<PAGE> 1
FLEXIBLE PREMIUM VARIABLE ANNUITY
THE OHIO NATIONAL LIFE INSURANCE COMPANY
SUPPLEMENT DATED DECEMBER 23, 1997 TO THE PROSPECTUS DATED MAY 1, 1997
The following is added after the second sentence of the second paragraph
under "Deduction for Risk Undertakings":
However, Ohio National Life has agreed that the deduction for these risk
undertakings for contracts purchased on and after November 1, 1997 shall
not be increased to more than the rate in effect at the time the contract
is issued. Ohio National Life may discontinue this limitation on its right
to increase the deduction, but only as to any contracts purchased after
notice of such discontinuance.
The following is added after the first sentence under "Death Benefit":
(This death benefit is not available on any contract purchased through a
bank located in Puerto Rico.)
The following is added under "Contingent Deferred Sales Charge":
The contingent deferred sales charge will not be imposed when the values
of one or more contracts owned by the trustee of a retirement plan
qualifying under Section 401, 403(b) or 457 of the Code are transferred
to a group annuity contract issued by Ohio National Life.
<PAGE> 2
PROSPECTUS
FLEXIBLE PURCHASE PAYMENT
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
OHIO NATIONAL VARIABLE ACCOUNT A
THE OHIO NATIONAL LIFE INSURANCE COMPANY
ONE FINANCIAL WAY
CINCINNATI, OHIO 45242
TELEPHONE (513) 794-6452
This prospectus offers a multiple funded, flexible purchase payment, individual
variable annuity contract that provides for the accumulation of values and the
payment of annuity benefits on a variable and/or fixed basis. Unless
specifically stated otherwise, only provisions relating to the variable portion
of the contracts are described in this prospectus. The fixed portion
("Guaranteed Accumulation Account") is briefly described in an appendix to the
Statement of Additional Information.
Variable annuities are designed to provide lifetime annuity payments which will
vary with the investment results of the investment vehicle chosen. The
accumulation value of a contract will vary with the investment performance of
Ohio National Fund, Inc. (the "Fund") or of other eligible investment companies
("Other Funds"), prior to the annuity payout date, and the amount of each
annuity payment will vary with the investment performance of the Fund or Other
Fund subsequent to the commencement of annuity payments. There can be no
assurance that the value of a contract during the years prior to the annuity
payout date or the aggregate amount of annuity payments received after such date
will equal or exceed the purchase payments made therefor.
The variable annuity contracts offered by this prospectus are designed for (1)
annuity purchase plans adopted by public school systems and certain tax-exempt
organizations described in Section 501(c)(3) of the Internal Revenue Code (the
"Code"), qualifying for tax-deferred treatment pursuant to Section 403(b) of the
Code, (2) other employee pension or profit-sharing trusts or plans qualifying
for tax-deferred treatment under Section 401(a), 401(k) or 403(a) of the Code,
(3) individual retirement annuities qualifying for tax-deferred treatment under
Section 408 of the Code, (4) state and municipal deferred compensation plans and
(5) non-tax-qualified retirement plans.
The minimum initial purchase payment is $2,000 for tax-qualified contracts and
$5,000 for non-tax-qualified contracts. Smaller payments may be permitted for
payroll deductions or employee benefit plans. Payments after the first payment
may be made at any time in amounts of at least $500. Generally the maximum
purchase payment is $100,000 per year.
Purchase payments are allocated to one or more subaccounts of Ohio National
Variable Account A ("VAA") as directed by the contract owner. VAA is a separate
account established by The Ohio National Life Insurance Company ("Ohio National
Life"). The assets of VAA are invested in shares of the Fund, a mutual fund
having 12 portfolios in which the contracts' assets may be invested: Equity
Portfolio, Money Market Portfolio, Bond Portfolio, Omni Portfolio, International
Portfolio, Capital Appreciation Portfolio, Small Cap Portfolio, Global
Contrarian Portfolio, Aggressive Growth Portfolio, Strategic Income Portfolio,
Stellar Portfolio and Relative Value Portfolio. Presently, the only Other Fund
in which contract assets may be invested is the Emerging Markets Fund of the
Montgomery Variable Series ("Emerging Markets Fund"). (See the accompanying
prospectuses of the Fund and of the Emerging Markets Fund which also contain
information about other portfolios that are not available for the contracts
offered herein.)
All or part of the contract's accumulation value may be withdrawn before the
annuity payout date. Amounts withdrawn may be subject to federal income tax
penalties. A contingent deferred sales charge up to 7% of the amount withdrawn
may be assessed. After the first year, up to 10% of the accumulation value may
be withdrawn each year without this charge. Exercise of contract rights may be
subject to the terms of any qualified employee trust or annuity plan under which
a contract is purchased. This prospectus contains no information concerning such
trusts or plans.
The contracts offered hereby may be revoked by the purchaser without penalty
within 20 days of their delivery.
THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE. IT SETS FORTH THE
INFORMATION ABOUT VAA AND THE VARIABLE ANNUITY CONTRACTS OFFERED BY THIS
PROSPECTUS THAT YOU SHOULD KNOW BEFORE INVESTING. ADDITIONAL INFORMATION ABOUT
VAA HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN A STATEMENT
OF ADDITIONAL INFORMATION DATED MAY 1, 1997 THE STATEMENT OF ADDITIONAL
INFORMATION IS INCORPORATED HEREIN BY REFERENCE AND IS AVAILABLE UPON REQUEST
AND WITHOUT CHARGE BY WRITING OR CALLING OHIO NATIONAL LIFE AT THE ABOVE
ADDRESS. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION IS
ON PAGE 2.
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.
THIS PROSPECTUS SHOULD BE ACCOMPANIED BY THE CURRENT PROSPECTUS OF OHIO NATIONAL
FUND, INC.
May 1, 1997
FORM V-4825-A
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Fee Table..................................................3
Financial Statements..................................4
The Ohio National Financial Services Group.................5
Ohio National Life....................................5
Ohio National Variable Account A......................5
Ohio National Fund, Inc...............................5
Emerging Markets Fund.................................5
Distribution of Variable Annuity Contracts.................6
Deductions and Expenses....................................7
Contingent Deferred Sales Charge......................7
Contract Administration Charge........................7
Deduction For Administrative Expenses.................7
Deduction For Risk Undertakings.......................7
Transfer Fee..........................................8
Deduction For State Premium Tax.......................8
Fund Expenses.........................................8
Description of Variable Annuity Contracts..................8
20-Day Free Look......................................8
Accumulation Period...................................8
Annuity Period.......................................12
Contract Owner Inquiries.............................14
Performance Data.....................................14
Federal Tax Status........................................14
IRA Disclosure Statement..................................18
- -------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
Custodian
Independent Certified Public Accountants
Underwriter
Calculation of Money Market Subaccount Yield
Total Return
Transfer Limitations
Financial Statements for VAA and Ohio National Life
Appendix: Loans Under Tax-Sheltered Annuities
Guaranteed Accumulation Account
</TABLE>
GLOSSARY OF SPECIAL TERMS
ACCUMULATION PERIOD - The period prior to the annuity payout date and during the
lifetime of the annuitant.
ACCUMULATION UNIT - A unit of measure used to determine the value of contracts
during the accumulation period.
ACCUMULATION VALUE - The cash value of an annuity contract before the annuity
payout date.
ANNUITANT - Any natural person who is to receive or is receiving annuity
payments and upon whose continuation of life annuity payments with life
contingencies depend.
ANNUITY PAYOUT DATE - The date on which annuity payments are to begin.
ANNUITY PAYMENTS - Periodic payments made to an annuitant pursuant to an annuity
contract.
ANNUITY UNIT - A unit of measure used to determine the second and subsequent
variable annuity payments and reflecting the investment performance of the Fund.
FUND - Ohio National Fund, Inc.
FUND SHARES - Shares of the Fund or of any Other Fund.
OTHER FUND - Any registered open-end investment company in which contract assets
may be invested other than the Fund.
OWNER - During the lifetime of the designated annuitant and prior to the
specified annuity payout date, the owner is the person in whose name the
contract is registered. On and after the annuity payout date the annuitant
becomes the owner. After the death of the annuitant, the beneficiary becomes the
owner.
PURCHASE PAYMENTS - The amount of payments made by the owner or on his behalf
under the annuity contract.
SETTLEMENT - The application of the accumulation value of an annuity contract
under the settlement provisions contained therein.
STAR BANK - Star Bank, N.A. or any bank affiliated with it.
SUBACCOUNT - The Equity subaccount, Money Market subaccount, Bond subaccount,
Omni subaccount, International subaccount, Capital Appreciation subaccount,
Small Cap subaccount, Global Contrarian subaccount, Aggressive Growth
subaccount, Strategic Income subaccount, Stellar subaccount, Relative Value
subaccount, Emerging Markets subaccount, or any other subaccounts established
under VAA.
VALUATION PERIOD - The period of time from one determination of accumulation
unit and annuity unit values to their next determination. Such determination is
made at the same time that the net asset value of Fund Shares is determined. See
page 22 of the accompanying Fund prospectus and page 10 of the Emerging Markets
Fund prospectus.
