FIRST VARIABLE ANNUITY FUND E, 497, 1997-05-12

FIRST VARIABLE ANNUITY FUND E
497, 1997-05-12

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PART A

4
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{LOGO] FIRST
VARIABLE
LIFE INSURANCE
COMPANY

Marketing and Executive Office: Variable Service Center:
10 Post Office Square P.O. Box 1317
Boston, MA 02109 Des Moines, IA 50305-1317
Automated Information Line: (800) 228-1035 (800) 228-1035

CAPITAL FIVE VA
Individual Variable Annuity Contracts
Funded in
FIRST VARIABLE ANNUITY FUND E

Prospectus
Dated: May 1, 1997

The Individual Flexible Purchase Payment Deferred Variable and Fixed Annuity
Contracts (the "Contracts") described in this Prospectus are issued by First
Variable Life Insurance Company (the "Company") and provide for accumulation of
Contract Values and payment of monthly annuity payments on a fixed and variable
basis. The Contracts are designed for use by individuals in retirement plans on
a Qualified or Non-Qualified basis. (See "Definitions.")

Purchase Payments for a Contract may be allocated to the Company's segregated
investment account called First Variable Annuity Fund E (the "Separate Account")
or to the Company's General Account. The Separate Account invests in selected
Portfolios of two mutual funds: Variable Investors Series Trust ("VIST") and
Federated Insurance Series ("Federated"). The Portfolios currently available
under a Contract are: VIST Growth, VIST Growth & Income, VIST High Income Bond,
VIST Matrix Equity, VIST Multiple Strategies, VIST Small Cap Growth, VIST U.S.
Government Bond, VIST World Equity and Federated Prime Money Fund II. (See
"Investment Options.") The Company reserves the right, under certain
circumstances, to delay the investment of initial Purchase Payments in VIST
Portfolios, but does not currently do so. (See "Application and Issuance of a
Contract.")

The Contracts are not deposits or obligations of, or guaranteed or endorsed by,
any financial institution, and the Contracts are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. An investment in the Contract is subject to risk that may cause the
value of the Owner's investment to fluctuate, and when the Contract is
surrendered, the value may be higher or lower than the Purchase Payments.

This Prospectus contains information that an investor should know before
investing. A Statement of Additional Information about the Contracts and the
Separate Accounts, 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 can
be found on page 34 of this Prospectus. For a copy of the Statement of
Additional Information, which is available at no cost, write the Company at its
Variable Service Center or call the number shown above.

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.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.

<PAGE>

TABLE OF CONTENTS

DEFINITIONS...................................................................1

HIGHLIGHTS ...................................................................2

FEE TABLE ....................................................................3

CONDENSED FINANCIAL INFORMATION...............................................6

THE COMPANY...................................................................8

THE SEPARATE ACCOUNT..........................................................9
INVESTMENT OPTIONS ...........................................................9
Variable Investors Series Trust....................................9
Federated Insurance Series........................................10
General Account Options ..........................................11
Voting Rights.....................................................11
Substitution of Other Securities..................................11

CHARGES AND DEDUCTIONS.......................................................12
Deduction for Withdrawal Charge (Sales Load)......................12
Deduction for Mortality and Expense Risk Charge...................13
Deduction for Administrative Charge...............................13
Deduction for Annual Contract Maintenance Charge..................13
Deduction for Premium Taxes.......................................13
Deduction for Income Taxes........................................14
Deduction for Expenses of the Funds...............................14
Deduction for Transfer Fee........................................14
Elimination or Reduction of Charges and Deductions................14

THE CONTRACTS................................................................14
Application and Issuance of a Contract............................14
Ownership 15
Annuitant 15
Assignment 15
Transfers by the Company..........................................16
Beneficiary.......................................................16
Change of Beneficiary.............................................16
Transfers of Contract Values During the Accumulation Period.......16
Telephone Transactions............................................17
Death of the Annuitant............................................17
Death of the Owner................................................17

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ANNUITY PROVISIONS...........................................................18
Annuity Date and Annuity Option...................................18
Change in Annuity Date and Annuity Option.........................18
Allocation of Annuity Payments....................................19
Transfers During the Annuity Period...............................19
Annuity Options...................................................19
Frequency and Amount of Annuity Payments..........................20

PURCHASE PAYMENTS AND CONTRACT VALUE.........................................20
Purchase Payments.................................................20
Allocation of Purchase Payments...................................20
Dollar Cost Averaging.............................................20
Distribution......................................................21
Contract Value....................................................21
Accumulation Unit.................................................21

WITHDRAWALS..................................................................21
Systematic Withdrawals............................................21
Texas Optional Retirement Program.................................22
Suspension of Payments or Transfers...............................22

PERFORMANCE INFORMATION......................................................23
Prime Money Fund II...............................................23
Other Portfolios..................................................23

TAX STATUS ..................................................................24
General ..........................................................24
Diversification...................................................24
Contracts Owned by Other than Natural Persons.....................25
Multiple Contracts................................................25
Tax Treatment of Assignments......................................25
Income Tax Withholding............................................25
Tax Treatment of Withdrawals--Non-Qualified Contracts.............26
Qualified Plans...................................................26
Tax Treatment of Withdrawals--Qualified Contracts.................27
Tax-Sheltered Annuities--Withdrawal Limitations...................28

FINANCIAL STATEMENTS.........................................................28

LEGAL PROCEEDINGS............................................................28

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.................28

ii
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DEFINITIONS

Account - General Account and/or one or more of the Sub-Accounts of the Separate
Account.

Accumulation Period - The period during which Purchase Payments may be made
prior to the Annuity Date.

Accumulation Unit - A unit of measure used to calculate the Contract Value of a
Sub-Account of the Separate Account prior to the Annuity Date.

Annuitant -The natural person on whose life Annuity Payments are based.

Annuity Date -The date on which Annuity Payments begin.

Annuity Payments -The series of payments made to the Annuitant after the Annuity
Date under the Annuity Option elected.

Annuity Period -The period after the Annuity Date during which Annuity Payments
are made.

