VARIFLEX, 497, 1998-02-24

VARIFLEX
497, 1998-02-24

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VARIFLEX
VARIABLE ANNUITY CONTRACTS

SOLD BY--
SECURITY BENEFIT LIFE INSURANCE COMPANY
700 SW HARRISON, TOPEKA, KANSAS 66636-0001

(785) 431-3000

This Prospectus describes the Variflex Variable Annuity Contracts (the
"Variflex Contracts" or "Contracts") offered by Security Benefit Life Insurance
Company ("SBL"). The Contracts may be issued for use with retirement plans
qualified for favorable tax treatment under the Internal Revenue Code, such as
pension and profit sharing plans, annuity purchase plans of public school
systems and certain tax-exempt organizations, individual retirement plans and
individual retirement annuities, and certain deferred compensation plans of
state and local governments and with plans and trusts which are not so
qualified. This Prospectus offers Contracts which may be purchased with single
or multiple purchase payments, with annuity payments commencing immediately or
at some later date. The Contracts are offered on both an individual and group
basis.
Variflex Contracts offer Contractowners and Participants the opportunity to
arrange for a Variable Annuity, with lifetime or other annuity payments based on
the investment performance of one or more Series of Variflex. Variflex, a
separate account of SBL, is registered as a unit investment trust and issues
eleven separate series--Growth Series, Growth-Income Series (formerly the
"Income-Growth Series"), Money Market Series, Worldwide Equity Series, High
Grade Income Series, Social Awareness Series, Emerging Growth Series, Global
Aggressive Bond Series, Specialized Asset Allocation Series, Managed Asset
Allocation Series, and Equity Income Series. Each Series reflects the investment
results of a corresponding series of SBL Fund (the "Fund"), a registered
open-end management investment company.
Contractowners and Participants may additionally elect to accumulate values
and receive all or a portion of the benefits in the form of Guaranteed Annuity
payments funded by the General Account assets of SBL.
Depending on the state where the Contract is sold, it may contain a
provision which allows the Contract to be canceled within 10 or more days after
receipt of the Contract.
This Prospectus sets forth the information that a prospective investor
should know before investing. A Statement of Additional Information about the
Variflex Contract and Variflex is free and may be obtained by writing SBL at the
address above or by calling (785) 431-3112 or (800) 888-2461, extension 3112.
The Statement of Additional Information, which has the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Table of Contents of the Statement of
Additional Information is set forth at the end of this Prospectus.

- --------------------------------------------------------------------------------
ATTACHED TO THIS PROSPECTUS IS A CURRENT PROSPECTUS OF SBL FUND. BOTH
PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE.

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 CONTRACT AND CERTAIN VARIFLEX SERIES ARE NOT AVAILABLE IN ALL STATES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESPERSON, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.

THE CONTRACT INVOLVES RISK, INCLUDING LOSS OF PRINCIPAL, AND IS NOT A DEPOSIT OR
OBLIGATION OF, OR GUARANTEED BY, ANY BANK. THE CONTRACT IS NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY.

PROSPECTUS DATED: RETAIN FOR FUTURE REFERENCE
MAY 1, 1997, AS SUPPLEMENTED FEBRUARY 9, 1998

1
<PAGE>
VARIFLEX CONTENTS
Page
Glossary of Terms.......................................................... 4
Summary of the Contract.................................................... 5
Summary of Expenses........................................................ 6
Condensed Financial Information............................................ 8
Financial Statements.................................................. 12
Security Benefit Life Insurance Company and Variflex....................... 12
Security Benefit Life Insurance Company............................... 12
Variflex.............................................................. 12
SBL Fund................................................................... 12
Voting Rights......................................................... 13
Substituted Securities................................................ 13
Variflex Contracts......................................................... 14
Purpose of the Contracts.............................................. 14
Types of Variflex Contracts........................................... 14
Contract Application and Purchase Payments............................ 14
Allocation of Purchase Payments....................................... 15
Crediting of Accumulation Units....................................... 15
Dollar Cost Averaging Option.......................................... 15
Asset Reallocation Option............................................. 16
Transfer of Contract Value............................................ 16
Contract Value........................................................ 16
Determination of Contract Value....................................... 17
Contractowner Inquiries............................................... 17
Charges and Deductions..................................................... 17
Contingent Deferred Sales Charge...................................... 17
Hospital/Nursing Home Waiver.......................................... 18
Other Charges......................................................... 18
(a) Administrative Fees............................................... 18
(b) State Premium Taxes............................................... 19
(c) Actuarial Risk Fee................................................ 19
(d) Charges for Taxes................................................. 19
Sequential Deduction of Fees.......................................... 19
Variations in Charges................................................. 19
Distributions Under the Contract........................................... 20
Accumulation Period................................................... 20
Full and Partial Withdrawals.......................................... 20
Systematic Withdrawals................................................ 20
Free-Look Right....................................................... 21
Death Benefit During Accumulation Period.............................. 21
Loans Available from Certain Qualified Contracts...................... 22
Constraints on Distributions from Certain Section 403(b) Annuity
Contracts........................................................... 23
Annuity Period........................................................ 23
Annuity Provisions.................................................... 23
Election of Annuity Commencement Date and Form of Annuity............. 23
Allocation of Benefits................................................ 24
Optional Annuity Forms................................................ 24
Value of Variable Annuity Payments:
Assumed Investment Rates............................................ 25
Restrictions Under the Texas Optional Retirement Program.............. 25

2
<PAGE>
VARIFLEX CONTENTS (CONTINUED)
Page
Federal Tax Matters........................................................ 25
Introduction.......................................................... 25
Tax Status of SBL and the Separate Account............................ 26
General........................................................... 26
Charge for SBL Taxes.............................................. 26
Diversification Standards......................................... 26
Income Taxation of Annuities in General -- Non-Qualified Plans........ 27
Surrenders or Withdrawals Prior to the Annuity Start Date......... 27
Surrenders or Withdrawals On or After Annuity Start Date.......... 27
Penalty Tax on Certain Surrenders and Withdrawals................. 27
Additional Considerations............................................. 27
Distribution-at-Death Rules....................................... 27
Gift of Annuity Contracts......................................... 28
Contracts Owned by Non-Natural Persons............................ 28
Multiple Contract Rule............................................ 28
Possible Tax Charges.............................................. 28
Transfers, Assignments or Exchanges of a Contract................. 28
Qualified Plans....................................................... 28
Section 401....................................................... 29
Section 403(b).................................................... 30
Section 408 and Section 408A...................................... 30
Section 457....................................................... 31
Rollovers......................................................... 31
Tax Penalties..................................................... 32
Withholding....................................................... 32
Distributor of the Contracts............................................... 32
Performance Information............................................... 33
The General Account........................................................ 33
Statement of Additional Information........................................ 34

Appendix A - IRA Disclosure Statement
Appendix B - Roth IRA Disclosure Statement
Appendix C - Security Benefit Life Insurance Company Fixed and Variable Annuity
SIMPLE IRA Disclosure Statement

THE CONTRACT AND CERTAIN VARIFLEX SERIES ARE NOT AVAILABLE IN ALL STATES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT BE LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, THE FUND'S PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION OF
THE FUND OR ANY SUPPLEMENT THERETO.

3
<PAGE>
GLOSSARY OF TERMS
THE FOLLOWING DEFINITIONS MAY BE USEFUL IN READING THIS PROSPECTUS.
CERTAIN ADDITIONAL TERMS ARE DEFINED IN THE TEXT.

ACCUMULATION PERIOD--The period from the date Accumulation Units are first
purchased under the Contract to the Annuity Commencement Date, or, if earlier,
when the Contract is terminated, either through a full withdrawal, payment of
charges or payment of the death benefit.
ACCUMULATION UNIT--Unit of measure used to calculate the value of a
Contractowner's or Participant's interest in Variflex during the Accumulation
Period. The value of an Accumulation Unit fluctuates with the value of shares of
the corresponding series of the underlying Fund.
ANNUITANT--The person designated to receive, or actually receiving, annuity
payments under a Variflex Contract.
ANNUITY COMMENCEMENT DATE--The date when annuity payments are to begin.
CONTRACTOWNER--The person or entity entitled to exercise all legal rights
of ownership in a Variflex Contract and in whose name the Contract is issued.
CONTRACT DATE--The date shown as the Contract Date in a Contract. Annual
Contract anniversaries are measured from the Contract Date. It is usually the
date that the initial Purchase Payment is credited to the Contract.
CONTRACT DEBT--The unpaid loan balance including accrued loan interest.
CONTRACT VALUE--The total value of the amounts in a Contract allocated to
the Series of Variflex and the General Account, as well as any amount set aside
in the General Account to secure loans as of any Valuation Date.
CONTRACT YEAR--Each twelve-month period measured from the Contract Date.
GUARANTEED ANNUITY--An annuity under which the amount of each annuity
payment does not vary with the investment experience of the Variflex Separate
Account and which is guaranteed by SBL.
GROUP ALLOCATED CONTRACT--A master agreement between the Contractowner and
SBL under which a Participant's individual account is established for each
person for whom payments are being made under the Plan.
GROUP UNALLOCATED CONTRACT--A Contract between the Contractowner and SBL
under which individual accounts are not established for each Participant, but
instead, all Accumulation Units are credited to one accumulation account; when a
Plan Participant becomes entitled to receive payments under the Plan, the
appropriate number of units may be withdrawn to purchase an Annuity.
HOSPITAL--An institution that is licensed as such by the Joint Commission
of Accreditation of Hospitals, or any lawfully operated institution that
provides in-patient treatment of sick and injured persons through medical,
diagnostic and surgical facilities directed by physicians and 24 hour nursing
services.
NON-QUALIFIED CONTRACT--A Variflex Contract issued in connection with a
retirement plan that does not receive favorable tax treatment under Section 401,
403, 408 or 457 of the Internal Revenue Code.
PARTICIPANT--Any person who is covered under the terms of a group Variflex
Contract, and for whom an Annuity is being funded, particularly a person for
whom annuity payments have not commenced.
PARTICIPANT'S INDIVIDUAL ACCOUNT--The Participant's allocated share of the
value of a Group Allocated Variflex Contract.
PLAN--The document or agreement defining the retirement benefits and those
who are eligible to receive them. The Plan is not part of the Variflex Contract
and Security Benefit Life Insurance Company is not a party to the Plan.
PURCHASE PAYMENT--A payment made into a Variflex Contract.
QUALIFIED CONTRACT--A Variflex Contract issued in connection with a
retirement plan that receives favorable tax treatment under Section 401, 403,
408 or 457 of the Internal Revenue Code.
QUALIFIED SKILLED NURSING FACILITY--A facility licensed by the state to
provide on a daily basis convalescent or chronic care for in-patients who, by
reason of infirmity or illness, are not able to care for themselves.
VALUATION DATE--Each date on which Variflex is valued, which currently
includes each day that the New York Stock Exchange is open for trading. The New
York Stock Exchange is closed on weekends and on the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, July Fourth, Labor Day, Thanksgiving Day, and Christmas Day.
VALUATION PERIOD--A period used in measuring the investment experience of
each Series of Variflex. The Valuation Period begins at the close of one
Valuation Date and ends at the close of the next succeeding Valuation Date.
VARIABLE ANNUITY--An Annuity providing payments which vary in dollar amount
depending on the investment results of Variflex and the Fund.
VARIFLEX CONTRACTS-401(K) AND 408(K)--A version of the Variflex Contract
offered prior to May 1, 1990, to plans that qualify under Section 401(k) and
408(k)(6) of the Internal Revenue Code. The differences between this contract
and the currently offered versions of the Variflex Contract qualifying under
Section 401(k) and 408(k)(6) of the Code are noted where appropriate.
VARIFLEX INCOME VARIABLE ANNUITY ("VIVA") CONTRACT--A version of the
Variflex Contract offered prior to May 1, 1995 that is funded by a single
payment, with additional purchase payments allowed during the first Contract
Year, pursuant to which annuity payments will commence at some agreed time in
the future. The differences between this contract and the currently offered
versions of the Variflex Contract are noted where appropriate.
VARIFLEX CONTRACT--A contract issued pursuant to this Prospectus which sets
forth the obligations and contractual promises which SBL makes to the
Contractowner to provide a Guaranteed or Variable Annuity or combination
Guaranteed and Variable Annuity in return for Purchase Payments made for
allocation in any combination at the discretion of the Contractowner for
investment in one or more Series of Variflex or the General Account during the
Accumulation Period. Depending on the allocations made by the Contractowner,
benefits will be guaranteed (to the extent based on SBL's General Account) or
will reflect the investment results of selected Series of SBL Fund. A group
Variflex Contract is a master agreement between the Contractowner and the
insurance company covering the Participants in a Plan.

4
<PAGE>
SUMMARY OF THE CONTRACT

PURPOSE OF THE CONTRACTS
The objective of a Variable Annuity is to provide benefits which will tend,
to a greater degree than a Guaranteed Annuity, to reflect the changes in the
cost of living. The Contracts offer Contractowners and Participants the
opportunity to arrange for a Variable Annuity with lifetime or other annuity
payments based on the investment performance of the investments chosen by the
Contractowner or Participant.
There is no assurance that a Contract's objective will be obtained or that
its value will increase. Because a Variable Annuity value is based on investment
performance and is not guaranteed, a Variflex Contract entails more risk than
traditional guaranteed insurance. There is, however, a General Account option
whereby Contractowners or Participants can elect to accumulate values, and
receive all or a portion of their benefits in the form of guaranteed payments.

INVESTMENT ALTERNATIVES
You may choose to invest the payments made under the Contracts in one or
more of the eleven separate Variflex Series: Growth Series, Growth-Income Series
(formerly the "Income-Growth Series"), Money Market Series, Worldwide Equity
Series, High Grade Income Series, Social Awareness Series, Emerging Growth
Series, Global Aggressive Bond Series, Specialized Asset Allocation Series,
Managed Asset Allocation Series, and Equity Income Series. Each of the Series
invests exclusively in the shares of a corresponding series of the SBL Fund.
Each Series has a different investment objective. (See "SBL Fund," page 12).

PURCHASING A CONTRACT
Individuals wishing to purchase a Contract must complete an application and
provide an initial Purchase Payment which will be sent to the SBL home office.
The minimum and maximum amount of Purchase Payments vary depending upon the type
of Contract purchased. (See "Contract Application and Purchase Payments," page
14 and "Limits on Purchase Payments Paid Under Tax-Qualified Retirement Plans"
in the Statement of Additional Information.)

ALLOCATION AND TRANSFER AMONG
INVESTMENT ALTERNATIVES
Payments will be allocated to each Variflex Series pursuant to instructions
in the application. Changes in the allocation of future Purchase Payments may be
made by writing to the SBL home office. However, no allocation will be allowed
that would result in less than $25 being allocated to any one Variflex Series.
Prior to the Annuity Commencement Date, transfers may be made among the
Variflex Series. At present, there is no charge for such transfers. Transfers
among the Variflex Series, changes in allocation of future Purchase Payments and
changes to an existing Dollar Cost Averaging or Asset Reallocation Option may be
made by telephone instruction, provided that either the Telephone Transfer
section of the application has been completed or a Telephone Transfer
Authorization form is on file with SBL. (See "Transfer of Contract Value" on
page 16.)

THE DEATH BENEFIT
For individual and Group Allocated Contracts, the Contract provides for a
death benefit upon the death of the Annuitant during the Accumulation Period.
The death benefit will vary depending on your Contract's investment results and
the age of the Annuitant on the Contract Date. SBL will pay the death benefit
proceeds to the beneficiary upon receipt of due proof of the Annuitant's death
and instructions regarding payment. For Non-Qualified Contracts, the death
benefit will be paid upon the death of the Annuitant OR CONTRACTOWNER to meet
the distribution requirements of Section 72(s) of the Internal Revenue Code.
Under a Group Unallocated Contract, the death benefit will be determined by the
provisions of the Plan. (See "Death Benefit During Accumulation Period" on page
21.)

WITHDRAWALS FROM THE CONTRACT PRIOR TO MATURITY
Prior to the Annuity Commencement Date, all or part of a Contract's value
may be withdrawn upon your written request. In addition to potential losses due
to investment risks, your withdrawals may be reduced by any Contract Debt, a
contingent deferred sales charge, a 10 percent penalty tax and income tax.
Contracts purchased in connection with retirement plans may be subject to
additional withdrawal restrictions imposed by the Plan. (See "Full and Partial
Withdrawals" on page 20, "Constraints on Distributions from Certain Section
403(b) Annuity Contracts" on page 23 and "Federal Tax Matters" on page 25.)

HOW ANNUITY PAYMENTS ARE DETERMINED
There are a number of ways to receive annuity payments. They include
monthly payments for a specified number of years, an annuity for life with
payments guaranteed for 5, 10, 15 or 20 years, or a joint and survivor annuity.
Payments may be received on a fixed basis or on a variable basis. The amount of
a variable annuity payment will increase or decrease according to the investment
experience of the Variflex Series you select.

CHARGES AND DEDUCTIONS
An Actuarial Risk Fee is assessed daily against Variflex net assets at an
annual rate of 1.2 percent. Variflex Contracts also provide for certain
deductions and charges against the contract. These deductions and charges
include a $30 annual Administrative Fee (not applicable to all Contracts), and
any state premium taxes that may be assessed. Additionally, a contingent
deferred sales charge may be assessed against certain withdrawals during the
first eight Contract Years (declining from 8 percent in the first Contract

5
<PAGE>
Year to 0 percent in the ninth such year). (See "Charges and Deductions" on page
17.)

FREE-LOOK RIGHT
The laws of certain states require that Contractowners be given an
examination period, generally ten days, within which a Contractowner may return
the Contract to SBL's home office. In such cases, SBL will refund payments made,
adjusted to the extent permitted by state law, to reflect changes in the value
of the applicable Variflex Series during the period the contract was held.
(See "Free-Look Right" on page 21.)