1940 ACT - The Investment Company Act of 1940, as amended, or any similar
successor federal legislation.
2
<PAGE> 4
FEE TABLE
<TABLE>
<CAPTION>
CONTRACTOWNER TRANSACTION EXPENSES
Deferred Sales Load (as a percentage of YEARS PAYMENT
----- -------
<S> <C> <C>
value withdrawn; the 1st 7%
percentage varies with 2nd 7%
number of years from 3rd 6%
purchase payments to 4th 5%
which values relate) 5th 4%
6th 2%
7th 1%
8th and later 0%
Exchange (transfer) Fee $3 (currently no charge for the first 4 transfers per year)
Annual Contract Fee $35 (no fee if contract value exceeds $50,000)
VAA ANNUAL EXPENSES (as a percentage
of average account value)
Mortality and Expense Risk Fees 1.15%
Account Fees and Expenses 0.25%
-----
Total VAA Annual Expenses 1.40%
</TABLE>
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES (after fee waiver*)
(as a percentage of the Fund's
average net assets) MANAGEMENT OTHER TOTAL FUND
FEES EXPENSES EXPENSES
---- -------- --------
<S> <C> <C> <C>
Equity 0.55% 0.19% 0.74%
Money Market* 0.25% 0.19% 0.44%
Bond 0.60% 0.19% 0.79%
Omni 0.58% 0.19% 0.77%
International 0.90% 0.25% 1.15%
Capital Appreciation 0.80% 0.17% 0.97%
Small Cap 0.80% 0.16% 0.96%
Global Contrarian 0.90% 0.39% 1.29%
Aggressive Growth 0.80% 0.21% 1.01%
Strategic Income** 0.80% 0.35% 1.15%
Stellar** 1.00% 0.35% 1.35%
Relative Value** 0.90% 0.25% 1.15%
Emerging Markets* 0.23% 1.22% 1.45%
</TABLE>
EXAMPLE - If you surrendered your contract at the end of the applicable time
period, you would pay the following aggregate expenses on a $1,000 investment in
each subaccount, assuming 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity $ 95 $ 125 $ 157 $ 266
Money Market* 93 116 142 235
Bond 96 126 159 271
Omni 96 126 158 269
International 99 136 176 306
Capital Appreciation 98 131 168 289
Small Cap 97 131 167 288
Global Contrarian 101 140 183 320
Aggressive Growth 98 133 170 292
Strategic Income** 99 136 N/A N/A
Stellar** 101 142 N/A N/A
Relative Value** 99 136 N/A N/A
Emerging Markets* 102 145 191 335
</TABLE>
3
<PAGE> 5
EXAMPLE - If you do not surrender your contract or you annuitize at the end of
the applicable time period, you would pay the following aggregate expenses on
the same investment:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity $ 24 $ 72 $ 124 $ 266
Money Market* 21 63 109 235
Bond 24 74 127 271
Omni 24 73 126 269
International 28 85 144 306
Capital Appreciation 26 79 136 289
Small Cap 26 79 135 288
Global Contrarian 29 89 151 320
Aggressive Growth 26 81 138 292
Strategic Income** 28 85 N/A N/A
Stellar** 30 91 N/A N/A
Relative Value** 28 85 N/A N/A
Emerging Markets* 31 94 159 335
</TABLE>
The purpose of the above table is to help you to understand the costs and
expenses that a variable annuity contractowner will bear directly or indirectly.
THE EXAMPLE INCLUDED IN THE ABOVE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSE, AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. Note that the expense amounts shown in the example are
aggregate amounts for the total number of years indicated. In the example, the
annual fee is treated as if it were deducted as a percentage of assets, based
upon the average account value for all contracts, including ones from which a
portion of the contract fee may be paid from amounts invested in the general
account. Neither the table nor the example reflect any premium taxes that may be
applicable to a contract, which currently range from 0% to 3.5%. The above
table and example reflect only the charges for contracts currently offered by
this prospectus and not other contracts that may be offered by Ohio National
Life. For further details, see DEDUCTIONS FOR STATE PREMIUM TAX, page 8.
*For the Money Market Portfolio, management fees in excess of 0.25% are
presently being waived by the Fund's investment adviser. Without the waiver,
the Money Market Portfolio's Management Fee would be 0.30%, its Total Fund
Annual Expenses would be 0.49%, and its expenses would total $93 for a $1,000
contract surrendered at the end of 1 year, $118 if surrendered at the end of
3 years, $145 if surrendered at the end of 5 years or $240 if surrendered at
the end of 10 years. For a $1,000 contract not surrendered, the expenses
without the waiver would be $21 for 1 year, $65 for 3 years, $111 for
5 years or $240 for 10 years. For the Emerging Markets Portfolio, 1.02% of
the 1.25 management fee was waived by Montgomery Asset Management, L.P. in
1996. Without the waiver, the Emerging Markets Portfolio's Total Fund Annual
Expenses would have been 2.47% and its expenses would total $111 for a $1,000
contract surrendered at the end of 1 year, $171 if surrendered at the end of
3 years, $234 if surrendered at the end of 5 years or $420 if surrendered at
the end of 10 years. For a $1,000 contract not surrendered, the expenses
without the waiver would be $40 for 1 year, $122 for 3 years, $205 for
5 years or $420 for 10 years.
**The "Other Expenses" (and, accordingly, the Total Fund Expenses) for
the Strategic Income, Stellar and Relative Value Portfolios are based
on estimates.
FINANCIAL STATEMENTS
The complete financial statements of VAA and Ohio National Life, and the
Independent Auditors' Reports thereon, may be found in the Statement of
Additional Information.
4
<PAGE> 6
THE OHIO NATIONAL FINANCIAL SERVICES GROUP
OHIO NATIONAL LIFE
Ohio National Life was organized under the laws of Ohio in 1909 as a stock life
insurance company and became a mutual life insurance company in 1959. It writes
life, accident and health insurance and annuities in 47 states, the District of
Columbia and Puerto Rico. Currently it has assets in excess of $5.5 billion and
equity in excess of $500 million. Its home office is located at One Financial
Way, Cincinnati, Ohio 45242.
OHIO NATIONAL VARIABLE ACCOUNT A
VAA was established in 1969 by Ohio National Life as a separate account under
Ohio law for the purpose of funding variable annuity contracts. Purchase
payments for the variable annuity contracts are allocated to one or more
subaccounts of VAA. Income, gains and losses, whether or not realized, from
assets allocated to VAA are, as provided in the contracts, credited to or
charged against VAA without regard to other income, gains or losses of Ohio
National Life. The assets maintained in VAA will not be charged with any
liabilities arising out of any other business conducted by Ohio National Life.
Nevertheless, all obligations arising under the contracts, including the
commitment to make annuity payments, are general corporate obligations of Ohio
National Life. Accordingly, all of Ohio National Life's assets are available to
meet its obligations under the contracts. VAA is registered as a unit investment
trust under the 1940 Act.
The assets of the subaccounts of VAA are invested at net asset value (without
an initial sales charge) in shares of corresponding portfolios of the Fund:
the Equity Portfolio, Money Market Portfolio, Bond Portfolio, Omni Portfolio (a
flexible portfolio fund), International Portfolio, Capital Appreciation
Portfolio, Small Cap Portfolio, Global Contrarian Portfolio, Aggressive Growth
Portfolio, Strategic Income Portfolio, Stellar Portfolio (a growth and income
fund) or Relative Value Portfolio; assets of the Emerging Markets subaccount
are invested in shares of the Emerging Markets Fund.
OHIO NATIONAL FUND, INC.
The Fund is a diversified, open-end, management investment company registered
under the 1940 Act. The value of the Fund's investments fluctuates daily and is
subject to the risk of changing economic conditions as well as the risk inherent
in the ability of management to anticipate changes necessary in such investments
to meet changes in economic conditions. The Fund receives investment advice, for
a fee, from its investment adviser, Ohio National Investments, Inc., and from
Societe Generale Asset Management Corp. (sub-adviser to the International and
Global Contrarian Portfolios), T. Rowe Price Associates, Inc. (sub-adviser to
the Capital Appreciation Portfolio), Founders Asset Management, Inc.
(sub-adviser to the Small Cap Portfolio), Strong Capital Management, Inc.
(sub-adviser to the Aggressive Growth Portfolio) and Star Bank (subadviser to
the Strategic Income, Stellar and Relative Value Portfolios). For additional
information concerning the Fund, including the investment objectives of each of
its portfolios, see the attached Fund prospectus. Read the Fund prospectus
carefully before investing. The Fund prospectus contains information about other
portfolios that are not available for the contract offered herein.
EMERGING MARKETS FUND
The Emerging Markets Fund is a series of The Montgomery Funds III, a registered,
open-end, investment company the shares of which are sold only to insurance
company separate accounts to fund variable annuity contracts and variable life
insurance policies. The Emerging Markets Fund is managed, for a fee, by
Montgomery Asset Management, L.P. The value of Emerging Markets fund investments
fluctuates daily and is subject to the risk of changing economic conditions as
well as the risk inherent in the ability of management to anticipate changes
necessary in those investments to meet changes in economic conditions. For
additional information concerning the Emerging Markets Fund, including its
investment objectives, see its accompanying prospectus. Read the prospectus
carefully before investing. (It contains information about other funds that are
not available for the contract offered herein.)