Annuity Unit - A unit of measure used to calculate Variable Annuity Payments
after the Annuity Date.

Beneficiary -The person(s) or entity who will receive the death benefit.

Company - First Variable Life Insurance Company.

Contract Anniversary - An anniversary of the Issue Date.

Contract Value - The sum of the Owner's interest in the Sub-Accounts of the
Separate Account and in the General Account.

Contract Year - One year from the Issue Date and from each Contract Anniversary.

Distributor - First Variable Capital Services, Inc., 10 Post Office Square, 12th
Floor, Boston, MA 02109.

Fixed Annuity - A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company.

Funds - Variable Investors Series Trust and Federated Insurance Series, each of
which is an open-end management investment company in which the Separate Account
invests.

General Account - The Company's general investment account which contains all
the assets of the Company with the exception of the Separate Account and other
segregated asset accounts.

General Account Value - The Owner's interest in the General Account.

Investment Option - The General Account or any of the Sub-Accounts of the
Separate Account which can be selected by the Owner of a Contract.

1
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Issue Date - The date on which the first Contract Year begins.

Non-Qualified Contracts - Contracts issued under Non-Qualified Plans which do
not receive favorable tax treatment under Sections 401, 403(b) 408, or 457 of
the Internal Revenue Code.

Owner - The person, persons or entity entitled to all the ownership rights under
the Contracts and in whose name the Contracts have been issued.

Portfolio - A segment of a Fund which constitutes a separate and distinct class
of shares.

Purchase Payment - An amount paid to the Company to provide benefits under the
Contracts.

Qualified Contracts - Contracts issued under Qualified Plans which receive
favorable tax treatment under Sections 401, 403(b) 408, or 457 of the Internal
Revenue Code.

Separate Account - A separate investment account of the Company, designated as
First Variable Annuity Fund E, into which Purchase Payments or Contract Value
may be allocated.

Sub-Account - A segment of the Separate Account which invests in a Portfolio of
one of the Funds.

Valuation Date - The Separate Account will be valued each day that the New York
Stock Exchange is open for trading which is Monday through Friday, except for
normal business holidays.

Valuation Period - The period beginning at the close of business of the New York
Stock Exchange on each Valuation Date and ending at the close of business for
the next succeeding Valuation Date.

Variable Account Value - The Owner's interest in the Sub-Accounts of the
Separate Account.

Variable Annuity - A series of payments made during the Annuity Period which
vary in amount with the investment experience of each applicable Sub-Account.

Variable Service Center - The company's administrative service center for the
Contracts is located at 1206 Mulberry Street, Des Moines, IA 50309.

Withdrawal Value - The Withdrawal Value is:

1) the Contract Value for the Valuation Period next following the
Valuation Period during which a written request for withdrawal is
received at the Company; less

2) any applicable taxes not previously deducted; less

3) the Withdrawal Charge, if any; less

4) the Annual Contract Maintenance Charge, if any.

2
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HIGHLIGHTS

The Capital Five VA is an individual flexible payment variable annuity contract
(the "Contract"). The Owner may allocate Purchase Payments among ten Investment
Options under a Contract issued by First Variable Life Insurance Company (the
"Company"). Nine of these options are Sub-Accounts of First Variable Annuity
Fund E (the "Separate Account"), a segregated investment account of the Company.
Purchase Payments may also be allocated to the General Account of the Company.

Each Sub-Account invests exclusively in shares of a corresponding Portfolio of a
selected mutual fund (a "Fund"). The selected Funds are Variable Investors
Series Trust ("VIST") and Federated Insurance Series ("Federated"). The
Portfolios currently available are: VIST Growth, VIST Growth & Income, VIST High
Income Bond, VIST Matrix Equity, VIST Multiple Strategies, VIST Small Cap
Growth, VIST U.S. Government Bond, VIST World Equity, and Federated Prime Money
Fund II. (See "Investment Options.") Owners bear the investment risk for any
amounts allocated to a Sub-Account.

Owners have the right to return a Contract according to the terms of its
"free-look" right. The Company reserves the right to delay initial investments
of Purchase Payments in the VIST Portfolios in certain instances, but it does
not currently do so. (See "Application and Issuance of a Contract.")

A Withdrawal Charge (sales load) may be deducted in the event of a withdrawal of
all or a portion of the Contract Value. No Withdrawal Charge will be assessed
upon any withdrawal unless the amount withdrawn exceeds the Free Withdrawal
Amount. The annual Free Withdrawal Amount is determined as the sum of (a) 10% of
Purchase Payments still subject to the Withdrawal Charge; plus (b) the excess of
the Contract Value over Purchase Payments not previously withdrawn; plus (c) any
Purchase Payments no longer subject to the Withdrawal Charge. The Withdrawal
Charge will vary in amount, depending upon the Contract Year in which the
Purchase Payment being surrendered was made. (See "Charges and Deductions -
Deductions for Withdrawal Charge (Sales Load).")

There is a Mortality and Expense Risk Charge which is equal, on an annual basis,
to 1.25% of the average daily net asset value of the Separate Account. This
Charge compensates the Company for assuming the mortality and expense risks
under the Contracts. (See "Charges and Deductions - Deduction for Mortality and
Expense Risk Charge.")

There is an Administrative Charge which is equal, on an annual basis, to .15% of
the average daily net asset value of the Separate Account. This Charge
compensates the Company for costs associated with the administration of the
Contracts and the Separate Account. (See "Charges and Deductions - Deduction for
Administrative Charge.")

There is an Annual Contract Maintenance Charge of $30 each Contract Year. (See
"Charges and Deductions - Deduction for Annual Contract Maintenance Charge.")

Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the Contract Values. (See "Charges and Deductions -
Deduction for Premium Taxes.")

Under certain circumstances, a Transfer Fee may be assessed when an Owner
transfers Contract Values from one Sub-Account to another Sub-Account or to or
from the General Account. (See "Charges and Deductions - Deduction for Transfer
Fee.")

