there are legal
or contractual restrictions on resale (excepting from this restriction
securities that are subject to such resale restrictions but which, in the
judgment of The Franklin, are readily redeemable on demand) , if as a result of
any such purchase, more than 10% of the value of the Fund's assets would be
invested in such securities.

(10) The Fund will not purchase securities on margin, except for such short-
term credits as are necessary for the clearance of transactions.

(11) The Fund will not make short sales of securities or write, purchase or
sell puts, calls, straddles, spreads or combinations thereof.

(12) The Fund will not purchase the securities of any one issuer, other than
obligations issued or guaranteed by the United States Government and its
agencies or instrumentalities, if such purchase would cause more than 5% of the
Fund's assets to be invested in the securities of such issuer, except that up to
25% of the Fund's total assets taken at current value may be invested without
regard to such 5% limitation.

(13) The Fund will not acquire more than 10% of the outstanding voting
securities of any one issuer, other than obligations issued or guaranteed by the
United States Government and its agencies or instrumentalities (for this
purpose, all indebtedness of an issuer shall be deemed a single class) ; except
that up to 25% of the Fund's total assets taken at current value may be invested
without regard to such 10% limitation.

The primary investment objective and the fundamental investment restrictions
stated above may not be changed without approval by a vote of a majority of the
votes available to the Contract Owners. This means that the objective or
restrictions in question may not be changed without the approval of the lesser
of (a) the Contract Owners holding 67% or more of the voting power of the
Contract Owners present or represented at a meeting if Contract Owners holding
more than 50% of the total voting power of all Contract Owners in the Fund are
present or represented by proxy, or (b) Contract Owners holding more than 50% of
the total voting power of all Contract Owners in the Fund.

The following investment restrictions are not fundamental and may be changed
by action of the Board of Managers of the Fund:

(14) All securities in which the Fund invests shall be permissible for the
Fund under the Illinois Insurance Code. The Illinois Insurance Code provides
that investments of a separate account, like the Fund, are free of the
restrictions or provisions generally applicable to insurance companies under
that Code, and does not currently provide any special investment restrictions
applicable to separate accounts. However, no investment permitted under the
Illinois Insurance Code is thereby exempted from the other investment
restrictions specified under this caption.

(15) The Fund will not invest in companies for the purpose of exercising
control or management.

<PAGE>

(16) The Fund will not invest in the securities of other investment
companies.

(17) The Fund will not invest more than 5% of the value of its assets in
securities of issuers (other than issuers of United States agency securities)
which, with their predecessors, have a record of less than three years'
continuous operation.

If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values of portfolio securities or net assets will not be considered a
violation.

LEGAL RESTRICTIONS

The Securities and Exchange Commission imposes restrictions on the investment
authority of money market funds, such as the Fund, which are more restrictive
than the policies and restrictions of the Fund described above. In general, such
restrictions provide that a money market fund may not purchase any instrument
with a remaining maturity greater than 13 months or maintain a dollar-weighted
average portfolio maturity which exceeds ninety days. In addition, money market
funds are limited to making investments in United States dollar-denominated
investments which its board of directors determines present minimal credit risk
and which are at the time of acquisition rated (or which have been issued by an
issuer that has been rated) in one of the two highest rating categories by at
least two national rating agencies or, if unrated, that the money market fund's
board of directors determines are of comparable quality to a security so rated.
Money market funds are also generally prohibited from acquiring a security if,
after such acquisition, (i) more than 5% of the money market fund's assets would
be invested in the securities of the issuer of the acquired security, or (ii) if
the acquired security is not rated in the highest category by at least two
national rating agencies or is not an unrated security of comparable quality,
more than 1% of the money market fund's assets would be invested in the
securities of the issuer of the acquired security or more than 5% of the money
market fund's assets would be invested in securities that are not rated in the
highest category by at least two national rating agencies or that are not of
comparable quality. The foregoing percentage restrictions do not apply to
securities issued or guaranteed as to principal by the United States or by an
instrumentality of the United States and such securities may be purchased with
remaining maturities of up to two years. The acquisition of a security that is
rated by only one national rating agency must be approved by the money market
fund's board of directors.

SPECIAL INVESTMENT CONSTRAINTS

The amount of assets that the Fund may invest in the securities of any one
issuer is restricted by the Fund's fundamental investment restrictions and the
regulations of the Securities and Exchange Commission and the Internal Revenue
Service. See "Federal Income Tax Status - The Contracts: Non-Qualified Plans,"
p.31-34, below. Under the most restrictive of these provisions, the Fund
generally may not invest more than 5% of its assets in the securities of any
issuer, except that it may invest up to 55% of its assets in securities issued
or guaranteed as to principal by the United States government. It is
anticipated that the combination of these restrictions and the relatively small
and decreasing size of the Fund's assets will make it more difficult for the
Fund's investment adviser to secure appropriate commercial paper investments,
which have historically constituted a substantial portion of the Fund's
investments. As of December 31, 1995, the Fund's total assets were $2,308,143
(compared to total assets of $2,581,103 as of June 30, 1995 and total assets of
$2,803,785 as of December 31, 1994), and the maximum amount that the Fund was
permitted to invest in the commercial paper of any one issuer was approximately
$115,400. Due to market conditions, it is very difficult to purchase an issue
of commercial paper in an amount less than $100,000. The limit on the amount
the Fund may invest in the commercial paper of any one issuer will fall below
$100,000 if the Fund's assets decline below $2,000,000. It is possible that the
shrinking pool of commercial paper investments available to the Fund due to its
size may impair the future investment performance of the Fund.

<PAGE>

FEDERAL INCOME TAX STATUS

INTRODUCTION

The Contracts are designed for use by individuals in connection with
Qualified Plans or Non-Qualified Plans under the Code. The federal income tax
treatment of the Contracts and payments received thereunder depends on various
factors, including, among other factors, the tax status of The Franklin, the
type of retirement plan or program in connection with which the Contracts are
used and the form in which payments are received. The discussion of federal
income taxes contained in this Prospectus, which focuses on rules applicable to
Contracts purchased under this Prospectus, is general in nature and is based on
existing federal income tax law, which is subject to change. The tax discussion
is not intended as tax advice. The applicable federal income tax law is complex
and contains many special rules and exceptions in addition to the general rules
summarized herein. For these reasons, various questions about the applicable
rules exist. Accordingly, each person contemplating the purchase of a Contract
is advised to consult with a qualified tax advisor concerning federal income
taxes and any other federal, state or local taxes that may be applicable.

THE FRANKLIN

The Franklin is taxed as a "life insurance company" under the Code. Since the
operations of the Fund are part of the overall operations of The Franklin, the
Fund is subject to tax as part of The Franklin for federal income tax purposes.
Thus, the Fund is not taxed separately as a "regulated investment company" under
the Code.

Under the Code a life insurance company like The Franklin is generally taxed
at regular corporate rates, under a single-phase system, on its specially-
computed life insurance company taxable income. Some special rules continue to
apply, however, in the case of segregated asset accounts like the Fund.

Investment income and realized capital gains on the assets of the Fund are
reinvested by The Franklin for the benefit of the Fund and are taken into
account in determining the value of Accumulation Units and Annuity Units. As a
result, such income and gains are applied to increase reserves applicable to the
Fund. Under the Code, no federal income tax is payable by The Franklin on such
investment income or on realized capital gains of the Fund on assets held in the
Fund.

THE CONTRACTS: QUALIFIED PLANS

The manner in which payments received under a Contract are taxed for federal
income tax purposes depends on the form of payment. If payments are received in
the form of an annuity, then, in general, under Section 72 of the Code, such
payment is taxable to the recipient as ordinary income to the extent that such
payment exceeds the portion, if any, of the cost basis of the Contract that is
allocable to that payment. A payment received on account of partial redemption
of an annuity contract generally is taxable in whole or part. The taxation of a
partial redemption is governed by complex rules and a qualified tax advisor
should be consulted prior to a proposed partial redemption. If the Variable
Annuitant's life span exceeds his or her life expectancy, the Variable
Annuitant's cost basis will eventually be recovered, and any payments made after
that point will be fully taxable. If, however, the Annuity Payments cease after
the initial Annuity Payment Date by reason of the death of the Variable
Annuitant, the amount of any unrecovered cost basis in the Qualified Contract
will generally be allowed as a deduction to the Variable Annuitant for his or
her last taxable year.

Generally, payment of the proceeds of a Qualified Contract in a lump sum
instead of in the form of an annuity, either at or before maturity, also is
taxable as ordinary income to the extent the lump sum exceeds the cost basis of
the Qualified Contract. Taxation may be deferred, however, to the extent, if
any, that "rollover" treatment is available and elected for a particular
distribution.

The Qualified Contracts are designed for use in connection with several types
of Qualified Plans, as described generally below.

<PAGE>

A. QUALIFIED PENSION, PROFIT-SHARING AND ANNUITY PLANS

Under pension and profit-sharing plans that qualify under Section 401(a) of
the Code and annuity purchase plans that qualify under Section 403(a) of the
Code (collectively "Corporate Qualified Plans"), amounts contributed by an
employer to the Corporate Qualified Plan on behalf of an employee and any gains
thereon are not, in general, taxable to the employee until distribution.
Generally, the cost basis of an employee under a Corporate Qualified Plan will
equal the amount of non-deductible contributions, if any, that the employee made
to the Corporate Qualified Plan.

The Code imposes an additional tax of 10% on the taxable portion of any early
withdrawal from a Corporate Qualified Plan made by a Variable Annuitant before
age 59-1/2, death, or disability. The additional income tax on early withdrawals
will not apply however to certain distributions including (a) distributions
beginning after separation from service that are part of a series of
substantially equal periodic payments made at least annually for the life of the
Variable Annuitant or the joint lives of the Variable Annuitant and his or her
Beneficiary, and (b) distributions made to Variable Annuitants after attaining
age 55 and after separating from service. Further, additional penalties may
apply to distributions made on behalf of a "5-percent owner" (as defined by
Section 416(i)(1)(B) of the Code).

If a lump sum payment of the proceeds of a Contract qualifies as a "lump sum
distribution" under the Code, special tax rules (including limited capital gain
and income averaging treatment in some circumstances) may apply.

B. H.R. 10 PLANS (SELF-EMPLOYED INDIVIDUALS)

Self-employed persons (including members of partnerships) are permitted to
establish and participate in Corporate Qualified Plans under Sections 401(a) and
403(a) of the Code. Corporate Qualified Plans in which self-employed persons
participate are commonly referred to as "H.R. 10 Plans."

The tax treatment of annuity payments and lump sum payments received in
connection with an H.R. 10 Plan is, in general, subject to the same rules
described in "Qualified Pension, Profit-Sharing and Annuity Plans," immediately
above. Some special rules apply, however, in the case of self-employed persons
which, for example, affect certain "lump sum distribution" and "rollover" rules.

C. SECTION 403(B) ANNUITIES

Section 403(b) of the Code permits public schools and other tax-exempt
organizations described in Section 501(c)(3) of the Code to purchase annuity
contracts for their employees subject to special tax rules.

If the requirements of Section 403(b) are satisfied, amounts contributed by
the employer to purchase an annuity contract for an employee, and any gains
thereon, are not, subject to certain limitations, taxable to the employee until
distributed to the employee. Generally, the cost basis of an employee under a
Section 403(b) annuity contract will equal the amount of any non-deductible
contributions the employee made toward the contract plus any employer
contributions that were taxable to the employee because they exceeded excludable
amounts.

Federal tax law imposes limitations on distributions from Section 403(b)
annuity contracts. Withdrawals of amounts attributable to contributions made
pursuant to a salary reduction agreement in connection with a Section 403(b)
annuity contract will be permitted only (1) when an employee attains age 59-1/2,
separates from service, dies or becomes totally and permanently disabled or (2)
in the case of hardship. A withdrawal made in the case of hardship may not
include income attributable to the contributions. However, these limitations
generally do not apply to distributions which are attributable to assets held as
of December 31, 1988. In general, therefore, contributions made prior to January
1, 1989, and earnings on such contributions through December 31, 1988, are not
subject to these limitations. In addition, these limitations do not apply to
contributions made other than by a salary reduction agreement. A number of
questions exist concerning the application of these rules. Anyone considering a
withdrawal from a Contract issued in connection with a Section 403(b) annuity
plan should consult a qualified tax advisor.

The 10% penalty tax on early withdrawals described under "Qualified Pension,
Profit-Sharing and Annuity Plans," immediately above, also applies to Section
403(b) annuity contracts.

<PAGE>

D. INDIVIDUAL RETIREMENT ANNUITIES

1. SECTION 408(B) INDIVIDUAL RETIREMENT ANNUITIES

Under Sections 408(b) and 219 of the Code, special tax rules apply to
Individual Retirement Annuities. As described below, certain contributions to
such annuities (other than Rollover Contributions) are deductible within
certain limits and the gains on contributions (including Rollover Contributions)
are not taxable until distributed. Generally, the cost basis in an Individual
Retirement Annuity will equal the amount of non-deductible contributions, if
any, made to the Individual Retirement Annuity. Under special rules, all
individual retirement plans will be treated as one plan for purposes of these
rules.

Section 408(b) sets forth various requirements that an annuity contract must
satisfy before it will be treated as an Individual Retirement Annuity. Although
final regulations that interpret some of these requirements have been adopted,
other regulations have been proposed that interpret the additional requirement
that, under a Section 408(b) Individual Retirement Annuity, the premiums may not
be fixed. These proposed regulations, which contain certain ambiguities, may,
of course, be changed before they are issued in final form. ACCORDINGLY, WHILE
THE FRANKLIN BELIEVES THAT THE CONTRACTS OFFERED BY THIS PROSPECTUS MEET THE
REQUIREMENTS OF SECTION 408(B), THE FINAL REGULATIONS AND THE CURRENTLY PROPOSED
REGULATIONS THEREUNDER, THERE CAN BE NO ASSURANCE THAT THE CONTRACTS QUALIFY AS
INDIVIDUAL RETIREMENT ANNUITIES UNDER SECTION 408(B) PENDING THE ISSUANCE OF
COMPLETE FINAL REGULATIONS UNDER THAT CODE SECTION.