SUMMARY OF EXPENSES

CONTRACTOWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchase (as a percentage of Purchase Payments).... 0%
Contingent Deferred Sales Load
(as a percentage of Purchase Payments or amount withdrawn, as
applicable)(1)......................................................... 8%
Surrender Fees (as a percentage of amount surrendered, if applicable).... 0%
Exchange Fee............................................................. $0

ANNUAL CONTRACT FEE(2)...................................................... $30

SEPARATE ACCOUNT ANNUAL FEE (as a percentage of average account value)
Mortality and Expense Risk Fees..........................................1.2%
Account Fees and Expenses................................................0.0%
----
Total Separate Account Annual Expenses ..................................1.2%

SBL FUND ANNUAL EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
MANAGEMENT FEES OTHER EXPENSES (AFTER TOTAL ANNUAL
(AFTER FEE WAIVER)3 EXPENSE REIMBURSEMENT) EXPENSES3
<S> <C> <C> <C>
Growth (Series A)........................... 0.75% 0.08% 0.83%
Growth-Income (Series B).................... 0.75% 0.09% 0.84%
Money Market (Series C)..................... 0.50% 0.08% 0.58%
Worldwide Equity (Series D)................. 1.00% 0.30% 1.30%
High Grade Income (Series E)................ 0.75% 0.08% 0.83%
Social Awareness (Series S)................. 0.75% 0.09% 0.84%
Emerging Growth (Series J).................. 0.75% 0.09% 0.84%
Global Aggressive Bond (Series K)........... 0.00% 0.84% 0.84%
Specialized Asset Allocation (Series M)..... 1.00% 0.34% 1.34%
Managed Asset Allocation (Series N)......... 1.00% 0.45% 1.45%
Equity Income (Series O).................... 1.00% 0.15% 1.15%
</TABLE>
(1) The contingent deferred sales load is decreased based on the Contract Year
in which the withdrawal is made from 8% in the first Contract Year to 0% in
the ninth Contract Year. Variflex Contracts-401(k) and 408(k) are subject
to a schedule of charges that has a different rate of decline in the
percentage than other Contracts. Under certain circumstances, the
contingent deferred sales load may be reduced or waived, including certain
annuity options.
(2) The annual Administrative Fee for Variflex Contracts-401(k) and 408(k) is
the lesser of 2% of assets valued as of the year end or $30.
(3) During the fiscal year ended December 31, 1996, the Investment Manager
waived the management fees of Series K and, during the fiscal year ended
December 31, 1997, the Investment Manager waived the management fees of
Series K; absent such waiver, the management fee of Series K would have
been .75%. There can be no assurance that the Investment Manager will
continue to waive the Series' management fees after December 31, 1997.

6
<PAGE>
EXAMPLE: VARIFLEX CONTRACTS (EXCLUDING VARIFLEX CONTRACTS - 401(K) AND 408(K))
If you surrender your contract at the end of the applicable time period:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth Series............................................. 102 126 155 248
Growth-Income Series...................................... 102 126 156 249
Money Market Series....................................... 99 119 143 222
Worldwide Equity Series................................... 107 139 179 295
High Grade Income Series.................................. 102 126 155 248
Social Awareness Series................................... 102 126 156 249
Emerging Growth Series.................................... 102 126 156 249
Global Aggressive Bond Series............................. 102 126 156 249
Specialized Asset Allocation Series....................... 107 140 181 299
Managed Asset Allocation Series........................... 108 144 186 310
Equity Income Series...................................... 105 135 172 281
If you do not surrender your contract:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Growth Series............................................. 22 67 115 248
Growth-Income Series...................................... 22 68 116 249
Money Market Series....................................... 19 60 103 222
Worldwide Equity Series................................... 27 81 139 295
High Grade Income Series.................................. 22 67 115 248
Social Awareness Series................................... 22 68 116 249
Emerging Growth Series.................................... 22 68 116 249
Global Aggressive Bond Series............................. 22 68 116 249
Specialized Asset Allocation Series....................... 27 83 141 299
Managed Asset Allocation Series........................... 28 86 146 310
Equity Income Series...................................... 25 77 132 281
EXAMPLE: VARIFLEX CONTRACTS - 401(K) AND 408(K) (SOLD PRIOR TO MAY 1, 1990)

If you do not surrender your contract at the end of the applicable time period:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Growth Series............................................. 102 147 188 254
Growth-Income Series...................................... 103 148 189 255
Money Market Series....................................... 100 140 176 229
Worldwide Equity Series................................... 107 160 212 301
High Grade Income Series.................................. 102 147 188 254
Social Awareness Series................................... 103 148 189 255
Emerging Growth Series.................................... 103 148 189 255
Global Aggressive Bond Series............................. 103 148 189 255
Specialized Asset Allocation Series....................... 108 161 214 305
Managed Asset Allocation Series........................... 109 164 219 316
Equity Income Series...................................... 106 156 205 287
If you do not surrender your contract:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Growth Series............................................. 22 69 118 254
Growth-Income Series...................................... 23 69 119 255
Money Market Series....................................... 20 62 106 229
Worldwide Equity Series................................... 27 83 142 301
High Grade Income Series.................................. 22 69 118 254
Social Awareness Series................................... 23 69 119 255
Emerging Growth Series.................................... 23 69 119 255
Global Aggressive Bond Series............................. 23 69 119 255
Specialized Asset Allocation Series....................... 28 84 144 305
Managed Asset Allocation Series........................... 29 88 149 316
Equity Income Series...................................... 26 79 135 287
</TABLE>
The purpose of the preceding table is to assist Contractowners in
understanding the various costs and expenses that a Contractowner will bear
directly or indirectly and, thus, the table reflects expenses of both the
Variflex separate account and the SBL Fund. The example should not be considered
to be a representation of past or future expenses, and the example does not
include the deduction of state premium taxes, which in a number of states may be
assessed. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. The example
assumes a 5 percent annual rate of return pursuant to the requirements of the
Securities and Exchange Commission. This hypothetical rate of return is not
intended to be representative of past or future performance of the Fund.
Pursuant to the requirements of the Securities and Exchange Commission, any
annual contract fee is deducted pro rata from each Series; however, under the
contract the annual Administrative Fee is deducted sequentially from the Series
as specified under "Sequential Deduction of Fees" in this Prospectus. For a more
complete description of the various costs and expenses of the Fund, see the
prospectus for SBL Fund.

7
<PAGE>
CONDENSED FINANCIAL INFORMATION

The following condensed financial information presents accumulation unit
values at the beginning and end of each period as well as ending accumulation
units outstanding for Qualified and Non-Qualified Contracts under each Series of
Variflex.

<TABLE>
<CAPTION>
1996 1995(D)(E) 1994 1993 1992(C)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
QUALIFIED CONTRACTS

GROWTH SERIES (SERIES A)

Accumulation unit value:
Beginning of period .......... $ 37.75 $ 27.94 $ 28.75 $ 25.59 $ 23.30
End of period ................ $ 45.76 $ 37.75 $ 27.94 $ 28.75 $ 25.59
Accumulation units
outstanding at the
end of period ................ 10,310,079 9,203,332 7,723,910 6,900,722 6,640,177

GROWTH-INCOME SERIES (SERIES B)

Accumulation unit value:
Beginning of period .......... $ 39.88 $ 31.03 $ 32.37 $ 29.89 $ 28.47
End of period ................ $ 46.58 $ 39.88 $ 31.03 $ 32.37 $ 29.89
Accumulation units
outstanding at the
end of period ................ 15,264,292 14,963,215 14,312,801 13,236,948 11,381,462

MONEY MARKET SERIES (SERIES C)

Accumulation unit value:
Beginning of period .......... $ 17.59 $ 16.89 $ 16.48 $ 16.26 $ 15.94
End of period ................ $ 18.26 $ 17.59 $ 16.89 $ 16.48 $ 16.26
Accumulation units
outstanding at the
end of period ................ 3,252,140 2,989,809 3,578,026 2,680,809 2,373,251

WORLDWIDE EQUITY SERIES (SERIES D)

Accumulation unit value:
Beginning of period .......... $ 12.51 $ 11.42 $ 11.25 $ 8.65 $ 8.99
End of period ................ $ 14.51 $ 12.51 $ 11.42 $ 11.25 $ 8.65
Accumulation units
outstanding at the
end of period ................ 11,881,450 10,236,349 9,361,197 5,863,967 2,070,715

HIGH GRADE INCOME SERIES (SERIES E)

Accumulation unit value:
Beginning of period .......... $ 22.11 $ 18.87 $ 20.52 $ 18.44 $ 17.37
End of period ................ $ 21.69 $ 22.11 $ 18.87 $ 20.52 $ 18.44
Accumulation units
outstanding at the
end of period ................ 3,673,833 3,912,046 3,891,426 3,731,587 2,912,605

SOCIAL AWARENESS SERIES (SERIES S)

Accumulation unit value:
Beginning of period .......... $ 15.97 $ 12.65 $ 13.31 $ 12.04 $ 10.47
End of period ................ $ 18.75 $ 15.97 $ 12.65 $ 13.31 $ 12.04
Accumulation units
outstanding at the
end of period ................ 2,083,090 1,615,845 1,344,063 993,233 513,953

EMERGING GROWTH SERIES (SERIES J)

Accumulation unit value:
Beginning of period .......... $ 15.46 $ 13.10 $ 13.97 $ 12.44 $ 10.00
End of period ................ $ 18.03 $ 15.46 $ 13.10 $ 13.97 $ 12.44
Accumulation units
outstanding at the
end of period ................ 5,563,881 4,387,739 3,947,047 2,131,858 455,105
</TABLE>
<TABLE>
<CAPTION>
1991(A)(B) 1990 1989 1988 1987
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
QUALIFIED CONTRACTS

GROWTH SERIES (SERIES A)

Accumulation unit value:
Beginning of period .......... $ 17.33 $ 19.45 $ 14.59 $ 13.41 $ 12.77
End of period ................ $ 23.30 $ 17.33 $ 19.45 $ 14.59 $ 13.41
Accumulation units
outstanding at the
end of period ................ 5,420,372 4,616,955 3,191,257 3,032,118 3,620,263

GROWTH-INCOME SERIES (SERIES B)

Accumulation unit value:
Beginning of period .......... $ 20.92 $ 22.16 $ 17.46 $ 14.81 $ 14.46
End of period ................ $ 28.47 $ 20.92 $ 22.16 $ 17.46 $ 14.81
Accumulation units
outstanding at the
end of period ................ 8,753,337 6,449,776 4,613,783 3,388,090 2,932,678

MONEY MARKET SERIES (SERIES C)

Accumulation unit value:
Beginning of period .......... $ 15.27 $ 14.33 $ 13.30 $ 12.56 $ 11.94
End of period ................ $ 15.94 $ 15.27 $ 14.33 $ 13.30 $ 12.56
Accumulation units
outstanding at the
end of period ................ 2,161,924 1,913,734 3,216,085 2,774,046 962,056

WORLDWIDE EQUITY SERIES (SERIES D)

Accumulation unit value:
Beginning of period .......... $ 8.07 $ 10.57 $ 11.74 $ 11.33 $ 12.18
End of period ................ $ 8.99 $ 8.07 $ 10.57 $ 11.74 $ 11.33
Accumulation units
outstanding at the
end of period ................ 917,833 466,703 607,650 633,816 648,066

HIGH GRADE INCOME SERIES (SERIES E)

Accumulation unit value:
Beginning of period .......... $ 15.04 $ 14.26 $ 12.90 $ 12.17 $ 12.04
End of period ................ $ 17.37 $ 15.04 $ 14.26 $ 12.90 $ 12.17
Accumulation units
outstanding at the
end of period ................ 2,255,909 1,673,154 1,403,313 1,037,740 1,013,973

SOCIAL AWARENESS SERIES (SERIES S)

Accumulation unit value:
Beginning of period .......... $ 10.00 -- -- -- --
End of period ................ $ 10.47 -- -- -- --
Accumulation units
outstanding at the
end of period ................ 127,699 -- -- -- --

EMERGING GROWTH SERIES (SERIES J)

Accumulation unit value:
Beginning of period .......... -- -- -- -- --
End of period ................ -- -- -- -- --
Accumulation units
outstanding at the
end of period ................ -- -- -- -- --
</TABLE>

8
<PAGE>
<TABLE>
<CAPTION>
1996 1995(D)(E) 1994 1993 1992(C) 1991(A)(B)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
QUALIFIED CONTRACTS

GLOBAL AGGRESSIVE BOND SERIES (SERIES K)

Accumulation unit value:
Beginning of period ..................... $ 10.69 $ 10.00 -- -- -- --
End of period ........................... $ 12.00 $ 10.69 -- -- -- --
Accumulation units
outstanding at the
end of period ........................... 306,339 129,589 -- -- -- --

SPECIALIZED ASSET ALLOCATION SERIES (SERIES M)

Accumulation unit value:
Beginning of period ..................... $ 10.64 $ 10.00 -- -- -- --
End of period ........................... $ 12.01 $ 10.64 -- -- -- --
Accumulation units
outstanding at the
end of period ........................... 1,274,106 611,652 -- -- -- --

MANAGED ASSET ALLOCATION SERIES (SERIES N)

Accumulation unit value:
Beginning of period ..................... $ 10.66 $ 10.00 -- -- -- --
End of period ........................... $ 11.87 $ 10.66 -- -- -- --
Accumulation units
outstanding at the
end of period ........................... 626,179 295,053 -- -- -- --

EQUITY INCOME SERIES (SERIES O)

Accumulation unit value:
Beginning of period ..................... $ 11.62 $ 10.00 -- -- -- --
End of period ........................... $ 13.78 $ 11.62 -- -- -- --
Accumulation units
outstanding at the
end of period ........................... 2,016,966 604,325 -- -- -- --
</TABLE>
1990 1989 1988 1987
- --------------------------------------------------------------------------------
QUALIFIED CONTRACTS

GLOBAL AGGRESSIVE BOND SERIES (SERIES K)

Accumulation unit value:
Beginning of period ..................... -- -- -- --
End of period ........................... -- -- -- --
Accumulation units
outstanding at the
end of period ........................... -- -- -- --

SPECIALIZED ASSET ALLOCATION SERIES (SERIES M)

MANAGED ASSET ALLOCATION SERIES (SERIES N)

EQUITY INCOME SERIES (SERIES O)

9
<PAGE>
<TABLE>
<CAPTION>
1996 1995(D)(E) 1994 1993 1992(C)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NON-QUALIFIED CONTRACTS

GROWTH SERIES (SERIES A)

Accumulation unit value:
Beginning of period .......... $ 37.74 $ 27.92 $ 28.74 $ 25.58 $ 23.30
End of period ................ $ 45.74 $ 37.74 $ 27.92 $ 28.74 $ 25.58
Accumulation units
outstanding at the
end of period ................ 2,575,426 2,306,163 1,578,797 1,483,618 1,766,896

GROWTH-INCOME SERIES (SERIES B)

Accumulation unit value:
Beginning of period .......... $ 39.84 $ 31.00 $ 32.34 $ 29.87 $ 28.44
End of period ................ $ 46.54 $ 39.84 $ 31.00 $ 32.34 $ 29.87
Accumulation units
outstanding at the
end of period ................ 3,721,884 3,669,299 3,515,364 3,262,600 2,560,986

MONEY MARKET SERIES (SERIES C)

WORLDWIDE EQUITY SERIES (SERIES D)

HIGH GRADE INCOME SERIES (SERIES E)

Accumulation unit value:
Beginning of period .......... $ 22.09 $ 18.85 $ 20.50 $ 18.42 $ 17.36
End of period ................ $ 21.67 $ 22.09 $ 18.85 $ 20.50 $ 18.42
Accumulation units
outstanding at the
end of period ................ 1,377,342 1,325,159 1,392,830 1,290,268 962,775

SOCIAL AWARENESS SERIES (SERIES S)

Accumulation unit value:
Beginning of period .......... $ 15.98 $ 12.66 $ 13.31 $ 12.04 $ 10.47
End of period ................ $ 18.75 $ 15.98 $ 12.66 $ 13.31 $ 12.04
Accumulation units
outstanding at the
end of period ................ 746,852 612,235 543,287 389,861 226,145

EMERGING GROWTH SERIES (SERIES J)

Accumulation unit value:
Beginning of period .......... $ 15.46 $ 13.09 $ 13.96 $ 12.44 $ 10.00
End of period ................ $ 18.03 $ 15.46 $ 13.09 $ 13.96 $ 12.44
Accumulation units
outstanding at the
end of period ................ 1,559,302 1,248,987 1,211,099 610,801 68,338
</TABLE>
<TABLE>
<CAPTION>
1991(A)(B) 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NON-QUALIFIED CONTRACTS

GROWTH SERIES (SERIES A)

Accumulation unit value:
Beginning of period .......... $ 17.32 $ 19.45 $ 14.59 $ 13.41 $ 12.76
End of period ................ $ 23.30 $ 17.32 $ 19.45 $ 14.59 $ 13.41
Accumulation units
outstanding at the
end of period ................ 1,328,865 952,806 594,856 493,463 664,251

GROWTH-INCOME SERIES (SERIES B)

Accumulation unit value:
Beginning of period .......... $ 20.91 $ 22.16 $ 17.46 $ 14.80 $ 14.45
End of period ................ $ 28.44 $ 20.91 $ 22.16 $ 17.46 $ 14.80
Accumulation units
outstanding at the
end of period ................ 1,774,534 1,293,121 1,000,815 836,735 801,802

MONEY MARKET SERIES (SERIES C)

Accumulation unit value:
Beginning of period .......... $ 15.28 $ 14.32 $ 13.29 $ 12.55 $ 11.94
End of period ................ $ 15.94 $ 15.28 $ 14.32 $ 13.29 $ 12.55
Accumulation units
outstanding at the
end of period ................ 1,000,378 954,107 846,414 853,615 422,130

WORLDWIDE EQUITY SERIES (SERIES D)

Accumulation unit value:
Beginning of period .......... $ 8.07 $ 10.57 $ 11.74 $ 11.33 $ 12.19
End of period ................ $ 8.99 $ 8.07 $ 10.57 $ 11.74 $ 11.33
Accumulation units
outstanding at the
end of period ................ 279,878 125,010 211,920 214,723 225,118