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A ten percent (10%) federal income tax penalty may be applied to the income
portion of any distribution from a Non-Qualified Contract before the Owner
reaches age 59 1/2, with certain exceptions. (See "Tax Status - Tax Treatment of
Withdrawals - Non-Qualified Contracts.") Separate tax withdrawal penalties and
restrictions apply to a Qualified Contract. (See "Tax Status - Tax Treatment of
Withdrawals - Qualified Contracts.") Special restrictions apply to distributions
from a 403(b) annuity. (See "Tax Status - Tax-Sheltered Annuities Withdrawal
Limitations".)

For a further discussion of the taxation of a Contract, see "Tax Status" and
"Tax Status - Diversification" for a discussion of owner control of the
underlying investments in a variable annuity contract.

FIRST VARIABLE ANNUITY FUND E

FEE TABLE

<TABLE>
<CAPTION>
Owner Transaction Expenses
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Withdrawal Charge (see Note 2 below) Contract
(as a percentage of Purchase Payment withdrawn) Anniversaries
Since Purchase
Payment Charge
------- ------
0 and 1 7%
2 6%
3 5%
4 4%
5 3%
6+ 0%

- -----------------------------------------------------------------------------------------------------------------
Transfer Fee (see Note 3 below)

No charge for first twelve (12) transfers in a
Contract Year prior to Annuity Date or for six (6)
transfers in a Contract Year during the Annuity
Period. Thereafter, the fee is the lesser of $25 or 2%
of the amount transferred.

- -----------------------------------------------------------------------------------------------------------------
Annual Contract Maintenance Charge..................... $30 per Contract per year

Separate Account Annual Expenses
- -----------------------------------------------------------------------------------------------------------------
(as a percentage of average account value)
Mortality and Expense Risk Charge........... 1.25%
Administrative Charge....................... .15%
-----
Total Separate Account Annual Expenses...... 1.40%
</TABLE>

4
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Funds' Annual Expenses
(as a percentage of the average daily net assets of a Portfolio)

<TABLE>
<CAPTION>
VIST VIST VIST Federated
Growth VIST VIST VIST Small US VIST Prime
VIST & Hi. Inc. Matrix Multiple Cap Gov. World Money
Growth Income Bond Equity Strat. Growth Bond Equity Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mgmt. Fees ....... .70% .75% .70% .65% .70% .85% .60% .70% .55%

Other Operating
Expenses -
After Expense
Reimbursement
(see Note 5) .47% .50% .50% .50% .50% .50% .25% .50% .25%
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Annual
Expenses 1.17% 1.25% 1.20% 1.15% 1.20% 1.35% .85% 1.20% .80%
</TABLE>

Examples

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

a) upon surrender at the end of each time period;

b) if the Contract is not surrendered or is annuitized.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth Portfolio........................ a) $ 91 $131 $172 $300
b) $ 27 $ 83 $141 $300
Growth & Income Portfolio............... a) $ 92 $133 $176 $308
b) $ 28 $ 85 $145 $308
High Income Bond Portfolio.............. a) $ 92 $132 $173 $303
b) $ 27 $ 84 $143 $303
Matrix Equity Portfolio................. a) $ 91 $131 $171 $298
b) $ 27 $ 82 $140 $298
Multiple Strategies Portfolio........... a) $ 92 $132 $173 $303
b) $ 27 $ 84 $143 $303
Small Cap Growth Portfolio.............. a) $ 93 $136 $181 $318
b) $ 29 $ 88 $150 $318
U.S. Government Bond Portfolio.......... a) $ 88 $122 $156 $267
b) $ 24 $ 73 $125 $267
World Equity Portfolio.................. a) $ 92 $132 $173 $303
b) $ 27 $ 84 $143 $303
Prime Money Fund II..................... a) $ 88 $120 $153 $262
b) $ 23 $ 71 $122 $262
</TABLE>

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Explanation of Fee Table and Examples

(1) The purpose of the Fee Table is to assist the Owner in understanding the
various costs and expenses that an Owner will incur, directly or
indirectly. The Table reflects expenses of the Separate Account and the
Investment Options. For additional information, see "Charges and
Deductions" in this Prospectus and the Prospectuses for Variable Investors
Series Trust and Federated Insurance Series.

(2) An Owner may make a withdrawal each Contract Year of the Free Withdrawal
Amount or some portion thereof provided that the amount withdrawn is at
least $1,000 or the Owner's entire interest in the Sub-Account, if less.
The minimum Contract Value which must remain in a Sub-Account after a
partial withdrawal is $1,000. Subject to any conditions and fees the
Company may impose, an Owner may elect to have this amount paid in equal
periodic installments. The Company reserves the right to charge a fee for
this service. Currently, however, there are no charges for this service.
(See "Charges and Deductions - Deduction for Withdrawal Charge (Sales
Load).)" The 10% free withdrawal has been factored into the Examples above.

(3) No Transfer Fee will be assessed for a transfer made in connection with the
Dollar Cost Averaging program providing for the automatic transfer of funds
from the Cash Management Sub-Account or the General Account to any other
Sub-Account(s). (See "Dollar Cost Averaging.")

(4) Prior to May 1, 1997, the Matrix Equity Portfolio was known as the "Tilt
Utility Portfolio" and had different investment policies. Prior to April 1,
1994, the Portfolio was known as the "Equity Income Portfolio" and had
different investment objectives and policies.

(5) First Variable Advisory Services Corp. ( "Investment Adviser" ) has agreed
through April 1, 1998 to reimburse Variable Investors Series Trust for all
operating expenses (exclusive of management fees) in excess of .50% of a
Portfolio's average net assets (.25% in the case of the U.S. Government
Bond Portfolio). Had the Investment Adviser not reimbursed expenses of the
Portfolios, for the year ended December 31, 1996, the VIST Annual Expenses
would have been 1.17% for the Growth Portfolio; 2.63% for the Growth &
Income Portfolio; 1.99% for the High Income Bond Portfolio; 1.48% for the
Matrix Equity Portfolio; 1.32% for the Multiple Strategies Portfolio; 2.38%
for the Small Cap Growth Portfolio; 1.66% for the U.S. Government Bond
Portfolio; and 1.50% for the World Equity Portfolio. Federated Advisors,
the investment adviser for Federated, has voluntarily agreed to waive any
portion of its fee and/or reimburse certain operating expenses of Federated
in excess of .80% of the Federated Prime Money Fund II Portfolio's average
net assets, but can modify or terminate this voluntary agreement at any
time at its sole discretion. Had this investment adviser not waived
expenses and/or reimbursed expenses of the Federated Prime Money Fund II
Portfolio for the year ended December 31, 1996, the annual expenses, as a
percentage of the Portfolio's average assets, would have been 1.37%.