Individuals who are not "active participants" in an employer-related
retirement plan described in Section 219(g) of the Code will, in general, be
allowed to contribute to an Individual Retirement Annuity and to deduct a
maximum of $2,000 annually (or 100% of the individual's compensation if less) .
In addition, this deduction will be allowed for individuals who are active
participants in Qualified Plans with annual adjusted gross income that is not
above $25,000 ($40,000 for married individuals filing a joint return). This
deduction will be phased out for individuals who are active participants in
Qualified Plans with annual adjusted gross income between $25,000 and $35,000
($40,000 and $50,000 for married individuals filing a joint return), and will
not be allowed for such active participants with annual adjusted gross income
above $35,000 ($50,000 for married individuals filing a joint return). The
active participant status of both spouses is taken into account in determining
the deductible limit. In addition, an individual will not be considered married
for a year in which the individual and the individual's spouse (1) file separate
returns and (2) did not live together at any time during the year. Individuals
who may not make deductible contributions to an Individual Retirement Annuity
may, instead, make non-deductible contributions (up to the applicable maximum
described above) on which earnings will accumulate on a tax-deferred basis. If
the Individual Retirement Annuity includes non-deductible contributions,
distributions will be divided on a pro rata basis between taxable and non-
taxable amounts. Special rules apply if, for example, an individual contributes
to an Individual Retirement Annuity for his or her own benefit and to another
Individual Retirement Annuity for the benefit of his or her spouse.

The 10% penalty tax on early withdrawals described under "Qualified Pension,
Profit-Sharing and Annuity Plans," p. 32, above, also applies to Individual
Retirement Annuities, except that the circumstances in which the penalty tax
will not apply are different in certain respects. Further, for any year in which
a Contract Owner borrows any money under or by use of the Individual Retirement
Annuity, the Contract ceases to qualify under Section 408(b), and an amount
equal to the fair market value of the Contract as of the first day of such year
is includible in the Contract Owner's gross income for such year.

2. SECTION 408(K) SIMPLIFIED EMPLOYEE PENSIONS

An Individual Retirement Annuity described in Section 408(b) of the Code that
also meets the special requirements of Section 408(k) qualifies as a Simplified
Employee Pension. Under a Simplified Employee Pension, employers may contribute
to the Individual Retirement Annuities of their employees. An employee may
exclude the employer's contribution on his or her behalf to a Simplified
Employee Pension from gross income subject to certain limitations. Elective
deferrals under a Simplified Employee Pension are to be treated like elective
deferrals under a cash or deferred arrangement under Section 401(k) of the Code
and are subject to a $7,000 limitation, adjusted for inflation. In general, the
employee may also contribute and deduct an additional amount not in excess of
the lesser of (a) $2,000 or (b) 100% of compensation if the employee meets the
qualifications for an Individual Retirement Annuity.

<PAGE>

In general, except as stated in this section, the rules discussed in "Section
408(b) Individual Retirement Annuities," p. 33, apply to a Simplified Employee
Pension.

THE CONTRACTS: NON-QUALIFIED PLANS

In the case of Non-Qualified Contracts issued in connection with retirement
or deferred compensation plans which are Non-Qualified Plans, the provisions of
the Plan determine the tax treatment of Plan participants.

For example, contributions to, or deferred compensation in connection with,
Non-Qualified Plans may or may not be currently taxable to participants.

Payments received under a Non-Qualified Contract are subject to tax under
Section 72 of the Code. If payments are received in the form of an annuity,
then, in general, each payment is taxable as ordinary income to the extent that
such payment exceeds the portion of the cost basis of the annuity contract that
is allocable to that payment. Payment of the proceeds of an annuity contract in
a lump sum either before or at maturity is taxable as ordinary income to the
extent the lump sum exceeds the cost basis of the annuity contract. If the
Variable Annuitant's life span exceeds his or her life expectancy, the Variable
Annuitant's cost basis will eventually be recovered, and any payments made after
that point will be fully taxable. If, however, the Annuity Payments cease after
the initial Annuity Payment Date by reason of the death of the Variable
Annuitant, the amount of any unrecovered cost basis in the Contract will
generally be allowed as a deduction to the Variable Annuitant for his or her
last taxable year.

A payment received on account of a partial redemption of an annuity contract
generally is taxable as ordinary income in whole or in part. Also, if prior to
the initial Annuity Payment Date, (i) an annuity contract is assigned or
pledged, or (ii) a Contract issued after April 22, 1987 is transferred without
adequate consideration, then the amount assigned, pledged or transferred may
similarly be taxable. Special rules may apply with respect to investments in a
Contract made before August 14, 1982. Because the applicable tax treatment is
complex, a qualified tax advisor should be consulted prior to a partial
withdrawal, assignment, pledge, or contract transfer.

Further, in general, in the case of a payment received under a Non-Qualified
Contract in a taxable year beginning after December 31, 1986, a penalty may be
imposed equal to 10% of the taxable portion of the payment. However, the 10%
penalty does not apply in various circumstances. For example, the penalty is
generally inapplicable to payments that are: (i) made on or after age 59-1/2;
(ii) allocable to investments in the Contract before August 14, 1982, (iii) made
on or after the death of the holder; (iv) made incident to disability; (v) part
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or the life expectancy) of the Variable Annuitant
or the joint lives (or joint life expectancies) of the Variable Annuitant and
his or her beneficiary; or (vi) made under a Contract purchased with a single
premium and which has an annuity starting date commencing no later than one
year from the purchase date of the annuity and which provides for a series of
substantially equal periodic payments (to be made not less frequently than
annually) during the annuity period.

A Non-Qualified Contract will not be treated as an annuity contract for
purposes of certain Code sections, including Section 72, for any period (and any
subsequent period) for which the investments made by the Fund attributable to
such Non-Qualified Contract are not, in accordance with Treasury regulations,
adequately diversified. Although certain questions exist about the
diversification standards, The Franklin believes that the Fund presently
satisfies those standards and intends that the Fund will continue to be
adequately diversified for those purposes.

AGGREGATION OF CONTRACTS

Under a provision of the federal tax law effective for annuity contracts
entered into after October 21, 1988, all annuity contracts (other than contracts
held in connection with Qualified Plans) issued by the same company (or
affiliates) to the same contract owner during any calendar year will generally
be treated as one annuity contract for the purpose of determining the amount of
any distribution, not in the form of an annuity, that is includable in gross
income. This rule may have the effect of causing more rapid taxation of the
distributed amounts from such combination of contracts. It is not certain how
this rule will be applied or interpreted by the Internal Revenue Service. In
particular, it is not clear if or how this rule applies to Immediate Variable
Annuity Contracts or "split" annuity arrangements. Accordingly, a qualified tax
advisor should be consulted about the application and effect of this rule.

<PAGE>

INCOME TAX WITHHOLDING

Withholding of federal income tax is generally required from distributions
from Qualified Plans and Non-Qualified Plans, or Contracts issued in connection
therewith, to the extent the distributions are taxable and are not otherwise
subject to withholding as wages ("Distributions"). See "The Contracts: Qualified
Plans," pp. 31-34, above, and "The Contracts: Non-Qualified Plans," pp. 34,
above, regarding the taxation of Distributions.

Federal income tax is generally required to be withheld from all or any
portion of a Distribution made on or after January 1, 1993 that constitutes an
"eligible rollover distribution." An "eligible rollover distribution" generally
includes any distribution from a qualified trust described in Section 401(a) of
the Code, a qualified annuity plan described in Section 403(a) of the Code or a
qualified annuity contract described in Section 403(b) of the Code except for
(i) a distribution which is one of a series of substantially equal periodic
instalments payable at least annually for the life (or over the life expectancy)
of the Variable Annuitant or for the joint lives (or over the joint life
expectancies) of the Variable Annuitant and his or her Beneficiary, or for a
specified period of 10 years or more or (ii) a minimum distribution required
pursuant to Section 401(a)(9) of the Code and (iii) an amount which is not
includible in gross income (for example, the return of non-deductible
contributions). Any eligible rollover distribution which is not rolled over
directly from a Section 401(a) qualified trust, a Section 403(a) qualified
annuity plan or a Section 403(b) qualified annuity contract to an "eligible
retirement plan" is subject to mandatory federal income tax withholding in an
amount equal to 20% of the eligible rollover distribution. An "eligible
retirement plan" generally includes a qualified trust described in Section
401(a) of the Code, a qualified annuity plan described in Section 403(a) of the
Code, an individual retirement account described in Section 408(a) of the Code
or an Individual Retirement Annuity described in Section 408(b) of the Code.
Mandatory federal income tax withholding is required even if the Variable
Annuitant receives an eligible rollover distribution and rolls it over within 60
days to an eligible retirement plan. Federal income tax is not required to be
withheld from any eligible rollover distribution which is rolled over directly
from a qualified trust described in Section 401(a) of the Code, a qualified
annuity plan described in Section 403(a) of the Code or a qualified annuity
contract described in Section 403(b) of the Code to an eligible retirement plan.

Except with respect to certain payments delivered outside the United States
or any possession of the United States, federal income tax is not required to be
withheld from any Distribution which does not constitute an eligible rollover
distribution, if the Variable Annuitant or Beneficiary properly elects in
accordance with the prescribed procedures not to have withholding apply. In the
absence of a proper election not to have withholding apply, the amount to be
withheld from a Distribution which is not an eligible rollover distribution
depends upon the type of payment being made. Generally, in the case of a
periodic payment which is not an eligible rollover distribution, the amount to
be withheld from such payment is the amount that would be withheld therefrom
under specified wage withholding tables if the payment were a payment of wages
for the appropriate payroll period. In the case of a nonperiodic payment which
is not an eligible rollover distribution, the amount to be withheld is generally
equal to 10% of the amount of the Distribution.

The applicable federal law pertaining to income tax withholding from
Distributions is complex and contains many special rules and exceptions in
addition to the general rules summarized above. Special rules apply, for
example, if the Distribution is made to the surviving spouse of a Variable
Annuitant or if the Distribution is an eligible rollover distribution from a
qualified annuity contract under Section 403(b) of the Code. Any Variable
Annuitant or Beneficiary considering a Distribution should consult a qualified
tax advisor.

MANAGEMENT

The Fund is managed by a Board of Managers elected annually by the Contract
Owners. The Board of Managers currently has four members. The members of the
Board of Managers also serve as the Board of Managers of Franklin Life Variable
Annuity Fund A and Franklin Life Variable Annuity Fund B, separate accounts of
The Franklin having investment objectives of long-term appreciation of capital
through investment appreciation and retention and reinvestment of income derived
mainly from investments in equity securities, particularly common stocks. The
assets of Fund A are held with respect to Variable Annuity contracts
used in connection with certain qualified

<PAGE>

plans and trusts or individual retirement annuities accorded special tax
treatment under the Code and those of Fund B are held with respect to Variable
Annuity contracts used for retirement planning for individuals and not in
connection with qualified plans and trusts, individual retirement annuities or
employer-related plans that are accorded such special tax treatment.

The affairs of the Fund are conducted in accordance with Rules and
Regulations adopted by the Board of Managers. Under the Rules and Regulations,
the Board of Managers is authorized to take various actions on behalf of the
Fund, including the entry into contracts for the purpose of services with
respect to the Fund under circumstances where the approval of such contracts is
not required to be submitted to the Contract Owners. Subject to the authority of
the Board of Managers, officers and employees of The Franklin are responsible
for overall management of the Fund's business affairs.

VOTING RIGHTS

All Contract Owners will have the right to vote upon:

(1) The approval of any investment management agreement and any amendment
thereto.

(2) Ratification of an independent public accountant for the Fund.

(3) Any change in the primary investment objective or fundamental investment
restrictions of the Fund.

(4) Election of members of the Board of Managers of the Fund (cumulative
voting is not permitted).

(5) Termination of the investment management agreement (such termination may
also be effected by the Board of Managers).

(6) Any other matter submitted to them by the Board of Managers.

The number of votes which a Contract Owner may cast as to any Contract,
except after the initial Annuity Payment Date, is equal to the number of
Accumulation Units credited to the Contract. With respect to any Contract as to
which Annuity Payments measured by Annuity Units have commenced, the Contract
Owner may cast a number of votes equal to (i) the amount of the assets in the
Fund to meet the Variable Annuity obligations related to such Contract, divided
by (ii) the value of an Accumulation Unit. Accordingly, the voting rights of a
Contract Owner will decline during the Annuity Payment period as the amount of
assets in the Fund required to meet the Annuity Payments decreases and, in
addition, will decline as the value of an Accumulation Unit increases.
Fractional votes will be counted.

An employee covered by an H.R. 10 Plan, if not the Contract Owner, will have
the right to instruct the Contract Owner with respect to all votes attributable
to the Qualified Contract. An employee covered by a Qualified Contract issued in
connection with a qualified pension or profit-sharing plan described in Section
401 of the Code will have the right to instruct the Contract Owner with respect
to votes attributable to his or her payments to the plan, if any, and, to the
extent authorized by the terms of the plan, with respect to any additional votes
under the Qualified Contract. If Annuity Payments are being made under an
annuity to a person who is not a Contract Owner, that person will have the right
to instruct the Contract Owner with respect to votes attributable to the amount
of the assets in the Fund to meet the Annuity Payments related to the Contract.

<PAGE>

Qualified Contract Owners will cast votes with respect to which instructions
have been received in accordance with such instructions. Votes with respect to
which employees, Variable Annuitants or other persons to whom payments are being
made under a Qualified Contract are entitled to instruct the Contract Owner, but
for which the Contract Owner has received no instructions, shall be cast by the
Contract Owner for or against each proposal to be voted on in the same
proportion as votes for which instructions have been received by such Contract
Owner. If no one is entitled to instruct the Contract Owner, or if the Contract
Owner receives no instructions, all votes which the Contract Owner is entitled
to cast may be cast at his or her sole discretion. Neither the Fund nor The
Franklin has any duty to inquire as to the instructions received or the
authority of the Contract Owner to cast such votes; except to the extent that
the Fund or The Franklin has actual knowledge to the contrary, the votes cast by
Contract Owners will be considered valid and effective as among the Fund, The
Franklin and other persons having voting rights with respect to the Fund.

Should assets be maintained in the Fund with respect to contracts other than
those offered by this Prospectus, contract owners under such contracts would be
entitled to vote, and their votes would be computed in a similar manner. Assets
maintained by The Franklin in the Fund in excess of the amounts attributable to
the Contracts or other contracts of The Franklin will entitle The Franklin to
vote and its vote would be computed in a similar manner. The Franklin will cast
its votes in the same proportion as the votes cast by Contract Owners and the
owners of such other contracts.

The number of votes which each Contract Owner may cast at a meeting shall be
determined as of a record date to be chosen by the Board of Managers within 120
days of the date of the meeting. At least 20 days' written notice of the meeting
will be given to Contract Owners of record. To be entitled to vote or to receive
notice, a Contract Owner must have been such on the record date.

DISTRIBUTION OF THE CONTRACTS

Franklin Financial Services Corporation serves as "principal underwriter" (as
that term is defined in the Investment Company Act of 1940) for the Contracts
pursuant to a Sales Agreement with the Fund. The Sales Agreement is described
under "Distribution of The Contracts" in the Statement of Additional
Information. Franklin Financial, located at #1 Franklin Square, Springfield,
Illinois 62713, is organized under the laws of the State of Delaware and is a
wholly-owned subsidiary of The Franklin.