5
<PAGE> 7
MIXED AND SHARED FUNDING
In addition to being offered to VAA, shares of the Fund are currently offered to
other separate accounts of Ohio National Life in connection with variable
annuity contracts and a separate account of Ohio National Life Assurance
Corporation in connection with variable life insurance contracts. In the future,
shares of the Fund may be offered to other insurance company separate accounts.
Shares of the Emerging Markets Fund are presently offered to variable annuity
and variable life insurance separate accounts of other unaffiliated life
insurance companies. It is conceivable that in the future it may become
disadvantageous for both variable life and variable annuity separate accounts or
for separate accounts of other life insurance companies to invest in Fund
Shares. Although neither Ohio National Life nor the Fund currently foresees any
such disadvantage, the Board of Directors of the Fund and of each Other Fund
will monitor events in order to identify any material conflict between different
types of contractowners and to determine what action, if any, should be taken in
response thereto, including the possible withdrawal of VAA`s participation in
the Fund or Other Fund. Material conflicts could result from such things as (1)
changes in state insurance law; (2) changes in federal income tax law; (3)
changes in the investment management of any portfolio of the Fund; or (4)
differences between voting instructions given by different types of
contractowners.
VOTING RIGHTS
Ohio National Life shall vote Fund Shares held in VAA at meetings of
shareholders of the Fund or of any Other Fund in accordance with voting
instructions received from contract owners. The number of Fund Shares for which
an owner is entitled to give instructions will be determined by Ohio National
Life in the manner described below, not more than 90 days prior to the meeting
of shareholders. Proxy material will be distributed to each owner together with
appropriate forms for giving voting instructions. Fund Shares held in VAA, for
which no timely instructions are received, will be voted by Ohio National Life
in proportion to the instructions which are received with respect to all
contracts participating in VAA.
During the accumulation period, the number of Fund Shares for which instructions
may be given to Ohio National Life is determined by dividing the variable
accumulation value of a subaccount of the contract by the net asset value of a
share of the corresponding portfolio of the Fund or Other Fund as of the same
date. During the annuity payment period, the number of Fund Shares for which
such instructions may be given is determined by dividing the actuarial liability
for variable annuities in the course of payment by the net asset value of a Fund
Share as of the same date. Generally, the number of votes tends to decrease as
annuity payments progress.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The variable annuity contracts are sold by Ohio National Life insurance agents
who are also registered representatives of (a) MDS Securities, Inc. ("MDS"), (b)
The O.N. Equity Sales Company ("ONESCO"), a wholly-owned subsidiary of Ohio
National Life, or (c) other broker-dealers that have entered into distribution
agreements with Ohio National Equities, Inc. ("ONE, Inc.," another wholly-owned
subsidiary of Ohio National Life) which is the principal underwriter of the
contracts. Each of ONE, Inc. MDS, ONESCO and the other broker-dealers is
registered under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc. Ohio National Life pays ONE,
Inc. 6.75% of purchase payments. ONE, Inc. then pays a portion of that amount to
MDS, ONESCO and the other broker-dealers as compensation for their sales
efforts. MDS, ONESCO and the other broker-dealers will remunerate their
registered representatives from their own funds. Purchase payments on which no
compensation is paid to registered representatives will not be included in
amounts on which the sales compensation will be paid to ONE, Inc. To the extent
that the amount of the contingent deferred sales charge received by Ohio
National Life is not sufficient to recover the fee paid to ONE, Inc., any
deficiency will be made up from Ohio National Life's general account assets
which include, among other things, any profit from the mortality and expense
risk charges.
6
<PAGE> 8
DEDUCTIONS AND EXPENSES
CONTINGENT DEFERRED SALES CHARGE
No deduction for sales expense is made from purchase payments. A contingent
deferred sales charge may be assessed by Ohio National Life when a contract is
surrendered or a partial withdrawal is made to defray expenses relating to the
sale of the contract, including compensation to sales personnel, cost of sales
literature and prospectuses, and other expenses related to sales activity. The
charge equals a percentage of the amount withdrawn. This percentage will vary
with the number of years from the date the purchase payments were made
(starting with the first purchase payment) as follows:
<TABLE>
<CAPTION>
YEARS PAYMENT
----- -------
<S> <C>
1st 7%
2nd 7%
3rd 6%
4th 5%
5th 4%
6th 2%
7th 1%
8th and later 0%
</TABLE>
On or after the first contract anniversary, partial withdrawals of not more than
10% of the accumulation value (as of the last day of the prior contract year)
may be made without the imposition of the contingent deferred sales charge. If
less than 10% is withdrawn in a year the remainder of that 10% may be carried
into future years. But, you can never carry over more than 30% of the year-end
accumulation value for this purpose and you can never withdraw more than 30% of
the previous year-end accumulation value without a charge.
CONTRACT ADMINISTRATION CHARGE
Each year on the contract anniversary (or at the time of surrender of the
contract), Ohio National Life will deduct a contract administration charge of
$35 from the accumulation value to reimburse it for the expenses relating to the
maintenance of the contract. This charge is not designed to produce a profit and
Ohio National Life does not expect to recover from the charge any amount in
excess of accumulated administrative expenses. There is no contract
administration charge (a) for contracts having a value of at least $50,000 on
the contract anniversary or (b) after the annuity payout date. Ohio National
Life guarantees not to change the contract administration charge. The charge
is not made after the annuity payout date.
DEDUCTION FOR ADMINISTRATIVE EXPENSES
A deduction is made at the end of each valuation period equal to 0.25% on an
annual basis of the contract value for administrative expenses. This deduction
is not designed to produce a profit but to reimburse Ohio National Life for
expenses incurred for accounting, auditing, legal, contract owner services,
reports to regulatory authorities and contract owners, contract issue, etc., not
covered by the contract administration charge.
DEDUCTION FOR RISK UNDERTAKINGS
Prior to the annuity payout date, Ohio National Life guarantees that the
accumulation value of all contracts will not be affected by any excess of sales
and administrative expenses over the deductions provided therefor. Ohio National
Life also guarantees to pay a death benefit in the event of the annuitant's
death prior to the annuity payout date (see Death Benefit, page 11). After the
annuity payout date, Ohio National Life guarantees that variable annuity
payments will not be affected by adverse mortality experience or expenses.
For assuming these risks, Ohio National Life, in determining the accumulation
unit values and the annuity unit values for each subaccount, makes a deduction
from the applicable investment results equal to 1.15% of the contract value on
an annual basis. That deduction may be decreased by Ohio National Life at any
time but may not be increased to more than 1.15% on an annual basis. Although
Ohio National Life views the risk charge as an indivisible whole, of the amount
currently being deducted, it has estimated that a reasonable allocation would be
0.65% for mortality risk, and
7
<PAGE> 9
0.50% for expense risk. Although Ohio National Life hopes to realize a profit
from this charge, if the deduction is insufficient to cover the actual risk
involved, the loss will fall on Ohio National Life; conversely, if the deduction
proves more than sufficient, the excess will be a gain to Ohio National Life.
TRANSFER FEE
A transfer fee of $3 (which may be increased to $15) is made for each transfer
from one subaccount to another. The fee is charged against the subaccount from
which the transfer is effected. No fee is charged for the first four transfers
each year.
DEDUCTION FOR STATE PREMIUM TAX
Most states do not presently charge a premium tax for these contracts. Where a
tax applies, the rates for tax-qualified contracts are presently 0.5% in
California, 1.0% in Puerto Rico and West Virginia, 2.0% in Kentucky and 2.25% in
the District of Columbia. For non-tax-qualified contracts, the rates are
presently 1.0% in Puerto Rico, West Virginia and Wyoming, 1.25% in the South
Dakota, 2.0% in Kansas, Kentucky and Maine, 2.25% in the District of Columbia,
2.35% in California and 3.5% in Nevada. Normally, any such applicable taxes will
not be deducted until annuity payments begin. However, in Kansas, South Dakota
and Wyoming, they are presently being deducted from purchase payments.
FUND EXPENSES
There are deductions from, and expenses paid out of, the assets of the Fund and
of any Other Fund. These are described in the accompanying prospectuses of the
Fund and of the Emerging Markets Fund.
DESCRIPTION OF VARIABLE ANNUITY CONTRACTS
20-DAY FREE LOOK
The contract owner may revoke the contract at any time until the end of 20 days
after receipt of the contract and receive a refund of the entire purchase price.
To revoke, the owner must return the contract to Ohio National Life within the
20 day period. In those states where required by state law, the value of the
contract as of the date of cancellation will be returned in lieu of the entire
purchase price in case of revocation during the 20 day free look period.
ACCUMULATION PERIOD
PURCHASE PAYMENT PROVISIONS
The contracts provide for minimum initial purchase payments of $2,000 for
tax-qualified contracts and $5,000 for non-tax qualified contracts, minimum
subsequent payments of $500 and maximum payments of $100,000 per year. Ohio
National Life may permit (a) smaller payments in the case of payroll deductions
or employee benefit plans or (b) larger payments in its discretion. Subject to
these limits, payments may be made at any time. Failure to make payments shall
not constitute a default, but could result in involuntary termination (see Ohio
National Life's Right to Terminate, page 9).