(6) Premium taxes are not reflected. Premium taxes may apply.

(7) The assumed initial Purchase Payment is $1,000.

(8) THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

6
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FIRST VARIABLE ANNUITY FUND E

CONDENSED FINANCIAL INFORMATION

ACCUMULATION UNIT VALUES
(for a unit outstanding throughout the period)

The following condensed financial information is derived from the financial
statements of the Separate Account (Policy Forms 7800 and 20224). The
information should be read in conjunction with the financial statements, related
notes and other financial information for the Separate Account included in the
Statement of Additional Information. The financial statements and report of
independent auditors of the Company are also contained in the Statement of
Additional Information.

<TABLE>
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth Sub-Account (1)
Beginning of Period $ 17.05 $ 12.61 $ 12.89 $ 11.98 $ 13.16 $ 9.93 $ 10.00
End of Period $ 21.16 $ 17.05 $ 12.61 $ 12.89 $ 11.98 $ 13.16 $ 9.93
Number of Accum. Units Outstanding 834,675 518,976 242,120 187,792 213,353 157,474 6,736
Growth & Income Sub-Account
Beginning of Period (5/31/95) $ 11.22 $ 10.00
End of Period $ 12.41 $ 11.22
Number of Accum. Units Outstanding 755,887 289,200
High Income Bond Sub-Account (1)
Beginning of Period $ 16.26 $ 13.86 $ 15.12 $ 13.34 $ 11.70 $ 9.34 $ 10.00
End of Period $ 18.31 $ 16.26 $ 13.86 $ 15.12 $ 13.34 $ 11.70 $ 9.34
Number of Accum. Units Outstanding 520,055 309,472 190,699 437,508 337,571 195,048 536
Matrix Equity Sub-Account (2)
Beginning of Period $ 19.34 $ 14.70 $ 15.06 $ 12.95 $ 12.99 $ 10.15 $ 10.00
End of Period $ 19.95 $ 19.34 $ 14.70 $ 15.06 $ 12.95 $ 12.99 $ 10.15
Number of Accum. Units Outstanding 466,610 455,859 265,271 211,775 203,350 98,273 6,477
</TABLE>

(1) Prior to May 1, 1997, the Growth Sub-Account was known as the "Common Stock
Sub-Account." Prior to January 1, 1989, the High Income Bond Sub-Account
was known as the "High Yield Bond Sub-Account."

(2) Prior to May 1, 1997, the Matrix Equity Sub-Account was known as the "Tilt
Utility Sub-Account" and had different investment policies. Prior to April
1, 1994, the Sub-Account was known as the "Equity Income Division" and had
different investment objectives, policies and restrictions.

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CONDENSED FINANCIAL INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Multiple Strategies Sub-Account
Beginning of Period $ 17.32 $ 13.28 $ 14.02 $ 12.86 $ 12.59 $ 10.34 $ 10.00
End of Period $ 20.21 $ 17.32 $ 13.28 $ 14.02 $ 12.86 $ 12.59 $ 10.34
Number of Accum. Units Outstanding 960,499 795,702 529,845 167,168 169,897 128,348 11,761
Small Cap Growth Sub-Account (1)
Beginning of Period (5/4/95) $ 12.93 $ 10.00
End of Period $ 16.25 $ 12.93
Number of Accum. Units Outstanding 787,620 278,163
U.S. Government Bond Sub-Account
Beginning of Period $ 15.32 $ 12.93 $ 13.48 $ 12.49 $ 11.94 $ 10.56 $ 10.00
End of Period $ 15.46 $ 15.32 $ 12.93 $ 13.48 $ 12.49 $ 11.94 $ 10.56
Number of Accum. Units Outstanding 213,751 222,013 207,710 175,294 175,547 494,291 6,523
World Equity Sub-Account
Beginning of Period $ 14.67 $ 11.97 $ 11.03 $ 9.54 $ 9.85 $ 9.25 $ 10.00
End of Period $ 16.26 $ 14.67 $ 11.97 $ 11.03 $ 9.54 $ 9.54 $ 9.25
Number of Accum. Units Outstanding 1,054,077 719,094 349,771 151.437 92,431 72,323 5,125
Prime Money Fund II Sub-Account (2)
Beginning of Period $ 11.67 $ 11.22 $ 10.97 $ 10.86 $ 10.67 $ 10.24 $ 10.00
End of Period $ 12.06 $ 11.67 $ 11.22 $ 10.97 $ 10.86 $ 10.67 $ 10.24
Number of Accum. Units Outstanding 297,512 406,002 123,042 52,908 309,216 207,448 63,260
</TABLE>

(1) Prior to May 1, 1997, the Small Cap Growth Sub-Account was known as the
"Small Cap Sub-Account."

(2) On January 2, 1997, shares of Federated Prime Money Fund II were
substituted for shares of the VIST Cash Management Portfolio. Accumulation
Unit Values shown are based on the value of VIST Cash Management Portfolio
shares held for the periods shown.