STATE REGULATION

As a life insurance company organized and operated under Illinois law, The
Franklin is subject to statutory provisions governing such companies and to
regulation by the Illinois Director of Insurance. An annual statement is filed
with the Director on or before March 1 of each year covering the operations of
The Franklin for the preceding year and its financial condition on December 31
of such year. The Franklin's books and accounts are subject to review and
examination by the Illinois Insurance Department at all times, and a full
examination of its operations is conducted by the National Association of
Insurance Commissioners ("NAIC") periodically. The NAIC has divided the country
into six geographic zones. A representative of each such zone may participate in
the examination.

In addition, The Franklin is subject to the insurance laws and regulations of
the jurisdictions other than Illinois in which it is licensed to operate.
Generally, the insurance departments of such jurisdictions apply the laws of
Illinois in determining permissible investments for The Franklin.

For certain provisions of Illinois law applicable to the Fund's investments,
see "Investment Policies and Restrictions of the Fund," pp. 25-30, above.

REPORTS TO OWNERS

The Franklin will mail to the Contract Owner, at the last known address of
record at the Home Office of The Franklin, at least annually, a report
containing such information as may be required by any applicable law or
regulation and a statement showing the then Cash Value of his or her Contract.

<PAGE>

FUNDAMENTAL CHANGES

The Franklin has no present intention of effecting any of the following
fundamental modifications in the operations or status of the Fund. However, upon
compliance with applicable law, including obtaining any necessary affirmative
vote of Contract Owners in each case: (a) the Fund may be operated in a form
other than as a "management company" under the Investment Company Act of 1940
(including operation as a "unit investment trust") ; (b) the Fund may be
deregistered under the Investment Company Act of 1940 in the event such
registration is no longer required; or (c) the provisions of the Contracts may
be modified to assure qualification under the pertinent provisions of the Code
or to comply with other applicable federal or state laws. In the event of any
such fundamental change, The Franklin may make appropriate amendments to the
Contracts to give effect to such change or take such other action as may be
necessary in this respect.

REGISTRATION STATEMENT

A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Contracts offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement and amendments thereto and exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Fund, The Franklin and the Contracts offered hereby.
Statements contained in this Prospectus as to the content of Contracts and other
legal instruments are summaries. For a complete statement of the terms thereof,
reference is made to such instruments as filed.

OTHER VARIABLE ANNUITY CONTRACTS; EFFECT OF NON-QUALIFICATION

The Franklin may offer, under other prospectuses, other variable annuity
contracts having interests in the Fund and containing different terms and
conditions from those offered hereby.

In the event that a plan intended to qualify as a Qualified Plan under the
Code fails to meet the applicable qualification requirements under the Code
(including Section 818(a)) or in the event a Qualified Plan ceases to qualify
thereunder, The Franklin shall have the right, upon receiving notice of such
non-qualification, to treat any such Contract issued in connection with such a
plan as a Non-Qualified Contract participating in the Fund.

YIELD INFORMATION

In accordance with regulations adopted by the Securities and Exchange
Commission, the Fund has computed an annualized yield and an effective yield for
a seven-day period ending on the date of the Fund's most recent balance sheet.
The annualized yield is computed by determining the net change, exclusive of
realized gains and losses from the sale of investments and unrealized
appreciation and depreciation on investments, in the value of a hypothetical
pre-existing account having a balance of one Accumulation Unit at the beginning
of the period, dividing the net change in account value by the value of the
account at the beginning of the seven-day period (the "base period return") and
multiplying this result by 365/7 to obtain an annualized yield. The annualized
yield for the seven calendar day period ended December 29, 1995 was 4.00%.The
effective yield is computed by compounding the base period return by adding one,
raising the sum to a power equal to 365 divided by 7, and substracting one from
the result. The effective yield for the seven calendar day period ended December
29, 1995 was 4.08%. The effective yield is higher because it represents a
compound yield, i.e. it assumes that the increase in account value represented
by the base period return is reinvested.

Yield as determined with respect to a portfolio composed primarily of money
market securities normally will fluctuate on a daily basis and is affected by
changes in interest rates on money market securities, average portfolio
maturities, the type and quality of portfolio securities held and the expenses
of the Fund. Therefore, the yield for any given past period should not be
considered as a representation of the yield for any future period.

<PAGE>

In addition, although yield information may be useful in reviewing the Fund's
performance and in providing a basis for comparison with other investment
alternatives, it should be kept in mind that the Fund's yield cannot be compared
to the yield on bank deposits and other investments which pay fixed yields for a
stated period of time and that other investment companies may calculate yield on
additional bases. When comparing the yields of investment companies,
consideration should be given to the quality and maturity of the portfolio of
securities of each company as well as to the type of expenses incurred. In this
connection, it should be noted that the accrued expenses of the Fund differ from
those incurred under conventional money market funds that do not offer variable
annuity contracts in that additional charges are made against the Fund relating
to The Franklin's assumption of mortality and expense risks under the Contract.
See "Mortality and Expense Risk Charge," p. 12, above. In addition, the yield
information contained herein does not reflect administration deductions from
Stipulated Payments or deductions for premium taxes, which would reduce the
yield and effective yield contained herein. Furthermore, unlike investments in
conventional money market funds which may be held on a non-qualified basis by
the investor, investment income earned by the Fund during the accumulation
period is not currently taxable to holders of Contracts. See "Federal Income Tax
Status," pp. 31-35, above.

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

PAGE IN STATEMENT OF
ADDITIONAL INFORMATION
----------------------
General Information . . . . . . . . . . . . . . . . . . 3
Investment Objectives. . . . . . . . . . . . . . . . . . 3
Limitations on Settlement Options. . . . . . . . . . . . 3
Management . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Advisory and Other Services . . . . . . . . . 7
Distribution of The Contracts. . . . . . . . . . . . . . 8
Portfolio Turnover and Brokerage . . . . . . . . . . . . 9
Safekeeper of Securities . . . . . . . . . . . . . . . . 10
Legal Opinions . . . . . . . . . . . . . . . . . . . . . 10
Experts. . . . . . . . . . . . . . . . . . . . . . . . . 10
Index to Financial Statements. . . . . . . . . . . . . . F-1

<PAGE>

APPENDIX-DEBT SECURITY RATINGS

STANDARD & POOR'S CORPORATION-BOND RATINGS

AAA-Highest grade. Capacity to pay principal and interest is extremely
strong. AA-High grade. Capacity to pay principal and interest is very strong,
and in the majority of instances these bonds differ from AAA issues only in a
small degree. A-Strong capacity to pay principal and interest, although they are
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions.

MOODY'S INVESTORS SERVICE, INC.-BOND RATINGS

Aaa-Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt-edge." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues. Aa-High quality by all standards. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities, fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make the long-term risks appear
somewhat larger. A-Upper medium grade. Factors giving security to principal and
interest are considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.

COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market. An A-1 rating (highest quality) by Standard & Poor's indicates that the
degree of safety regarding timely repayment is strong. An A-2 rating indicates
that capacity for timely payment is satisfactory, although the relative degree
of safety is not as high as for issues designated A-1. An A-3 rating indicates
adequate capacity for repayment but with more vulnerability to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Issuers (or institutions supplying credit support) rated
Prime-1 (Moody's highest rating) have a superior ability for repayment of senior
short-term debt obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics: (1) leading market positions in well-
established industries; (2) high rates of return on funds employed; (3)
conservative capitalization structure with moderate reliance on debt and ample
asset protection; (4) broad margins in earnings coverage of fixed financial
charges and high internal cash generation; and (5) well established access to a
range of financial markets and assured sources of alternate liquidity. Issuers
(or institutions supplying credit support) rated Prime-2 have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Issuers (or institutions supplying credit support) rated Prime-3 have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.

<PAGE>

PROSPECTUS

FRANKLIN LIFE MONEY
MARKET VARIABLE
ANNUITY FUND C

INDIVIDUAL VARIABLE
ANNUITY CONTRACTS

ISSUED BY
THE FRANKLIN LIFE INSURANCE COMPANY
#1 FRANKLIN SQUARE
SPRINGFIELD, ILLINOIS 62713

- --------------------------------------------------------------------------------
Complete and return this form to:

Supply Department
The Franklin Life Insurance Company
#1 Franklin Square
Springfield, Illinois 62713
(217) 528-2011

Please send me the Statement of Additional Information dated April 30, 1996 for
Franklin Life Money Market Variable Annuity Fund C.

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

- --------------------------------------------------------------------------------
(Street)

- --------------------------------------------------------------------------------
(City) (State) (Zip Code)

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

<PAGE>

INDIVIDUAL VARIABLE ANNUITY
CONTRACTS

ISSUED BY

FRANKLIN LIFE MONEY MARKET THE FRANKLIN LIFE INSURANCE COMPANY
VARIABLE ANNUITY #1 FRANKLIN SQUARE
SPRINGFIELD, ILLINOIS 62713
FUND C TELEPHONE (217) 528-2011

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus dated April 30, 1996 relating to the
offering of individual variable annuities for use as individual retirement
annuities or in connection with trusts and retirement or deferred compensation
plans which may or may not qualify for special federal tax treatment under the
Internal Revenue Code. A copy of the Prospectus may be obtained by writing to
the Equity Administration Department of The Franklin Life Insurance Company at
the address set forth above or by calling (217) 528-2011.

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

THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.

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

THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS APRIL 30, 1996.

<PAGE>

TABLE OF CONTENTS

PAGE

General Information. . . . . . . . . . . . . . . . . . . . . . . . 3

Investment Objectives. . . . . . . . . . . . . . . . . . . . . . . 3

Limitations on Settlement Options. . . . . . . . . . . . . . . . . 3

Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Investment Advisory and Other Services . . . . . . . . . . . . . . 7

Distribution of The Contracts. . . . . . . . . . . . . . . . . . . 8

Portfolio Turnover and Brokerage . . . . . . . . . . . . . . . . . 9

Safekeeper of Securities . . . . . . . . . . . . . . . . . . . . . 10

Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Index to Financial Statements. . . . . . . . . . . . . . . . . . . F-1

<PAGE>

GENERAL INFORMATION

The individual variable annuity contracts offered by the Prospectus dated
April 30, 1996 (the "Prospectus") are designed primarily to provide annuity
payments which will vary with the investment performance of Franklin Life Money
Market Variable Annuity Fund C (the "Fund"), a separate account which has been
established by The Franklin Life Insurance Company ("The Franklin") under
Illinois insurance law. Reference is made to the Prospectus, which should be
read in conjunction with this Statement of Additional Information. Capitalized
terms not otherwise defined in this Statement of Additional Information shall
have the meanings designated in the Prospectus.

On January 31, 1995, American General Corporation ("American General")
through its wholly-owned subsidiary, AGC Life Insurance Company, purchased from
American Brands, Inc. all of the outstanding shares of common stock of American
Franklin Company, the parent corporation of The Franklin, pursuant to a stock
purchase agreement dated as of November 29, 1994. The address of American
Franklin Company is #1 Franklin Square, Springfield, Illinois 62713. The
address of AGC Life Insurance Company is American General Center, Nashville,
Tennessee 37250-0001. The address of American General is 2929 Allen Parkway,
Houston, Texas 77019-2155.

American General is one of the nation's largest diversified financial
services organizations, with assets of $61 billion and shareholders' equity of
$5.8 billion. Founded in 1926 and headquartered in Houston, it is a leading
provider of retirement annuities, consumer loans and life insurance.

American General has advised the Fund that there was no person who was known
to it to be the beneficial owner of 10% or more of the voting power of American
General as of February 15, 1996.

INVESTMENT OBJECTIVES

The investment objectives of the Fund are described under "Investment
Policies and Restrictions of the Fund" in the Prospectus.

LIMITATIONS ON SETTLEMENT OPTIONS

A. LIMITATIONS ON CHOICE OF SETTLEMENT OPTION

Described below are certain limitations on Settlement Options based on The
Franklin's current understanding of the distribution rules generally applicable
to Non-Qualified Contracts and to Qualified Contracts purchased for use as
Individual Retirement Annuities or issued in connection with Section 403(b)
annuity purchase plans. Various questions exist, however, about the application
of the distribution rules to distributions from the Contracts and their effect
on Settlement Option availability thereunder.

The Internal Revenue Service has proposed regulations relating to required
distributions from qualified plans, individual retirement plans, and annuity
contracts under Section 403(b) of the Code. These proposed regulations may limit
the availability of the Settlement Options in Contracts purchased for use as
Individual Retirement Annuities or issued in connection with Section 403(b)
annuity purchase plans. The proposed regulations are generally effective for
calendar years after 1984; persons contemplating the purchase of a Contract
should consult a qualified tax advisor concerning the effect of the proposed
regulations on the Settlement Option or Options he or she is contemplating.

FIRST OPTION-LIFE ANNUITY. Under Qualified Contracts issued for use as
Individual Retirement Annuities or in connection with Section 403(b) annuity
purchase plans, if the Variable Annuitant dies before Annuity Payments have
commenced, this Option is not available to a Beneficiary unless distributions to
the Beneficiary begin not later than one year after the date of the Variable
Annuitant's death (except that distributions to a Beneficiary who is the
surviving spouse of the Variable Annuitant need not commence earlier than the
date on which the Variable Annuitant would have attained age 70-1/2). If the
surviving spouse of the Variable Annuitant is the Beneficiary and such surviving
spouse dies before Annuity Payments to such spouse have commenced, the surviving
spouse will be treated as the Variable Annuitant for purposes of the preceding
rule.

<PAGE>

Under Non-Qualified Contracts, the limitations of the preceding paragraph
(other than the parenthetical clause) apply.

SECOND OPTION-LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN.
Under Qualified Contracts issued for use as Individual Retirement Annuities or
in connection with Section 403(b) annuity purchase plans, this Option is not
available unless the selected period does not extend beyond the life expectancy
of the Variable Annuitant (or the life expectancy of the Variable Annuitant and
his or her Beneficiary). Further, if the Variable Annuitant dies before Annuity
Payments have commenced, this Option is not available to a Beneficiary unless
(i) the selected period does not extend beyond the life expectancy of the
Beneficiary and (ii) the distribution to the Beneficiary commences not later
than one year after the date of the Variable Annuitant's death (except that
distributions to a Beneficiary who is the surviving spouse of the Variable
Annuitant need not commence earlier than the date on which the Variable
Annuitant would have attained age 70-1/2). If the surviving spouse of the
Variable Annuitant is the Beneficiary and the surviving spouse dies before
Annuity Payments to such spouse have commenced, the surviving spouse will be
treated as the Variable Annuitant for purposes of the preceding sentence. This
Option is also not available under Individual Retirement Annuities or in
connection with Section 403(b) annuity purchase plans unless certain minimum
distribution incidental benefit requirements of the proposed regulations are
met.