ACCUMULATION UNITS
Prior to the annuity payout date, the contract value is measured by accumulation
units. Each purchase payment results in the crediting of accumulation units to
the contract (see Crediting Accumulation Units, page 9). The number of
accumulation units so credited remains constant but the dollar value of
accumulation units will vary depending upon the investment results of the
particular subaccount to which payments are allocated.
8
<PAGE> 10
CREDITING ACCUMULATION UNITS
Completed application forms, together with a check for the first purchase
payment, are forwarded to the home office of Ohio National Life for acceptance.
Upon acceptance, a contract is issued to the contract owner, and the first
purchase payment is then credited to the contract in the form of accumulation
units. Initial purchase payments are credited not later than two business days
after receipt if the application and all information necessary for processing
the purchase payment are complete. If an application is not accepted within five
business days, the purchase payment will be returned immediately to the
applicant unless the applicant specifically consents to having Ohio National
Life retain the purchase payment until the application is completed. After that,
the purchase payment will be credited within two business days. Subsequent
purchase payments are sent directly to the home office of Ohio National Life and
are applied to provide that number of accumulation units (for each subaccount)
determined by dividing the amount of the purchase payment by the value of the
appropriate accumulation unit next computed after the payment is received at the
home office of Ohio National Life.
ALLOCATION OF PURCHASE PAYMENTS
In the contract application, you may direct the allocation of your purchase
payments among the subaccounts of VAA and the general account of Ohio National
Life. The amount allocated to any subaccount or the general account must equal a
whole percentage. The allocation of future purchase payments may be changed at
any time upon written notice to the home office of Ohio National Life.
ACCUMULATION UNIT VALUE AND ACCUMULATION VALUE
The accumulation unit value of each subaccount of VAA was set at $10 when the
first payment for these contracts was allocated to each subaccount. The
accumulation unit value for any subsequent valuation period is determined by
multiplying the accumulation unit value for the immediately preceding valuation
period by the net investment factor (described below) for such subsequent
valuation period. The accumulation value is determined by multiplying the total
number of accumulation units (for each subaccount) credited to the contract by
the accumulation unit value (for such subaccount) for the valuation period for
which the accumulation value is being determined.
NET INVESTMENT FACTOR
The net investment factor is a quantitative measure of the investment results of
each subaccount of VAA. The net investment factor for each subaccount for any
valuation period is determined by dividing (a) by (b), then subtracting (c) from
the result, where:
(a) is -
(1) the net asset value of the corresponding Fund Share determined as of
the end of a valuation period, plus
(2) The per share amount of any dividends or other distributions declared
for that portfolio by the Fund or an Other Fund if the "ex-dividend"
date occurs during the valuation period, plus or minus
(3) per share charge or credit for any taxes paid or reserved for which is
determined by Ohio National Life to result from the maintenance or
operation of that subaccount of VAA; (No federal income taxes are
applicable under present law.)
(b) is the net asset value of the corresponding Fund Share determined at the
end of the preceding valuation period; and
(c) is the deduction for administrative and sales expenses and risk
undertakings. (See Deduction for Administrative Expenses, page 7, and,
Deduction for Risk Undertakings, page 7.)
OHIO NATIONAL LIFE'S RIGHT TO TERMINATE
Ohio National Life may, at its option, require surrender of a contract on any
anniversary when the accumulation value is less than $1,000. Such termination
could have adverse tax consequences. (See Federal Tax Status, page 14.) Such
termination will not be made on an individual retirement annuity (IRA) if a
purchase payment has been made during the preceding two years, nor will it be
made on an annuity funding a Section 403(b) salary reduction agreement.
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SURRENDER AND PARTIAL WITHDRAWAL
Prior to the annuity payout date, or thereafter in the case of annuity Option
1(e) described below, the owner of a contract may surrender (totally
withdraw the value of) his or her contract for its accumulation value or elect a
partial (at least $100) withdrawal therefrom. These transactions may be subject
to the contingent deferred sales charge described on page 7. That charge is a
percentage of the total amount withdrawn. For example, if a partial withdrawal
of $100 is requested during the first two years after the first purchase payment
for which there are contract values, Ohio National Life would pay you $100, but
the total amount deducted from the accumulation value would be $107.53 (i.e.,
$107.53 x 7% = $7.53). Unless otherwise specified, the withdrawal will be made
pro-rata from the values of each subaccount. The amount available for withdrawal
is the sum of the subaccount values less the contingent deferred sales charge,
if any. In the case of a complete surrender, the amount payable is also reduced
by the amount of the contract administration charge. Payment by Ohio National
Life shall be made within seven days from the date of receipt of the request for
such payment except as it may be deferred under the circumstances described
below. Surrenders and partial withdrawals are limited or not permitted in
connection with certain retirement plans. See Tax Deferred Annuities, page 16.
For tax consequences of a surrender or withdrawal, see Federal Tax Status, page
14.
Occasionally Ohio National Life may receive a request for a surrender or partial
withdrawal which includes contract values derived from purchase payments which
have not cleared the banking system. Ohio National Life may delay mailing that
portion which relates to such payments until the check for the purchase payment
has cleared. Ohio National Life requires the return of the contract in the case
of a complete surrender.
The right to withdraw may be suspended or the date of payment postponed (1) for
any period during which the New York Stock Exchange is closed (other than
customary weekend and holiday closings) or during which trading on the Exchange,
as determined by the Securities and Exchange Commission, is restricted; (2) for
any period during which an emergency, as determined by the Commission, exists as
a result of which disposal of securities held in the Fund or Other Fund is not
reasonably practical, or it is not reasonably practical to determine the value
of the Fund's or Other Fund's net assets; or (3) or such other periods as the
Commission may by order permit for the protection of security holders.
TRANSFERS AMONG SUBACCOUNTS
Contract values may be transferred from one subaccount to another upon the
request of the owner. Transfers may be made at any time during the accumulation
period. The amount of any such transfer must be at least $300 (or the entire
value of the contract's interest in a subaccount, if less). Ohio National Life
reserves the right to limit the number, frequency, method or amount of
transfers. Transfers from any portfolio of the Fund or Other Fund on any one day
may be limited to 1% of the previous day's total net assets of that portfolio if
Ohio National Life or the Fund or Other Fund in its or their discretion,
believes that the portfolio might otherwise be damaged. If and when transfers
must be so limited, some transfer requests will not be made. In determining
which requests will be made, scheduled transfers (pursuant to a pre-existing DCA
program) will be made first, followed by mailed written requests in the order
postmarked and, lastly, telephone and facsimile requests in the order received.
Contract owners whose transfer requests are not made will be so notified.
Current SEC rules preclude us from processing at a later date those requests
that were not made. Accordingly, a new transfer request would have to be
submitted in order to make a transfer that was not made because of these
limitations. After the annuity payout date, transfers among subaccounts can only
be made once each calendar quarter. Such transfers may then be made without a
transfer fee. (See Transfer Fee, page 8, and Transfers After Annuity Payout
Date, page 13). Not more than 20% of a contract's guaranteed accumulation value
(or $1,000, if greater) as of the beginning of a contract year may be
transferred to variable subaccounts during that contract year.
SCHEDULED TRANSFERS (DOLLAR COST AVERAGING)
Ohio National Life administers a scheduled transfer ("DCA") program enabling you
to preauthorize automatic monthly or quarterly transfers of a specified dollar
amount of at least $300, (a) from any variable subaccount(s) to any other
subaccount(s), including the Guaranteed Accumulation Account, or (b) from the
Guaranteed Accumulation Account to any variable subaccount(s) if the DCA program
is scheduled to begin within 6 months of contract issue and the term of the DCA
program does not exceed 2 years. For transfers from variable subaccounts, at
least 12 transfers must be scheduled and the term of the DCA program may not
exceed 5 years. No transfer fee is charged for DCA transfers. Ohio National Life
may discontinue the DCA program at any time. You may also discontinue further
DCA transfers by giving Ohio National Life written notice at least 7 business
days before the next scheduled transfer.
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DCA generally has the effect of reducing the risk of purchasing at the top, and
selling at the bottom, of market cycles. DCA transfers from the Guaranteed
Accumulation Account or from a fund with a stabilized net asset value, such as
the Money Market subaccount, will generally reduce the average total cost of
indirectly purchasing Fund Shares because greater numbers of shares will be
purchased when the share prices are lower than when prices are higher. However,
DCA does not assure you of a profit, nor does it protect against losses in a
declining market. Moreover, for transfers from a subaccount not having a
stabilized net asset value, DCA will have the effect of reducing the average
price of the shares being redeemed. DCA might also be used to systematically
transfer accumulation values from variable subaccounts to the General
Accumulation Account, in anticipation of retirement, in order to reduce the
risk of making a single transfer during a low market.