8
<PAGE>

Six
Months Year Year
Ended Ended Ended
6/30/92 12/31/91 12/31/90
---------- ---------- ----------

Real Estate Investment Sub-Account*
Beginning of Period $ 11.74 $ 8.93 $ 10.00
End of Period $ 11.58 $ 11.74 $ 8.93
Number of Accum. Units Outstanding 0 6,903 904
Natural Resources Sub-Account*
Beginning of Period $ 9.19 $ 9.22 $ 10.0
End of Period $ 8.81 $ 9.19 $ 9.22
Number of Accum. Units Outstanding 0 9,794 1,237
World Bond Sub-Account*
Beginning of Period $ 12.27 $ 10.91 $ 10.00
End of Period $ 12.29 $ 12.27 $ 10.91
Number of Accum. Units Outstanding 0 47,602 4,343
Aggressive Growth Sub-Account*
Beginning of Period $ 11.81 $ 9.28 $ 10.00
End of Period $ 10.02 $ 11.81 $ 9.28
Number of Accum. Units Outstanding 0 41,617 3,269

* On June 29, 1992, the Real Estate Investment, Natural Resources, Aggressive
Growth and World Bond Sub-Accounts of Fund E, and the corresponding Portfolios
of VIST were terminated, based primarily on their small size and the limited
prospect for growth in the foreseeable future. Investments in these four
Sub-Accounts were transferred into the then remaining Sub-Accounts.

THE COMPANY

First Variable Life Insurance Company (the "Company") is a stock life insurance
company which was organized under the laws of the State of Arkansas in 1968. The
Company is principally engaged in the annuity business. The Company is licensed
in 49 states, the District of Columbia and the U.S. Virgin Islands. The Company
is a wholly-owned subsidiary of Irish Life of North America, Inc. ("ILoNA")
which in turn is beneficially owned by Irish Life plc ("Irish Life"). ILoNA also
owns Interstate Assurance Company ("Interstate") of Des Moines, IA. Irish Life
was formed in 1939 through a consolidation of a number of Irish and British Life
offices transacting business in Ireland. In terms of assets, Irish Life controls
over 50% of the Irish domestic market. As Ireland's leading institutional
investor, it owns in excess of 10% of the leading Irish publicly traded stocks.
Irish Life, through its international subsidiaries, conducts business in
Ireland, the United Kingdom, the United States and France. As of the end of
1996, the Irish Life consolidated group had in excess of $11billion in assets.
ILoNA is a Delaware corporation, incorporated as Carrig International, Inc. in
1986, which is the holding company of Interstate and the Company.

The Company has an A- (Excellent) rating from A.M. Best, an independent firm
that analyzes insurance carries. This rating is assigned to companies that have
a strong ability to meet obligations to policyholders over a long period of
time. The Company also has an AA (Double-A) rating from Duff & Phelps Credit
Rating Co. and an AA- (Double A minus) from Standard's and Poors on claims
paying ability. The

9
<PAGE>

financial strength of the Company may be relevant with respect of the Company's
ability to satisfy its General Account obligations under the Contracts.

The Company may publish in advertisements and reports to Owner, the ratings and
other information assigned it by one or more independent rating services Further
the Company may publish charts and other information concerning dollar cost
averaging, tax-deferral and other investment methods.

THE SEPARATE ACCOUNT

The Board of Directors of the Company adopted a resolution to establish a
segregated asset account pursuant to Arkansas insurance law on December 4, 1979.
This segregated asset account has been designated First Variable Annuity Fund E
(the "Separate Account"). The Company has caused the Separate Account to be
registered with the Securities and Exchange Commission as a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940.

The assets of the Separate Account are the property of the Company. However, the
assets of the Separate Account, equal to the reserves and other contract
liabilities with respect to the Separate Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. Income,
gains and losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Separate Account without regard to
other income, gains or losses of the Company. The Company's obligations arising
under the Contracts are general obligations.

The Separate Account meets the definition of a "separate account" under the
federal securities laws.

The Separate Account is divided into Sub-Accounts, with the assets of each
Sub-Account invested in one Portfolio of a selected Fund. There is no assurance
that the investment objective of any of the Portfolios will be met. Owners bear
the complete investment risk for Purchase Payments and Contract Value allocated
to a Sub-Account. Contract Values will fluctuate in accordance with the
investment performance of the Sub-Account(s) to which Purchase Payments are
allocated, and in accordance with the imposition of the fees and charges
assessed under the Contracts.

INVESTMENT OPTIONS

Owners of a Contract may allocate Purchase Payments and Contract Value to one or
more Sub-Accounts of the Separate Account and to the General Account. Each
Sub-Account invests exclusively in a Portfolio of a selected Fund. A brief
summary of the Funds and the investment objectives of the currently available
Portfolios is set forth below. More comprehensive information, including a
discussion of potential risks, is found in the current prospectuses for the
Portfolios which are included with this prospectus. The prospectuses for the
Funds may describe other portfolios that are not available under a Contract.
THERE IS NO ASSURANCE THAT THE AVAILABLE PORTFOLIOS WILL ACHIEVE THEIR STATED
OBJECTIVES. Investors should read this prospectus and the prospectuses for the
Funds carefully before investing. To obtain prospectuses for the Funds, write
the Company at its Variable Service Center or call the number shown on the cover
page.

Variable Investors Series Trust

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Investment Counseling with respect to the High Income Bond Portfolio, Value
Line, Inc. with respect to the Multiple Strategies Portfolio and the Growth
Portfolio, Strong Capital Management, Inc. with respect to the U.S. Government
Bond Portfolio, State Street Bank and Trust Company with respect to the Matrix
Equity Portfolio, Keystone Investment Management Company with respect to the
World Equity Portfolio, Warburg Pincus Counsellors, Inc. with respect to the
Growth & Income Portfolio and Pilgrim, Baxter & Associates, Ltd. with respect to
the Small Cap Growth Portfolio. Prior to April 1, 1994, INVESCO Capital
Management, Inc. was the investment adviser of VIST. VIST is an open-end
management investment company. While a brief summary of the investment
objectives of the Portfolios is set forth below, more comprehensive information,
including a discussion of potential risks, is found in the current VIST
Prospectus which is included with this Prospectus. Purchasers should read this
Prospectus and the VIST Prospectus carefully before investing.

VIST is intended to meet differing investment objectives with its currently
available separate Portfolios: Growth Portfolio, Growth & Income Portfolio, High
Income Bond Portfolio, Matrix Equity Portfolio, Multiple Strategies Portfolio,
Small Cap Growth Portfolio, U.S. Government Bond Portfolio and World Equity
Portfolio. The investment objectives of the Portfolios are as follows:

Growth Portfolio. The investment objective of this Portfolio is capital growth
which it seeks to achieve through a policy of investing primarily in a
diversified portfolio of common stocks and securities convertible into or
exchangeable for common stock. The secondary objective is current income when
consistent with its primary objective. Prior to May 1, 1997, this Portfolio was
known as the "Common Stock Portfolio."