Under Non-Qualified Contracts the limitations of the second and third
sentences of the preceding paragraph (other than the parenthetical clause)
apply.

THIRD OPTION-UNIT REFUND LIFE ANNUITY. This Option is not available under
Qualfied Contracts issued for use as Individual Retirement Annuities. Also,
under Qualified Contracts issued in connection with Section 403(b) annuity
purchase plans, if the Variable Annuitant dies before Annuity Payments have
commenced, this Option is not available to a Beneficiary unless distributions to
the Beneficiary begin not later than one year after the date of the Variable
Annuitant's death (except that distributions to a Beneficiary who is the
surviving spouse of the Variable Annuitant need not commence earlier than the
date on which the Variable Annuitant would have attained age 70-1/2). If the
surviving spouse of the Variable Annuitant is the Beneficiary and such surviving
spouse dies before Annuity Payments to such spouse have commenced, the surviving
spouse will be treated as the Variable Annuitant for purposes of the preceding
rule. This Option is also not available in connection with Section 403(b)
annuity purchase plans unless certain minimum distribution incidental benefit
requirements of the proposed regulations are met.

Under Non-Qualified Contracts the limitations of the second and third
sentences of the preceding paragraph (other than the parenthetical clause)
apply.

FOURTH OPTION-JOINT AND LAST SURVIVOR LIFE ANNUITY. Under Qualified
Contracts issued for use as Individual Retirement Annuities or in connection
with Section 403(b) annuity purchase plans, this Option is not available unless
the secondary variable annuitant is the spouse of the Variable Annuitant or
unless certain minimum distribution incidental benefit requirements of the
proposed regulations are met. Further, if the Variable Annuitant dies before
Annuity Payments have commenced, this Option is not available to a Beneficiary
under a Non-Qualified Contract or a Qualified Contract issued for use as
Individual Retirement Annuities or in connection with Section 403(b) annuity
purchase plans.

FIFTH OPTION-PAYMENTS FOR A DESIGNATED PERIOD. Under Qualified Contracts
issued for use as Individual Retirement Annuities or in connection with Section
403(b) annuity purchase plans, this Option is not available unless the
limitations described in the Second Option, above, applicable to such Qualified
Contracts, are satisfied, except that this Option is otherwise available to a
Beneficiary where the Variable Annuitant dies before Annuity Payments have
commenced, if the designated period does not exceed a period that terminates
five years after the death of the Variable Annuitant or the substituted
surviving spouse, as the case may be. In addition, this Option is not available
if the number of years in the selected period over which Annuity Payments would
otherwise be paid plus the attained age of the Variable Annuitant at the initial
Annuity Payment Date would exceed 95.

Under Non-Qualified Contracts this Option is not available to a Beneficiary
where the Variable Annuitant dies before Annuity Payments have commenced, unless
either the limitations described in the Second Option, above,

<PAGE>

applicable to such Non-Qualified Contracts are satisfied, or the selected period
does not exceed a period that terminates five years after the death of the
Variable Annuitant or the substituted surviving spouse, as the case may be.

SIXTH OPTION-PAYMENTS OF A SPECIFIED DOLLAR AMOUNT. This Option is not
available under Qualified Contracts issued for use as Individual Retirement
Annuities or in connection with Section 403(b) annuity purchase plans. This
Option also is not available to a Beneficiary under a Non-Qualified Contract
where the Variable Annuitant dies before Annuity Payments have commenced, unless
the amount selected results in a distribution period which either satisfies the
limitations described in the Second Option, above, applicable to such Non-
Qualified Contracts, or which terminates not more than five years after the
death of the Variable Annuitant or the substitute surviving spouse, as the case
may be.

SEVENTH OPTION-INVESTMENT OPTION. This Option is not available under
Qualified Contracts issued in connection with any Qualified Plan. If the
Variable Annuitant dies before Annuity Payments have commenced, this Option also
is not available to a Beneficiary under a Non-Qualified Contract.

B. LIMITATIONS ON COMMENCEMENT OF ANNUITY PAYMENTS

The Contract Owner may defer the initial Annuity Payment Date and continue
the Contract to a date not later than age 75 unless the provisions of the Code
or any governing Qualified Plan require Annuity Payments to commence at an
earlier date. For example, under Qualified Contracts, the Contract Owner may not
defer the initial Annuity Payment Date beyond April 1 of the calendar year
following the calendar year in which the Variable Annuitant attains age 70-1/2.
The Franklin will require satisfactory proof of age of the Variable Annuitant
prior to the initial Annuity Payment Date.

MANAGEMENT

The following persons hold the positions designated with respect to the Board
of Managers. The table also shows any positions held with The Franklin and
Franklin Financial Services Corporation, a wholly-owned subsidiary of The
Franklin which serves as distributor for the Contracts. (See "Distribution of
the Contracts," pp. 8-9, below.)

NAME AND ADDRESS PRINCIPAL OCCUPATIONS POSITIONS HELD
DURING PAST 5 YEARS WITH THE FUND

<S> <C> <C>
ROBERT G. SPENCER* Officer of The Franklin; currently Chairman and Member,
#1 Franklin Square Vice President of The Franklin. Board of Managers
Springfield, Illinois 62713

STEPHEN P. HORVAT, JR.*+ Officer of The Franklin; currently, Secretary, Board of Managers
#1 Franklin Square Senior Vice President, Secretary
Springfield, Illinois 62713 and General Counsel and a director
of The Franklin. Mr. Horvat also
serves as Vice President, Secretary
and a director of Franklin Financial
Services Corporation.

DR. ROBERT C. SPENCER Visiting Professor of Government, Member, Board of Managers
2303 South 3rd Avenue Montana State University, since
Bozeman, Montana 59715 1992.

<PAGE>

JAMES W. VOTH Chairman, Resource International Member, Board of Managers
50738 Meadow Green Court Corp., South Bend, Indiana (marketing,
Granger, Indiana 46530 manufacturing and engineering service
to industry); prior to 1993, also
President of Resource International Corp.

CLIFFORD L. GREENWALT Director, President and Chief Member, Board of Managers
607 East Adams Street Executive Officer, CIPSCO Incorporated,
Springfield, Illinois 62739 since October, 1990 (utility holding
company); Director, President and Chief
Executive Officer, Central Illinois
Public Service Company, Springfield,
Illinois (a subsidiary of CIPSCO
Incorporated); Director, Electric Energy,
Inc., Joppa, Illinois; Director, First of
America Bank, Kalamazoo, Michigan;
Director, First of America Bank - Illinois,
N.A. (a subsidiary of First of America Bank).
</TABLE>

*DENOTES INDIVIDUALS WHO ARE "INTERESTED PERSONS" (AS DEFINED IN THE INVESTMENT
COMPANY ACT OF 1940) OF THE FUND, THE FRANKLIN OR FRANKLIN FINANCIAL SERVICES
CORPORATION BY REASON OF THE CURRENT POSITIONS HELD BY THEM AS SET FORTH IN THE
ABOVE TABLE AND, WITH RESPECT TO MR. HORVAT, BY VIRTUE OF HIS POSITION AS A
DIRECTOR OF AMERICAN FRANKLIN COMPANY AS DESCRIBED IN THE FOLLOWING FOOTNOTE.

+MR. HORVAT SERVES AS AN ASSISTANT SECRETARY AND DIRECTOR OF AMERICAN FRANKLIN
COMPANY, WHICH OWNS ALL THE CAPITAL STOCK OF THE FRANKLIN AND WHICH IS A WHOLLY-
OWNED SUBSIDIARY OF AMERICAN GENERAL CORPORATION. SEE "GENERAL INFORMATION," P.
3, ABOVE.

The following table sets forth a summary of compensation paid for services to
the Fund and certain other entities that are deemed to be part of the same "Fund
Complex" in accordance with the rules of the Securities and Exchange Commission
to all members of the Board of Managers during the year ended December 31, 1995.
Pursuant to the terms of its agreement to assume certain of the Fund's
administrative expenses, The Franklin pays all compensation received by the
members of the Board of Managers and the officers of the Fund. Members of the
Board of Managers or officers of the Fund who are also officers, directors or
employees of The Franklin do not receive any remuneration for their services as
members of the Board of Managers or officers of the Fund. Other members of the
Board of Managers received a fee of $1,400 ($1,050 where the member did not
serve for the entire year) for the year and, thus, the aggregate direct
remuneration of all such members of the Board of Managers was $3,850 during
1995. It is currently anticipated that the annual aggregate remuneration of
such members of the Board of Managers to be paid during 1996 will not exceed
$4,200.

NAME OF AGGREGATE PENSION OR ESTIMATED ANNUAL TOTAL COMPENSATION
PERSON, POSITION COMPENSATION FROM RETIREMENT BENEFITS BENEFITS UPON FROM FUND AND
FUND ACCRUED AS PART RETIREMENT FUND COMPLEX PAID
OF FUND EXPENSES TO DIRECTORS
<S> <C> <C> <C> <C>

All members of the $3,850 (1) -0- -0- $11,550(1)(2)
Board of Managers
as a group (4 persons)
</TABLE>

(1) Paid by The Franklin pursuant to an agreement to assume certain Fund
administrative expenses.
(2) Includes amounts paid to members of the Board of Managers who are not
officers, directors or employees of The Franklin for service on the Boards
of Managers of Franklin Life Variable Annuity Fund A and Franklin Life
Variable Annuity Fund B.

<PAGE>

Neither any member of the Board of Managers nor the Secretary of the Fund
was, as of April 15, 1996, the owner of any contract participating in the
investment experience of the Fund.

INVESTMENT ADVISORY AND OTHER SERVICES

The Franklin acts as investment manager of the Fund pursuant to an Investment
Management Agreement executed and dated January 31, 1995, which was approved by
Contract Owners at their annual meeting held on April 17, 1995. The method of
determining the advisory charge is described in the Prospectus under "Investment
Management Service Charge."

The Investment Management Agreement:

(1) May not be terminated by The Franklin without the prior approval of a
new investment management agreement by a "majority" (as that term is defined in
the Investment Company Act of 1940) of the votes available to the Contract
Owners, and may be terminated without the payment of any penalty on 60 days'
written notice by a vote of the Board of Managers of the Fund or by a vote of a
majority of the votes available to the Contract Owners.

(2) Shall continue in effect from the date of its execution until the second
anniversary of such execution date and thereafter shall continue in effect from
year to year but only if such continuance is specifically approved at least
annually by the Board of Managers or by a vote of a majority of the votes
available to Contract Owners, provided that in either case the continuation is
also approved by the vote of a majority of the Board of Managers who are not
"interested persons" (as that term is defined in the Investment Company Act of
1940) of the Fund or of The Franklin, cast in person at a meeting called for the
purpose of voting on such approval.

(3) Shall not be amended without prior approval by a majority of the votes
available to the Contract Owners.

(4) Shall terminate automatically on "assignment" (as that term is defined
in the Investment Company Act of 1940).

A "majority" of the votes available to the Contract Owners is defined in the
Investment Company Act of 1940 as meaning the lesser of (i) Contract Owners
holding 67% or more of the voting power of the Contract Owners present at a
meeting if Contract Owners holding more than 50% of the total voting power of
all Contract Owners in the Fund are present or represented by proxy, or (ii)
Contract Owners holding more than 50% of the total voting power of all Contract
Owners in the Fund. For the voting rights of Contract Owners, see "Voting
Rights," in the Prospectus.

Under the Investment Management Agreement, The Franklin, subject to the
control of the Board of Managers of the Fund, is authorized and has the duty to
manage the investment of the assets of the Fund, subject to the Fund's
investment policies and the restrictions on investment activities set forth in
the Prospectus, and to order the purchase and sale of securities on behalf of
the Fund. In carrying out its obligations to manage the investment of the
assets of the Fund, The Franklin is committed by the Agreement, so long as it
remains in force, to pay all investment expenses of the Fund other than the
following, which the Fund will bear: (i) taxes, if any, based on the income of,
capital gains of assets in, or existence of, the Fund; (ii) taxes, if any, in
connection with the acquisition, disposition or transfer of assets of the Fund;
(iii) commissions or other capital items payable in connection with the purchase
or sale of the Fund's investments; and (iv) interest on account of any
borrowings by the Fund.

Messrs. Robert G. Spencer and Stephen P. Horvat, Jr. are "affiliated
persons," as defined in the Investment Company Act of 1940, of both The Franklin
and the Fund by reason of the positions held by them with The Franklin and the
Fund as set forth in the table under "Management," pp. 5-6, above.

The Administration Agreement discussed under "Deductions and Charges Under
the Contracts-Administration Deduction" in the Prospectus provides that The
Franklin will provide all services and will assume all expenses required for the
administration of the Contracts, including expenses for legal and accounting
services to the Fund and the cost of such indemnification of members of the
Board of Managers and officers,

<PAGE>

agents, or employees of the Fund as is provided by the Fund in its Rules and
Regulations. The Franklin is not, however, obligated under the Administration
Agreement to pay the investment management service charge discussed under
"Investment Management Service Charge," in the Prospectus. The Administration
Agreement also provides that The Franklin will from time to time adjust the
assets of the Fund by withdrawing sums in cash or by transferring cash to the
Fund so that the assets of the Fund will be equal to the actuarial value of the
amounts payable under all outstanding Contracts having an interest in the Fund.
The Administration Agreement may be amended or terminated at any time by mutual
consent of the Fund and The Franklin.

DISTRIBUTION OF THE CONTRACTS

Franklin Financial Services Corporation ("Franklin Financial"), #1 Franklin
Square, Springfield, Illinois 62713, is organized under the laws of the State of
Delaware and is a wholly-owned subsidiary of The Franklin. Franklin Financial
serves as "principal underwriter" (as that term is defined in the Investment
Company Act of 1940) for the Contracts, pursuant to a Sales Agreement with the
Fund. The present Sales Agreement was approved by the Board of Managers of the
Fund, and came into effect, on January 31, 1995. It was renewed by the Board of
Managers on January 15, 1996. Franklin Financial's employment will continue
thereunder if specifically approved at least annually by the Board of Managers
of the Fund, or by a majority of votes available to Contract Owners, provided
that in either case the continuance of the Sales Agreement is also approved by a
majority of the members of the Board of Managers of the Fund who are not
"interested persons" (as that term is defined in the Investment Company Act of
1940) of the Fund or Franklin Financial. The employment of Franklin Financial as
principal underwriter automatically terminates upon "assignment" (as that term
is defined in the Investment Company Act of 1940) of the Sales Agreement and is
terminable by either party on not more than 60 days' and not less than 30 days'
notice.