HIGH GRADE INCOME SERIES (SERIES E)

Accumulation unit value:
Beginning of period .......... $ 15.02 $ 14.25 $ 12.89 $ 12.17 $ 12.03
End of period ................ $ 17.36 $ 15.02 $ 14.25 $ 12.89 $ 12.17
Accumulation units
outstanding at the
end of period ................ 784,496 582,285 519,624 419,410 420,483

SOCIAL AWARENESS SERIES (SERIES S)

EMERGING GROWTH SERIES (SERIES J)

10
<PAGE>
<TABLE>
<CAPTION>
1996 1995(D)(E) 1994 1993 1992(C)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NON-QUALIFIED CONTRACTS

GLOBAL AGGRESSIVE BOND SERIES (SERIES K)

Accumulation unit value:
Beginning of period ..................... $ 10.69 $ 10.00 -- -- --
End of period ........................... $ 12.00 $ 10.69 -- -- --
Accumulation units
outstanding at the
end of period ........................... 178,818 74,528 -- -- --

SPECIALIZED ASSET ALLOCATION SERIES (SERIES M)

Accumulation unit value:
Beginning of period ..................... $ 10.64 $ 10.00 -- -- --
End of period ........................... $ 12.00 $ 10.64 -- -- --
Accumulation units
outstanding at the
end of period ........................... 532,893 297,967 -- -- --

MANAGED ASSET ALLOCATION SERIES (SERIES N)

Accumulation unit value:
Beginning of period ..................... $ 10.66 $ 10.00 -- -- --
End of period ........................... $ 11.87 $ 10.66 -- -- --
Accumulation units
outstanding at the
end of period ........................... 374,276 226,555 -- -- --

EQUITY INCOME SERIES (SERIES O)

Accumulation unit value:
Beginning of period ..................... $ 11.62 $ 10.00 -- -- --
End of period ........................... $ 13.78 $ 11.62 -- -- --
Accumulation units
outstanding at the
end of period ........................... 710,206 234,242 -- -- --
</TABLE>
<TABLE>
<CAPTION>
1991(A)(B) 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NON-QUALIFIED CONTRACTS

GLOBAL AGGRESSIVE BOND SERIES (SERIES K)

SPECIALIZED ASSET ALLOCATION SERIES (SERIES M)

MANAGED ASSET ALLOCATION SERIES (SERIES N)

EQUITY INCOME SERIES (SERIES O)

Accumulation unit value:
Beginning of period ..................... -- -- -- -- --
End of period ........................... -- -- -- -- --
Accumulation units
outstanding at the
end of period ........................... -- -- -- -- --
</TABLE>
(a) Social Awareness Series of Variflex was first publicly offered on May 1,
1991.
(b) Effective May 1, 1991, the investment objective of Worldwide Equity Series
of Variflex was changed from high current income to long-term capital growth
through investment in common stocks and equivalents of companies domiciled
in foreign countries and the United States.
(c) Emerging Growth Series of Variflex was first publicly offered on October 1,
1992.
(d) Global Aggressive Bond, Specialized Asset Allocation, Managed Asset
Allocation and Equity Income Series were first publicly offered on June 1,
1995.
(e) Effective June 1, 1995, the investment objective of Growth-Income Series of
Variflex was changed from seeking to provide income with secondary emphasis
on capital appreciation to seeking long-term growth of capital with
secondary emphasis on income.

11
<PAGE>
FINANCIAL STATEMENTS
The full financial statements for Variflex and the financial statements of
SBL as well as the auditor's reports thereon are in the Statement of Additional
Information.

SECURITY BENEFIT LIFE INSURANCE
COMPANY AND VARIFLEX

SECURITY BENEFIT LIFE INSURANCE COMPANY
Security Benefit Life Insurance Company ("SBL") is a mutual life insurance
company. SBL, which was formed originally as a fraternal benefit society under
the laws of Kansas and commenced business February 22, 1892, became a mutual
life insurance company under its present name on January 2, 1950. Its home
office is 700 Harrison Street, Topeka, Kansas 66636-0001. SBL is licensed in the
District of Columbia, and in all states except New York.

In December of 1997, the Board of Directors of SBL approved a Plan of
Conversion ("Plan") under which SBL would convert from a mutual life insurance
company to a stock life insurance company ultimately controlled by a
newly-formed mutual holding company to be named Security Benefit Mutual Holding
Company. Under the Plan, membership interests of current SBL policyholders would
become membership interests in Security Benefit Mutual Holding Company upon
conversion. After the conversion, persons who acquire policies from SBL would
automatically be members in the mutual holding company. The conversion will not
increase premiums or reduce policy benefits, values, guarantees or other policy
obligations to policyholders. The Plan is subject to approval by the Insurance
Commissioner of the State of Kansas and SBL policyholders, among other approvals
and conditions. If the necessary approvals are obtained and conditions met, the
conversion could occur in the second quarter of 1998.

VARIFLEX
Variflex was established by SBL as a separate account on January 31, 1984,
and is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940 (the "Act"). Variflex
is designed to provide the funding for Variable Annuities. Under Kansas law,
regulation of SBL by the Commissioner of Insurance includes regulation of
Variflex. The insurance laws of Kansas under which Variflex was established
provide that the assets of Variflex shall not be chargeable with liabilities
arising out of any other business which SBL may conduct (except to the extent
that the assets of Variflex exceed the reserves and other liabilities of the
separate account). Accordingly, Variflex Contracts provide that the income,
gains and losses from the assets allocated to Variflex, whether or not realized,
are credited to or charged against Variflex without regard to other income,
gains, or losses of SBL. The assets of Variflex will thus be held exclusively
for the benefit of Contractowners and beneficiaries under the Contracts (and
other contracts which may be offered in the future under which net premiums are
placed in Variflex and which provide benefits varying in accordance with the
investment results of Variflex) to the extent they are entitled to benefits
based on Variflex.
Variflex contains eleven Series--Growth Series, Growth-Income Series, Money
Market Series, Worldwide Equity Series, High Grade Income Series, Social
Awareness Series, Emerging Growth Series, Global Aggressive Bond Series,
Specialized Asset Allocation Series, Managed Asset Allocation Series, and Equity
Income Series. Amounts allocated by Contractowners or Participants to each of
these Series are invested, respectively, in Series A, B, C, D, E, S, J, K, M, N
and O of SBL Fund (the "Fund"). Additional Series may be added to Variflex at
the discretion of SBL.

SBL FUND

The Fund is a diversified, open-end management investment company. The
assets of the Fund are managed by Security Management Company, LLC (the
"Investment Manager"), the investment adviser to the Fund, under the supervision
of the Fund's board of directors.
The Fund currently issues its shares in eleven separate series: Series A,
Series B, Series C, Series D, Series E, Series S, Series J, Series K, Series M,
Series N, and Series O ("Series"). The assets of each Series are held separate
from the assets of other Series, and each Series has different investment
objectives and policies. As a result, each Series operates as a separate
investment fund. Each Series of Variflex invests solely in a corresponding
Series of the Fund.
SERIES A--Amounts allocated to the GROWTH SERIES of Variflex are invested
in Series A. The investment objective of Series A is to seek long-term capital
growth by investing in a broadly diversified portfolio of common stocks,
securities convertible into common stocks, preferred stocks, bonds and other
debt securities.
SERIES B--Amounts allocated to the GROWTH-INCOME SERIES of Variflex are
invested in Series B. Series B seeks long-term growth of capital, with secondary
emphasis on income, by investing in various types of securities, including
common stocks, convertible securities, preferred stocks and debt securities.
Series B's investments in debt securities may include securities rated below
investment grade (commonly referred to as "junk bonds").
SERIES C--Amounts allocated to the MONEY MARKET SERIES of Variflex are
invested in Series C. The investment objective of Series C is to provide as high
a level of current income as is consistent with preserving capital. It invests
in high quality money market instruments with maturities of not longer than
thirteen months.
SERIES D--Amounts allocated to the WORLDWIDE EQUITY SERIES of Variflex are
invested in Series D. The investment objective of Series D is to seek long-term
growth of capital primarily through investment in common stocks and equivalents
of companies domiciled in foreign countries and the United States.
SERIES E--Amounts allocated to the HIGH GRADE INCOME SERIES of Variflex are
invested in Series E. The investment

12
<PAGE>
objective of Series E is to provide current income with security of principal.
Series E seeks to achieve this investment objective by investing in a broad
range of debt securities, including U.S. and foreign corporate debt securities
and securities issued by the U.S. and foreign governments.
SERIES S--Amounts allocated to the SOCIAL AWARENESS SERIES of Variflex are
invested in Series S. The investment objective of Series S is to seek capital
appreciation by investing in various types of securities which meet certain
social criteria established for the Series. Series S will invest in a
diversified portfolio of common stocks, convertible securities, preferred stocks
and debt securities.
SERIES J--Amounts allocated to the EMERGING GROWTH SERIES of Variflex are
invested in Series J. The investment objective of Series J is to seek capital
appreciation through investment in a broadly diversified portfolio of securities
which may include common stocks, preferred stocks, debt securities and
securities convertible into common stocks.
SERIES K--Amounts allocated to the GLOBAL AGGRESSIVE BOND SERIES of
Variflex are invested in Series K. The investment objective of Series K is to
seek high current income and, as a secondary objective, capital appreciation by
investing in a combination of foreign and domestic high-yield, lower rated debt
securities (commonly referred to as "junk bonds").
SERIES M--Amounts allocated to the SPECIALIZED ASSET ALLOCATION SERIES of
Variflex are invested in Series M. The investment objective of Series M is to
seek high total return consisting of capital appreciation and current income.
Series M seeks this objective by following an asset allocation strategy that
contemplates shifts among a wide range of investment categories and market
sectors, including equity and debt securities of domestic and foreign issuers.
SERIES N--Amounts allocated to the MANAGED ASSET ALLOCATION SERIES of
Variflex are invested in Series N. The investment objective of Series N is to
seek a high level of total return by investing primarily in a diversified
portfolio of debt and equity securities.
SERIES O--Amounts allocated to the EQUITY INCOME SERIES of Variflex are
invested in Series O. The investment objective of Series O is to seek to provide
substantial dividend income and also capital appreciation by investing primarily
in dividend-paying common stocks of established companies.
The Investment Adviser has engaged Lexington Management Corporation, Park
80 West, Plaza Two, Saddle Brook, New Jersey 07663 to provide investment
advisory services to Series D and K. Lexington has entered into an agreement
with MFR Advisors, Inc., One Liberty Plaza, 46th Floor, New York, New York 10006
to provide investment advisory services to Series K of the Fund. The Investment
Adviser has engaged T. Rowe Price Associates, Inc., 100 East Pratt Street,
Baltimore, Maryland 21202 to provide investment advisory services to Series N
and O, and has engaged Meridian Investment Management Corporation, 12835 East
Arapahoe Road, Tower II, 7th Floor, Engelwood, Colorado 80112, to provide
investment advisory and analytical services to Series M.

THERE IS NO ASSURANCE THAT ANY OF THESE SERIES WILL ATTAIN THEIR RESPECTIVE
STATED OBJECTIVES.

ADDITIONAL INFORMATION CONCERNING THE INVESTMENT OBJECTIVES AND POLICIES OF
THE SERIES AND THE INVESTMENT ADVISORY SERVICES AND CHARGES CAN BE FOUND IN THE
CURRENT PROSPECTUS FOR THE FUND, WHICH IS ATTACHED TO AND SHOULD BE READ IN
CONJUNCTION WITH THIS PROSPECTUS BEFORE ANY DECISION IS MADE CONCERNING THE
ALLOCATION OF PURCHASE PAYMENTS, SINCE THE INVESTMENT PERFORMANCE OF THE SERIES
WILL AFFECT THE VARIABLE ANNUITY VALUES.

VOTING RIGHTS
As the record owner of the Fund shares which represent the assets of
Variflex, including the Variflex assets represented by reserves for Annuitants
currently receiving Annuity payments, SBL will vote at all Fund shareholder
meetings. However, Contractowners will have the right to instruct SBL with
respect to such voting. Each Contractowner will receive all Fund periodic
reports and proxy materials and a form with which to give voting instructions. A
Participant under a group Contract will have no rights with regard to voting or
instructing SBL unless the Participant's views are solicited by the
Contractowner. It should be noted that the number of votes allocable to a
particular Contract will gradually decrease as annuity payments are made during
the annuity period.
In addition, the bylaws of SBL provide that each SBL policyholder, without
regard to the number of contracts owned or the amount of each such contract,
shall have the right to cast one vote, in person or by proxy, for the election
of directors of SBL, and on all other corporate matters brought before its
policyholders.

SUBSTITUTED SECURITIES
If shares of the Fund or any Series should become unavailable for purchase
by Variflex, or if in the judgment of SBL further investment in such shares is
no longer appropriate in view of the purposes of Variflex, SBL reserves the
right, subject to any applicable law, to make certain changes including (i) to
substitute therefor shares of another fund or another Series of the Fund; or
(ii) net payments received after a date specified by SBL may be applied to the
purchase of shares of such other fund or of another Series of the Fund. In
either event, to the extent required by the Act, prior approval by a vote of a
majority of the votes to be cast by persons having a voting interest in the Fund
shares held in the affected Series within Variflex and the Securities and
Exchange Commission shall be obtained.

13
<PAGE>
VARIFLEX CONTRACTS

PURPOSE OF THE CONTRACTS
The Contracts described in this Prospectus may be issued for use with
retirement plans and trusts qualified under the Internal Revenue Code of 1986,
as amended (the "Code"), for favorable tax treatment ("Qualified Contracts") and
for use with plans and trusts which are not so qualified ("Non-Qualified
Contracts"). Retirement plans qualified for favorable tax treatment include
pension and profit sharing plans qualified under Section 401 or 403(a) of the
Internal Revenue Code, annuity purchase plans of public school systems and
certain tax-exempt organizations which qualify for tax deferred treatment under
Section 403(b) or 403(c) of the Code, individual retirement plans and individual
retirement annuities under Section 408 of the Code and deferred compensation
plans under Section 457 of the Code. See section entitled "Federal Tax
Matters-Qualified Plans," page 28 for further details.
The basic objective of the Contracts is to provide a Guaranteed or Variable
Annuity or a combination Guaranteed and Variable Annuity. Variable Annuities
pursuant to the Contracts are funded by Variflex. The objective of a Variable
Annuity is to provide benefits which will tend to a greater degree than a
Guaranteed Annuity to reflect the changes in the cost of living. There can be no
assurance that this objective will be attained. Annuity payments based on any of
the Series of Variflex are not guaranteed and entail more risk to the Annuitant
than traditional guaranteed insurance.
This Prospectus generally describes only the variable aspects of the
Variflex Contracts, except where guaranteed aspects are specifically mentioned.
For a discussion of the guaranteed investment option and guaranteed benefits
available in connection with Variflex Contracts, see "The General Account" on
page 33.
The terms of the Contracts may only be changed by mutual agreement between
SBL and each Contractowner, except as described in "Substituted Securities,"
above, and except for changes required to make the contracts comply with, or
give Contractowners the benefit of, any law or regulation issued by a
governmental agency to which SBL or the Variflex Contracts are subject.

TYPES OF VARIFLEX CONTRACTS
Different types of the Contracts are offered by SBL through this
Prospectus. The Contracts vary in the amount and timing of the minimum payments,
and in various other respects. The different types of Contracts are described
below:
a. SINGLE PAYMENT IMMEDIATE ANNUITY CONTRACT - This type of contract is
used for an individual where a single Purchase Payment has been allocated to
provide for life contingent annuity payments to commence immediately.
b. SINGLE AND INSTALLMENT PAYMENT DEFERRED ANNUITY CONTRACTS - This type of
contract is used for an individual where either a single Purchase Payment (which
may be supplemented with additional payments within thirteen months) or periodic
Purchase Payments will be made to the individual's account with annuity payments
to commence at a later date.
c. GROUP SINGLE AND INSTALLMENT PAYMENT DEFERRED ANNUITY CONTRACT - This
type of contract may be used when Purchase Payments, either single or
installment, under group plans are to be accumulated until the retirement date
of each Participant. Generally, under a Group Allocated Contract, an Individual
Account is established for each Participant for whom payments are being made and
normally the benefit at retirement will be determined by the value of the
Participant's Individual Account at that time.
Under a Group Unallocated Contract, the Purchase Payments are applied to
acquire Accumulation Units. However, the Accumulation Units are not allocated to
the individual Participants but are credited to the Contractowner's accumulation
account. When a Participant becomes entitled to receive pension payments under
the provisions of the Plan, the appropriate number of Accumulation Units may be
withdrawn from the accumulation account by the Contractowner to provide the
Participant with an annuity.

CONTRACT APPLICATION AND PURCHASE PAYMENTS
Individuals wishing to purchase a Contract must complete an application and
provide an initial Purchase Payment which will be sent to the SBL home office.
If the application can be accepted in the form received, the initial Purchase
Payment will be credited within two business days after receipt by the SBL home
office. If an incomplete application cannot be completed within five days of its
receipt, the applicant will be notified of the reasons for the delay and any
payments received will be returned immediately unless the applicant specifically
consents to have SBL retain them pending completion of the application.
The Contracts set certain minimum amounts for the initial and subsequent
Purchase Payments. For Qualified Contracts, the minimum initial and subsequent
payments are $25, except Group Unallocated Contracts, which require a minimum
initial payment of $500 and subsequent payments of $25. For Non-Qualified
Contracts, the minimum initial payment is $500 and subsequent payments must be
at least $25. For Single Payment Immediate and Single Payment Deferred Annuity
Contracts, the minimum initial payment is $2,500. The maximum amount of Purchase
Payments under Variflex Contracts is $1,000,000, without the prior approval of
SBL. These amounts may be changed at the sole discretion of SBL. In addition,
SBL reserves the right to terminate any individual or Group Contract for certain
specified reasons, including failure of the Contract Value to meet certain
specified minimums. (See "Termination of Contract" in the Statement of
Additional Information for a detailed listing of such circumstances.)
For an Installment Payment Deferred Annuity, Purchase Payments may be made
at such intervals as desired, but are

14
<PAGE>
usually made on an annual, semiannual, quarterly or monthly basis. The frequency
of Purchase Payments may be changed by the Contractowner. If Purchase Payments
cease, they may be resumed at a future date, subject to the Annuity Commencement
Date requirements. The amount of future Purchase Payments may be increased or
decreased on any date a payment is submitted. Submission of a Purchase Payment
different from the previous payment will automatically effect an increase or
decrease. The number of changes permitted and the maximum payments allowed under
the Internal Revenue Code for Qualified Plans vary depending on the type of
plan. For a discussion of those limitations see "Limits on Purchase Payments
Paid Under Tax-Qualified Retirement Plans" in the Statement of Additional
Information. Failure to comply with those limitations may subject the Contract
to adverse tax treatment.