Growth & Income Portfolio. The investment objectives of this Portfolio are to
provide current income and growth of capital. The Portfolio seeks to achieve its
objectives by investing in equity securities, fixed income securities and money
market instruments. The portion of the Portfolio invested at any given time in
each of these asset classes will vary depending on market conditions, and there
may be extended periods when the Portfolio is primarily invested in one of them.
In addition, the amount of income derived from the Portfolio will fluctuate
depending on the composition of the Portfolio's holdings and will tend to be
lower when a higher portion of the Portfolio is invested in equity securities.
The Portfolio may also purchase without limitation dollar-denominated American
Depository Receipts ("ADRs"). ADRs are issued by domestic banks and evidence
ownership of underlying foreign securities.

High Income Bond Portfolio. The investment objective of this Portfolio is to
obtain as high a level of current income as is believed to be consistent with
prudent investment management. As a secondary objective, the Portfolio seeks
capital appreciation when consistent with its primary objective. The Portfolio
seeks to achieve its investment objectives by investing primarily in
fixed-income securities rated lower than A. Many of the high yield securities in
which the Portfolio may invest are commonly referred to as "junk bonds." For
special risks involved with investing in such securities (including among
others, risk of default and illiquidity) see "Investment Objectives and Policies
of the Portfolios - High Income Bond Portfolio" in the VIST prospectus.

Matrix Equity Portfolio. The investment objective of this Portfolio is capital
appreciation and current income. The Portfolio will seek to achieve its
investment objective by investing in a diversified portfolio that is selected by
the Sub-Adviser on the basis of its proprietary analytical model. Sector weights
are normally maintained at a similar level to that of the S&P 500 Index. The
Portfolio will invest at least 65% of its total assets in equity securities.
Prior to May 1, 1997, the Matrix Equity Portfolio was known as the "Tilt Utility
Portfolio" and had different policies, but maintained the same investment
objective.

Multiple Strategies Portfolio. The investment objective of this Portfolio is to
seek as high a level of total return over an extended period of time as is
considered consistent with prudent investment risk by investing in equity
securities, bonds, and money market instruments in varying proportions.

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Small Cap Growth Portfolio. The investment objective of this Portfolio is to
seek capital appreciation. The Portfolio will invest, under normal conditions,
at least 65% of its total assets in securities of companies with market
capitalization or annual revenues under $1 billion at the time of purchase.
Prior to May 1, 1997, this Portfolio was known as the "Small Cap Portfolio."

U.S. Government Bond Portfolio. The investment objective of this Portfolio is to
seek current income and preservation of capital through investment primarily in
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies, authorities, or instrumentalities.

World Equity Portfolio. The investment objective of this Portfolio is to
maximize long-term total return by investing primarily in common stocks, and
securities convertible into common stocks, traded in securities markets located
in countries around the world, including the United States. See "Foreign
Investments" under "Policies and Techniques Applicable to all Portfolios" in the
VIST prospectus for a discussion of the risks involved in investing in foreign
securities.

Federated Insurance Series

Federated Insurance Series ("Federated") is an open-end investment management
company that was formed as a series trust to provide funding options for
variable life insurance and variable annuity contracts. Pursuant to an
investment advisory contract with Federated, investment decisions for Federated
are made by Federated Advisers, an affiliate of Federated Investment Counseling.

Prime Money Fund II. The investment objective of this series is to provide
current income consistent with the stability of principal and liquidity. The
Fund pursues its investment objective by investing exclusively in a portfolio of
money market instruments maturing in 397 days or less. An investment in the
Prime Money Fund II is neither insured nor guaranteed by the U.S. Government.

General Account Option

This Prospectus is generally intended to describe the Contract and Separate
Account. Because of certain exemptive and exclusionary provisions, interests in
the General Account are not registered under the Securities Act of 1933 and the
General Account is not registered as an investment company under the Investment
Company Act of 1940, as amended. Accordingly, neither the General Account nor
any interests therein are subject to the provisions of these Acts, and the
Company has been advised that the staff of the Securities and Exchange
Commission has not reviewed the disclosures in the Prospectus relating to the
General Account.

The Company guarantees that it will credit interest to Contract Value in the
General Account at a minimum rate of 3% per year. Additional amounts of
"current" interest may be credited by the Company in its sole discretion. The
initial current interest rate will be guaranteed for at least one year. New
Purchase Payments and transfers from the Separate Account allocated to the
General Account may each receive different current interest rate(s) than the
current interest rate(s) credited to Contract Value existing in the General
Account. The Company determines current interest rates in advance and credits
interest daily to General Account Value.

Voting Rights

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instructions received from persons having the voting interest in the Separate
Account. The Company will vote shares for which it has not received
instructions, as well as shares attributable to it, in the same proportion as it
votes shares for which it has received instructions. Neither VIST nor Federated
holds regular meetings of shareholders.

Shares of VIST and Federated are used as the investment vehicle for separate
accounts of insurance companies offering variable annuity contracts and variable
life insurance policies. The use of VIST's and Federated's shares as investments
for both variable annuity contracts and variable life insurance policies is
referred to as "mixed funding." The use of these shares as investments by
separate accounts of unaffiliated life insurance companies is referred to as
"shared funding."

VIST and Federated intend to engage in mixed funding and shared funding.
Although VIST and Federated do not currently foresee any disadvantage to
Contract owners due to differences in redemption rates, tax treatment, or other
considerations resulting from mixed funding or shared funding, the Trustees of
VIST and the Trustees of Federated will closely monitor the operation of mixed
funding and shared funding and will consider appropriate action to avoid
material conflict and take appropriate action in response to material conflicts
which occur.