Contracts are offered continuously. Contracts are sold primarily by persons
who are insurance agents or brokers for The Franklin authorized by applicable
law to sell life and other forms of personal insurance and who are similarly
authorized to sell Variable Annuities. Pursuant to an Agreement, dated December
3, 1981, between The Franklin and Franklin Financial, Franklin Financial has
agreed to employ and supervise agents chosen by The Franklin to sell the
Contracts and to use its best efforts to qualify such persons as registered
representatives of Franklin Financial, which is a broker-dealer registered with
the Securities and Exchange Commission under the Securities Exchange Act of 1934
and a member of the National Association of Securities Dealers, Inc. Franklin
Financial also may enter into agreements with The Franklin and each such agent
with respect to the supervision of such agent. The Contracts also may be sold by
persons who are registered representatives of other registered broker-dealers
who are members of the National Association of Securities Dealers, Inc., and
with whom Franklin Financial may enter into a selling agreement. If Contracts
are sold by other dealers, the maximum allowance which will be made to them by
Franklin Financial will be 5% in the case of Periodic Stipulated Payment
Contracts and 4% in the case of Single Stipulated Payment Contracts.

Franklin Financial incurs certain sales expenses, such as sales literature
preparation and related costs, in conneciton with the sale of the Contracts
pursuant to a Sales Agreement with the Fund. Surrender charges imposed in
connection with the redemption of a Contract and certain partial redemptions are
paid to Franklin Financial as a means to recover sales expenses. Surrender
charges are not necessarily related to Franklin Financial's actual sales
expenses in any particular year. To the extent sales expenses are not covered by
surrender charges, Franklin Financial will cover them from other assets.

Pursuant to an Agreement between The Franklin and Franklin Financial, The
Franklin has agreed to pay commissions earned by registered representatives of
Franklin Financial on the sale of the Contracts and Franklin Financial has
agreed to remit to The Franklin the excess of all surrender charges paid to
Franklin Financial over the sales or promotional expenses incurred by Franklin
Financial to the extent necessary to reimburse The Franklin for commissions or
other remuneration paid in connection with sales of the Contracts. Such
agreement also provides that the amount of such commissions and other
remuneration not so reimbursed shall be deemed to have been contributed by The
Franklin to the capital of Franklin Financial. Commissions and other
remuneration will be paid by The Franklin from its General Account to the extent
it does not receive reimbursement from Franklin Financial.

Registration as a broker-dealer does not mean that the Securities and
Exchange Commission has in any way passed upon the financial standing, fitness
or conduct of any broker or dealer, upon the merits of any securities

<PAGE>

offering or upon any other matter relating to the business of any broker or
dealer. Salesmen and employees selling Contracts, where required, are also
licensed as securities salesmen under state law.

Stephen P. Horvat, Jr. is an "affiliated person" (as that term is defined in the
Investment Company Act of 1940) of both Franklin Financial and the Fund by
reason of the positions held by him with Franklin Financial and the Fund as set
forth in the table under "Management," pp. 5-6, above.

PORTFOLIO TURNOVER AND BROKERAGE

Since the Fund's assets will be invested in securities with short maturities,
the Fund's portfolio of money market instruments is expected to turn over
several times a year. A meaningful portfolio turnover rate for 1995 or 1994 is
not able to be calculated as a result of the short maturities of the assets in
which the Fund invested during those periods.

Decisions to buy or sell securities for the Fund will be made by The
Franklin, as the Fund's investment manager, subject to the control of the Fund's
Board of Managers. The Franklin, as investment manager, also is responsible for
placing the brokerage business of the Fund and, where applicable, negotiating
the amount of the commission rate paid, subject to the control of the Fund's
Board of Managers. Portfolio securities normally will be purchased directly from
the issuer or from an underwriter or market maker for the securities. Thus,
there usually will be no brokerage commissions paid by the Fund for such
purchases. Purchases from underwriters of portfolio securities will include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers will include the spread between the bid
and asked price. The Fund has no formula for the distribution of brokerage
business in connection with the placing of orders for the purchase and sale of
investments for the Fund. It is The Franklin's intention to place such orders,
consistent with the best execution, to secure the highest possible price on
sales and the lowest possible price on purchases of securities. Portfolio
transactions executed in the over-the-counter market will be placed directly
with the primary market makers unless better executions are available elsewhere.
Subject to the foregoing, The Franklin may give consideration in the allocation
of brokerage business to services performed by a broker or dealer in furnishing
statistical data and research to it. The Franklin may thus be able to supplement
its own information and to consider the views and information of other research
organizations in arriving at its investment decisions. Any such services would
also be available to The Franklin in the management of its own assets and those
of any other separate account. To the extent that such services are used by The
Franklin in performing its investment management functions with respect to the
Fund, they may tend to reduce The Franklin's expenses. However, the dollar value
of any information which might be received is indeterminable and may, in
fact, be negligible. The Franklin does not consider the value of any research
services provided by brokers or dealers in negotiating commissions. No brokerage
commissions were paid during 1995, 1994 and 1993. No officer or director of The
Franklin or Franklin Financial (the principal underwriter for the Contracts),
and no member of the Board of Managers, is affiliated with any brokerage firm
(except with Franklin Financial Services Corporation, as described under
"Investment Management Service Charge," in the Prospectus, and "Distribution of
the Contracts," p. 8-9, above) and no beneficial owner of 5% or more of the
total voting power of The Franklin or any of its parents is known to be
affiliated with any brokerage firm utilized by the Fund (except with Franklin
Financial).

<PAGE>

SAFEKEEPER OF SECURITIES

Securities of the Fund are held by State Street Bank and Trust Company, which is
located in Boston, Massachusetts, under a Custodian Agreement dated _____, 1996
to which The Franklin, State Street Bank and Trust Company, as sub-custodian,
and State Street Bank and Trust Company of Connecticut, as custodian, are
parties.

LEGAL OPINIONS

Legal matters concerning federal securities laws applicable to the issue and
sale of the variable annuity contracts offered hereby have been passed upon by
Messrs. Chadbourne & Parke LLP, 30 Rockefeller Plaza, New York, New York 10112.
All matters of Illinois law, including The Franklin's right and power to issue
such contracts, have been passed upon by Stephen P. Horvat, Jr., Esq., Senior
Vice President, General Counsel, Secretary and a director of The Franklin, a
director and Secretary of Franklin Financial, and Secretary to the Board of
Managers of the Fund.

EXPERTS

The statement of assets and liabilities, including the portfolio of
investments, as of December 31, 1995 and the related statements of operations
and changes in contract owners' equity and the table of per-unit income and
changes in accumulation unit value for the year then ended of the Fund appearing
in this Statement of Additional Information have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewere herein. The consolidated financial statements at December 31, 1995,
and for the eleven months then ended and the consolidated statements of income,
stockholder's equity and cash flows for the one month ended January 31, 1995 of
The Franklin appearing in this Statement of Additional Information have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein. The statement of changes in contract
owners' equity for the year ended December 31, 1994 and the table of per-unit
income and changes in accumulation unit value for each of the four years in the
period then ended of the Fund appearing in this Statement of Additional
Information have been audited by Coopers & Lybrand L.L.P., independent
accountants, as stated in their report. The balance sheet of The Franklin for
the year ended December 31, 1994 and the statements of income, stockholder's
equity and cash flows of The Franklin for each of the two years in the period
then ended have been audited by Coopers & Lybrand L.L.P., independent
accountants, as stated in their report. Such financial statements and tables of
per-unit income and changes in accumulation unit value referred to above are
included in reliance upon such reports given upon the authority of such firms as
experts in accounting and auditing.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C

INDIVIDUAL VARIABLE ANNUITY CONTRACTS

ISSUED BY

THE FRANKLIN LIFE INSURANCE COMPANY
#1 FRANKLIN SQUARE
SPRINGFIELD, ILLINOIS 62713

<PAGE>

PART C

OTHER INFORMATION

Item 28. Financial Statements and Exhibits

(a) Financial Statements:

Included in the Prospectus:

Franklin Life Money Market Variable Annuity Fund C:

Per-Unit Income and Changes in Accumulation Unit Value for
the ten years ended December 31, 1995

Included in the Statement of Additional Information:

Franklin Life Money Market Variable Annuity Fund C:

Reports of Independent Accountants
Financial Statements:
Statement of Net Assets, December 31, 1995
Statement of Operations for the year ended
December 31, 1995
Statements of Changes in Contract Owners' Equity for
the two years ended December 31, 1995
Notes to Financial Statements
Portfolio of Investments, December 31, 1995

The Franklin Life Insurance Company:

Reports of Independent Accountants
Financial Statements:
Balance Sheet, December 31, 1995 and 1994
Statement of Income for the years ended
December 31, 1995, 1994 and 1993
Statement of Stockholder's Equity for the years ended
December 31, 1995, 1994 and 1993
Statement of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
Notes to Financial Statements

Included in Part C:

Franklin Life Money Market Variable Annuity Fund C:

Report of Independent Accountants on Statement of Sources of
Net Assets (see Exhibit 14(a))
Statement of Sources of Net Assets, December 31, 1995 (see
Exhibit 14(b))

Other schedules have been omitted because they are not required under
the related instructions or are not applicable, or the information has
been shown elsewhere.

(b) Exhibits:

2 - Rules and Regulations adopted by Registrant, as amended, are
incorporated herein by reference to Exhibit 2 of Registrant's
Registration Statement Amendment No. 2 on Form N-1, filed
December 18, 1981 (File No. 2-74459).

3 - Custodian Agreement dated _________, 1996 between The Franklin
Life Insurance Company, State Street Bank and Trust Company of
Connecticut and State Street Bank and Trust Company.

4 - Investment Management Agreement dated January 31, 1995 between
Registrant and The Franklin Life Insurance Company is
incorporated herein by reference to Exhibit 4 of Registrant's
Post-Effective Amendment No. 19 on Form N-3, filed March 2, 1995.

C-1

<PAGE>

5 (a) - Sales Agreement dated January 31, 1995 between Registrant
and Franklin Financial Services Corporation is incorporated
herein by reference to Exhibit 5(a) of Registrant's Post-
Effective Amendment No. 19 on Form N-3, filed March 2, 1995.

(b) - Form of Agreement to be entered into among The Franklin Life
Insurance Company, Franklin Financial Services, and agents
is incorporated herein by reference to Exhibit 6(b) of
Registrant's Registration Statement Amendment No. 2 on Form
N-1, filed December 18, 1981 (File No. 2-74459).
6 (a) - Amended specimen copy of Form 1175, periodic payment
deferred variable annuity contract, is incorporated herein
by reference to Exhibit 4(a) of Registrant's Registration
Statement Amendment No. 2 on Form N-1, filed December 18,
1981 (File No. 2-74459).
(b) - Amended specimen copy of Form 1176, single payment deferred
variable annuity contract, is incorporated herein by
reference to Exhibit 4(b) of Registrant's Registration
Statement Amendment No. 2 on Form N-1, filed December 18,
1981 (File No. 2-74459).
(c) - Specimen of copy of Form 1177, single payment immediate life
variable annuity contract, is incorporated herein by
reference to Exhibit 4(c) of Registrant's Registration
Statement on Form N-1, filed October 15, 1981 (File No. 2-
74459).
(d) - Specimen copy of Form 1178, single payment immediate life
variable annuity contract with guaranteed period, is
incorporated herein by reference to Exhibit 4(d) of
Registrant's Registration Statement on Form N-1, filed
October 15, 1981 (File No. 2-74459).
(e) - Specimen copy of Form 1179, single payment immediate joint
and last survivor life variable annuity contract, is
incorporated herein by reference to Exhibit 4(e) of
Registrant's Registration Statement on Form N-1, filed
October 15, 1981 (File No. 2-74459).
(f) - Specimen copy of Form 4840, "Endorsement to Make Contract
Nontransferable," attached as endorsement to Forms 1175,
1176, 1177, 1178 and 1179, is incorporated herein by
reference to Exhibit 4(f) of Registrant's Registration
Statement on Form N-1, filed October 15, 1981 (File No. 2-
74459).
(g) - Specimen copy of Form 6012, "Waiver of Stipulated Payment
Disability Benefit," for use as endorsement to Form 1175, is
incorporated herein by reference to Exhibit 4(g) of
Registrant's Registration Statement on Form N-1, filed
October 15, 1981 (File No. 2-74459).
(h) - Specimen copy of Form 6275-A, "Variable Annuity
Endorsement," attached as endorsement to Forms 1175, 1176,
1177, 1178 and 1179 when such contracts are issued to
variable annuitants in the State of Texas, is incorporated
herein by reference to Exhibit 4(h) of Registrant's
Registration Statement on Form N-1, filed October 15, 1981
(File No. 2-74459).
(i) - Specimen copy of Form 6296, "Amendments to this Contract,"
attached as endorsement to Forms 1175, 1176, 1177, 1178 and
1179 when such contracts are issued to variable annuitants
in the State of New Jersey, is incorporated herein by
reference to Exhibit 4(i) of Registrant's Registration
Statement on Form N-1, filed October 15, 1981 (File No. 2-
74459).
(j) - Specimen copy of endorsement to Forms 1175, 1176, 1177, 1178
and 1179 when such contracts are issued to variable
annuitants in the State of Texas is incorporated herein by
reference to Exhibit 6 (j) to Post-Effective Amendment No.
13 to Registrant's Registration Statement on Form N-3, filed
March 1, 1990 (File No. 2-74459).
7 - The applications for Forms 1175, 1176, 1177, 1178 and 1179
set forth in Exhibit 6 are included as parts of the
respective contract forms.
8 (a) - Certificate of Incorporation of The Franklin Life Insurance
Company is incorporated herein by reference to Exhibit 8 (a)
to Post-Effective Amendment No. 13 to Registrant's
Registration Statement on Form N-3, filed March 1, 1990
(File No. 2-74459).

(b) - By-Laws of The Franklin Life Insurance Company.

(b) - Agreement dated December 3, 1981 between The Franklin Life
Insurance Company and Franklin Financial Services
Corporation is incorporated herein by reference to
Exhibit9(b) of Registrant's Registration Statement Amendment
No. 2
on Form N-1, filed December 18, 1981 (File No. 2-74459).

12 - Opinion and consent dated April 2, 1986 of Stephen P.
Horvat, Jr., Esq., Senior Vice President, General Counsel
and Secretary of The Franklin Life Insurance Company is
incorporated herein by reference to Exhibit 10(b) of
Registrant's Post-Effective Amendment No. 8 of Form N-1,
filed April 29, 1986 (File No. 2-74459).

C-2

<PAGE>

13(a) - List of Consents Pursuant to Rule 483(c).

(b) - Consent of Ernst & Young LLP, independent auditors.

(c) - Consent of Coopers & Lybrand L.L.P., Independent
Accountants.
(d) - Consent of Messrs. Chadbourne & Parke LLP.
(e) - Consent of Stephen P. Horvat, Jr.