ALLOCATION OF PURCHASE PAYMENTS
The Purchase Payments will be allocated to each Series within Variflex in
accordance with the written instructions contained in the application. The
Contractowner or Participant may by written instruction to the home office
indicate one or more Series to which a specified portion or portions of the
Purchase Payment should be applied, except that no allocation is permitted which
would result in less than $25 per payment being allocated to any one Series
within Variflex. Changes in allocation of future Purchase Payments (with the
same $25 minimum per Series) may be made at any time by specific written
instruction to the home office or by telephone instruction, provided that a
properly completed Telephone Transfer Authorization form is on file with SBL or
the Telephone Transfer section of the application has been completed. (See
"Transfer of Contract Value" on page 16.)

CREDITING OF ACCUMULATION UNITS
During the Accumulation Period, when a Purchase Payment is received in its
home office, SBL currently credits the entire payment to the Variflex Contract.
Amounts allocated to Series of Variflex are credited in the form of Accumulation
Units. The number of Accumulation Units that may be purchased for any Series is
found by dividing the Purchase Payment allocated to that Series by the
Accumulation Unit value for that Series determined at the end of the Valuation
Period in which the Purchase Payment is credited. The Accumulation Unit value
for each Series is determined as of 3:00 p.m. Central time on each Valuation
Date and on any other day in which there is a sufficient degree of trading in
the portfolio securities of a Series of the Fund that the Accumulation Unit
value of an applicable Series of Variflex might be materially affected.
The value of an Accumulation Unit in each Series is expected to increase or
decrease, reflecting the investment experience of the corresponding Series of
the underlying Fund less any deductions for charges or taxes. The Statement of
Additional Information contains a detailed description of how the Accumulation
Units are valued.

DOLLAR COST AVERAGING OPTION
SBL currently offers an option under which Contractowners may dollar cost
average their allocations in the Series under the Contract by authorizing SBL to
make periodic allocations of Contract Value from any one Series to one or more
of the other Series. Dollar cost averaging is a systematic method of investing
in which securities are purchased at regular intervals in fixed dollar amounts
so that the cost of the securities gets averaged over time and possibly over
various market cycles. The option will result in the allocation of Contract
Value to one or more Series, and these amounts will be credited at the
Accumulation Unit value as of the end of the Valuation Dates on which the
transfers are effected. Since the value of Accumulation Units will vary, the
amounts allocated to a Series will result in the crediting of a greater number
of units when the Accumulation Unit value is low and a lesser number of units
when the Accumulation Unit value is high. Similarly, the amounts transferred
from a Series will result in a debiting of a greater number of units when the
Accumulation Unit value is low and a lesser number of units when the
Accumulation Unit value is high. Dollar cost averaging does not guarantee
profits, nor does it assure that a Contractowner will not have losses.
A Dollar Cost Averaging Request form is available upon request. On the
form, the Contractowner must designate whether a specific dollar amount,
percentage of Contract Value or earnings only are to be transferred, the Series
to and from which the transfers will be made, the desired frequency of the
transfers, which may be on a monthly or quarterly basis, and the length of time
during which the transfers shall continue or the total amount to be transferred
over time.
After SBL has received a Dollar Cost Averaging Request in proper form at
its home office, SBL will transfer Contract Value in amounts designated by the
Contractowner from the Series from which transfers are to be made to the Series
chosen by the Contractowner. The minimum amount that may be transferred to any
one Series is $25. Each transfer will be effected on the monthly or quarterly
anniversary, whichever corresponds to the period selected by the Contractowner,
of the date of receipt at SBL's home office of a Dollar Cost Averaging Request
in proper form, until the total amount elected has been transferred, or until
Contract Value in the Series from which transfers are made has been depleted.
Amounts periodically transferred under this option are not currently subject to
any transfer charges.
A Contractowner may instruct SBL at any time to terminate the option by
written request to SBL's home office. In that event, the Contract Value in the
Series from which transfers were being made that has not been transferred will
remain in that Series unless the Contractowner instructs otherwise. If a
Contractowner wishes to continue transferring on a dollar cost averaging basis
after the

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expiration of the applicable period, the total amount elected has been
transferred, or the Series has been depleted, or after the Dollar Cost Averaging
Option has been canceled, a new Dollar Cost Averaging Request must be completed
and sent to SBL's home office. SBL may discontinue, modify, or suspend the
Dollar Cost Averaging Option at any time. Contract Value may also be dollar cost
averaged to or from the General Account, provided that such transfers do not
violate the restrictions on transfers as described in "The General Account,"
page 33.

ASSET REALLOCATION OPTION
SBL currently offers an option under which Contractowners authorize SBL to
automatically transfer their Contract Value each quarter to maintain a
particular percentage allocation among the Series as selected by the
Contractowner. The Contract Value allocated to each Series will grow or decline
in value at different rates during the quarter, and Asset Reallocation
automatically reallocates the Contract Value in the Series each quarter to the
allocation selected by the Contractowner. Asset Reallocation is intended to
transfer Contract Value from those Series that have increased in value to those
Series that have declined in value. Over time, this method of investing may help
a Contractowner buy low and sell high. This investment method does not guarantee
profits, nor does it assure that a Contractowner will not have losses.
To elect the Asset Reallocation Option, an Asset Reallocation Request in
proper form must be received by SBL at its home office. An Asset Reallocation
Request form is available upon request. On the form, the Contractowner must
indicate the applicable Series and the percentage of Contract Value which should
be allocated to each of the applicable Series each quarter ("Asset Reallocation
Program"). If the Asset Reallocation Option is elected, all Contract Value
invested in the Series must be included in the Asset Reallocation Program.
This option will result in the transfer of Contract Value to one or more of
the Series on the date of SBL's receipt of the Asset Reallocation Request in
proper form and each quarterly anniversary of that date thereafter. The amounts
transferred will be credited at the Accumulation Unit value as of the end of the
Valuation Dates on which the transfers are effected. Amounts periodically
transferred under this option are not currently subject to any transfer charges.
A Contractowner may instruct SBL at any time to terminate this option by
written request to SBL's home office. In that event, the Contract Value in the
Series that has not been transferred will remain in those Series regardless of
the percentage allocation unless the Contractowner instructs otherwise. If a
Contractowner wishes to continue Asset Reallocation after it has been canceled,
a new Asset Reallocation Request form must be completed and sent to SBL's home
office. SBL may discontinue, modify, or suspend, and reserves the right to
charge a fee for the Asset Reallocation Option at any time. Asset Reallocation
is not available for Group Unallocated Contracts.
Contract Value invested in the General Account may be included in the Asset
Reallocation Program, provided that transfers from the General Account do not
violate the restrictions on transfers as described in "The General Account,"
page 33.

TRANSFER OF CONTRACT VALUE
During the Accumulation Period, the Contractowner or Participant may elect
by written notice to the SBL home office to transfer all or any part of the
Contract Value invested in a particular Variflex Series to any other Variflex
Series. Such transfers (and changes to an existing Dollar Cost Averaging or
Asset Reallocation Option) may be made by telephone if a properly completed
Telephone Transfer Authorization form, which may be obtained from SBL, is on
file with SBL or the Telephone Transfer section of the application has been
completed. SBL reserves the right to deny any telephone transfer request. SBL
has established procedures to confirm that instructions communicated by
telephone are genuine and may be liable for any losses due to fraudulent or
unauthorized instructions if it fails to comply with its procedures. SBL`s
procedures require that any person requesting a telephone transfer provide the
account and contract number and the owner`s tax identification number and such
instructions must be received on a recorded line. Neither SBL nor any of its
affiliates will be liable for any claim, loss or expense resulting from any
alleged error or mistake in connection with a telephone transfer which was
authorized by the Contractowner, or by anyone else who purports to give
instructions on his or her behalf, provided that SBL complied with its
procedures. The frequency of transfers generally is not limited, although SBL
reserves the right to limit them as to any individual, or in the future, in
general, to not more than once every 30 days. Such transfers are currently made
without charge. The telephone transfer privilege may be suspended, modified or
discontinued at any time without notice. SBL's policy concerning telephone
transfers may require a Contractowner who authorizes telephone transfers to bear
the risk of loss from a fraudulent or unauthorized telephone transfer. For a
discussion of transfers after the Annuity Commencement Date, see "Allocation of
Benefits" on page 24.

CONTRACT VALUE
The Contract Value is the sum of the amounts under the Contract held in
each Series of Variflex and in the General Account, including amounts set aside
in the General Account to secure loans.
On each Valuation Date, the portion of the Contract Value allocated to any
particular Series will be adjusted to reflect the investment experience of that
Series. See "Determination of Contract Value," below. No minimum amount of
Contract Value is guaranteed. A Contractowner bears the entire investment risk
relating to the investment performance of Contract Value allocated to the
Variflex Series.

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DETERMINATION OF CONTRACT VALUE
The Contract Value will vary to a degree that depends upon several factors,
including investment performance of the Series to which Contract Value has been
allocated, payment of Purchase Payments, the amount of any outstanding Contract
Debt, partial withdrawals, and the charges assessed in connection with the
Contract. The amounts allocated to the Series will be invested in shares of the
corresponding Series of the SBL Fund. The investment performance of the Series
will reflect increases or decreases in the net asset value per share of the
corresponding Series of SBL Fund and any dividends or distributions declared by
such Series.
Assets in the Series are divided into Accumulation Units, which are
accounting units of measure used to calculate the value of a Contractowner's
interest in a Series. When a Contractowner allocates Purchase Payments to a
Series, the Contract is credited with Accumulation Units. The number of
Accumulation Units to be credited is determined by dividing the dollar amount
allocated to the particular Series by the Accumulation Unit value for the
particular Series at the end of the Valuation Period in which the Purchase
Payment is credited. In addition, other transactions including loans, full or
partial withdrawals, transfers, and assessment of certain charges against the
Contract affect the number of Accumulation Units credited to a Contract. The
number of units credited or debited in connection with any such transaction is
determined by dividing the dollar amount of such transaction by the unit value
of the affected Series. The Accumulation Unit value of each Series is determined
on each Valuation Date. The number of Accumulation Units credited to a Contract
shall 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 Valuation Date
to Valuation Date depending upon the investment experience of the Series and
charges against the Series.
The Accumulation Unit value of each Series' unit initially was $10. The
unit value of a Series on any Valuation Date is calculated by dividing the value
of each Series' net assets by the number of Accumulation Units credited to the
Series on that date. Determination of the value of the net assets of a Series
takes into account the following: (1) the investment performance of the Series,
which is based upon the investment performance of the corresponding Series of
the SBL Fund, (2) any dividends or distributions paid by the corresponding
Series, (3) the charges, if any, that may be assessed by SBL for taxes
attributable to the operation of the Series, and (4) the Actuarial Risk Fee
under the Contract.

CONTRACTOWNER INQUIRIES
Contractowner inquiries and Purchase Payments should be addressed to
Security Benefit Life Insurance Company at its home office, P.O. Box 750497,
Topeka, Kansas 66675-0497, or made by calling (913) 295-3112 or (800) 888-2461,
extension 3112.

CHARGES AND DEDUCTIONS

CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from the Purchase Payments for
Variflex Contracts. However, except as set forth below, a contingent deferred
sales charge (which may also be referred to as a withdrawal charge), may be
assessed by SBL on a full or partial withdrawal from the Contracts, to the
extent the amount withdrawn is attributable to Purchase Payments made. During
the first Contract Year, the withdrawal charge applies against the total amount
withdrawn attributable to total Purchase Payments made. Each Contract Year
thereafter, a withdrawal charge will not be assessed upon the first withdrawal
in the Contract Year of up to 10 percent of the Contract Value, as of the date
of the withdrawal (the "Free Withdrawal Right"). All or any part of the Free
Withdrawal Right for that Contract Year that is not applied to the first
withdrawal is forfeited. The free withdrawal is not available to Contractowners
receiving "systematic withdrawals" as discussed under "Systematic Withdrawals,"
page 20.
The Free Withdrawal Right for certain Contracts funding charitable
remainder trusts is available immediately and allows free withdrawals to the
extent that such withdrawals do not in any Contract Year exceed 10 percent of
the Contract Value on the date of the first withdrawal in that Contract Year.
For Group Unallocated Contracts, after the first Contract Year the Contractowner
shall be allowed one free withdrawal per calendar month. (Any partial month
immediately following a Contract Year anniversary shall be treated as a calendar
month for this purpose.) The free withdrawal for such Contracts applies only to
the first withdrawal in any calendar month. In any Contract Year, the total free
withdrawals from Group Unallocated Contracts cannot exceed 10 percent of the
Contract Value as of the beginning of such Contract Year. All or any part of the
free withdrawal for a month that is not applied to the first withdrawal in that
month is forfeited and once the 10 percent level described in the previous
sentence is met, the right to any further monthly free withdrawals is forfeited
for the remainder of the Contract Year.
For purposes of determining the withdrawal charge, a withdrawal will be
attributed first to Purchase Payments and then will be attributed to earnings,
even if the Contractowner elects to redeem amounts allocated to an Account
(including the General Account) other than an Account to which Purchase Payments
were allocated. The amount of the charge will depend upon the Contract Year in
which the withdrawal is made.
The applicable withdrawal charge for the Contracts except Variflex
Contracts-401(k) and 408(k), is as follows, based on the Contract Year in which
the withdrawal is made:

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CONTRACT YEAR OF WITHDRAWAL
WITHDRAWAL CHARGE
---------- ------
1 8
2 7
3 6
4 5
5 4
6 3
7 2
8 1
9 and after 0

For Variflex Contracts-401(k) and 408(k), the following withdrawal charges
apply:

CONTRACT YEAR OF WITHDRAWAL
WITHDRAWAL CHARGE
---------- ------
1 8
2 8
3 8
4 8
5 7
6 6
7 5
8 4
9 and after 0

In no event will the amount of any withdrawal charge, when added to any
such charge previously assessed against any amount withdrawn from the Contract,
exceed 8 percent of the Purchase Payments paid under a Contract. In addition, no
charge will be imposed (1) upon payment of the death benefit under the Contract;
(2) upon annuity payments under Annuity Options 1, 2, 3, 4 or any similar life
contingent payment option that is mutually agreed upon between the Contractowner
and SBL; (3) upon withdrawals that qualify for the hospital/nursing home waiver,
discussed below; or (4) upon certain systematic withdrawals. The contingent
deferred sales charge will be deducted, to the extent applicable, from
withdrawals and annuity payments under Annuity Options 5, 6, 7, 8 and other
non-life contingent payment options, unless annuity payments extend over a
period of at least five years and are made in substantially equal amounts.
The contingent deferred sales charge will be paid to SBL for its services
and expenses relating to the sales of the Contracts, including commissions to
sales personnel, the costs of preparing sales literature and other promotional
activity. SBL anticipates it will pay the selling broker-dealer or any national
banks that sell Variflex a sales commission or fee of not more than 6 percent of
all Purchase Payments. In addition, under certain circumstances, SBL may pay
certain broker-dealers persistency bonuses which will take into account, among
other things, the length of time and the amount of Purchase Payments held under
Variflex Contracts invested in certain Series of Variflex. A persistency bonus
is not anticipated to exceed .25 percent, on an annual basis, of the Contract
Values considered in connection with the bonus. If total contingent deferred
sales charges realized are not sufficient to pay sales expenses for Variflex
Contracts in any one year or in total, SBL will pay the difference from its
general account assets, including amounts derived indirectly from the Actuarial
Risk Fee. SBL anticipates sales expenses will be greater than the contingent
deferred sales charge.

HOSPITAL/NURSING HOME WAIVER

SBL will waive the withdrawal charge on any full or partial withdrawal upon
the Contractowner's request for such a waiver, provided that the Contractowner:
(1) has been confined to a "hospital" or "qualified skilled nursing facility"
for at least 90 consecutive days prior to the date of the withdrawal; (2) is so
confined when SBL receives the withdrawal request; and (3) became so confined
after the date the Contract was issued. (See the "Glossary of Terms" on page 4.)
Any request for the hospital/nursing home waiver must be accompanied by a
properly completed claim form which may be obtained from SBL and a written
physician's statement acceptable to SBL certifying that such confinement is a
medical necessity and is due to illness or infirmity. SBL reserves the right to
have the Contractowner examined by a physician of SBL's choice and at SBL's
expense to determine if the Contractowner is eligible for the hospital/nursing
home waiver. The hospital/nursing home waiver is not available in certain states
pending department of insurance approval. If the waiver is later approved by the
insurance department of a state, SBL intends to make the waiver available to all
Contractowners in that state at that time, but there can be no assurance that
the waiver will be approved. Prospective contractowners should contact their
agent concerning availability of the waiver in their state.