TELEPHONE TRANSFERS
If the contract owner first submits a pre-authorization form to Ohio
National Life, transfers may be made by telephoning Ohio National Life, between
9:00 a.m. and 3:30 p.m. (Eastern time) on days that it is open for business, at
1-800-635-3225. Ohio National Life will honor pre-authorized telephone transfer
instructions from anyone who is able to provide the personal identifying
information requested, but reserves the right to refuse to honor any such
request if that seems prudent. Telephone transfer requests will not be honored
after the annuitant's death. Ohio National Life will use reasonable procedures
to confirm that telephone instructions are genuine. (Otherwise, Ohio National
Life may be liable for any losses due to unauthorized or fraudulent
instructions.) A written confirmation will be sent following each telephone
transfer.
DEATH BENEFIT
In the event of the death of the annuitant and any contingent annuitant prior
to the annuity payout date, the contract provides a death benefit to be paid to
a designated beneficiary. The amount of the death benefit will be determined as
of the date of the annuitant's death. It will be paid to the beneficiary in a
single sum unless the owner or beneficiary elects settlement under one or more
of the settlement options provided in the contract.
The death benefit will be the contract value if, (a) on the date of death or (b)
as of any contract anniversary date, the sum of all withdrawals exceeds the
remaining contract value. Otherwise, the death benefit will be the greatest of:
(a) the contract value; or (b) the net of purchase payments less withdrawals
accumulated at an annual effective interest rate of 4% until the annuitant
attains age 75 and 0% after that; or (c) the stepped-up death benefit amount if
the contract has been in effect for at least 7 years. For the 7-year period
beginning on the seventh contract anniversary, the stepped-up death benefit will
be the greater of (i) the contract value as of the seventh anniversary or (ii)
the net of purchase payments less withdrawals made on or before the seventh
anniversary. At the beginning of each later 7-year period (until the annuitant
attains age 75), the stepped up death benefit will be the greater of (i) the
contract value on that date or (ii) the death benefit as of the last day of the
preceding 7-year period. The stepped-up death benefit amount is increased by
purchase payments and decreased by withdrawals made during each 7-year period
after the seventh anniversary.
OHIO NATIONAL LIFE EMPLOYEE DISCOUNT
Ohio National Life and its affiliated companies offer a credit on the purchase
of contracts by any of their employees, directors or retirees, or their spouse
or the surviving spouse of a deceased retiree, covering any of the foregoing or
any of their minor children, or any of their children ages 18 to 21 who is
either (i) living in the purchaser's household or (ii) a full-time college
student being supported by the purchaser, or any of the purchaser's minor
grandchildren under the Uniform Gifts to Minors Act. This credit is treated as
additional income under the contract. The amount of the credit equals 3.2% of
all purchase payments made in the first contract year and 5.5% of purchase
payments made in the second through sixth contract years. Ohio National Life
credits the Guaranteed Accumulation Account of the eligible person's contract
in the foregoing amounts at the time of each payment made by the eligible
person.
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ANNUITY PERIOD
ANNUITY PAYOUT DATE
Annuity payments under a contract will begin on the annuity payout date. This
date is selected by the owner at the time the contract is issued and must be at
least 30 days after the contract date. It may be changed from time to time by
the owner so long as the annuity payout date selected is the first day of any
month at least 30 days after the date of such change. The contract restricts the
annuity payout date to not later than the first of the month following the
annuitant's 90th birthday; however, this restriction may be waived by mutual
agreement between Ohio National Life and the owner.
The contracts include Ohio National Life's assurance that annuity payments will
be paid for the lifetime of the annuitant in accordance with the annuity rates
contained in the contract, regardless of actual mortality experience.
Other than in connection with annuity Option 1(e) described below, once annuity
payments commence, the contract cannot be surrendered for cash except that,
upon the death of the annuitant, the beneficiary shall be entitled to surrender
the contract for the commuted value of any remaining period-certain payments.
Surrenders and partial withdrawals from annuity Option 1(e) are permitted at any
time.
ANNUITY OPTIONS
The owner may elect one or more of the following annuity options, and may change
such election anytime before the annuity payout date.
Option 1(a): Life Annuity with installment payments for the lifetime of the
annuitant (under this option it is possible for the annuitant to
receive only one payment; this could happen if the annuitant
should die before receiving the second payment; there is no
residual value of the contract after annuitant's death).
Option 1(b): Life Annuity with installment payments guaranteed for five years
and continuing thereafter during the remaining lifetime of the
annuitant.
Option 1(c): Life Annuity with installment payments guaranteed for ten years
and continuing thereafter during the remaining lifetime of
the annuitant.
Option 1(d): Installment Refund Life Annuity with payments guaranteed for
a period certain and continuing thereafter during the remaining
lifetime of the annuitant. The number of period-certain payments
is equal to the amount applied under this option divided by the
amount of the first payment.
Option 1(e): Installment Refund Annuity with payments guaranteed for a fixed
number (up to thirty) of years. This option is available for
variable annuity payments only. Although the deduction for risk
undertakings is taken from annuity unit values, Ohio
National Life has no mortality risk during the annuity payout
period under this option.
Option 2(a): Joint & Survivor Life Annuity with installment payments during
the lifetime of an annuitant and continuing during the lifetime
of a designated contingent annuitant (under this option it is
possible for the annuitant and contingent annuitant to receive
only one payment; this could happen if both were to die before
receiving the second payment).
Option 2(b): Joint & Survivor Life Annuity with installment payments
guaranteed for ten years and continuing thereafter during the
remaining lifetime of the annuitant or a designated contingent
annuitant.
Other settlement options are available as agreed to by Ohio National Life.
Unless the contract owner directs otherwise, as of the annuity payout date the
contract values will be applied to provide annuity payments pro-rata from each
subaccount in the same proportion as the contract values immediately prior to
the annuity payout date.
If no election is in effect on the annuity payout date, the accumulation value
of the contract will be applied under Option 1(c) (except that certain contracts
might require a Joint and Survivor Annuity pursuant to the Pension Reform Act of
1974, as amended) with the beneficiary as payee for any remaining period-certain
installments payable after the death of the annuitant. Options 2(a) and 2(b) are
available only with the consent of Ohio National Life if the contingent
annuitant is not related to the annuitant.
The Internal Revenue Service has not ruled on the tax treatment of a commutable
variable annuity. If you select Option 1(e), it is possible that the IRS could
determine that the entire value of the annuity is fully taxable at the time you
elect Option 1(e) or that variable annuity payments under this option should
not be taxed under the annuity rules (see Federal Tax Status, page 15), which
could result in your payments being fully taxable to you. Should the IRS so
rule, Ohio National may be required to tax report up to the full value of the
annuity to you as taxable income.
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DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The first variable annuity payment is determined by applying the accumulation
value for each subaccount in accordance with the settlement option tables
contained in the contract. The rates contained in those tables depend upon the
annuitant's (and any contingent annuitant's) age and sex and the option
selected. Contracts issued to plans sponsored by employers subject to Title VII
of the Civil Rights Act of 1964 or similar state statutes use annuity tables
which do not vary with annuitant's sex. The accumulation value to be applied is
determined at the end of a valuation period (selected by Ohio National Life and
uniformly applied) not more than 10 valuation periods before the annuity payout
date.
If the amount to be applied under an option is less than $5,000, the option
shall not be available and accumulation value shall be paid in a single sum to
the annuitant. If the first periodic payment under any option would be less than
$25, Ohio National Life reserves the right to change the frequency of payments
so that the first such payment is at least $25.
ANNUITY UNIT AND THE DETERMINATION OF SUBSEQUENT PAYMENTS
Subsequent variable annuity payments will vary to reflect the investment
performance of each applicable subaccount. The amount of each subsequent payment
is determined by annuity units. The number of annuity units for each subaccount
is determined by dividing the dollar amount of the first annuity payment from
each subaccount by the value of the subaccount annuity unit for the same
valuation period used to determine the accumulation value of the contract
applied to provide annuity payments. This number of annuity units remains fixed
during the annuity payment period unless changed as provided below.
The annuity unit value for each subaccount was set at $10 for the valuation
period as of which the first variable annuity payable from each subaccount of
VAA was calculated. The annuity unit value for each subsequent valuation period
equals the annuity unit value for the immediately preceding valuation period
multiplied by the net investment factor (see page 9) for such subsequent
valuation period and by a factor (0.9998925 for a one-day valuation period) to
neutralize the assumed interest rate discussed below.
The dollar amount of each subsequent variable annuity payment is equal to the
fixed number of annuity units for each subaccount multiplied by the value of the
annuity unit for the valuation period.
The annuity rate tables contained in the contracts are based on the Progressive
Annuity Mortality Table with compound interest at the effective rate of 4% per
year. A higher interest assumption would mean a higher initial annuity payment
but a more slowly rising series of subsequent annuity payments if annuity unit
values were increasing (or a more rapidly falling series of subsequent annuity
payments if annuity unit values were decreasing). A lower interest assumption
would have the opposite effect. If the actual net investment rate were equal to
the assumed interest rate, annuity payments would be level.