14(a) - Report of Independent Accountants on Statement of Sources of
Net Assets.
(b) - Statement of Sources of Net Assets of Franklin Life Money
Market Variable Annuity Fund C, December 31, 1995.

15 - Contribution Agreement dated as of October 30, 1981 between
Registrant and The Franklin Life Insurance Company is
incorporated herein by reference to Exhibit 13 of
Registrant's Registration Statement Amendment No. 2 on Form
N-1, filed December 18, 1981 (File No. 2-74459).
16 - Computation of performance data set forth under "Yield
Information" in the Prospectus (unaudited).

17 - Power of Attorney.

18 - Financial Data Schedule meeting the requirements of Rule
483.

Item 29. Directors and Officers of Insurance Company

Information concerning the name, principal business address and positions and
offices with The Franklin of each officer and director of The Franklin is hereby
incorporated herein by reference to Item 33. Information concerning the
positions and offices with the Fund of Messrs. Robert G. Spencer and Stephen P.
Horvat, the only directors or officers of The Franklin who hold positions or
offices with the Fund, is hereby incorporated herein by reference to the table
under "Management" in the Statement of Additional Information.

Item 30. Persons Controlled by or under Common Control with the Insurance
Company or Registrant.

There is no person controlled by or under common control with Registrant.

The Franklin is an indirect wholly-owned subsidiary of American General
Corporation ("AGC"). A list of the subsidiaries of AGC is set forth below.

The following chart sets forth the identities of, and the interrelationships
among, AGC and all affiliated persons within the holding company system.

The following is a list of American General Corporation's subsidiaries as of
December 31, 1995(1). Subsidiaries of subsidiaries are indicated by
indentations and unless otherwise indicated, all subsidiaries are wholly-owned.
Inactive subsidiaries are denoted by an asterisk (*).

Jurisdiction of
Name Incorporation Insurer
- --------------------------------------------------------------------------------

AGC Life Insurance Company (2) MO Yes
American Franklin Company DE No
The Franklin Life Insurance Company IL Yes
The American Franklin Life Insurance Company IL Yes
Franklin Financial Services Corporation DE No
American General Life and Accident Insurance Company TN Yes
American General Exchange, Inc. TN No
American General Life Insurance Company TX Yes
American General Annuity Service Corporation TX No
American General Life Insurance Company of New York NY Yes
The Winchester Agency Ltd. NY No
American General Securities Incorporated (3) TX No
American General Insurance Agency, Inc. MO No
American General Insurance Agency of Hawaii, Inc. HI No
American General Insurance Agency of Massachusetts, Inc. MA No
The Variable Annuity Life Insurance Company TX Yes
The Variable Annuity Marketing Company TX No
Allen Property Company DE No
Florida Westchase Corporation DE No
Greatwood Development, Inc. DE No
Greatwood Golf Club, Inc. TX No
Highland Creek Golf Club, Inc. NC No
Hunter's Creek Communications Corporation FL No

C-3

<PAGE>

Jurisdiction of
Name Incorporation Insurer
- --------------------------------------------------------------------------------

Pebble Creek Corporation DE No
Pebble Creek Development Corporation FL No
Westchase Development Corporation DE No
Westchase Golf Corporation FL No
American General Capital Services, Inc. DE No
American General Delaware Management Corporation ("AGDMC")(1) DE No
American General Finance, Inc. IN No
AGF Investment Corp. IN No
American General Auto Finance, Inc.` DE No
American General Finance Corporation (4) IN No
American General Finance Group, Inc. DE No
American General Financial Services, Inc. (5) DE No
The National Life and Accident Insurance Company TX Yes
Merit Life Insurance Co. IN Yes
Yosemite Insurance Company CA Yes
American General Finance, Inc. AL No
American General Financial Center UT No
American General Financial Center, Inc.* IN No
American General Financial Center, Incorporated* IN No
American General Financial Center Thrift Company* CA No
Thrift, Incorporated* IN No
American General Investment Corporation DE No
American General Mortgage Company DE No
American General Realty Investment Corporation TX No
American Athletic Club, Inc. TX No
Hope Valley Farms Recreation Association, Inc. NC No
INFL Corporation DE No
Ontario Vineyard Corporation DE No
Pebble Creek Country Club Corporation FL No
Pebble Creek Service Corporation FL No
SR/HP/CM Corporation TX No
American General Mortgage and Land Development, Inc. DE No
American General Land Development, Inc. DE No
American General Realty Advisors, Inc. DE No
American General Property Insurance Company TN Yes
Bayou Property Company DE No
AGLL Corporation ("AGLL")(6) DE No
American General Land Holding Company ("AGLH") DE No
AG Land Associates, LLC(6) CA No
Hunter's Creek Realty, Inc.* FL No
Summit Realty Company, Inc. SC No
Financial Life Assurance Company of Canada Canada Yes
Florida GL Corporation DE No
GPC Property Company DE No
Cinco Ranch Development Corporation TX No
Cinco Ranch East Development, Inc. DE No
Cinco Ranch West Development, Inc. DE No
The Colonies Development, Inc. DE No
Fieldstone Farms Development, Inc. DE No
Hickory Downs Development, Inc. DE No
Lake Houston Development, Inc. DE No
South Padre Development, Inc. DE No
Green Hills Corporation DE No
Knickerbocker Corporation TX No
Lincoln American Corporation DE No
Pavilions Corporation DE No

American General Finance Foundation, Inc., is not included on this list. It is
a non-profit corporation.

C-4

<PAGE>

(1) The following limited liability companies were formed in the State of
Delaware on March 28, 1995. The limited liability interests of each are
jointly owned by AGC and AGDMC and the business and affairs of each are
managed by AGDMC.

American General Capital, L.L.C.
American General Delaware, L.L.C.

(2) The following companies became approximately 40% owned by AGC Life
Insurance Company ("AGCL") on December 23, 1994:

Western National Corporation ("WNC")
WNL Holding Corporation
Western National Life Insurance Company
WesternSave (401K Plan)
Independent Advantage Financial & Insurance Services, Inc.
WNL Investment Advisory Services, Inc.
Conseco Annuity Guarantee Corp.
WNL Brokerage Services, Inc.
WNL Insurance Services, Inc.

Accordingly, these companies became AGCL affiliates under insurance holding
company laws. However the WNC stock is held for investment purposes by
AGCL and there are no plans for AGCL to direct the operations of any of
these companies.

(3) The following companies are controlled indirectly by American General
Securities Incorporated: American General Insurance Agency of Ohio, Inc.,
American General Insurance Agency of Texas, Inc., and American General
Insurance Agency of Oklahoma, Inc. (formerly American Capital Marketing
Insurance Agency of Oklahoma, Inc.).

(4) American General Finance Corporation is the parent of an additional 41
subsidiaries incorporated in 26 states for the purpose of conducting its
consumer finance operations.

(5) American General Financial Services, Inc. is the parent of an additional 7
subsidiaries incorporated in 4 states and Puerto Rico for the purpose of
conducting its consumer finance operations.

(6) AG Land Associates, LLC is jointly owned by AGLH and AGLL. AGLH holds a
98.75% managing interest and AGLL owns a 1.25% managing interest.

C-5

<PAGE>

Item 31. Number of Holders of Securities.

As of February 15, 1996, the number of record holders of the sole class of
securities of Registrant was as indicated below:

(1) (2)
Title of Class Number of Record Holders
- --------------------------------------------------------------------------------
Accumulation Units Under 371
Variable Annuity Contracts

Item 32. Indemnification.

The information called for by this item has not changed from that provided in
Registrant's initial Registration Statement on Form N-1 (1933 Act File No. 2-
74459 and 1940 Act File No. 811-3289) filed with the Commission on October 19,
1981, as amended by Amendment No. 1 filed with the Commission on November 6,
1981 and Amendment No. 2 filed with the Commission on December 22, 1981.

Item 33. Business and Other Connections of Investment Adviser.

The Franklin Life Insurance Company ("The Franklin") is an Illinois legal
reserve stock life insurance company engaged in the writing of ordinary life
policies, annuities and income protection policies. The Franklin also acts as
investment adviser to Franklin Life Variable Annuity Fund A and Franklin Life
Variable Annuity Fund B. The business, profession, vocation or employment of a
substantial nature in which the directors and officers of The Franklin are or
have been, at any time during the past two fiscal years, engaged for their own
account or in the capacity of director, officer, employee, partner or trustee
are described below:

(1) (2)
Name Business or Employment
- --------------------------------------------------------------------------------

Vickie J. Alton............. Vice President, The Franklin

Elizabeth E. Arthur......... Vice President, Associate General
Counsel and Assistant Secretary,
The Franklin

Robert M. Beuerlein......... Senior Vice President-Actuarial and
Director, The Franklin

Barbara S. Butler........... Vice President, The Franklin

Mark R. Butler.............. Vice President - Management Development
Director, The Franklin

Thomas J. Byerly............ Executive Vice President, Chief
Marketing Officer and Director, The
Franklin; prior to February 22,
1995, also Chief Operating Officer,
The Franklin

Philip D. Calderwood........ Vice President and Actuary, The Franklin

Eldon R. Canary............. Division Vice President - Actuarial,
The Franklin

Robert M. Devlin............ Director and Senior Chairman, The
Franklin since February 22, 1995;
President and a director, American
General Corporation, 2929 Allen
Parkway Houston, Texas 77019; Vice
Chairman, American General
Corporation, prior to October 26,
1995

Steve A. Dmytrack............ Vice President, The Franklin; Assistant
Vice President, The Franklin, prior
to August 24, 1995

Paul C. Ely.................. Vice President, The Franklin

C-6

<PAGE>

(1) (2)
Name Business or Employment
- --------------------------------------------------------------------------------

Stephen H. Field............. Vice President, The Franklin, since
December 22, 1995; President and
Chief Executive Officer, American
General Mortgage and Land
Development, Inc., 2929 Allen
Parkway, Houston, Texas 77019

Barbara Fossum............... Vice President, The Franklin; prior to
June, 1995, Vice President,
American General Life Insurance
Company

Robert J. Gibbons............ Chief Executive Officer, The Franklin,
since November 30, 1995; Director
and President, The Franklin since
February 22, 1995; President and
Chief Executive Officer, American
General Life Insurance Company of
New York prior to February 22,
1995; Senior Vice President and
Chief Marketing Officer, American
General Life Insurance Company of
New York, prior to June, 1994

Harold S. Hook............... Director and Senior Chairman, The
Franklin since February 22, 1995;
Chairman, Chief Executive Officer
and a director, American General
Corporation, 2929 Allen Parkway,
Houston, Texas 77019

Stephen P. Horvat, Jr........ Senior Vice President, Secretary,
General Counsel and Director, The
Franklin

Howard C. Humphrey Chairman of the Board, The Franklin;
prior to November 30, 1995, also
Chief Executive Officer, The
Franklin; prior to February 22,
1995, also President, The Franklin;
prior to January 31, 1995 Vice
President - Life Insurance of
American Brands, Inc., 1700 East
Putnam Avenue, P.O. Box 811, Old
Greenwich, CT 06870-0811; Director,
BANC One Corp. (IL.) (bank holding
company), E. Old State Capital
Plaza, Springfield, IL. 62701

Jerry P. Jourdan.............. Director of Information Services -
Technical Support, The Franklin;
prior to January 31, 1996,
Assistant Vice President, The
Franklin

Darrell J. Malano............. Division Vice President, The Franklin

Margaret L. Manola............ Vice President, The Franklin

Thomas K. McCracken........... Vice President, The Franklin

Sylvia A. Miller.............. Vice President, The Franklin; Assistant
Vice President, The Franklin, prior
to July, 1994
Cheryl E. Morton.............. Division Vice President - Actuarial, The
Franklin

Jon P. Newton................. Director and Vice Chairman, The
Franklin, since January 31, 1996;
Vice Chairman and General Counsel,
American General Corporation, 2929
Allen Parkway, Houston, Texas
77019; prior to October 26, 1995,
Senior Vice President and General
Counsel, American General
Corporation

Randall E. O'Brien............ Division Vice President, The Franklin

James R. Philpott............. Vice President, The Franklin

Jeffrey D. Pirmann............ Vice President, Controller and
Treasurer, The Franklin

John M. Pruitt................ Vice President and Director of Sales
Services, The Franklin

C-7

<PAGE>

(1) (2)
Name Business or Employment
- --------------------------------------------------------------------------------

James M. Quigley.............. Division Vice President, The Franklin;
prior to August 24, 1995, Vice
President, The Franklin

Gary D. Reddick............... Director and Executive Vice President,
The Franklin since February 22,
1995; Senior Vice President,
American General Corporation,
Houston, Texas, prior to February,
1995; Senior Vice President,
American General Life Insurance
Company, prior to October 28, 1994

Dale W. Sachtleben............ Division Vice President, The Franklin

John E. Sartore............... Vice President, The Franklin

Robert G. Spencer............. Vice President, The Franklin; prior to
1996, also Treasurer, The Franklin

Peter V. Tuters............... Director, Vice President and Chief
Investment Officer, The Franklin
since February 22, 1995; Senior
Vice President since 1992 and Chief
Investment Officer since December,
1993, American General Corporation,
2929 Allen Parkway, Houston, Texas
77019

J. Alan Vala.................. Vice President and Agency Secretary, The
Franklin

David G. Vanselow............. Division Vice President, The Franklin

Raymond P. Weber.............. Vice President and Associate General
Counsel, The Franklin

C-8

<PAGE>

Item 34. Principal Underwriters.

(a) Franklin Life Variable Annuity Fund A, Franklin Life Variable Annuity Fund
B and Separate Account VUL and Separate Account VUL-2 of The American Franklin
Life Insurance Company, which offer interests in flexible premium variable life
insurance policies (The American Franklin Life Insurance Company is a wholly-
owned subsidiary of The Franklin), are the only investment companies (other than
Registrant) for which Franklin Financial Services Corporation, the principal
underwriter of Registrant, also acts as principal underwriter, depositor,
sponsor or investment adviser.

(b) Information required with respect to each director or officer of the
principal underwriter of Registrant is set forth below. The principal business
address of each individual is c/o The Franklin Life Insurance Company, #1
Franklin Square, Springfield, Illinois 62713.

(1) (2) (3)
Name Positions and Offices Positions and Offices
with Underwriter with Registrant
- --------------------------------------------------------------------------------

Robert M. Beuerlein Director None

Thomas J. Byerly Director and Senior Vice President None

Robert J. Gibbons Chairman of the Board, President None
and Chief Executive Officer

Stephen P. Horvat, Jr. Director, Vice President Secretary to the
and Secretary Board of Managers

Randall E. O'Brien Vice President-Marketing None

Deanna Osmonson Vice President-Administration None
and Assistant Secretary

Gary D. Osmonson Senior Vice President-Sales and None
Compliance Officer

Jeffrey D. Pirmann Vice President, Treasurer None
and Chief Financial Officer

Gary D. Reddick Director and Executive Vice President None

J. Alan Vala Vice President and Assistant Secretary None

(c) Information regarding commissions and other compensation received by each
principal underwriter, directly or indirectly, from Registrant during 1995,
Registrant's last fiscal year, is set forth below:

(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage Other
Underwriters Commissionsor Annuitization Commissions Compensation
- --------------------------------------------------------------------------------
Franklin Financial
Services Corporation -0- $108 -0- -0-

C-9

<PAGE>

Item 35. Location of Accounts and Records.