The number of shares which a person has a right to vote will be determined as of
a date to be chosen by the Company not more than sixty (60) days prior to a
shareholder meeting. Each Owner having a voting interest will receive proxy
material, reports, and other materials relating to the appropriate Portfolio.

Substitution of Other Securities

If other shares of VIST or Federated (or any Portfolio within the Funds), are no
longer available for investment by the Separate Account or, if in the judgment
of the Company, further investment in the shares should become inappropriate in
view of the purpose of the Contracts, the Company may substitute shares of
another mutual fund (or Portfolio) for shares already purchased or to be
purchased in the future by Purchase Payments under the Contracts. No
substitution of securities may take place without prior approval of the
Securities and Exchange Commission and under the requirements it may impose.

CHARGES AND DEDUCTIONS

Various charges and deductions are made from Contract Values and the Separate
Account. These charges and deductions are:

Deduction for Withdrawal Charge (Sales Load)

If all or a portion of the Contract Value is withdrawn, a Withdrawal Charge
(sales load) will be calculated at the time of each withdrawal and will be
deducted from the Contract Value. This Charge reimburses the Company for
expenses incurred in connection with the promotion, sale and distribution of the
Contracts. No Withdrawal Charge will be assessed upon any withdrawal unless the
amount withdrawn exceeds the Free Withdrawal Amount. The annual Free Withdrawal
Amount is determined as the sum of (a) 10% of Purchase Payments still subject to
the Withdrawal Charge; plus (b) the excess of the Contract Value over Purchase
Payments not previously withdrawn; plus (c) any Purchase Payments no longer
subject to the Withdrawal Charge. The Withdrawal Charge is determined by
multiplying the excess of the amount withdrawn over the Free Withdrawal Amount
by the applicable percentage(s) from the Table of Withdrawal Charges below. The
Withdrawal Charge percentages are based upon the number of Contract
Anniversaries,

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<PAGE>

that Purchase Payments have remained in the Contract before being withdrawn.
Purchase Payments are deemed to be withdrawn in the order in which they are
made.

TABLE OF WITHDRAWAL CHARGES:

Contract Anniversaries
Since Purchase Payment Charge
---------------------- ------
0 and 1 7%
2 6%
3 5%
4 4%
5 3%
6+ 0%

An Owner may make a withdrawal each Contract Year of the Free Withdrawal Amount
provided that the amount withdrawn is at least $1,000 or the Owner's entire
interest in the Sub-Account, if less. The minimum Contract Value which must
remain in a Sub-Account after a partial withdrawal is $1,000.

In the event of the death of the Owner, the Company will waive the Withdrawal
Charge with respect to any death benefits paid.

For a partial withdrawal, the Withdrawal Charge will be deducted from the
remaining Withdrawal Value, if sufficient; otherwise it will be deducted from
the amount withdrawn. The amount deducted from the Contract Value will be
determined by subtracting values from the General Account and/or cancelling
Accumulation Units from each applicable Sub-Account in the ratio that the value
of each Account bears to the total Contract Value. The Owner must specify in
writing in advance which Units are to be cancelled from each Sub-Account and/or
whether values are to be deducted from the General Account if other than the
above method of cancellation is desired.

Waiver of Withdrawal Charge. Subject to state availability, the Company will
waive the Withdrawal Charge:

o If the Owner or Owner's spouse is first diagnosed with a terminal illness.
The Company may require evidence of such illness, including an examination
by a licensed physician of the Company's choice.

o After the first Contract Year, if the Owner or the Owner's spouse is
confined for 90 consecutive days in a qualifying nursing home.

To qualify for a waiver of charges based on confinement in a qualifying nursing
home, the Owner or the Owner's spouse, as the case may be, must never have been
confined in a qualifying nursing home on or before the date the application for
the Contract was signed.

Owners should review their Contracts carefully for a complete description of the
terminal illness and nursing home waiver of charges requirements.

Deduction for Mortality and Expense Risk Charge

The Company deducts on each Valuation Date, both prior to the Annuity Date and
during the Annuity Period, a Mortality and Expense Risk Charge which is equal,
on an annual basis, to 1.25% of the average daily net asset value of the
Separate Account. The mortality risks assumed by the Company arise from its
contractual obligation to make annuity payments after the Annuity Date for the
life of the Annuitant and to waive the Withdrawal Charge in the event of the
death of the Owner. The Company also bears a mortality risk with respect to the
death benefit. The expense risk assumed by the Company is that all actual
expenses

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<PAGE>

involved in administering the Contracts, including Contract maintenance costs,
administrative costs, mailing costs, data processing costs, legal fees,
accounting fees, filing fees and the costs of other services may exceed the
amount recovered from the Annual Contract Maintenance Charge and the
Administrative Charge.

If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount deducted
proves more than sufficient, the excess will be a profit to the Company. The
Company expects a profit from this charge. To the extent that the Withdrawal
Charge is insufficient to cover the actual cost of distribution, the Company may
use any of its corporate assets, including potential profit which may arise from
the Mortality and Expense Risk Charge to provide for any difference.

The Mortality and Expense Risk Charge is guaranteed by the Company and cannot be
increased.

Deduction for Administrative Charge

The Company deducts on each Valuation Date, both prior to the Annuity Date and
during the Annuity Period, an Administrative Charge which is equal, on an annual
basis, to .15% of the average daily net asset value of the Separate Account.
This charge, together with the Annual Contract Maintenance Charge (see below),
is to reimburse the Company for the expenses it incurs in the establishment and
maintenance of the Contracts and the Separate Account. These expenses include
but are not limited to: preparation of the Contracts, confirmations, annual
reports and statements, maintenance of Owner records, maintenance of Separate
Account records, administrative personnel costs, mailing costs, data processing
costs, legal fees, accounting fees, filing fees, the costs of other services
necessary for Owner servicing and all accounting, valuation, regulatory and
reporting requirements. Since this charge is an asset-based charge, the amount
of the charge attributable to a particular Contract may have no relationship to
the administrative costs actually incurred by that Contract. The Company does
not intend to profit from this charge. This charge will be reduced to the extent
that the amount of this charge is in excess of that necessary to reimburse the
Company for its administrative expenses. Should this charge prove to be
insufficient, the Company will not increase this charge and will incur the loss.