TRANSFERS AFTER ANNUITY PAYOUT DATE
After annuity payments have been made for at least 12 months, the annuitant can,
once each calendar quarter, change the subaccount(s) on which variable annuity
payments are based. On at least 30 days written notice to Ohio National Life at
its home office, that portion of the periodic variable annuity payment directed
by the annuitant will be changed to reflect the investment results of a
different subaccount. The annuity payment immediately after such change will be
the amount that would have been paid without such change. Subsequent payments
will reflect the new mix of subaccount allocation.
OTHER CONTRACT PROVISIONS
ASSIGNMENT
Any amount payable in settlement of the contracts may not be commuted,
anticipated, assigned or otherwise encumbered, or pledged as loan collateral to
any person other than Ohio National Life. To the extent permitted by law, no
such amounts shall be subject in any way to any legal process to subject them to
payment of any claims against an annuitant before the annuity payout date. A
tax-qualified contract may not, but a non-tax-qualified contract may, be
collaterally assigned before the annuity payout date. Ownership of a
tax-qualified contract may not be transferred
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except to (1) the annuitant, (2) a trustee or successor trustee of a pension or
profit-sharing trust which is qualified under Section 401 of the Code, or (3)
the employer of the annuitant provided that the contract after transfer is
maintained under the terms of a retirement plan qualified under Section 403(a)
of the Code for the benefit of the annuitant, or (4) as otherwise permitted by
laws and regulations governing plans for which the contract may be issued.
Ownership of a non-tax-qualified contract may be transferred.
PERIODIC REPORTS
Ohio National Life will furnish each owner, once each calendar quarter prior to
the annuity payout date, a statement showing the number of accumulation units
credited to the contract by subaccount and the accumulation unit value of each
such unit as of the end of the preceding quarter. In addition, as long as the
contract remains in effect, Ohio National Life will forward any periodic reports
of the Fund or Other Fund.
SUBSTITUTION FOR FUND SHARES
If investment in the Fund or Other Fund is no longer possible or in Ohio
National Life's judgment becomes inappropriate to the purposes of the contract,
Ohio National Life may substitute one or more other mutual funds. Substitution
may be made with respect to both existing investments and the investment of
future purchase payments. However, no such substitution will be made without any
necessary approval of the Securities and Exchange Commission. We may also add
other investment portfolios of the Fund or of additional Other Funds as eligible
investments of VAA.
CONTRACT OWNER INQUIRIES
Any questions from contract owners should be directed to Ohio National Life,
Variable Annuity Administration, P.O. Box 2669, Cincinnati, Ohio 45201;
telephone (513) 794-6452.
PERFORMANCE DATA
Ohio National Life may advertise performance data for the various portfolios of
the Fund or Other Fund showing the percentage change in the value of an
accumulation unit based on the performance of the applicable portfolio over a
period of time (usually a calendar year). Such percentage change is determined
by dividing the increase (or decrease) in value for the unit by the accumulation
unit value at the beginning of the period. This percentage figure will reflect
the deduction of any asset-based charges under the contract but will not reflect
the deduction of any applicable contract administration charge or contingent
deferred sales charge. The deduction of any applicable contract administration
charge or contingent deferred sales charge would reduce any percentage increase
or make greater any percentage decrease.
Any such advertising will also include average annual total return figures
calculated as shown in the Statement of Additional Information. The average
annual total return figures will reflect the deduction of applicable contract
administration charges and contingent deferred sales charges as well as
applicable asset-based charges.
Ohio National Life may also distribute sales literature comparing separate
account performance to the Consumer Price Index or to such established market
indexes as the Dow Jones Industrial Average, the Standard & Poor's 500 Stock
Index, IBC's Money Fund Reports, Lehman Brothers Bond Indices, the Morgan
Stanley Europe Australia Far East Index, Morgan Stanley World Index, Russell
2000 Index, or other variable annuity separate accounts.
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FEDERAL TAX STATUS
The following discussion of federal income tax treatment of amounts received
under a variable annuity contract is not exhaustive, does not purport to cover
all situations, and is not intended as tax advice. A qualified tax adviser
should always be consulted with regard to the application of law to individual
circumstances. Tax laws can change, even with respect to contracts that have
already been issued. Tax law revisions, with unfavorable consequences to
contracts offered by this prospectus, could have retroactive effect on
previously issued contracts or on subsequent voluntary transactions in
previously issued contracts.
Ohio National Life is taxed as a life insurance company under Subchapter L of
the Internal Revenue Code (the "Code"). Since the operations of VAA are a part
of, and are taxed with, the operations of Ohio National Life, VAA is not
separately taxed as a "regulated investment company" under Subchapter M of the
Code.
As to tax-qualified contracts, no federal income tax is payable under present
law on dividend income or capital gains distributions from Fund Shares held in
VAA or upon capital gains realized by VAA on redemption of Fund Shares. When a
non-tax-qualified contract is issued in connection with a deferred compensation
plan or arrangement, all rights, discretions and powers relative to the contract
are vested in the employer and you must look only to your employer for the
payment of deferred compensation benefits. Generally, in that case, an annuitant
will have no "investment in the contract" and amounts received by you from your
employer under a deferred compensation arrangement will be taxable in full as
ordinary income in the year of receipt.
The contracts described in this prospectus are considered annuity contracts
under Section 72 of the Code, which generally provides for taxation of
annuities. Under existing provisions of the Code, any increase in the
accumulation value of the contract is not taxable to you as the owner or
annuitant until you receive it, either in the form of annuity payments, as
contemplated by the contract, or in some other form of distribution (provided
that the owner of a non-tax qualified contract must be a natural person for this
purpose). With certain exceptions, where the owner of a non-tax qualified
contract is a non-natural person (corporation, partnership or trust) any
increase in the accumulation value of the contract attributable to purchase
payments made after February 28, 1986 will be treated as ordinary income
received or accrued by the owner during the current tax year.
When annuity payments commence under the contract each payment is taxable under
Section 72 of the Code as ordinary income in the year of receipt if the
annuitant has neither paid any portion of the purchase payments for the contract
nor has previously been taxed on any portion of the purchase payments. If any
portion of the purchase payments has been paid from or included in your taxable
income, this aggregate amount will be considered your "investment in the
contract." You will be entitled to exclude from your taxable income a portion of
each annuity payment equal to your "investment in the contract" divided by the
period of expected annuity payments, determined by your life expectancy and the
form of annuity benefit. Once your "investment in the contract" is recovered,
the entire portion of each annuity payment will be included in your taxable
income.
If an election is made to receive the accumulated value in a single sum in lieu
of annuity payments, any amount received or withdrawn in excess of the
"investment in the contract" will normally be taxed as ordinary income in the
year received. A partial withdrawal of contract values is taxable as income to
the extent that the accumulated value of the contract immediately before the
payment exceeds the "investment in the contract." Such a withdrawal is treated
as a distribution of earnings first and only second as recovery of your
"investment in the contract". Any part of the value of the contract that is
assigned or pledged to secure a loan will be taxed as if it had been a partial
withdrawal and may be subject to a penalty tax.
There is a penalty tax equal to 10% of any amount that must be included in gross
income for tax purposes. The penalty will not apply to a redemption that is (1)
received on or after the taxpayer reaches age 59 1/2; (2) made to a beneficiary
on or after the death of the annuitant; (3) attributable to the taxpayer's
becoming disabled; (4) made as a series of substantially equal periodic payments
for the life of the annuitant (or joint lives of the annuitant and beneficiary);
(5) from a contract that is a qualified funding asset for purposes of a
structured settlement; (6) made under an annuity contract that is purchased with
a single premium and with an annuity payout date not later than a year from the
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purchase of the annuity, or (7) incident to divorce. If an election is made not
to have withholding apply to the early withdrawal or if an insufficient amount
is withheld, the contract owner may be responsible for payment of estimated tax.
You may also incur penalties under the estimated tax rules if the withholding
and estimated tax payments are not sufficient. Failure to provide your taxpayer
identification number will automatically subject any payments under the contract
to withholding.
TAX-DEFERRED ANNUITIES
Under the provisions of Section 403(b) of the Code, purchase payments made for
annuity contracts purchased for employees by public educational institutions and
certain tax-exempt organizations which are described in Section 501(c)(3) of the
Code are excludable from the gross income of such employees to the extent that
the aggregate purchase payments plus any other amounts contributed to the
purchase of a contract and toward benefits under qualified retirement plans do
not exceed the exclusion allowance determined for the employee as set forth in
Sections 403(b) and 415 of the Code. Employee contributions are, however,
subject to social security (FICA) tax withholding. All amounts received by an
employee under a contract, either in the form of annuity payments or cash
withdrawal, will be taxed under Section 72 of the Code as ordinary income for
the year received, except for exclusion of any amounts representing "investment
in the contract." Under certain circumstances, amounts received may be used to
make a "tax-free rollover" into one of the types of individual retirement
arrangements permitted under the Code. Amounts received that are eligible for
"tax-free rollover" will be subject to an automatic 20% withholding unless such
amounts are directly rolled over from the tax-deferred annuity to the individual
retirement arrangement.