Item 36. Management Services.

Registrant has no management-related service contract not discussed in Part A
or Part B hereof.

Item 37. Undertakings.

(b) The Registrant hereby undertakes to file a post-effective amendment to
this Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more than
16 months old for so long as payments under the Contracts may be accepted.

(c) The Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that the
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information.

(d) The Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form N-3 promptly upon written or oral request.

(e) The Registrant is relying upon the "no-action" letter of the Securities
and Exchange Commission dated November 28, 1988 in response to the American
Council of Life Insurance with respect to restrictions on withdrawal of amounts
from Contracts issued in connection with annuity purchase plans meeting the
requirements of Internal Revenue Code Section 403(b), which amounts are
attributable to contributions made on or after January 1, 1989 pursuant to a
salary reduction agreement or to income earned on or after January 1, 1989 with
respect to contributions made pursuant to a salary reduction agreement. The
Registrant represents that it has complied with the requirement of numbered
paragraphs (1) through (4) of such "no-action" letter.

C-10

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 ("1933 Act") and
the Investment Company Act of 1940 ("1940 Act"), Franklin Life Money Market
Variable Annuity Fund C has duly caused this Post-Effective Amendment to the
Registration Statement under the 1933 Act and this Amendment to the Registration
Statement under the 1940 Act to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Springfield, and State of Illinois, on
the 28th day of February, 1996.

FRANKLIN LIFE MONEY MARKET
VARIABLE ANNUITY FUND C

By S.P. Horvat, Jr.
---------------------------------------------
(S.P. Horvat, Jr., Secretary, Board of Managers)

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

Signature Title Date

Clifford L. Greenwalt*
- ------------------------- Member, Board February 28, 1996
(Clifford L. Greenwalt) of Managers

R.C. Spencer*
- ------------------------- Member, Board February 28, 1996
(R.C. Spencer) of Managers

R.G. Spencer*
- ------------------------- Chairman, Board February 28, 1996
(R.G. Spencer) of Managers

J.W. Voth*
- ------------------------- Member, Board February 28, 1996
(J.W. Voth) of Managers

S.P. Horvat, Jr.
- ------------------------- Secretary, Board February 28, 1996
(S.P. Horvat, Jr.) of Managers

Stephen P. Horvat, Jr.
- -------------------------
* By Stephen P. Horvat, Jr., Attorney-in-Fact

C-11

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 ("1933 Act") and
the Investment Company Act of 1940 ("1940 Act"), The Franklin Life Insurance
Company has duly caused this Post-Effective Amendment to the Registration
Statement under the 1933 Act and this Amendment to the Registration Statement
under the 1940 Act to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Springfield, and State of Illinois, on the 28th day
of February, 1996.

THE FRANKLIN LIFE INSURANCE COMPANY

By S.P. Horvat, Jr.
---------------------------------------

(S.P. Horvat, Jr., Senior Vice President,
General Counsel and Secretary)

Signature Title Date

R. M. Beuerlein
- ------------------------ Senior Vice President- February 28, 1996
(R. M. Beuerlein) Actuarial and Director

T.J. Byerly
- ------------------------ Executive Vice President February 28, 1996
(T.J. Byerly) and Director

- ------------------------ Senior Chairman and Director February ___, 1996
(R.M. Devlin)

R.J. Gibbons
- ------------------------ President, Chief Executive February 28, 1996
(R.J. Gibbons) Officer and Director
(principal executive officer)

- ------------------------ Senior Chairman and Director February ___, 1996
(H.S. Hook)

S.P. Horvat, Jr.
- ------------------------ Senior Vice President February 28, 1996
(S.P. Horvat, Jr.) General Counsel,
Secretary and Director

H.C. Humphrey
- ------------------------ Chairman of the Board February 28, 1996
(H.C. Humphrey)

- ------------------------ Director and Vice Chairman February ___, 1996
(J.P. Newton)

J.D. Pirmann
- ------------------------ Vice President, Controller February 28, 1996
(J.D. Pirmann) and Treasurer
(principal financial officer and
principal accounting officer)

G.D. Reddick
- ------------------------ Executive Vice President and February 28, 1996
(G.D. Reddick) Director

- ------------------------ Vice President, Chief InvestmentFebruary ___ , 1996
(P.V.Tuters) Officer and Director

- ------------------------
* By Stephen P. Horvat, Jr., Attorney-in-Fact

C-12

<PAGE>

EXHIBIT INDEX

EXHIBIT Page

1 - Resolution of The Franklin Life Insurance Company's Board
of Directors creating Franklin Life Money Market Variable
Annuity Fund C is incorporated herein by reference to
Exhibit 1 of Registrant's Registration Statement on Form
N-1, filed October 15, 1981 (File No. 2-74459).
2 - Rules and Regulations adopted by Registrant, as amended,
are incorporated herein by reference to Exhibit 2 of
Registrant's Registration Statement Amendment No. 2 on
Form N-1, filed December 18, 1981 (File No. 2-74459).

3 - Custodian Agreement dated __________, 1996 between The
Franklin Life Insurance Company, State Street Bank and
Trust Company of Connecticut and State Street Bank and
Trust Company.

4 - Investment Management Agreement dated January 31, 1995
between Registrant and The Franklin Life Insurance Company
is incorporated herein by reference to Exhibit 4 of
Registrant's Post-Effective Amendment No. 19 on Form N-3,
filed March 2, 1995.

5(a) - Sales Agreement dated January 31, 1995 between Registrant
and Franklin Financial Services Corporation is
incorporated herein by reference to Exhibit 5(a) of
Registrant's Post-Effective Amendment No. 19 on Form N-3,
filed March 2, 1995.

<PAGE>

6(h) - Specimen copy of Form 6275-A, "Variable Annuity
Endorsement," attached as endorsement to Forms 1175, 1176,
1177, 1178 and 1179 when such contracts are issued to
variable annuitants in the State of Texas, is incorporated
herein by reference to Exhibit 4(h) of Registrant's
Registration Statement on Form N-1, filed October 15, 1981
(File No. 2-74459).
(i) - Specimen copy of Form 6296, "Amendments to this Contract,"
attached as endorsement to Forms 1175, 1176, 1177, 1178
and 1179 when such contracts are issued to variable
annuitants in the State of New Jersey, is incorporated
herein by reference to Exhibit 4(i) of Registrant's
Registration Statement on Form N-1, filed October 15, 1981
(File No. 2-74459).
(j) - Specimen copy of endorsement to Forms 1175, 1176, 1177,
1178 and 1179 when such contracts are issued to variable
annuitants in the State of Texas is incorporated herein by
reference to Exhibit 6 (j) to Post-Effective Amendment
No. 13 to Registrant's Registration Statement on Form N-3,
filed March 1, 1990 (File No. 2-74459).
7 - The applications for Forms 1175, 1176, 1177, 1178 and 1179
set forth in Exhibit 6 are included as parts of the
respective contract forms.
8(a) - Certificate of Incorporation of The Franklin Life Insurance
Company is incorporated herein by reference to Exhibit 8 (a)
to Post-Effective Amendment No. 13 to Registrant's
Registration Statement on Form N-3, filed March 1, 1990
(File No. 2-74459).

(b) - By-Laws of The Franklin Life Insurance Company.

9 - Not applicable.
10 - Not applicable.
11(a) - Administration Agreement dated December 3, 1981 between The
Franklin Life Insurance Company and Franklin Financial
Services Corporation is hereby incorporated by reference
to Exhibit 9(a) of Registrant's Registration Statement
Amendment No. 2 on Form N-1, filed December 18, 1981 (File
No. 2-74459).
(b) - Agreement dated December 3, 1981 between The Franklin Life
Insurance Company and Franklin Financial Services
Corporation is incorporated herein by reference to Exhibit
9(b) of Registrant's Registration Statement Amendment No. 2
on Form N-1, filed December 18, 1981 (File No. 2-74459).

12 - Opinion and consent dated April 2, 1986 of Stephen P.
Horvat, Jr., Esq., Senior Vice President, General
Counsel and Secretary of The Franklin Life Insurance
Company is incorporated herein by reference to Exhibit
10(b) of Registrant's Post-Effective Amendment No. 8 of
Form N-1, filed April 29, 1986 (File No. 2-74459).
13(a) - List of Consents Pursuant to Rule 483(c).

(b) - Consent of Ernst & Young LLP, Independent Auditors.

<PAGE>

(e) - Consent of Stephen P. Horvat, Jr.

14(a) - Report of Independent Auditors on Statement of Sources of
Net Assets.

(b) - Statement of Sources of Net Assets of Franklin Life Money
Market Variable
Annuity Fund C, December 31, 1995.

15 - Contribution Agreement dated as of October 30, 1981 between
Registrant and The Franklin Life Insurance Company is
incorporated herein by reference to Exhibit 13 of
Registrant's Registration Statement Amendment No. 2 on Form
N-1, filed December 18, 1981 (File No. 2-74459).
16 - Computation of performance data set forth under
"Yield Information" in the Prospectus (unaudited).

17 - Power of Attorney.

18 - Financial Data Schedule meeting the requirements of
Rule 483.

<PAGE>

B Y L A W S

O F

THE FRANKLIN LIFE INSURANCE COMPANY
SPRINGFIELD, ILLINOIS

(AMENDED FEBRUARY 22, 1995)

A R T I C L E I

MEETING OF STOCKHOLDERS

SECTION 1. The regular annual meeting of the stockholders of the Company
shall be held at the Home Office of the Company, in the City of Springfield,
Illinois, on the second Tuesday in January of each year at the hour of nine-
thirty a.m.

SECTION 2. Special meetings of the stockholders may be called at any time
by the President and Secretary or by the holders of not less than a majority of
the then outstanding stock by mailing to each stockholder a written notice
(stating the time, place and object of the meeting) at least five (5) days prior
to the date fixed therefor.

SECTION 3. At any meeting of stockholders the holders of the majority of
the capital stock issued and outstanding present in person or represented by
proxy, shall constitute a quorum for all purposes. If the holders of the amount
of stock necessary to constitute a quorum shall fail to attend in person or by
proxy at the time and place fixed by these Bylaws for an annual meeting, or
fixed by notice as provided for a special meeting, a majority in interest
(although less than a quorum) of the stockholders present in person or by proxy
may adjourn, from time to time, without notice other than by announcement at the
meeting. At any such adjourned meeting at which a quorum shall be present any
business may be transacted which might have been transacted at the meeting as
originally fixed or modified.

<PAGE>

A R T I C L E I I

DIRECTORS

SECTION 1. The Board of Directors of the Company shall consist of fifteen
(15) members. They shall be elected by the stockholders at their regular annual
meeting for the term of one year each or until their successors are elected.

SECTION 2. Vacancies in the Board of Directors may be filled by the
stockholders at any regular meeting of stockholders, or at any special meeting
called for that purpose.

SECTION 3. A regular meeting of the board of Directors shall be held on
the second Tuesday in the months of January, April, July and October at 9:30
a.m. Notice of each meeting shall be given to each member of the Board by the
President or Secretary at least three days prior to the meeting date. A
majority of all of the Directors shall constitute a quorum for the transaction
of business but when a quorum is not present, one or more Directors present may
adjourn and continue to adjourn such meeting from time to time, but not to a
time beyond the date of the next regular meeting.

SECTION 4. Special meetings of the Board of Directors may be called by the
Chairman or President and Secretary , or by a majority of the Directors, by
mailing to each Director a written notice (stating the time, place, and object
of the meeting) at least three days prior to the date fixed therefor. A
majority of all Directors shall constitute a quorum.

SECTION 5. The Board of Directors, at its first meeting following the
regular annual meeting of stockholders in each year, shall elect one of its
members as Chairman of the Board to serve for one year or until his successor is
elected and shall elect one of its members as Vice Chairman of the Board to
serve for one year or until his successor is elected. The Chairman shall
preside at all meetings of the stockholders and of the Board of Directors and
shall perform such other duties as may be required of him by the Board or by the
Executive Committee. In case of a vacancy in the office of Chairman, the same
may be filled for the unexpired term by the Board of Directors at any regular
meeting or at any special meeting called for that purpose. In the event of the
absence or inability of the Chairman, his duties shall be performed by the Vice
Chairman, and the Vice Chairman

<PAGE>

shall perform such other duties as may be required of him by the Board or by the
Executive committee. In the event of the absence or inability of the Chairman
and the Vice Chairman, the duties of the Chairman shall be performed by the
President.

SECTION 6. The Board of Directors shall have the power to elect or
appoint, and to remove at pleasure, all officers, committees and members of
committees, and shall fix the salaries of all officers and committee members and
prescribe their duties.

A R T I C L E I I I

STANDING COMMITTEES

SECTION 1. The Board of Directors shall, at its first meeting following
the regular annual meeting of the stockholders in each year, appoint the
following standing committees: an Executive Committee of not less than three
members or more than eight members; an Operations Committee of not less than
five members or more than twelve members; an Investment Committee of not less
than four members or more than nine members; a Claims Committee of not less than
three members or more than ten members, a Marketing Committee of not less than
five members or more than twelve members; an Auditing Committee of not less than
three members or more than seven members; an Underwriting Committee of not less
than three members or more than ten members; a Benefits Committee of not less
than three members or more than five members; and Consumer Affairs Committee of
not less than four members and not more than twelve members. All members shall
serve for a term of one year or until their successors may be appointed.
Vacancies may be filled by the Board of Directors at any regular meeting, or at
any special meeting called for that purpose. Said Committees shall make written
reports of their transactions to the Board, and their acts shall be subject to
review by the Board of Directors. A majority of the members of any committee
shall be a quorum for the transactions of business, except that it will not be
necessary for the Underwriting Committee to have a quorum to pass on the
insurability of any applicant for insurance.

SECTION 2. The Executive Committee shall have the custody of all books,
papers, and records of the Company, and shall have general control and direction
of all the affairs and business of the Company not delegated

<PAGE>

in these Bylaws to other persons, officers, or committees or reserved to the
Board of Directors.

SECTION 3. The Operations Committee shall have general supervision of the
administrative activities of the Company.