OTHER CHARGES

(a) ADMINISTRATIVE FEES

Except as noted below, SBL deducts at each calendar year-end from each
individual and Group Contract and from each Participant's Individual Account an
annual administrative fee ("Administrative Fee") of $30 to cover expenses
relating to maintenance of the Contract or account. The Administrative Fee is
$30 for all Contracts except the Variflex Contracts-401(k) and 408(k) for which
the fee is the lesser of 2 percent of Contract Value valued as of the calendar
year-end or $30. SBL will waive the Administrative Fee during a Contract Year
for any Contract that has been in force for eight Contract Years or more AND the
Contract Value of which is $25,000 or more at year-end (or in the event of a
full withdrawal, on the date of the withdrawal). This fee is designed only to
reimburse SBL for the expenses of maintaining the Contracts. When a Contract is
withdrawn for its full value or where a Contract has been in force for less than
a full calendar year, a pro rata annual Administrative Fee will be deducted at
the time of the

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withdrawal or at year-end. The Administrative Fee is deducted both during the
Accumulation Period and after annuity payments have commenced; however, no
Administrative Fee is charged on life-contingent Single Stipulated Payment
Immediate Annuity Contracts or during any payout under Options 1, 2, 3, 4 or
similar life-contingent payment options agreed to by SBL. Once the contract is
issued, the amount of the Administrative Fee under that Contract may not be
increased by SBL.

(b) STATE PREMIUM TAXES

An amount for state premium taxes (which presently range from 0 percent to
3.5 percent) customarily will be deducted when assessed by a given state. In
most cases, if the Contract is to be annuitized, the dollar amount of any such
tax is assessed and deducted from the Contract Value at the time annuity
payments commence. In some states, premium taxes are assessed by the state at
the time Purchase Payments are made rather than at the time annuity payments
commence. In such states, SBL will pay the tax when assessed and will deduct a
pro rata share of the amount of any such tax from any partial withdrawal and any
remaining amount of tax from the Contract Value at the time the contract is
surrendered or annuity payments commence. SBL, however, reserves the right to
deduct the premium tax when assessed.

SBL assumes a number of risks under the Variflex Contracts. While Variable
Annuity payments will vary in accordance with the investment performance of the
selected Series, the amount of such payments will not be decreased because of
adverse mortality experience of Annuitants as a class or because of an increase
in actual expenses of SBL over the expense charges provided for in the
Contracts. SBL assumes the risk that Annuitants as a class may live longer than
expected (necessitating a greater number of annuity payments) and that fees
deducted may not prove sufficient to cover its actual costs. In assuming these
risks, SBL agrees to continue annuity payments under life-contingent annuity
options, determined in accordance with the annuity tables and other provisions
of the Variflex Contracts, to the Annuitant or other payee for as long as he or
she may live. In addition, SBL is at risk for the death benefits payable under
the Variflex Contracts, to the extent that the death benefit in such cases
exceeds the Contract Value.
For SBL's contractual promise to accept these risks, an Actuarial Risk Fee
will be assessed daily against Variflex based on the value of its net assets, at
an annual rate of 1.2 percent. This fee is assessed during the Accumulation
Period and the Annuity Period against life-contingent and non-life-contingent
options, even though certain of the covered risks are not present in the latter
case. SBL may ultimately realize a profit from this fee to the extent it is not
needed to cover mortality and administrative expenses, but SBL may realize a
loss to the extent the fee is not sufficient. SBL may use any profit derived
from this fee for any lawful purpose, including distribution expenses.

(d) CHARGES FOR TAXES

Charges may be made against Variflex only as may be appropriate in the
future to reimburse SBL for the amount of any tax liability (state or federal)
paid or reserved by SBL which results from the maintenance of Variflex. SBL does
not currently expect that there will be any charge for such taxes. (See "Charge
for SBL Taxes," page 26.)

SEQUENTIAL DEDUCTION OF FEES
When annual Administrative Fees are deducted from the value of a Contract,
they shall be deducted from the Contractowner's Contract Value in the Variflex
Series in the following order: Money Market Series, High Grade Income Series,
Global Aggressive Bond Series, Growth-Income Series, Equity Income Series,
Managed Asset Allocation Series, Specialized Asset Allocation Series, Growth
Series, Worldwide Equity Series, Social Awareness Series, and Emerging Growth
Series, and then from the General Account. The value in each Variflex Series
will be depleted before the next Series is charged. This sequence is designed to
charge first those account assets which are more liquid or tend to experience
less capital fluctuation.

VARIATIONS IN CHARGES
SBL may reduce or waive the amount of the contingent deferred sales charge
and administrative charge for a Contract where the expenses associated with the
sale of the Contract or the administrative and maintenance costs associated with
the Contract are reduced for reasons such as the amount of the initial Purchase
Payment, the amounts of projected Purchase Payments, or that the Contract is
sold in connection with a group or sponsored arrangement. SBL may also reduce or
waive the contingent deferred sales charge and administrative charge on
Contracts sold to directors, officers and bona fide full-time employees of SBL
and its affiliated companies; the spouses, grandparents, parents, children,
grandchildren and siblings of such directors, officers and employees and their
spouses; and salespersons (and their spouses and minor children) who are
licensed with SBL to sell variable annuities.
SBL will only reduce or waive such charges where expenses associated with
the sale of the Contract or the costs associated with administering and
maintaining the Contract are reduced. Additional information about reductions in
charges is contained in the Statement of Additional Information.

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DISTRIBUTIONS UNDER THE CONTRACT

ACCUMULATION PERIOD

FULL AND PARTIAL WITHDRAWALS

To the extent permitted by the Plan under the terms of which the Contract
was purchased, any Contract or Participant's Individual Account may be
withdrawn, in full or partially, during the Accumulation Period, subject to the
limitations discussed herein. If any partial withdrawal exceeds 90 percent of
the then current Contract Value of a Participant's Individual Account or an
individual Contract, the then current full value may be paid and the account
shall be closed or the Contract canceled, respectively. A request for a partial
withdrawal under a Contract should specify the allocation of that withdrawal, as
applicable, from the General Account and each Series of Variflex. In the absence
of specification, SBL will, without further instruction, take the amounts needed
to satisfy the withdrawal from the Series in the manner set forth in "Sequential
Deduction of Fees," above.
The proceeds received upon a full withdrawal will be equal to the Contract
Value as of the end of the Valuation Period during which a proper withdrawal
request is received by SBL at its home office, less any pro rata Administrative
Fee, any applicable contingent deferred sales charge, and any outstanding
Contract Debt. To the extent possible, upon a partial withdrawal, any charges
will be deducted from the value remaining in the Contract after the
Contractowner has received the amount requested.
Upon receipt of an application for a partial or full withdrawal of a
Contract or account signed by the Contractowner, the applicable Accumulation
Unit value will be that determined as of the end of the Valuation Period that a
proper written request is received in SBL's home office.
A full or partial withdrawal may subject a Contractowner to adverse tax
consequences, including the 10 percent penalty tax that may be imposed on
withdrawals made prior to the Contractowner attaining age 59 1/2. For a
discussion of the tax consequences of withdrawals, see "Constraints on
Distributions from Certain Section 403(b) Annuity Contracts" on page 23 and
"Federal Tax Matters" on page 25.
Payment of any withdrawal will be made in cash as soon as practicable, but
in no event later than seven days after a request is received in SBL's home
office, subject to postponement (i) for any period during which the New York
Stock Exchange is closed other than customary weekend and holiday closings or
when trading on such exchange is restricted, (ii) for any period during which an
emergency exists as a result of which disposal by Variflex of securities owned
by it is not reasonably practicable or it is not reasonably practicable for
Variflex fairly to determine the value of its net assets, or (iii) for such
other periods as the Securities and Exchange Commission may by order permit for
the protection of Contractowners and Participants. The Securities and Exchange
Commission shall, by rules and regulations, determine the conditions under which
trading shall be deemed to be restricted, and an emergency shall be deemed to
exist.
Except as specified with respect to partial withdrawals exceeding 90
percent, no partial withdrawal will directly affect future requirements to make
Purchase Payments or the maturity date of the Contract or account. Contracts
have other provisions which encourage the Contractowner to continue the Contract
in times of emergency, including the right to discontinue Purchase Payments for
such periods as may be permitted by the Plan and to resume payments at a later
date without penalty.

SYSTEMATIC WITHDRAWALS

SBL currently offers a feature under which systematic withdrawals may be
elected. Under this feature, a Contractowner may elect, before the Annuity
Commencement Date, to receive systematic withdrawals that are not subject to a
contingent deferred sales charge by sending a properly completed Systematic
Withdrawal Request form to SBL. Systematic withdrawals are available immediately
from VIVA Contracts and generally are available from other Variflex Contracts
beginning 37 months after the date that the initial Purchase Payment is credited
to the Contract. Systematic withdrawals are available, however, during the first
37 months of a Contract, provided that Contract Value is $40,000 or more at the
time the systematic withdrawal request is received by SBL.
A Contractowner may request that systematic withdrawals be made monthly,
quarterly, semiannually, or annually (1) in a fixed amount not to exceed in any
Contract Year an amount equal to 10 percent of Contract Value as of the date of
the first systematic withdrawal under the current request; (2) in Level Payments
calculated by SBL subject to the 10 percent limit described in (1) above; (3)
for a specified period of at least five years for Variflex Contracts that have
been in force 37 months or more, 10 years for other Variflex Contracts and 15
years for VIVA Contracts; (4) of all earnings in the Contract; or (5) calculated
according to age recalculation which is described under "Optional Annuity Forms"
on page 24.
Each systematic withdrawal must be at least $25. Upon payment of a
systematic withdrawal, the Contractowner's Contract Value will be reduced by an
amount equal to the payment proceeds plus any applicable premium taxes and, if
withdrawals exceed the amounts described in (1) through (5) above, any
applicable contingent deferred sales charges. Any systematic withdrawal that
equals or exceeds the Contract Value will be treated as a full withdrawal. The
Contract will automatically terminate if a systematic withdrawal causes the
Contract Value to equal zero.
Each systematic withdrawal will be effected as of the end of the Valuation
Period during which the withdrawal is scheduled. The deduction caused by the
systematic withdrawal will be allocated to the Contractowner's

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Contract Value in the Variflex Series and the General Account as instructed by
the Contractowner. If no instructions are provided, SBL will make systematic
withdrawals from the Variflex Series and the General Account in the order set
forth under "Sequential Deduction of Fees," on page 19.
The Free Withdrawal Right discussed under "Charges and Deductions" on page
17 is not available while a Contractowner is receiving systematic withdrawals
and systematic withdrawals in excess of the amounts described above are subject
to any applicable contingent deferred sales charges. Upon termination of
systematic withdrawals, the Free Withdrawal Right will be available in the
Contract Year following termination. Systematic withdrawals may be terminated
upon proper written request by the Contractowner received by SBL at least 30
days in advance of the requested date of termination.
The tax consequences of systematic withdrawals, including the 10 percent
penalty tax that may be imposed on withdrawals made prior to the Owner attaining
age 59 1/2, should be carefully considered. For a discussion of the tax
consequences of withdrawals, see "Constraints on Distributions from Certain
Section 403(b) Annuity Contracts" on page 23 and "Federal Tax Matters" on page
25. SBL may, at any time, discontinue, modify or suspend systematic withdrawals.

FREE-LOOK RIGHT

A Contractowner may return a Contract within the Free-Look Period, which is
generally a ten-day period beginning when the Contractowner receives the
Contract. The returned Contract will then be deemed void and SBL will refund any
Purchase Payments allocated to the General Account plus the Contract Value in
the Variflex Series plus any charges deducted from the Series and premium taxes,
if any. SBL will refund Purchase Payments allocated to the Series rather than
Contract Value in those states that require it to do so.

DEATH BENEFIT DURING ACCUMULATION PERIOD

If the Annuitant under a Variflex Contract, other than a Group Unallocated
Contract, dies during the Accumulation Period, SBL will pay the death benefit
proceeds to the beneficiary upon receipt of due proof of the Annuitant's death
and instructions regarding payment. The death benefit proceeds will be the death
benefit reduced by any outstanding Contract Debt and any uncollected premium
taxes. If the Annuitant dies during the Accumulation Period and the age of the
Annuitant was 75 or younger on the Contract Date, the amount of the death
benefit will be the greatest of: (1) the sum of all Purchase Payments made
reduced by any partial withdrawals; (2) the Contract Value on the date due proof
of death and instructions regarding payment are received by SBL at its home
office; or (3) the stepped-up death benefit. The stepped-up death benefit is:
(a) the largest Contract Value on any Contract anniversary that is both an exact
multiple of six and occurs prior to the Annuitant reaching age 76, plus (b) any
Purchase Payments received since the applicable Contract anniversary, less (c)
any reductions caused by partial withdrawals since the applicable Contract
anniversary. For Contracts in effect for six Contract Years or more as of May 1,
1991, the Contract Value on the Contract anniversary immediately preceding May
1, 1991, will be used as the sixth Contract anniversary in determining the
stepped-up death benefit.
If the Annuitant dies during the Accumulation Period and the age of the
Annuitant was 76 or greater on the Contract Date, the amount of the death
benefit will be the greater of: (1) the sum of all Purchase Payments made
reduced by any partial withdrawals; or (2) the Contract Value on the date due
proof of death and instructions regarding payment are received by SBL at its
home office.
Notwithstanding the foregoing, the death benefit for Contracts issued in
Florida is as follows. If the Annuitant was 75 or younger on the date of death,
the death benefit is the greatest of (1) or (2) above or (3) the largest
Contract Value on any Contract anniversary that is an exact multiple of six,
less any partial withdrawals since that anniversary. If the Annuitant was 76 or
older on the date of death, the death benefit is the Contract Value on the date
due proof of death and instructions regarding payment are received, less any
applicable withdrawal charges. SBL currently waives any withdrawal charges
applicable to the death benefit.
In lieu of payment in one lump sum, an individual Contractowner or a
Participant under a Group Allocated Contract may elect that the death benefit be
applied under any one of the optional annuity forms described on page 24. If the
Contractowner or Participant did not make such an election, the beneficiary may
do so. The person selecting the optional annuity settlement may also designate
contingent beneficiaries to receive any further amounts due, should the first
beneficiary die before completion of the specified payments. The manner in which
annuity payments to the beneficiary are determined and in which they may vary
from month to month are described under "Annuity Period," on page 23.
The death benefit under a Group Unallocated Contract will be an amount not
greater than that under the provisions of the Plan to be paid in the case of the
death of the Participant. The death benefit for a Participant cannot exceed the
present value of the current accrued portion of the pension benefit payable at
the normal retirement date under the Plan for the Participant. If the Plan is
being funded by more than one method and/or contract, the maximum death benefit
payable under a Variflex Contract will be reduced. In this case of multiple
funding, the maximum death benefit will be reduced by multiplying it by the
following ratio of "a" divided by "b" where:

a. is the total value under the Variflex Contract.

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b. is the total of the contract values and/or funds accumulated under all
funding methods and/or contracts.

The Contractowner must provide the information to calculate the death benefit
before it will be paid and the death benefit amount will be paid as a partial
surrender under the Group Unallocated Contract. The partial surrender will be
paid without imposition of a contingent deferred sales charge and will not be
considered as a free withdrawal.
For Non-Qualified Contracts, the death benefit described herein will be
paid in the event of the death of the Annuitant OR CONTRACTOWNER to meet the
requirements of Section 72(s) of the Internal Revenue Code. The amount of the
death benefit in the event of the Contractowner's death will be based on the age
of the Contractowner on the Contract Date. For Non-Qualified Contracts, if the
surviving spouse of the deceased Contractowner is the sole beneficiary, such
spouse may elect to continue the Contract in force until the earliest of the
surviving spouse's death or the Annuity Commencement Date or receive the death
benefit proceeds. For any beneficiary other than a surviving spouse, only those
options may be chosen that provide for complete distribution of the
Contractowner's interest in the Contract within five years of the death of the
Owner. If the beneficiary is a natural person, that person alternatively can
elect to begin receiving annuity payments within one year of the Contractowner's
death over a period not extending beyond the beneficiary's life or life
expectancy. The beneficiary of the death benefit payable upon the death of the
Contractowner prior to maturity is the same beneficiary as that designated for
the Annuitant's death benefit, unless another beneficiary is designated.

LOANS AVAILABLE FROM CERTAIN QUALIFIED CONTRACTS

The Contractowner of a Contract issued in connection with a retirement plan
that is qualified under Section 401 or 403(b) of the Internal Revenue Code may
borrow money from SBL using his or her Contract Value as the only security for
the loan by submitting a written request to SBL. A loan may be taken while the
Owner is living and prior to the Annuity Commencement Date.
The minimum loan that may be taken is $1,000. The maximum loan that can be
taken is generally equal to the lesser of: (1) $50,000 reduced by the excess of:
(a) the highest outstanding loan balance within the preceding 12-month period
ending on the day before the date the loan is made; over (b) the outstanding
loan balance on the date the loan is made; or (2) 50 percent of the Contract
Value or $10,000, whichever is greater. However, an amount may not be borrowed
which exceeds the annuity's total value minus the amount needed as security for
the loan as described below. The Internal Revenue Code requires aggregation of
all loans made to an individual employee under a single employer plan. However,
since SBL has no information concerning outstanding loans with other providers,
we will only use information available under annuity contracts issued by us. In
addition, reference should be made to the terms of the particular Qualified Plan
for any additional loan restrictions.
When an eligible Contractowner takes a loan, Contract Value in an amount
equal to the loan amount is transferred from the Variflex Series and/or the
General Account into an account called the "Loan Account." In addition, 10
percent of the loaned amount will be held in the General Account as security for
the loan. Amounts allocated to the Loan Account earn 3.5 percent, the minimum
rate of interest guaranteed under the General Account. Amounts acting as
security for the loan in the General Account will earn the current rate of
interest.
Interest will be charged for the loan and will accrue on the loan balance
from the effective date of any loan. The loan interest rate will be 5.50
percent. Because the Contract Value maintained in the Loan Account will always
be equal in amount to the outstanding loan balance, the net cost of a loan is 2
percent.
Loans must be repaid within five years, unless SBL determines that the loan
is to be used to acquire a principal residence of the Owner, in which case the
loan must be repaid within 30 years. Loan payments must be made at least
quarterly and may be prepaid at any time. Upon receipt of a loan payment, SBL
will transfer Contract Value from the Loan Account to the General Account and/or
the Series according to the Contractowner's current instructions with respect to
Purchase Payments in an amount equal to the amount by which the payment reduces
the amount of the loan outstanding. The amount held as security for the loan
will also be reduced by each loan payment so that the security is again equal to
10 percent of the outstanding loan balance immediately after the loan payment is
made. However, amounts which are no longer needed as security for the loan will
not automatically be allocated back among the General Account and/or Series in
accordance with the Contractowner's Purchase Payment instructions.
If any required loan payment is not made, within 30 days of the due date
for loans with a monthly repayment schedule or within 90 days of the due date
for loans with a quarterly repayment schedule, the TOTAL OUTSTANDING LOAN
BALANCE will be deemed to be in default, and the entire loan balance, with any
accrued interest, will be reported as income to the Internal Revenue Series
("IRS"). Once a loan has gone into default, regularly scheduled payments will
not be accepted, and no new loans will be allowed while a loan is in default.
Interest will continue to accrue on a loan in default and if such interest is
not paid by December 31st of each year, it will be added to the outstanding
balance of the loan and will be reported to the IRS. Contract Value equal to the
amount of the accrued interest will be transferred to the Loan Account. If a
loan continues to be in default, the total outstanding balance will be deducted
from Contract Value upon the Contractowner's attained age 59 1/2. The Contract
will be automatically

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terminated if the outstanding loan balance on a loan in default equals or
exceeds the amount for which the Contract may be surrendered, plus any
withdrawal charge. The proceeds from the Contract will be used to repay the debt
and any applicable withdrawal charge. Because of the adverse tax consequences
associated with defaulting on a loan, a Contractowner should carefully consider
his or her ability to repay the loan and should consult with a tax advisor
before requesting a loan.
The partial withdrawal may be subject to taxation as a distribution.
Contractowners should consult with their tax advisers before requesting a loan.
While the amount to secure the loan is held in the General Account and the
amount of the outstanding loan balance is held in the Loan Account, the Owner
forgoes the investment experience of the Series and the current rate of interest
on the Loan Account. Outstanding Contract Debt will reduce the amount of
proceeds paid upon full withdrawal or upon payment of the death benefit.
A Contractowner should consult with his or her tax adviser on the effect of
a loan.
The foregoing discussion of Contract loans is general and does not address
the tax consequences resulting from all situations in which a person may receive
a Contract loan. For plans that are subject to the Employee Retirement Income
Security Act ("ERISA"), loans may not be available or may be subject to certain
restrictions. A competent tax adviser should be consulted before obtaining a
Contract loan.