With respect to earnings accrued and purchase payments made after December 31,
1988, pursuant to a salary reduction agreement under Section 403(b) of the Code,
distributions may be paid only when the employee (a) attains age 59 1/2, (b)
separates from the employer's service, (c) dies, (d) becomes disabled as defined
in the Code, or (e) incurs a financial hardship as defined in the Code. In the
case of hardship, cash distributions may not exceed the amount of such purchase
payments. These restrictions do not affect rights to transfer investments among
the subaccounts and do not limit the availability of transfers between
tax-deferred annuities.
QUALIFIED PENSION OR PROFIT-SHARING PLANS
Under present law, purchase payments made by an employer or trustee, pursuant to
a plan or trust qualified under Section 401(a) or 403(a) of the Code, are
generally excludable from gross income of the employee. The portion, if any, of
the purchase payments made by the employee, or which is considered taxable
income to the employee in the year such payments are made, constitutes an
"investment in the contract" under Section 72 of the Code for the employee's
annuity benefits. Salary reduction payments to a profit sharing plan qualifying
under Section 401(k) of the Code are generally excludable from gross income of
the employee.
The Code requires that plans must prohibit any distribution to a plan
participant prior to age 59 1/2, except in the event of death, total disability
or separation from service. Distributions must commence no later than April 1 of
the calendar year following the year in which the participant reaches age 70
1/2. Premature distribution of benefits or contributions in excess of those
permitted by the Code may result in certain penalties under the Code.
If an employee, or one or more of the beneficiaries, receives the total amounts
payable with respect to an employee within one taxable year after age 59 1/2 on
account of the employee's death or separation from service of the employer, any
amount received in excess of the employee's "investment in the contract" may be
taxed under special 5-year forward averaging rules. The taxpayer can elect to
have that portion of a lump-sum distribution attributable to years of
participation prior to January 1, 1974 given capital gains treatment.) The
percentage of pre-74 distribution subject to capital gains treatment decreases
as follows: 100%, 1987; 95%, 1988; 75%, 1989; 50%, 1990; and 25%, 1991. For tax
years 1992 and thereafter no capital gains treatment is available (except that
taxpayers who were age 50 before 1986 may still elect capital gains treatment).
The employee receiving such a distribution may be able to make a "tax-free
rollover" of the distribution less the employee's "investment in the contract"
into another qualified plan in which the employee is a participant or into one
of the types of individual retirement arrangements permitted under the Code. An
employee's surviving spouse receiving such a distribution may be able to make a
tax-free rollover to one of the types of individual retirement arrangements
permitted under the Code. Amounts received that are eligible for "tax-free
rollover" will be subject to an automatic 20% withholding unless such amounts
are directly rolled over to another qualified plan or individual retirement
arrangement.
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<PAGE> 18
INDIVIDUAL RETIREMENT ANNUITIES (IRA)
Section 408(b) of the Code provides that an individual may invest an amount up
to $2,000 per year of earned income in an IRA and claim it as a personal tax
deduction if such person or the person's spouse is not an "active participant"
in an employer maintained qualified retirement plan or such person has adjusted
gross income which does not exceed the "applicable dollar limit." For a single
taxpayer, the applicable dollar limitation is $25,000, with the amount of IRA
contribution which may be deducted reduced proportionately for Adjusted Gross
Income between $25,000-$35,000. For married couples filing jointly, the
applicable dollar limitation is $40,000, with the amount of IRA contribution
which may be deducted reduced proportionately for Adjusted Gross Income between
$40,000-$50,000. There is no deduction allowed for IRA contributions when
Adjusted Gross Income reaches $35,000 for individuals and $50,000 for married
couples filing jointly. In the alternative, an individual otherwise qualified
for an IRA may elect to contribute to an IRA for the individual and for the
individual's non-working spouse, with the total deduction limited to $4,000.
Individuals are permitted to make non-deductible IRA contributions to the extent
they are ineligible to make deductible IRA contributions. Any amount received
from another qualified plan (including another individual retirement
arrangement) which is eligible as a "tax-free rollover" may be invested in an
IRA, and is not counted toward the overall contribution limit. Earnings on
nondeductible IRA contributions are not subject to tax until they are withdrawn.
The combined limit on designated nondeductible and deductible contributions for
a tax year is the lesser of 100% of compensation or $2,000 ($4,000 in the case
of an additional contribution to a spousal IRA).
Generally, distributions (all or part) made prior to age 59 1/2 (except in the
case of death or disability) will result in a penalty tax of 10% plus ordinary
income tax treatment of the amount received. Additionally, there is an excise
tax of 6% of the amount contributed in excess of either the deductible limit or
nondeductible limit, as indicated above, if such amount is not withdrawn prior
to the filing of the income tax return for the year of contribution or applied
as an allowable contribution for a subsequent year. The excise tax will continue
to apply each year until the excess contribution is corrected. Distributions
after age 59 1/2 are treated as ordinary income at the time received.
Distributions must commence before April 1 following the year in which the
individual reaches age 70 1/2. A 50% nondeductible excise tax is imposed on the
excess in any tax year of the amount that should have been distributed over the
amount actually distributed.
SIMPLIFIED EMPLOYEE PENSION PLANS (SEPPS)
Under Section 408 of the Code, employers may establish SEPPs for their
employees. Under these plans the employer may contribute on behalf of an
employee to an individual retirement account or annuity. The amount of the
contribution is excludable from the employee's income.
Certain employees who participate in a SEPP will be entitled to elect to have
the employer make contributions to a SEPP on their behalf or to receive the
contributions in cash. If the employee elects to have contributions made on the
employee's behalf to a SEPP, it is not treated as current taxable income to the
employee. Elective deferrals under a SEPP are subject to an inflation-indexed
limit which is $9,500 for 1997. Salary-reduction SEPPs are available only if at
least 50% of the employees elect to have amounts contributed to the SEPP and if
the employer has 25 or fewer employees at all times during the preceding year.
An employee may also take a deduction for individual contributions to the IRA,
subject to the limits applicable to IRAs in general. Withdrawals from the IRAs
to which the employer contributes must be permitted. These withdrawals, however,
are subject to the general rules with respect to withdrawals from IRAs.
WITHHOLDING ON DISTRIBUTION
Distributions from tax-deferred annuities or qualified pension or profit sharing
plans that are eligible for "tax-free rollover" will be subject to an automatic
20% withholding unless such amounts are directly rolled over to an individual
retirement arrangement or another qualified plan. Federal income tax withholding
on annuity payments is required. However, recipients of annuity payments are
allowed to elect not to have the tax withheld. Such an election may be revoked
at any time with respect to annuity payments and thereafter withholding would
commence. Failure to provide your taxpayer identification number will
automatically subject any payments under the contract to withholding.
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<PAGE> 19
APPENDIX A
IRA DISCLOSURE STATEMENT
This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your simplified
employee pension IRA (SEPP-IRA) for employer contributions, or to one you
purchase for your spouse (see "IRA for Non-working Spouse", page 19). You can
obtain more information regarding your IRA either from your sales representative
or from any district office of the Internal Revenue Service.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a full refund within 20 days after it is delivered (see
page 8). This is a more liberal provision than is required in connection with
IRA's. To exercise this "free-look" provision write or call the address shown
below:
The Ohio National Life Insurance Company
P. O. Box 2669
Cincinnati, Ohio 45201
Telephone: (513) 794-6452 - 8:30 a.m. - 4:30 p.m. (Eastern Time Zone)
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you or your spouse is not an
"active participant" in an employer maintained qualified retirement plan or you
have Adjusted Gross Income which does not exceed the "applicable dollar limit".
IRA (or SEPP-IRA) contributions must be made by no later than the time you file
your income tax return for that year. For a single taxpayer, the applicable
dollar limitation is $25,000, with the amount of IRA contribution which may be
deducted reduced proportionately for Adjusted Gross Income between
$25,000-$35,000. For married couples filing jointly, the applicable dollar
limitation is $40,000, with the amount of IRA contribution which may be deducted
reduced proportionately for Adjusted Gross Income between $40,000-$50,000. There
is no deduction allowed for IRA contributions when Adjusted Gross Income reaches
$35,000 for individuals and $50,000 for married couples filing jointly.
Contributions made by your employer to your SEPP-IRA are excludable from your
gross income for tax purposes in the calendar year for which the amount is
contributed. Certain employees who participate in a SEPP-IRA will be entitled to
elect to have their employer make contributions to their SEPP-IRA on their
behalf or to receive the contributions in cash. If the employee elects to have
contributions made on the employee's behalf to the SEPP, those funds are not
treated as current taxable income to the employee. Elective deferrals under a
SEPP-IRA are subject to an inflation-adjusted limit which is $9,500 for 1997.
Salary-reduction SEPP-IRAs (also called "SARSEPs") are available only if at
least 50% of the employees elect to have amounts contributed to the SEPP-IRA and
if the employer has 25 or fewer employees at all times during the preceding
year.
The IRA maximum annual contribution and your tax deduction is limited to the
lesser of: (1) $2,000 or (2) 100% of your earned compensation. Contributions in
excess of the deduction limits may be subject to penalty. See below.
Under a SEPP-IRA agreement, the maximum annual contribution which your employer
may make on your behalf to a SEPP-IRA contract which is excludable from your
income is the lesser of 15% of your salary or $22,500. An employee who is a
participant in a SEPP-IRA agreement may make after-tax contributions to the
SEPP-IRA contract, subject to the contribution limits applicable to IRAs in
general. Those employee contributions will be deductible subject to the
deductibility rules described above.