SECTION 4. The Investment Committee shall have authority to make all
investments of the Company (except loans to policyholders when provided for by
their policies) and all such investments shall be made in the name of the
Company. Said Committee shall have control of all real estate belonging to the
Company, and when in their judgment it is expedient to do so, may authorize any
proper officer or employee to sell and/or transfer any of the Company's
properties, securities, or investments and to manage any of the Company's
properties. No investments shall be made or any assets sold unless the
investment or sale is authorized or ratified by all members of said committee
present at the meeting when such investment or sale is considered.

SECTION 5. The Claims Committee shall supervise the administration of all
claims arising from the death or disability of policyholders of the Company and
formulate such rules and regulations covering the administration of claims as it
deems necessary.

SECTION 6. The Marketing Committee shall have general supervision of the
agency activities of the Company.

SECTION 7. The Auditing Committee shall audit the receipts and
disbursements of the Company each month, and shall perform such other duties as
may be required of it by the Board of Directors.

SECTION 8. The Underwriting Committee shall (a) supervise the underwriting
of applications for new insurance and reinstatement of lapsed policies and
promulgate such rules and regulations regarding the eligibility for insurance of
such applicants as it deems necessary, and (b) perform such other duties as may
be required of them by the Board of Directors.

SECTION 9. The Benefits Committee shall administer any Retirement and
Welfare Plan of the Company.

SECTION 10. The Consumer Affairs Committee shall have general supervision
of the Company's relations with the insuring public.

<PAGE>

A R T I C L E I V

EXECUTIVE OFFICERS

SECTION 1. The Executive Officers of the Company shall consist of a Chief
Executive Officer, a President, one or more Vice Presidents, a Secretary, one or
more Assistant Secretaries, Treasurer, and one or more Assistant Treasurers,
who shall be elected by the Board of Directors at their first meeting after the
annual meeting of the stockholders, and they shall, subject to these Bylaws,
serve for a term of one year each or until their successors are duly elected.
In case of a vacancy in any of the offices named in this Section, the same may
be filled for the unexpired term by the Board of Directors at any regular
meeting, or at a special meeting called for that purpose.

SECTION 2. The Chief Executive Officer shall perform such duties as
usually pertain to his office or as may be required of him by the Board of
Directors or by the Executive Committee.

SECTION 3. The President shall perform such duties as usually pertain to
his office or as may be required of him by the Board of Directors or by the
Executive Committee.

SECTION 4. The Vice Presidents, in the order designated by the President,
shall perform the duties of the President in case of his absence or inability to
act. In event the President shall fail to make such designations, the order
shall be designated by the Board of Directors, and in event of the absence or
inability of the President and the Vice Presidents, the Board of Directors may
select one of its members as President Pro Tem. The Vice Presidents shall
perform such other duties as may be required of them by the Board of Directors
or by the Executive Committee.

SECTION 5. The Secretary shall keep a record of the meetings of the
stockholders and of the Board of Directors, and shall perform such duties as
usually pertain to his office, or as may be required of him by the Board of
Directors or by the Executive Committee.

SECTION 6. The Assistant Secretaries, in the order designated by the
Secretary, shall perform the duties of the Secretary in case of his

<PAGE>

absence or inability to act. In event the Secretary shall fail to make such
designation, the order shall be designated by the Board of Directors, and in the
event of the absence or inability of the Secretary and the Assistant
Secretaries, the Board of Directors may select one of its members as Secretary
Pro Tem. The Assistant Secretaries shall perform such other duties as may be
required of them by the Board of Directors or by the Executive Committee

SECTION 7. The Treasurer shall perform such duties as may be required of
him by the Board of Directors, or by the Executive Committee.

SECTION 8. The Assistant Treasurers, in the order designated by the
Treasurer, shall perform the duties of the Treasurer in case of his absence or
inability to act. In event the Treasurer shall fail to make such designation,
the order shall be designated by the Board of Directors and in the event of the
absence or inability of the Treasurer and the Assistant Treasurers the Board of
Directors may select one of its members as Treasurer Pro Tem. The Assistant
Treasurers shall perform such other duties as may be required of them by the
Board of Directors or by the Executive Committee.

A R T I C L E V

TRANSFERRING REAL ESTATE, SECURITIES, ETC.

SECTION 1. The President, or a Vice President, or an Assistant Vice
President, or the General Counsel, or the Treasurer, or the Assistant Treasurer
and the Secretary or an Assistant Secretary, are authorized for and on behalf of
the Company.

(a) To execute, acknowledge, and deliver deeds to real estate when such
real estate has been sold.

(b) To assign, transfer, and cancel evidence of indebtedness and notes
secured by mortgage upon real estate when such notes have been paid or sold.

(c) To execute releases of mortgages upon real estate when the notes such
mortgages were given to secure have been paid, and to execute partial releases,
easements, and subordinations.

<PAGE>

(d) To transfer bonds, stocks, and/or other securities held as collateral
security for loans when such loans have been paid or sold.

(e) To transfer bonds, stocks, and/or other assets or securities when such
bonds, stocks, and/or other assets or securities have been sold or called for
payments.

(f) To execute such other instruments from time to time as may be
necessary or expedient to carry on the business of the Company.

SECTION 2. For the purpose of deposit under the provisions of Section 1 of
"An Act to Provide for the Deposit of Reserve and the Registration of Policies
and Annuity Bonds by Life Insurance Companies of this State" (approved April 18,
1899, in force July 1, 1899, as amended), the President, or a Vice President, or
an Assistant Vice President, or the General Counsel and the Secretary, or an
Assistant Secretary, are hereby authorized to execute, acknowledge, and deliver
from time to time and for and on behalf of and in the name of this Company, a
deed or deeds conveying to the Director of Insurance of the State of Illinois,
his successor, or successors, in office, in trust for the purpose and objects
specified in said Act, such parcels of real estate as said officers may deem
advisable.

SECTION 3. The President, a Vice President, an Assistant Vice President,
the General Counsel, or the Secretary is authorized to negotiate and enter into
any leasing agreement for any real estate owned by the Company and to execute
the same for and on behalf of the Company, and to do and perform any and all
other acts that may be necessary to effectively accomplish the purposes
mentioned.

A R T I C L E V I

ACTUARIES, MEDICAL DIRECTORS, ETC.

SECTION 1. The Board of Directors may appoint one or more Actuaries, one
or more Associate Actuaries, and one or more Assistant Actuaries, one or more
Medical Directors, one or more Associate Medical Directors and one or more
Assistant Medical Directors, and such other officers and department heads as it
may deem necessary and expedient, who shall perform such duties as may be
required of them by the Board of Directors or by the Executive Committee.

<PAGE>

A R T I C L E V I I

INDEMNIFICATION FOR OFFICERS AND DIRECTORS

SECTION 1. The Company shall indemnify and hold harmless each person who
shall serve at any time hereafter as a director or officer of the Company or who
is serving at the request of the Company as a director or officer of any other
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise from and against any and all claims and liabilities to which such
person shall become subject by reason of his having heretofore or hereafter been
a director or officer of the Company, or such other organization with respect to
which such director or officer serves at the request of the Company, or by
reason of any action alleged to have been heretofore or hereafter taken or
omitted by him as such director or officer, and shall reimburse each such person
for all legal and other expenses reasonably incurred by him in connection with
any such claim or liability; provided, however, that no such person shall be
indemnified against, or be reimbursed for, any expense incurred in connection
with any claim or liability arising out of his own willful misconduct.

A R T I C L E V I I I

SALARIES

SECTION 1. All salaries, compensations, or emolument to be paid to any
officer or director of the Company, and all salaries, compensations or emolument
amounting in any year to more than forty thousand dollar ($40,000.00) to any
person, firm, or corporation, shall be first authorized by a vote of the Board
of Directors, which vote shall be by roll call at a regular meeting of said
Board, and which vote shall be duly recorded in the records of the Company.

A R T I C L E I X

SEAL

SECTION 1. The Corporate Seal of the Company shall be that now in use,
consisting of two concentric circles between which shall be the

<PAGE>

words "The
Franklin Life Insurance Company, Springfield, Ill." and in the center shall be
inserted the words "Corporate Seal" and such seal is impressed on the margin
hereof.

A R T I C L E X

AMENDMENTS

Section 1. These Bylaws may be amended, repealed, or altered in whole or
in part by the Board of Directors at any regular meeting, or at any special
meeting called for that purpose.

* * * * * * * * * *

I, Stephen P. Horvat, Jr., Senior Vice President and Secretary of The
Franklin Life Insurance Company, do hereby certify the foregoing to be a true
and correct copy of the Bylaws of The Franklin Life Insurance Company as amended
February 22, 1995.

IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Franklin Life Insurance Company this _19th_day of April, 1995.

_____________________________________
Senior Vice President and Secretary

<PAGE>

EXHIBIT 13(a)

LIST OF CONSENTS PURSUANT TO RULE 483(c)

Consent of Ernst & Young LLP, independent auditors, appears as Exhibit 13(b)
hereto.

Consent of Coopers & Lybrand L.L.P., independent accountants, appears as Exhibit
13(c) hereto.

Consent of Messrs. Chadbourne & Parke LLP appears as Exhibit 13(d) hereto.

Consent of Stephen P. Horvat, Jr., Esq., Senior Vice President and General
Counsel of The Franklin Life Insurance Company, appears as Exhibit 13(e) hereto.

<PAGE>

EXHIBIT 13(d)

CONSENT OF COUNSEL

We consent to the reference to our firm under the caption "Legal Opinions" in
the Statement of Additional Information constituting a part of this Post-
Effective Amendment No. 20 to the Registration Statement under the Securities
Act of 1933 and Amendment No. 18 to the Registration Statement under the
Investment Company Act of 1940.

Chadbourne & Parke LLP
-----------------------------------
CHADBOURNE & PARKE LLP

New York, New York
February 28, 1996

<PAGE>

EXHIBIT 13(e)

CONSENT OF COUNSEL

I hereby consent to the use of my name under the caption "Legal Opinions" in
the Statement of Additional Information constituting a part of this Post-
Effective Amendment No. 20 to the Registration Statement under the Securities
Act of 1933 and Amendment No. 18 to the Registration Statement under the
Investment Company Act of 1940 and to the incorporation herein by reference of
my opinion dated April 2, 1986 filed as part of Post-Effective Amendment No. 8
to the Registration Statement under the Securities Act of 1933 (File No. 2-
74459) and Amendment No. 7 to the Registration Statement under the Investment
Company Act of 1940 (File No. 811-3289) on Form N-1, filed on April 29, 1986.

Stephen P. Horvat, Jr.
-----------------------------------
STEPHEN P. HORVAT, JR.
Senior Vice President and
General Counsel
The Franklin Life Insurance Company

Springfield, Illinois
February 28, 1996

<PAGE>

Exhibit 16

COMPUTATION OF PERFORMANCE DATA
SET FORTH UNDER "YIELD INFORMATION"
IN THE PROSPECTUS (Unaudited)

<S> <C>

Annualized Yield Computation

December 29, 1995 Unit Value (A) 22.02979638
less December 22, 1995 Unit Value (B) 22.01289355
-----------
.01690283

Base Period Return = (A minus B) .01690283
Divided by December 22, 1995 Unit Value Divided By 22.01289355
-----------
= .00076786

Annualized Yield = (Base Period Return)
x 365/7 (.00076786) x 365/7
= 4.00%

Effective Yield Computation

December 29, 1995 Unit Value (A) 22.02979638
less December 22, 1995 Unit Value (B) 22.01289355
-----------
.01690283

Base Period Return = (A minus B) .01690283
Divided by December 22, 1995 Unit Value Divided By 22.01289355
-----------
= .00076786

Effective Yield = (1 + Base Period Return) (365/7)
- 1 (1 + .00076786)(365/7) - 1
4.08%
</TABLE>

<PAGE>

Conformed Copy
Exhibit 17

POWER OF ATTORNEY

The undersigned, acting in the capacity or capacities stated opposite
their respective names below, hereby constitute and appoint STEPHEN P. HORVAT,
JR., RAYMOND P. WEBER, EDWARD P. SMITH and PETER K. INGERMAN, and each of them,
singularly, attorneys-in-fact of the undersigned with full power to each of them
to sign for and in the name of the undersigned in the capacities indicated below
(a) Post-Effective Amendment No. 20 to the Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act"), and Amendment No. 18 to the
Registration Statement under the Investment Company Act of 1940, as amended (the
"1940 Act"), on Form N-3 (1933 Act File No. 2-74459 and 1940 Act File No. 811-
3289) of Franklin Life Money Market Variable Annuity Fund C of The Franklin Life
Insurance Company ("The Franklin") and (b) any and all amendments (including
further Post-Effective Amendments and Amendments) thereto, and to give any
certification which may be required in connection therewith pursuant to Rule 485
under the 1933 Act.

Signature Title Date
--------- ----- ----

/s/ R.M. Beuerlein Senior Vice President- 1/16, 1996
- ---------------------- Actuarial and Director of
R.M. Beuerlein The Franklin

/s/ T.J. Byerly Executive Vice President and 1/16, 1996
- ---------------------- Chief Marketing Officer and
T.J. Byerly Director of The Franklin

- ---------------------- Senior Chairman and , 1996
R.M. Devlin Director of The Franklin

/s/ Robert J. Gibbons President, Chief Executive 1/16, 1996
- ---------------------- Officer (principal executive
Robert J. Gibbons officer) and Director
of The Franklin

/s/ C.L. Greenwalt Member, Board of Managers of 1/15, 1996
- ---------------------- the Fund
C.L. Greenwalt

- ---------------------- Senior Chairman and , 1996
H.S. Hook Director of The Franklin

/s/ S.P. Horvat, Jr. Senior Vice President, 1/16, 1996
- ---------------------- General Counsel, Secretary
S.P. Horvat, Jr. and Director of The Franklin;
Secretary, Board of Managers
of the Fund

/s/ H.C. Humphrey Chairman of the Board 1/22, 1996
- ---------------------- of The Franklin
H.C. Humphrey

<PAGE>

/s/ J.D. Pirmann Vice President and Treasurer 1/16, 1996
- ---------------------- (principal financial
J.D. Pirmann officer and principal
accounting officer) of The
Franklin

/s/ Gary D. Reddick Executive Vice President- 1/16, 1996
- ---------------------- Administration and Director
G.D. Reddick of The Franklin

/s/ R.C. Spencer Member, Board of Managers 1/15, 1996
- ---------------------- of the Fund
R.C. Spencer

/s/ Robert G. Spencer Member, Board of Managers 1/29, 1996
- ---------------------- of the Fund
R.G. Spencer

- ---------------------- Vice President, Chief , 1996
P.V. Tuters Investment Officer and Director of The
Franklin

/s/ James W. Voth Member, Board of Managers 1/15, 1996
- ---------------------- of the Fund
James W. Voth

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
REGISTRANT'S FORM N-SAR FOR THE YEAR ENDING 12-31-95 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 37
<AVERAGE-NET-ASSETS> 2562
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>