CONSTRAINTS ON DISTRIBUTIONS FROM CERTAIN SECTION 403(B) ANNUITY CONTRACTS

The Internal Revenue Code imposes restrictions on certain distributions
from tax-sheltered annuity contracts meeting the requirements of Section 403(b).
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations specified
in Section 501(c)(3) of the Code to purchase annuity contracts and, subject to
certain limitations, exclude the amount of purchase payments from gross income
for tax purposes. Section 403(b)(11) requires that distributions from Section
403(b) annuities that are attributable to employee contributions under a salary
reduction agreement not begin before the employee (i) reaches age 59 1/2, (ii)
separates from service, (iii) dies, (iv) becomes disabled or (v) incurs a
hardship. SBL reserves the right to require satisfactory written proof of the
events in items (i) through (v) prior to any distribution from the Contract.
Furthermore, distributions of income attributable to such contributions may not
be made on account of hardship. Hardship, for this purpose, is generally defined
as an immediate and heavy financial need, such as for paying medical expenses,
the purchase of a principal residence, or paying certain tuition expenses. A
Participant in a Variflex Contract purchased as a Section 403(b) annuity
contract will not, therefore, be entitled to exercise the right of withdrawal,
including systematic withdrawals, as described in this Prospectus, in order to
receive amounts attributable to elective contributions credited to such
Participant after December 31, 1988 under the Contract unless one of the
foregoing conditions has been satisfied. A Participant's value in a Contract may
be able to be transferred to certain other investment alternatives meeting the
requirements of Section 403(b) that are available under an employer's Section
403(b) arrangement.

ANNUITY PERIOD

ANNUITY PROVISIONS

Life-contingent Variable Annuity payments are determined on the basis of
(a) the mortality table (1983 Table a) specified in the contract (except for
single payment immediate contracts which contain no tables, but for which
annuity rates are available upon request) which generally reflects the age and
sex of the Variable Annuitant and the type of annuity payment option selected,
and (b) the investment performance of Variflex.
Pursuant to the U.S. Supreme Court decision in Arizona Governing Committee
for Tax Deferral Annuity and Deferred Compensation Plans v. Norris, which held
that an employer subject to Title VI of the Civil Rights Act of 1964 may not
offer its employees the option of receiving retirement benefits calculated on
the basis of sex, Variflex Contracts for Participants in such Plans will offer
retirement benefits calculated only on a unisex basis. To the extent that future
legislation expands requirements for unisex rates, Variflex Contracts will
conform to such requirements.

ELECTION OF ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY

(a) NON-QUALIFIED CONTRACTS

The date on which annuity payments are to begin and the form of option are
elected in the application. A Contract may not be purchased after age 80 and
annuity payments must begin no later than age 90, except that for Contracts
purchased on or before June 1, 1986, payments must begin no later than age 85.
If no such elections are made, SBL reserves the right to automatically begin
payments at age 65 (or if age at purchase was over 55, then 10 years after
issue) under Option 2 set out below, with 120 monthly payments certain. The
Annuity Commencement Date of individual and Group Allocated Contracts cannot be
less than 37 months after the date the first contribution is credited to the
Contract, except for Single Stipulated Payment Immediate Annuity Contracts.

(b) QUALIFIED CONTRACTS

For Qualified Contracts, the Annuity Commencement Date cannot be less than
37 months after the date the first

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contribution is credited to the contract, except for Single Payment Immediate
Annuity Contracts.
Contracts purchased in accordance with Plans qualifying under Section 401
or 403(a) of the Internal Revenue Code provide for annuity payments to begin on
the date and under the annuity options provided for in the Plan. Contracts
qualifying under Section 408 of the Code provide that annuity payments may not
commence without penalty until after the Participant attains age 59 1/2, but no
later than age 70 1/2, and that the optional annuity form selected must conform
to the distribution requirements of Section 408.
For contracts qualifying under Section 403(b) of the Code, the date on
which annuity payments are to begin and the form of option are elected in the
application. The option may be any one of Options 1 through 5 or Option 8 as
shown below (provided that distributions under the option comply with the
minimum distribution rules of the Code), and the Annuity Commencement Date must
be no later than that allowed by law. Distributions from 403(b) contracts must
generally begin by the April 1 following the year in which the Annuitant reaches
age 70 1/2.
For Contracts qualifying under Section 403(c) or 457 of the Code, the date
on which annuity payments are to begin and the form of option are provided for
in the Plan agreement. Changes in such election of option may be made at any
time up to 30 days prior to the date on which annuity payments are to begin.
Payments under a Contract qualifying under Section 457 of the Code must comply
with minimum distribution rules generally applicable to qualified retirement
plans.
If no election of an Annuity Commencement Date is made, SBL reserves the
right to automatically begin payments at age 65 (or if age at purchase was over
55, then 10 years after issue) under Option 2, with 120 monthly payments
certain.

ALLOCATION OF BENEFITS

For the Annuity Period, if no election is made to the contrary, the
Accumulation Units of each Series in Variflex (held on the Annuity Commencement
Date) will be changed into Variable Annuity Units and applied to provide a
Variable Annuity based on that Series.
In lieu of this automatic allocation of annuity benefits, the Contractowner
or Participant may elect to convert his or her Accumulation Units to any other
Series in Variflex. After the Annuity Commencement Date, further changes
affecting the account allocation may be made only once each calendar year except
for contracts receiving payments pursuant to annuity options 5, 6, 7 or 8, the
allocation of which may be changed as described under "Transfer of Contract
Value" on page 16. Each Contractowner or Participant may convert Variable
Annuity Units of one Series into Variable Annuity Units of another Series as
discussed above at any time other than the five-day interval prior to and
including any annuity payment date.
No election may be made for any individual unless such election would
produce a periodic payment of at least $25 to that individual and if a
combination benefit is elected, no election may be made unless the guaranteed
and variable payments would each be at least $25.

OPTIONAL ANNUITY FORMS

The following optional annuity forms are available. Individual factual
situations or Plan provisions may vary, however, and special rules not discussed
herein may control.
OPTION 1 -- LIFE INCOME -- Monthly payments will be made during the
lifetime of the Annuitant with payments ceasing upon death, regardless of the
number of payments received. There is no minimum number of payments guaranteed
under this option and it is possible for an Annuitant to receive only one
annuity payment if the Annuitant's death occurred prior to the due date of the
second annuity payment, or only two if death occurred prior to the due date of
the third annuity payment, etc.
OPTION 2 -- LIFE INCOME WITH GUARANTEED PAYMENTS OF 5, 10, 15, OR 20 YEARS
- -- Monthly payments will be made during the lifetime of the Annuitant with
payments made for a stated period of not less than 5, 10, 15, or 20 years, as
elected. If, at the death of the Annuitant, payments have been made for less
than the stated period, annuity payments will be continued during the remainder
of such period to the beneficiary.
OPTION 3 -- UNIT REFUND LIFE INCOME -- Monthly payments will be made during
the lifetime of the Annuitant. If, at the death of the Annuitant, payments have
been made for less than the number of months determined by dividing the amount
applied under this Option by the first monthly payment, the remainder of such
payments will continue to the beneficiary. The Option guarantees that the
annuity units but not necessarily the dollar value applied under a variable
payout will be repaid to the Annuitant or his or her beneficiary.
OPTION 4 -- JOINT AND SURVIVOR ANNUITY -- Monthly payments will be made
during the lifetime of the Annuitant and another named Annuitant and thereafter
during the lifetime of the survivor, ceasing upon the death of the survivor.
There is no minimum number of payments guaranteed under this option and it is
possible for only one annuity payment to be made if both Annuitants under the
Option died prior to the due date of the second annuity payment, or only two
payments if both died prior to the third annuity payment due date, etc.
OPTION 5 -- INSTALLMENT PAYMENTS FOR A FIXED PERIOD -- Monthly payments
will be made for a specified number of years. The amount of each payment will be
determined by multiplying (a) the Accumulation Unit Value for the day the
payment is made, times (b) the result of dividing the number of Accumulation
Units applied under this Option by the number of remaining monthly payments. If
at the death of the Annuitant, payments have been made for less than the

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specified number of years, the remaining unpaid payments will be paid to the
beneficiary.
OPTION 6 -- INSTALLMENT PAYMENTS FOR A FIXED AMOUNT -- Equal monthly
payments will be made until the amount applied, adjusted daily by the investment
results, is exhausted. The final payment will be the amount remaining with SBL.
OPTION 7 -- DEPOSIT OPTION -- The amount due under the Contract on the
Maturity Date may be left on deposit with SBL for placement in its General
Account with interest at the rate of not less than 2 percent per year. Interest
will be paid annually, semiannually, quarterly or monthly as elected. This
option may not be available under certain Qualified Contracts.
OPTION 8 -- IRC AGE RECALCULATION -- Monthly payments will be made until
the amount applied to this Option, adjusted daily by the investment results, is
exhausted. The amount of monthly payments will be based upon the Annuitant's
life expectancy, or the joint life expectancies of the Annuitant and his or her
beneficiary, at the Annuitant's attained age (and the beneficiary's attained or
adjusted age, if applicable) each year as computed by reference to actuarial
tables prescribed by the Treasury Secretary.
The contingent deferred sales charge, where applicable, will be deducted
from annuity payments under Annuity Options 5, 6, 7 and 8 and other non-life
contingent payment options mutually agreed to with SBL, except that the
contingent deferred sales charge is waived if annuity payments extend over a
period of at least 5 years and are made in substantially equal amounts.
OTHER ANNUITY FORMS -- Provision may be made for annuity payments in any
reasonable arrangement mutually agreed upon.
If the beneficiary dies while receiving payments certain under Option 2, 3,
5, 6 or 8 above, the present value may be paid in a lump sum to the estate of
the beneficiary.

VALUE OF VARIABLE ANNUITY PAYMENTS:
ASSUMED INVESTMENT RATES

The annuity tables in the Contract which are used to calculate the annuity
payments are based on an "assumed investment rate" of 3.5 percent. If the actual
investment performance of the particular Series selected is such that the net
investment return to Variflex is 3.5 percent per annum, payments will remain
constant. If the net investment return exceeds 3.5 percent, the payments will
increase and if the return is less than 3.5 percent, the payments will decline.
Use of a higher investment rate assumption would mean a higher initial payment
but a more slowly rising series of subsequent payments in a rising market (or a
more rapidly falling series of subsequent payments in a declining market). A
lower assumption would have the opposite effect. Generally, one might expect an
equity investment to experience more significant market fluctuations than a debt
investment, and a longer term debt investment to experience more market
fluctuation than a shorter term debt investment. Thus, while there can be no
certainty, more fluctuation might be expected in the value of Growth,
Growth-Income, Worldwide Equity, Social Awareness, Emerging Growth, Global
Aggressive Bond, Equity Income, Specialized Asset Allocation and Managed Asset
Allocation Series. The High Grade Income Series should experience a lesser
amount of fluctuation, and the Money Market Series should experience the least
fluctuation.
The payment amount will be greater for shorter guaranteed periods than for
longer guaranteed periods, and greater for life annuities than for joint and
survivor annuities, because the life annuities are expected to be made for a
shorter period.
At the election of the Contractowner, where state law permits, a Single
Payment Immediate Annuity Contract with annuity payments commencing immediately
may provide annuity benefits based on an assumed investment rate other than 3.5
percent. The annuity rates for Single Payment Immediate Annuity Contracts are
available upon request from the home office.
The method of computing the Variable Annuity payment is described in more
detail in the Statement of Additional Information.

RESTRICTIONS UNDER THE TEXAS
OPTIONAL RETIREMENT PROGRAM

Plans for participants in the Texas Optional Retirement Program contain
restrictions required under the Texas Education Code. In accordance with those
restrictions, a participant in such a Plan will not be permitted to make
withdrawals prior to such participant's retirement, death or termination of
employment in a Texas public institution of higher education.

FEDERAL TAX MATTERS

INTRODUCTION

The Contract described in this Prospectus is designed for use by
individuals in retirement plans which may or may not be Qualified Plans under
the provisions of the Internal Revenue Code ("Code"). The ultimate effect of
federal income taxes on the amounts held under a Contract, on annuity payments,
and on the economic benefits to the Owner, the Annuitant, and the Beneficiary or
other payee will depend upon the type of retirement plan, if any, for which the
Contract is purchased, the tax and employment status of the individuals involved
and a number of other factors. The discussion contained herein and in the
Statement of Additional Information is general in nature and is not intended to
be an exhaustive discussion of all questions that might arise in connection with
a Contract. It is based upon SBL's understanding of the present federal income
tax laws as currently interpreted by the Internal Revenue Service ("IRS"), and
is not intended as tax advice.

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No representation is made regarding the likelihood of continuation of the
present federal income tax laws or of the current interpretations by the IRS or
the courts. Future legislation may affect annuity contracts adversely. Moreover,
no attempt has been made to consider any applicable state or other laws. Because
of the inherent complexity of the tax laws and the fact that tax results will
vary according to the particular circumstances of the individual involved and,
if applicable, the Qualified Plan, a person should consult with a qualified tax
adviser regarding the purchase of a Contract, the selection of an Annuity Option
under a Contract, the receipt of annuity payments under a Contract or any other
transaction involving a Contract. SBL DOES NOT MAKE ANY GUARANTEE REGARDING THE
TAX STATUS OF, OR TAX CONSEQUENCES ARISING FROM, ANY CONTRACT OR ANY TRANSACTION
INVOLVING THE CONTRACTS.

TAX STATUS OF SBL AND THE SEPARATE ACCOUNT

GENERAL

SBL intends to be taxed as a life insurance company under Part I,
Subchapter L of the Code. Because the operations of the Separate Account form a
part of SBL, SBL will be responsible for any federal income taxes that become
payable with respect to the income of the Separate Account and its Subaccounts.

CHARGE FOR SBL TAXES

A charge may be made for any federal taxes incurred by SBL that are
attributable to the Separate Account, the Subaccounts or to the operations of
SBL with respect to the Contracts or attributable to payments, premiums, or
acquisition costs under the Contracts. SBL will review the question of a charge
to the Separate Account, the Subaccounts or the Contracts for SBL's federal
taxes periodically. Charges may become necessary if, among other reasons, the
tax treatment of SBL or of income and expenses under the Contracts is ultimately
determined to be other than what SBL currently believes it to be, if there are
changes made in the federal income tax treatment of variable annuities at the
insurance company level, or if there is a change in SBL's tax status.

DIVERSIFICATION STANDARDS

Each Series of the Mutual Fund will be required to adhere to regulations
adopted by the Treasury Department pursuant to Section 817(h) of the Code
prescribing asset diversification requirements for investment companies whose
shares are sold to insurance company separate accounts funding variable
contracts. Pursuant to these regulations, on the last day of each calendar
quarter (or on any day within 30 days thereafter), no more than 55 percent of
the total assets of a Series may be represented by any one investment, no more
than 70 percent may be represented by any two investments, no more than 80
percent may be represented by any three investments, and no more than 90 percent
may be represented by any four investments. For purposes of Section 817(h),
securities of a single issuer generally are treated as one investment but
obligations of the U.S. Treasury and each U.S. Governmental agency or
instrumentality generally are treated as securities of separate issuers. The
Separate Account, through the Series, intends to comply with the diversification
requirements of Section 817(h).
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includable in the variable
contractowner's gross income. The IRS has stated in published rulings that a
variable contractowner will be considered the owner of separate account assets
if the contractowner possesses incidents of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control of the investments of a
segregated asset account may cause the investor (i.e., the policyowner), rather
than the insurance company, to be treated as the owner of the assets in the
account." This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular subaccounts without being treated as owners of the
underlying assets." As of the date of this Prospectus, no such guidance has been
issued.
The ownership rights under the Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policyowners were not owners of separate account assets. For
example, the Contractowner has additional flexibility in allocating purchase
payments and Contract Values. These differences could result in a Contractowner
being treated as the owner of a pro rata portion of the assets of the Separate
Account. In addition, SBL does not know what standards will be set forth, if
any, in the regulations or rulings which the Treasury Department has stated it
expects to issue. SBL therefore reserves the right to modify the Contract, as it
deems appropriate, to attempt to prevent a Contractowner from being considered
the owner of a pro rata share of the assets of the Separate Account. Moreover,
in the event that regulations or rulings are adopted, there can be no assurance
that the Series will be able to operate as currently described in the
Prospectus, or that the Mutual Fund will not have to change any Series'
investment objective or investment policies.