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<PAGE> 20
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of (1) $2,000 or (2) 100% of
taxable alimony.
If you or your employer should contribute more than the maximum contribution
amount to your IRA or SEPP-IRA, the excess amount will be considered an "excess
contribution". You are permitted to withdraw an excess contribution from your
IRA or SEPP-IRA before your tax filing date without adverse tax consequences.
If, however, you fail to withdraw any such excess contribution before your tax
filing date, a 6% excise tax will be imposed on the excess for the tax year of
contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See Premature Distributions, page 19, for penalties imposed on
withdrawal when the contribution exceeds $2,000).
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you will also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and if your
non-working spouse has compensation, his/her compensation must be less than
your compensation for the year. Contributions of up to $2,000 each may be made
to your IRA and the spousal IRA if the combined compensation of you and your
spouse is at least equal to the amount contributed. If requirements for
deductibility (including income levels) are met, you will be able to deduct an
amount equal to the least of (i) the amount contributed to the IRAs, (ii)
$4,000, or (iii) 100% of your combined gross income.
Contributions in excess of the contribution limits may be subject to a penalty.
See above under "Contributions and Deductions". If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirements
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA or SEPP-IRA and reinvest it in another IRA or bond. Withdrawals may also be
made from other IRAs and contributed to this contract. This transfer of funds
from one IRA to another is called a "rollover" IRA. To qualify as a rollover
contribution, the entire portion of the withdrawal must be reinvested in another
IRA within 60 days after the date it is received. You will not be allowed a
tax-deduction for the amount of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. Unless you were a self-employed
participant in the distributing plan, you may later roll over such a
contribution to another qualified retirement plan as long as you have not mixed
it with IRA (or SEPP-IRA) contributions you have deducted from your income. (You
may roll less than all of a qualified distribution into an IRA, but any part of
it not rolled over will be currently includable in your income without any
capital gains treatment.)
PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA or SEPP-IRA be forfeited. To insure
that your contributions will be used for your retirement, the federal tax law
does not permit you to use your IRA or SEPP-IRA as security for a loan.
Furthermore, as a general rule, you may not sell or assign your interest in your
IRA or SEPP-IRA to anyone. Use of an IRA (or SEPP-IRA) as security or assignment
of it to another will invalidate the entire annuity. It then will be includable
in your income in the year it is invalidated and will be subject to a 10%
penalty tax if you are not at least age 59 1/2 or totally disabled. (You may,
however, assign your IRA or SEPP-IRA without penalty to your former spouse in
accordance with the terms of a divorce decree.)
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<PAGE> 21
You may surrender any portion of the value of your IRA (or SEPP-IRA). In the
case of a partial surrender which does not qualify as a rollover, the amount
withdrawn will be includable in your income and subject to the 10% penalty if
you are not at least age or 59 1/2 totally disabled unless you comply with
special rules requiring distributions to be made at least annually over your
life expectancy.
The 10% penalty tax does not apply to the withdrawal of an excess contribution
as long as the excess is withdrawn before the due date of your tax return.
Withdrawals of excess contributions after the due date of your tax return will
generally be subject to the 10% penalty unless the excess contribution results
from erroneous information from a plan trustee making an excess rollover
contribution or unless you are over age 59 1/2 or are disabled.
DISTRIBUTION AT RETIREMENT
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA (or SEPP-IRA) regardless of when you
actually retire. You may elect to receive the distribution in either one sum or
under any one of the periodic payment options available under the contract. The
distributions from your IRA under any one of the periodic payment options or in
one sum will be treated as ordinary income as you receive them.
INADEQUATE OR UNDER DISTRIBUTIONS - 50% TAX
Your IRA or SEPP-IRA is intended to provide retirement benefits over your
lifetime. Thus, federal law requires that you either (1) receive a lump-sum
distribution of your IRA by April 1 of the year following the year in which you
attain age 70 1/2 or (2) start to receive periodic payments by that date. If you
elect to receive periodic payments, those payments must be sufficient to pay out
the entire value of your IRA during your life expectancy (or over the joint life
expectancies of you and your spouse). If the payments are not sufficient to meet
these requirements, an excise tax of 50% will be imposed on the amount of any
underpayment.
DEATH BENEFITS
If you, (or your surviving spouse) die before receiving the entire value of your
IRA (or SEPP-IRA), the remaining interest must be distributed to your
beneficiary (or your surviving spouse's beneficiary) in one lump-sum or applied
to purchase an immediate annuity for the beneficiary. This annuity must be
payable over the life expectancy of the beneficiary within one year after your
or your spouse's death. If your spouse is the designated beneficiary, he or she
is treated as the owner of the IRA. If minimum required distributions have
begun, the entire amount must be distributed at least as rapidly as if the owner
had survived. A distribution of the balance of your IRA upon your death will not
be considered a gift for federal tax purposes, but will be included in your
gross estate for purposes of federal estate taxes.
PROTOTYPE STATUS
The Internal Revenue Service has been requested to review the format of your
SEPP, and to issue an opinion letter to Ohio National Life stating that your IRA
qualifies as a prototype SEPP.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for pre-mature distributions or 50% for
underpayments), you must file Form 5329 with the Internal Revenue Service. The
form is to be attached to your federal income tax return for the tax year in
which the penalty applies. Normal contributions and distributions must be shown
on your income tax return for the year to which they relate.
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<PAGE> 22
ILLUSTRATION OF IRA FIXED ACCUMULATIONS
<TABLE>
<CAPTION>
AGE 60 AGE 65 AGE 70
GUARANTEED GUARANTEED GUARANTEED
SURRENDER VALUE SURRENDER VALUE SURRENDER VALUE
--------------- --------------- ---------------
$2,000 $2,000 $2,000
$1,000 ONE TIME $1,000 ONE TIME $1,000 ONE TIME
CONTRACT ANNUAL LUMP SUM ANNUAL LUMP SUM ANNUAL LUMP SUM
ANNIVERSARY CONTRIBUTIONS CONTRIBUTION CONTRIBUTIONS CONTRIBUTION CONTRIBUTIONS CONTRIBUTION
----------- ------------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 925.35 $ 2,027.45 $ 925.35 $ 2,027.45 $ 925.35 $ 2,027.45
2 1,878.46 2,055.72 1,878.46 2,055.72 1,878.46 2,055.72
3 2,870.01 2,083.76 2,870.01 2,083.76 2,870.01 2,083.76
4 3,901.83 2,111.91 3,901.83 2,111.91 3,901.83 2,111.91
5 4,975.45 2,140.16 4,975.45 2,104.16 4,975.45 2,140.16
6 6,102.14 2,166.24 6,102.14 2,166.24 6,102.14 2,166.24
7 7,276.08 2,194.24 7,276.08 2,194.24 7,276.08 2,194.24
8 8,497.12 2,222.31 8,497.12 2,222.31 8,497.12 2,222.31
9 9,757.56 2,253.98 9,757.56 2,253.98 9,757.56 2,253.98
10 11,055.81 2,286.60 11,055.81 2,286.60 11,055.81 2,286.60
15 18,155.17 2,464.97 18,155.17 2,464.97 18,155.17 2,464.97
20 26,385.27 2,671.76 26,385.27 2,671.76 26,385.27 2,671.76
25 35,926.22 2,911.48 35,926.22 2,911.48 35,926.22 2,911.48
30 46,986.79 3,189.39 46,986.79 3,189.39 46,986.79 3,189.39
35 59,809.02 3,511.55 59,809.02 3,511.55 59,809.02 3,511.55
40 74,673.50 3,885.03 74,673.50 3,885.03 74,673.50 3,885.03
45 91,905.51 4,318.00 91,905.51 4,318.00 91,905.51 4,318.00
50 111,882.13 4,819.92 111,882.13 4,819.92 111,882.13 4,819.92
55 135,040.51 5,401.79 135,040.51 5,401.79 135,040.51 5,401.79
60 161,887.42 6,076.34 161,887.42 6,076.34 161,887.42 6,076.34
65 193,010.34 6,858.32 193,010.34 6,858.32
70 229,090.34 7,764.85
<FN>
* Guaranteed Interest Rate: 3.00% is applicable to each contract anniversary.
* The Surrender Value is the Accumulation Values less the Contingent Deferred
Sales Charge.
</TABLE>
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<PAGE> 23
FLEXIBLE PURCHASE PAYMENT INDIVIDUAL VARIABLE ANNUITY CONTRACTS
THE OHIO NATIONAL LIFE INSURANCE COMPANY
OHIO NATIONAL VARIABLE ACCOUNT A
SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1997
The following is added to "Contingent Deferred Sales Charge" on page 7:
Prior to the first contract anniversary, a partial withdrawal or a
scheduled series of systematic partial withdrawals of a combined total
not more than 10% of total purchase payments may be made without the
imposition of the contingent deferred sales charge. Amounts not so
withdrawn may not be carried into future years under the preceding
paragraph.
The date of this Supplement is May 20, 1997.