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INCOME TAXATION OF ANNUITIES IN GENERAL --
NON-QUALIFIED PLANS

Section 72 of the Code governs the taxation of annuities. In general, a
Contractowner is not taxed on increases in value under an annuity contract until
some form of distribution is made under the contract. However, the increase in
value may be subject to tax currently under certain circumstances. See
"Contracts Owned by Non-Natural Persons" on page 28 and "Diversification
Standards" on page 26. Withholding of federal income taxes on all distributions
may be required unless a recipient who is eligible elects not to have any
amounts withheld and properly notifies SBL of that election.

1. Surrenders or Withdrawals Prior to the Annuity Start Date
Code Section 72 provides that amounts received upon a total or partial
withdrawal (including systematic withdrawals) from a Contract prior to the
Annuity Start Date generally will be treated as gross income to the extent that
the cash value of the Contract immediately before the withdrawal (determined
without regard to any surrender charge in the case of a partial withdrawal)
exceeds the "investment in the contract." The "investment in the contract" is
that portion, if any, of purchase payments paid under a Contract less any
distributions received previously under the Contract that are excluded from the
recipient's gross income. The taxable portion is taxed at ordinary income tax
rates. For purposes of this rule, a pledge or assignment of a contract is
treated as a payment received on account of a partial withdrawal of a Contract.

2. Surrenders or Withdrawals on or after the Annuity Start Date
Upon a complete surrender, the receipt is taxable to the extent that the
cash value of the Contract exceeds the investment in the Contract. The taxable
portion of such payments will be taxed at ordinary income tax rates.
For fixed annuity payments, the taxable portion of each payment generally
is determined by using a formula known as the "exclusion ratio," which
establishes the ratio that the investment in the Contract bears to the total
expected amount of annuity payments for the term of the Contract. That ratio is
then applied to each payment to determine the non-taxable portion of the
payment. The remaining portion of each payment is taxed at ordinary income
rates. For variable annuity payments, the taxable portion of each payment is
determined by using a formula known as the "excludable amount," which
establishes the non-taxable portion of each payment. The non-taxable portion is
a fixed dollar amount for each payment, determined by dividing the investment in
the Contract by the number of payments to be made. The remainder of each
variable annuity payment is taxable. Once the excludable portion of annuity
payments to date equals the investment in the Contract, the balance of the
annuity payments will be fully taxable.

3. Penalty Tax on Certain Surrenders and Withdrawals
With respect to amounts withdrawn or distributed before the taxpayer
reaches age 59 1/2, a penalty tax is imposed equal to 10 percent of the portion
of such amount which is includable in gross income. However, the penalty tax is
not applicable to withdrawals: (i) made on or after the death of the owner (or
where the owner is not an individual, the death of the "primary annuitant," who
is defined as the individual the events in whose life are of primary importance
in affecting the timing and amount of the payout under the Contract); (ii)
attributable to the taxpayer's becoming totally disabled within the meaning of
Code Section 72(m)(7); (iii) which are part of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the taxpayer, or the joint lives (or joint life expectancies) of
the taxpayer and his or her beneficiary; (iv) from certain qualified plans; (v)
under a so-called qualified funding asset (as defined in Code Section 130(d));
(vi) under an immediate annuity contract; or (vii) which are purchased by an
employer on termination of certain types of qualified plans and which are held
by the employer until the employee separates from service.
If the penalty tax does not apply to a surrender or withdrawal as a result
of the application of item (iii) above, and the series of payments are
subsequently modified (other than by reason of death or disability), the tax for
the first year in which the modification occurs will be increased by an amount
(determined by the regulations) equal to the tax that would have been imposed
but for item (iii) above, plus interest for the deferral period, if the
modification takes place (a) before the close of the period which is five years
from the date of the first payment and after the taxpayer attains age 59 1/2, or
(b) before the taxpayer reaches age 59 1/2.

ADDITIONAL CONSIDERATIONS

1. Distribution-at-Death Rules
In order to be treated as an annuity contract, a contract must provide the
following two distribution rules: (a) if any owner dies on or after the Annuity
Start Date, and before the entire interest in the Contract has been distributed,
the remainder of the owner's interest will be distributed at least as quickly as
the method in effect on the owner's death; and (b) if any owner dies before the
Annuity Start Date, the entire interest in the Contract must generally be
distributed within five years after the date of death, or, if payable to a
designated beneficiary, must be annuitized over the life of that designated
beneficiary or over a period not extending beyond the life expectancy of that
beneficiary, commencing within one year after the date of death of the owner. If
the sole designated beneficiary is the spouse of the deceased owner, the
Contract (together with the deferral of tax on the accrued and future income
thereunder) may be continued in the name of the spouse as owner.

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Generally, for purposes of determining when distributions must begin under
the foregoing rules, where an owner is not an individual, the primary annuitant
is considered the owner. In that case, a change in the primary annuitant will be
treated as the death of the owner. Finally, in the case of joint owners, the
distribution-at-death rules will be applied by treating the death of the first
owner as the one to be taken into account in determining generally when
distributions must commence, unless the sole Beneficiary is the deceased owner's
spouse.

2. Gift of Annuity Contracts
Generally, gifts of non-tax qualified Contracts prior to the Annuity Start
Date will trigger tax on the gain on the Contract, with the donee getting a
stepped-up basis for the amount included in the donor's income. The 10 percent
penalty tax and gift tax also may be applicable. This provision does not apply
to transfers between spouses or incident to a divorce.

3. Contracts Owned by Non-Natural Persons
If the Contract is held by a non-natural person (for example, a
corporation) the income on that Contract (generally the increase in net
surrender value less the purchase payments) is includable in taxable income each
year. The rule does not apply where the Contract is acquired by the estate of a
decedent, where the Contract is held by certain types of retirement plans, where
the Contract is a qualified funding asset for structured settlements, where the
Contract is purchased on behalf of an employee upon termination of a qualified
plan, and in the case of an immediate annuity. An annuity contract held by a
trust or other entity as agent for a natural person is considered held by a
natural person.

4. Multiple Contract Rule
For purposes of determining the amount of any distribution under Code
Section 72(e) (amounts not received as annuities) that is includable in gross
income, all Non-Qualified annuity contracts issued by the same insurer to the
same Contractowner during any calendar year are to be aggregated and treated as
one contract. Thus, any amount received under any such contract prior to the
contract's Annuity Start Date, such as a partial surrender, dividend, or loan,
will be taxable (and possibly subject to the 10 percent penalty tax) to the
extent of the combined income in all such contracts.
In addition, the Treasury Department has broad regulatory authority in
applying this provision to prevent avoidance of the purposes of this rule. It is
possible that, under this authority, the Treasury Department may apply this rule
to amounts that are paid as annuities (on and after the Annuity Start Date)
under annuity contracts issued by the same company to the same owner during any
calendar year. In this case, annuity payments could be fully taxable (and
possibly subject to the 10 percent penalty tax) to the extent of the combined
income in all such contracts and regardless of whether any amount would
otherwise have been excluded from income because of the "exclusion ratio" under
the contract.

5. Possible Tax Changes
In recent years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. Although as of the date of
this Prospectus, it does not appear that Congress is considering any legislation
regarding the taxation of annuities, there is always the possibility that the
tax treatment of annuities could change by legislation or other means (such as
IRS regulations, revenue rulings, and judicial decisions). Moreover, although
unlikely, it is also possible that any legislative change could be retroactive
(that is, effective prior to the date of such change).

6. Transfers, Assignments or Exchanges of a Contract
A transfer of ownership of a Contract, the designation of an Annuitant,
Payee or other Beneficiary who is not also the Owner, the selection of certain
Annuity Start Dates or the exchange of a Contract may result in certain tax
consequences to the Owner that are not discussed herein. An Owner contemplating
any such transfer, assignment, selection or exchange should contact a competent
tax adviser with respect to the potential effects of such a transaction.

QUALIFIED PLANS

The Contract may be used with Qualified Plans that meet the requirements of
Section 401, 403(b), 408 or 457 of the Code. The tax rules applicable to
participants in such Qualified Plans vary according to the type of plan and the
terms and conditions of the plan itself. No attempt is made herein to provide
more than general information about the use of the Contract with the various
types of Qualified Plans. These Qualified Plans may permit the purchase of the
Contracts to accumulate retirement savings under the plans. Adverse tax or other
legal consequences to the plan, to the participant or to both may result if this
Contract is assigned or transferred to any individual as a means to provide
benefit payments, unless the plan complies with all legal requirements
applicable to such benefits prior to transfer of the Contract. Contractowners,
Annuitants, and Beneficiaries, are cautioned that the rights of any person to
any benefits under such Qualified Plans may be subject to the terms and
conditions of the plans themselves or limited by applicable law, regardless of
the terms and conditions of the Contract issued in connection therewith. For
example, SBL may accept beneficiary designations and payment instructions under
the terms of the Contract without regard to any spousal consents that may be
required under the Employee Retirement Income Security Act of 1974 (ERISA).
Consequently, a Contractowner's Beneficiary designation or elected payment
option may not be enforceable.

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The amounts that may be contributed to Qualified Plans are subject to
limitations that vary depending on the type of Plan. In addition, early
distributions from most Qualified Plans may be subject to penalty taxes, or in
the case of distributions of amounts contributed under salary reduction
agreements, could cause the Plan to be disqualified. Furthermore, distributions
from most Qualified Plans are subject to certain minimum distribution rules.
Failure to comply with these rules could result in disqualification of the Plan
or subject the Owner or Annuitant to penalty taxes. As a result, the minimum
distribution rules may limit the availability of certain Annuity Options to
certain Annuitants and their beneficiaries. These requirements may not be
incorporated into SBL's Contract administration procedures. Owners, participants
and beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts comply with
applicable law.

The following are brief descriptions of the various types of Qualified
Plans and the use of the Contract therewith:

1. Section 401
Code Section 401 permits employers to establish various types of retirement
plans (e.g., pension, profit sharing and 401(k) plans) for their employees. For
this purpose, self-employed individuals (proprietors or partners operating a
trade or business) are treated as employees and therefore eligible to
participate in such plans. Retirement plans established in accordance with
Section 401 may permit the purchase of Contracts to provide benefits thereunder.
In order for a retirement plan to be "qualified" under Code Section 401, it
must: (i) meet certain minimum standards with respect to participation, coverage
and vesting; (ii) not discriminate in favor of "highly compensated" employees;
(iii) provide contributions or benefits that do not exceed certain limitations;
(iv) prohibit the use of plan assets for purposes other than the exclusive
benefit of the employees and their beneficiaries covered by the plan; (v)
provide for distributions that comply with certain minimum distribution
requirements; (vi) provide for certain spousal survivor benefits; and (vii)
comply with numerous other qualification requirements.
A retirement plan qualified under Code Section 401 may be funded by
employer contributions, employee contributions or a combination of both. Plan
participants are not subject to tax on employer contributions until such amounts
are actually distributed from the plan. Depending upon the terms of the
particular plan, employee contributions may be made on a pre-tax or after-tax
basis. In addition, plan participants are not taxed on plan earnings derived
from either employer or employee contributions until such earnings are
distributed.
Each employee's interest in a retirement plan qualified under Code Section
401 must generally be distributed or begin to be distributed not later than
April 1 of the calendar year following the later of the calendar year in which
the employee reaches age 70 1/2 or retires ("required beginning date"). Periodic
distributions must not extend beyond the life of the employee or the lives of
the employee and a designated beneficiary (or over a period extending beyond the
life expectancy of the employee or the joint life expectancy of the employee and
a designated beneficiary).
If an employee dies before reaching his or her required beginning date, the
employee's entire interest in the plan must generally be distributed within five
years of the employee's death. However, the five-year rule will be deemed
satisfied, if distributions begin before the close of the calendar year
following the year of the employee's death to a designated beneficiary and are
made over the life of the beneficiary (or over a period not extending beyond the
life expectancy of the beneficiary). If the designated beneficiary is the
employee's surviving spouse, distributions may be delayed until the employee
would have reached age 70 1/2.
If an employee dies after reaching his or her required beginning date, the
employee's interest in the plan must generally be distributed at least as
rapidly as under the method of distribution in effect at the time of the
employee's death.
Annuity payments distributed from a retirement plan qualified under Code
Section 401 are taxable under Section 72 of the Code. Section 72 provides that
the portion of each payment attributable to contributions that were taxable to
the employee in the year made, if any, is excluded from gross income as a return
of the employee's investment. The portion so excluded is determined by dividing
the employee's investment in the plan by (1) the number of anticipated payments
determined under a table set forth in Section 72 of the Code or (2) in the case
of a contract calling for installment payments, the number of monthly annuity
payments under such contract. The portion of each payment in excess of the
exclusion amount is taxable as ordinary income. Once the employee's investment
has been recovered, the full annuity payment will be taxable. If the employee
should die prior to recovering his or her entire investment, the unrecovered
investment will be allowed as a deduction on the employee's final return. If the
employee made no contributions that were taxable when made, the full amount of
each annuity payment is taxable as ordinary income.
A "lump-sum" distribution from a retirement plan qualified under Code
Section 401 is eligible for favorable tax treatment. A "lump-sum" distribution
means the distribution within one taxable year of the balance to the credit of
the employee which becomes payable: (i) on account of the employee's death, (ii)
after the employee attains age 59 1/2, (iii) on account of the employee's
termination of employment (in the case of a common law employee only) or (iv)
after the employee has become disabled (in the case of a self-employed person
only).
As a general rule, a lump-sum distribution is fully taxable as ordinary
income except for an amount equal to the employee's investment, if any, which is
recovered tax-free. However, special five-year averaging may be available,

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provided the employee has reached age 59 1/2 and has not previously elected to
use income averaging. (Special five-year averaging has been repealed for
distributions after 1999.) Special ten-year averaging and capital-gains
treatment may be available to an employee who reached age 50 before 1986.
Distributions from a retirement plan qualified under Code Section 401 may
be eligible for a tax-free rollover to either another qualified retirement plan
or to an individual retirement account or annuity (IRA). See "Rollovers" on page
31.

2. Section 403(b)
Code Section 403(b) permits public school employees and employees of
certain types of charitable, educational and scientific organizations specified
in Section 501(c)(3) of the Code to purchase annuity contracts, and, subject to
certain limitations, to exclude the amount of purchase payments from gross
income for tax purposes. The Contract may be purchased in connection with a
Section 403(b) annuity program.
Section 403(b) annuities must generally be provided under a plan which
meets certain minimum participation, coverage, and nondiscrimination
requirements. Section 403(b) annuities are generally subject to minimum
distribution requirements similar to those applicable to retirement plans
qualified under Section 401 of the Code. See "Section 401" on page 29.
A Section 403(b) annuity contract may be purchased with employer
contributions, employee contributions or a combination of both. An employee's
rights under a Section 403(b) contract must be nonforfeitable. Numerous
limitations apply to the amount of contributions that may be made to a Section
403(b) annuity contract. The applicable limit will depend upon, among other
things, whether the annuity contract is purchased with employer or employee
contributions.
Amounts used to purchase Section 403(b) annuities generally are excludable
from the taxable income of the employee. As a result, all distributions from
such annuities are normally taxable in full as ordinary income to the employee.
A Section 403(b) annuity contract must prohibit the distribution of
employee contributions (including earnings thereon) until the employee: (i)
attains age 59 1/2, (ii) terminates employment; (iii) dies; (iv) becomes
disabled; or (v) incurs a financial hardship (earnings may not be distributed in
the event of hardship).
Distributions from a Section 403(b) annuity contract may be eligible for a
tax-free rollover to either another Section 403(b) annuity contract or to an
individual retirement account or annuity (IRA). See "Rollovers" on page 31.

3. Section 408 and Section 408A

INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible
individuals to establish individual retirement programs through the purchase of
Individual Retirement Annuities ("traditional IRAs"). The Contract may be
purchased as an IRA. The IRAs described in this paragraph are called
"traditional IRAs" to distinguish them from the new "Roth IRAs" which became
available in 1998. Roth IRAs are described below.

IRAs are subject to limitations on the amount that may be contributed, the
persons who may be eligible and on the time when distributions must commence.
Depending upon the circumstances of the individual, contributions to a
traditional IRA may be made on a deductible or non-deductible basis. IRAs may
not be transferred, sold, assigned, discounted or pledged as collateral for a
loan or other obligation. The annual premium for an IRA may not be fixed and may
not exceed $2,000 (except in the case of a rollover contribution). Any refund of
premium must be applied to the payment of future premiums or the purchase of
additional benefits.
Sale of the Contract for use with IRAs may be subject to special
requirements imposed by the Internal Revenue Service. Purchasers of the Contract
for such purposes will be provided with such supplementary information as may be
required by the Internal Revenue Service or other appropriate agency, and will
have the right to revoke the Contract under certain circumstances.
In general, traditional IRAs are subject to minimum distribution
requirements similar to those applicable to retirement plans qualified under
Section 401 of the Code; however, the required beginning date for traditional
IRAs is generally the date that the Contractowner reaches age 70 1/2--the
Contractowner's retirement date, if any, will not affect his or her required
beginning date. See "Section 401" on page 29. Distributions from IRAs are
generally taxed under Code Section 72. Under these rules, a portion of each
distribution may be excludable from income. The amount excludable from the
individual's income is the amount of the distribution which bears the same ratio
as the individual's nondeductible contributions bears to the expected return
under the IRA.
Distributions from a traditional IRA may be eligible for a tax-free
rollover to another traditional IRA. In certain cases, a distribution from a
traditional IRA may be eligible to be rolled over to a retirement plan qualified
under Code Section 401(a) or a Section 403(b) annuity contract. See "Rollovers"
on page 31.
The Internal Revenue Service has not reviewed the Contract for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with IRA qualification requirements.

SIMPLE INDIVIDUAL RETIREMENT ANNUITIES. The Small Business Job Protection
Act of 1996 created a new retirement plan, the Savings Incentive Match Plan for
Employees of Small Employers (SIMPLE plans). Depending upon the type of SIMPLE
plan, employers may deposit the plan contributions into a single trust or into
SIMPLE

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Individual Retirement Annuities ("SIMPLE IRA") established by each participant.
Information on eligibility to participate in an employer's SIMPLE Plan will
be included in the summary description of the plan furnished to the participants
by their employer. Contributions to a SIMPLE IRA may be either salary deferral
contributions or employer contributions. On a pre-tax basis, participants may
elect to contribute (through salary deferrals) up to $6,000 of their
compensation to a SIMPLE IRA. In addition, employers are required to make either
(1) a dollar-for-dollar matching contribution or (2) a nonelective contribution
to their account each year. Finally, participants may roll over or transfer
contributions to their SIMPLE IRA from another SIMPLE IRA.
In general, SIMPLE IRAs are subject to minimum distribution requirements
similar to those applicable to retirement plans qualified under Section 401 of
the Code; however, the required beginning date for SIMPLE IRAs is generally the
date that the Contractowner reaches age 70 1/2--the Contractowner's retirement
date will not affect his or her required beginning date. Amounts used to
purchase SIMPLE IRAs generally are excludable from the taxable income of the
participant. As a result, all distributions from such annuities are normally
taxable in full as ordinary income to the participant.

Distributions from a SIMPLE IRA may be eligible for a tax-free rollover or
transfer to another SIMPLE IRA. However, a distribution from a SIMPLE IRA is
NEVER eligible to be rolled over to a retirement plan qualified under Code
Section 401(a) or a Section 403(b) annuity contract.

The Internal Revenue Service has not reviewed the Contract for
qualification as a SIMPLE IRA, and has not addressed in a ruling of general
applicability whether the death benefit provision such as the provision in the
Contract comports with SIMPLE IRA qualification requirements.

ROTH IRAS. Section 408A of the Code permits eligible individuals to
establish a Roth IRA, a new type of IRA which became available in 1998. The
Contract may be purchased as a Roth IRA. Contributions to a Roth IRA are not
deductible, but withdrawals that meet certain requirements are not subject to
federal income tax. Sale of the contract for use with Roth IRAs may be subject
to special requirements imposed by the Internal Revenue Service. Purchasers of
the Contract for such purposes will be provided with such supplementary
information as may be required by the Internal Revenue Service or other
appropriate agency, and will have the right to revoke the Contract under certain
requirements. Unlike a traditional IRA, Roth IRAs are not subject to minimum
required distribution rules during the Contractowner's life time. Generally,
however, the amount in a remaining Roth IRA must be distributed by the end of
the fifth year after the death of the Contractowner.

The Internal Revenue Service has not reviewed the Contract for
qualification as a Roth IRA and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with Roth IRA qualification requirements.

4. Section 457
Section 457 of the Code permits employees of state and local governments
and units and agencies of state and local governments as well as tax-exempt
organizations described in Section 501(c)(3) of the Code to defer a portion of
their compensation without paying current taxes if those employees are
participants in an eligible deferred compensation plan. A Section 457 plan may
permit the purchase of Contracts to provide benefits thereunder.
Although a participant under a Section 457 plan may be permitted to direct
or choose methods of investment in the case of a tax-exempt employer sponsor,
all amounts deferred under the plan, and any income thereon, remain solely the
property of the employer and subject to the claims of its general creditors,
until paid to the participant. The assets of a Section 457 plan maintained by a
state or local government employer must be held in trust (or custodial account
or an annuity contract) for the exclusive benefit of plan participants, who will
be responsible for taxes upon distribution. A Section 457 plan must not permit
the distribution of a participant's benefits until the participant attains age
70 1/2, terminates employment or incurs an "unforeseeable emergency."
Section 457 plans are generally subject to minimum distribution
requirements similar to those applicable to retirement plans qualified under
Section 401 of the Code. See "Section 401" on page 29. Since under a Section 457
plan, contributions are generally excludable from the taxable income of the
employee, the full amount received will usually be taxable as ordinary income
when annuity payments commence or other distributions are made. Distributions
from a Section 457 plan are not eligible for tax-free rollovers.

5. Rollovers
A "rollover" is the tax-free transfer of a distribution from one Qualified
Plan to another. Distributions which are rolled over are not included in the
employee's gross income until some future time.
If any portion of the balance to the credit of an employee in a Section 401
plan or Section 403(b) plan is paid to the employee in an "eligible rollover
distribution" and the employee transfers any portion of the amount received to
an "eligible retirement plan," then the amount so transferred is not includable
in income. An "eligible rollover distribution" generally means any distribution
that is not one of a series of periodic payments made for the life of the
distributee or for a specified period of at least ten years. In addition, a
required minimum distribution will not qualify as an eligible rollover
distribution. A rollover must be completed within 60 days after receipt of the
distribution.
In the case of a Section 401 plan, an "eligible retirement plan" will be
another retirement plan qualified under Code Section 401 or an individual
retirement account or annuity under Code Section 408. With respect to a Section
403(b) plan, an "eligible retirement plan" will be another

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Section 403(b) plan or an individual retirement account or annuity described in
Code Section 408.
A Section 401 plan and a Section 403(b) plan must generally provide a
participant receiving an eligible rollover distribution, the option to have the
distribution transferred directly to another eligible retirement plan.
The owner of an IRA may make a tax-free rollover of any portion of the IRA.
The rollover must be completed within 60 days of the distribution and generally
may only be made to another IRA. However, an individual may receive a
distribution from his or her IRA and within 60 days roll it over into a
retirement plan qualified under Code Section 401(a) if all of the funds in the
IRA are attributable to a rollover from a Section 401(a) plan. Similarly, a
distribution from an IRA may be rolled over to a Section 403(b) plan only if all
of the funds in the IRA are attributable to a rollover from a Section 403(b)
annuity.
Beginning in 1998 the owner of a traditional IRA may convert the
traditional IRA into a Roth IRA under certain circumstances. The conversion of a
traditional IRA to a Roth IRA will subject the amount of the converted
traditional IRA to federal income tax. If a traditional IRA is converted to a
Roth IRA, the taxable amount in the owner's traditional IRA will be considered
taxable income for federal income tax purposes for the year of the conversion.
Generally, all amounts in a traditional IRA are taxable except for the owner's
prior non-deductible contributions to the traditional IRA.

6. Tax Penalties

PREMATURE DISTRIBUTION TAX. Distributions from a Qualified Plan before the
participant reaches age 59 1/2 are generally subject to an additional tax equal
to 10 percent of the taxable portion of the distribution. The 10 percent penalty
tax does not apply to distributions: (i) made on or after the death of the
employee; (ii) attributable to the employee's disability; (iii) which are part
of a series of substantially equal periodic payments made (at least annually)
for the life (or life expectancy) of the employee or the joint lives (or joint
life expectancies) of the employee and a designated beneficiary and which begin
after the employee terminates employment; (iv) made to an employee after
termination of employment after reaching age 55; (v) made to pay for certain
medical expenses; (vi) that are exempt withdrawals of an excess contribution;
(vii) that are rolled over or transferred in accordance with Code requirements;
or (viii) that are transferred pursuant to a decree of divorce or separate
maintenance or written instrument incident to such a decree.
The exception to the 10 percent penalty tax described in item (iv) above is
not applicable to IRAs. However, distributions from an IRA to unemployed
individuals can be made without application of the 10 percent penalty tax to pay
health insurance premiums in certain cases. In addition, the 10 percent penalty
tax is generally not applicable to distributions from a Section 457 plan.
Starting January 1, 1998, there are two additional exceptions to the 10 percent
penalty tax on withdrawals from IRAs before age 59 1/2: withdrawals made to pay
"qualified" higher education expenses and withdrawals made to pay certain
"eligible first-time home buyer expenses."
MINIMUM DISTRIBUTION TAX. If the amount distributed from a Qualified Plan
is less than the minimum required distribution for the year, the participant is
subject to a 50 percent tax on the amount that was not properly distributed.
EXCESS DISTRIBUTION/ACCUMULATION TAX. The penalty tax of 15 percent which
was imposed (in addition to any ordinary income tax) on large plan distributions
and the "excess retirement accumulations" of an individual has been repealed
effective January 1, 1997.

7. Withholding
Periodic distributions (e.g., annuities and installment payments) from a
Qualified Plan that will last for a period of ten or more years are generally
subject to voluntary income tax withholding. The amount withheld on such
periodic distributions is determined at the rate applicable to wages. The
recipient of a periodic distribution may generally elect not to have withholding
apply.
Nonperiodic distributions (e.g., lump sums and annuities or installment
payments of less than ten years) from a Qualified Plan (other than IRAs and
Section 457 plans) are generally subject to mandatory 20 percent income tax
withholding. However, no withholding is imposed if the distribution is
transferred directly to another eligible Qualified Plan. Nonperiodic
distributions from an IRA are subject to income tax withholding at a flat 10
percent rate. The recipient of such a distribution may elect not to have
withholding apply.
The above description of the federal income tax consequences of the
different types of Qualified Plans which may be funded by the Contract offered
by this Prospectus is only a brief summary and is not intended as tax advice.
The rules governing the provisions of Qualified Plans are extremely complex and
often difficult to comprehend. Anything less than full compliance with the
applicable rules, all of which are subject to change, may have adverse tax
consequences. A prospective Contractowner considering adoption of a Qualified
Plan and purchase of a Contract in connection therewith should first consult a
qualified and competent tax adviser, with regard to the suitability of the
Contract as an investment vehicle for the Qualified Plan.

DISTRIBUTOR OF THE CONTRACTS

Subject to arrangements with SBL, the Contracts will be sold by independent
broker/dealers who are members of the National Association of Securities
Dealers, Inc. and who become licensed to sell life insurance and variable
annuities for SBL, and by national banks. Variflex Contracts may also be sold by
individuals who in addition to being licensed as agents for SBL, are associated
persons of Security Distributors, Inc., which is registered as a broker/dealer
under the Securities Exchange Act of 1934.

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PERFORMANCE INFORMATION
Performance information for the Series of Variflex may appear in
advertisements, sales literature or reports to Contractowners or prospective
purchasers. All Series except the Money Market Series may advertise "average
annual total return" and "total return." The Money Market Series may advertise
"yield" and "effective yield." Each of these figures is based upon historical
results and is not necessarily representative of the future performance of the
Series.
Average annual total return and total return calculations measure both the
net income generated by, and the effect of any realized or unrealized
appreciation or depreciation of, the investments underlying the Series for the
designated period. Average annual total return will be quoted for periods of 1,
5 and 10 years (up to the life of the Series) ending with a recent calendar
quarter. Average annual total return figures are annualized and, therefore,
represent the average annual percentage change in the value of an investment in
a Series over the designated period. Total return figures are not annualized and
represent the actual percentage change over the designated period. Yield is a
measure of the net dividend and interest income earned over a specific seven-day
period for the Money Market Series expressed as a percentage of the offering
price of the Series' units. Yield is an annualized figure, which means that it
is assumed that the Series generates the same level of net income over a one
year period. The effective yield for the Money Market Series is calculated
similarly but includes the effect of assumed compounding calculated under rules
prescribed by the Securities and Exchange Commission. The Money Market Series'
effective yield will be slightly higher than its yield due to this compounding
effect.
The Series' units are sold at Accumulation Unit value. The Series'
performance figures and Accumulation Unit values will fluctuate. Units of the
Series are redeemable by an investor at Accumulation Unit value, which may be
more or less than original cost. The performance figures include the deduction
of all expenses and fees, including a prorated portion of the Administrative
Fee, except total return figures which do not reflect deduction of the
Administrative Fee. Redemptions within the first eight years after purchase may
be subject to a contingent deferred sales charge that ranges from 8 percent the
first year to 0 percent after eight years. Yield, effective yield and total
return figures do not include the effect of any contingent deferred sales charge
that may be imposed upon the redemption of units, and thus may be higher than if
such charges were deducted. Average annual total return figures include the
effect of the applicable sales charge that may be imposed at the end of the
designated period.
Although the Contracts were not available for purchase until June 8, 1984,
the underlying investment vehicle of Variflex, the SBL Fund, has been in
existence since May 26, 1977. Performance information for Variflex may also
include quotations of total return for periods beginning prior to the
availability of Variflex contracts that incorporate the performance of the SBL
Fund.
From time to time, performance information for a Series may be compared to
the Standard & Poor's 500 Stock Index, the Dow Jones Industrial Average or other
unmanaged indices; other variable annuity separate accounts or other investment
products tracked by Lipper Analytical Services, Morningstar and the Variable
Annuity Research and Data Service ("VARDS(R)"), widely used independent research
firms that rank variable annuities and in the case of Lipper and Morningstar,
other investment companies by overall performance, and investment objectives, or
tracked by other ratings services, companies, publications, or persons who rank
separate accounts or other investment products on overall performance or other
criteria; and the Consumer Price Index (measure for inflation). Additional
information concerning the Series' performance appears in the Statement of
Additional Information.

THE GENERAL ACCOUNT

In addition to the eleven Series of Variflex, the Contracts provide a
General Account option for Qualified and Non-Qualified Contracts during the
Accumulation Period and a Guaranteed Annuity Option for Qualified and
Non-Qualified Contracts during the Annuity Period. Allocations and transfers to
the General Account become part of SBL's General Account, which supports its
insurance and annuity obligations.
Interests in the General Account are not registered under the Securities
Act of 1933 ("1933 Act") nor is the General Account registered as an investment
company under the Investment Company Act of 1940 ("1940 Act"). Accordingly,
neither the General Account nor any interests therein are generally subject to
the 1933 and 1940 Acts and SBL has been advised that the staff of the Securities
and Exchange Commission has not reviewed the disclosure in this Prospectus which
relates to the General Account or Guaranteed Annuity. Disclosures regarding the
General Account and Guaranteed Annuities, however, may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
Amounts allocated to the General Account for a Guaranteed Annuity are
guaranteed with a fixed rate of interest declared in advance. Excess interest
for a period is declared at the discretion of SBL. Pursuant to Qualified and
Non-Qualified Contracts, amounts may be allocated to the General Account in
addition to, or in lieu of, allocation to Series of Variflex, subject to the
same $25 minimum allocation as applicable in the case of Variflex. Amounts
allocated to the General Account or for a Guaranteed Annuity are also subject to
the annual Administrative Fee. (See "Administrative Fees," page 18).
Annuity options available for Variable Annuities (see "Optional Annuity
Forms," page 24) are also available for Guaranteed Annuities as well as for
combined Variable and Guaranteed Annuities. With respect to Option 5 (Fixed
Period Option), installment payments under Guaranteed

33
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Annuities will be determined by SBL and will reflect an effective yearly
interest rate of not less than 2.5 percent. Under Option 6 (Fixed Installment
Option), interest on any unpaid balance allocated to a Guaranteed Annuity will
be at least 2.5 percent per year and the last installment will be the remaining
sum left in the General Account for that Contract or account. The Annuity Unit
value under a Guaranteed Annuity otherwise remains constant throughout the
payout period.
Any amounts allocated to the General Account during the Accumulation Period
will automatically be allocated to provide a Guaranteed Annuity unless an
alternative allocation to one or more Series of Variflex is made at least 30
days prior to the Annuity Commencement Date. The annual conversion right during
the Annuity Period (see "Allocation of Benefits," page 24) does not include the
right to convert Variable Annuity Units of any Series into Guaranteed Annuity
Units, nor Guaranteed Annuity Units into any Variable Annuity Unit.
During the Accumulation Period, a Contractowner or Participant in a
Qualified or Non-Qualified Contract may elect, during any Contract Year, to
transfer amounts from the General Account to the various Series of Variflex. The
amount which may be transferred during any Contract Year is the greatest of (1)
$5,000, (2) 1/3 of the Contract Value in the General Account at the time of the
first transfer in the Contract Year, or (3) 120 percent of the dollar amount
transferred from the General Account in the prior Contract Year. SBL reserves
the right for a period of time to allow transfers from the General Account in
amounts that exceed the limits set forth above ("Waiver Period"). In any
Contract Year following such a Waiver Period, the total dollar amount that may
be transferred from the General Account is the greatest of: (1) above; (2)
above; or (3) 120 percent of the lesser of: (i) the dollar amount transferred
from the General Account in the prior Contract Year; or (ii) the maximum dollar
amount that would have been allowed in the prior Contract Year under the
transfer provisions above absent the Waiver Period.
The frequency of transfers of units from the General Account is not
currently limited; however, SBL reserves the right to limit them to no more
frequently than once each 30 days. All of the Contract Value of the General
Account may be transferred at the final conversion prior to the Annuity
Commencement Date.

STATEMENT OF ADDITIONAL INFORMATION

A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. The following is a
Table of Contents for that Statement:

TABLE OF CONTENTS
Page
THE CONTRACT.............................................. 1
Valuation of Accumulation Units...................... 1
Computation of Variable Annuity Payments............. 1
Illustration......................................... 2
Variations in Charges................................ 2
Termination of Contract.............................. 3
Group Contracts...................................... 3
PERFORMANCE INFORMATION................................... 3
LIMITS ON PURCHASE PAYMENTS PAID UNDER
TAX QUALIFIED RETIREMENT PLANS....................... 6
Section 401.......................................... 6
Section 403(b)....................................... 6
Section 408.......................................... 6
Section 457.......................................... 7
ASSIGNMENT................................................ 7
DISTRIBUTION OF THE CONTRACTS............................. 7
SAFEKEEPING OF VARIFLEX ACCOUNT ASSETS.................... 7
STATE REGULATION.......................................... 7
RECORDS AND REPORTS....................................... 7
LEGAL MATTERS............................................. 8
EXPERTS................................................... 8
OTHER INFORMATION......................................... 8
FINANCIAL STATEMENTS...................................... 9