Deduction for Annual Contract Maintenance Charge

The Company deducts an Annual Contract Maintenance Charge of $30 from the
Contract Value on each Contract Anniversary. This charge is to reimburse the
Company for its administrative expenses (see above). This charge is deducted by
subtracting values from the General Account and/or cancelling Accumulation Units
from each applicable Sub-Account in the ratio that the value of each Account
bears to the total Contract Value. When the Contract is withdrawn for its full
Withdrawal Value, on other than the Contract Anniversary, the Annual Contract
Maintenance Charge will be deducted at the time of withdrawal. If the Annuity
Date is not a Contract Anniversary, a pro rata portion of the Annual Contract
Maintenance Charge will be deducted on the Annuity Date. After the Annuity Date,
the Annual Contract Maintenance Charge will be collected on a monthly basis and
will result in a reduction of each Annuity Payment. The Company has set this
charge at a level so that, when considered in conjunction with the
Administrative Charge (see above), it will not make a profit from the charges
assessed for administration.

Deduction for Premium Taxes

Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the Contract Values. The Company currently intends to
deduct premium taxes when incurred. Some states assess premium taxes at the time
Purchase Payments are made; others assess premium taxes at the time annuity
payments begin. Premium taxes generally range from 0% to 4%.

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<PAGE>

Deduction for Income Taxes

While the Company is not currently maintaining a provision for federal income
taxes with respect to the Separate Account, the Company has reserved the right
to establish a provision for income taxes if it determines, in its sole
discretion, that it will incur a tax as a result of the operation of the
Separate Account. The Company will deduct for any income taxes incurred by it as
a result of the operation of the Separate Account whether or not there was a
provision for taxes and whether or not it was sufficient. The Company will
deduct any withholding taxes required by applicable law.

Deduction for Expenses of the Funds

There are other deductions from and expenses paid out of the assets of the Funds
which are described in the accompanying VISTand Federated prospectuses.

Deduction for Transfer Fee

Prior to the Annuity Date, an Owner may transfer all or part of an Account
without the imposition of any fee or charge if there have been no more than 12
transfers made in the Contract Year. During the Annuity Period, an Owner may
transfer all or part of an Account without the imposition of any fee or charge
if there have been no more than six (6) transfers made in a Contract Year. If
more than 12 transfers have been made in the Contract Year (or more than 6
transfers in the Contract Year during the Annuity Period), the Company will
deduct a transfer fee of $25 per transfer or, if less, 2% of the amount
transferred. If the Owner is participating in the Dollar Cost Averaging program
providing for the automatic transfer of funds from the Prime Money Fund II
Sub-Account or the General Account to any other Sub-Account(s), such transfers
are not taken into account in determining any transfer fee.

Elimination or Reduction of Charges and Deductions

The charges and deductions on a Contract may be reduced or eliminated, in whole
or in part, when sales of Contracts are made to individuals or to a group of
individuals in a manner that results in savings of sales or administration
expenses. Any reduction will be determined by the Company after examination of
relevant factors such as:

o the size and type of group to which sales are to be made because expenses
for a larger group are generally less than for a smaller group since large
numbers of Contracts may be implemented and administered with fewer
contacts;

o the total amount of Purchase Payments to be received because expenses are
likely to be less on larger Purchase Payments than on smaller ones;

o any prior or existing relationship with the Company because of the
likelihood of implementing the Contract with fewer contracts; and

o other circumstances, of which the Company is not presently aware, which
could result in reduced expenses.

Charges may also be eliminated when a Contract is issued to an officer, director
employee or agent of the Company or any of its affiliates. In no event will
reductions or elimination will be unfairly discriminatory to any person.

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THE CONTRACTS

Application and Issuance of a Contract

An Application must be completed and submitted to the Company to purchase a
Contract, together with the minimum required initial Purchase Payment. A
Contract ordinarily will be issued with respect to Owners and Annuitants up to
Age 85. Investors in Qualified Contracts for Owners and Annuitants beyond Age 70
1/2 should consult with qualified tax advisers on the impact of minimum
distribution requirements under their existing retirement plans. Any required
annual minimum distribution amount should be withdrawn from an existing
retirement plan before amounts are transferred to purchase a Qualified Contract.
(See "Tax Status - Tax Treatment of Withdrawals - Qualified Contracts.")

The Owner, Annuitant, and Beneficiary of a Contract are initially designated in
the application and subject to the Company's underwriting rules. If the
Application for a Contract is in good order, the Company will apply the Purchase
Payment within 2 business days of receipt: (a) to the Separate Account and
credit the Contract with Accumulation Units; and/or (b) to the General Account
and credit the Contract with dollars. If the application for a Contract is not
in good order, the Company will attempt to get it in good order or the Company
will return the application and the Purchase Payment within 5 business days. The
Company will not retain a Purchase Payment for more than 5 business days while
processing an incomplete application unless it has been authorized by the
purchaser. The Company may decline any application.

Free Look Right. An Owner has the right to review a Contract during an initial
inspection period specified in the Contract and, if dissatisfied, to return it
to the Company or to the agent through whom it was purchased. When the Contract
is returned to the Company during the permitted period, it will be voided as if
it had never been in force. The Company will ordinarily refund the Contract
Value (which may be greater or less than the Purchase Payments received) on a
Contract returned during the permitted period, unless a different amount is
required. The "free look period" is at least 10 days, and may be greater
depending on state requirements.

Delayed Investment Start Date. Purchase Payments are generally allocated to the
Sub-Accounts or to the General Account as selected by the Owner. In certain
instances, however, the Company reserves the right to allocate Purchase Payments
to the Prime Money Fund II Sub-Account for a period of up to 5 days beyond a
"free look" inspection period before they will be invested (together with any
investment gain) in any other Sub-Account(s) designated by the Owner. If the
Company elects to delay such initial investments in Sub-Accounts, the delay
would apply where a Contract is issued: (a) in a state which requires that
Purchase Payments less withdrawals be refunded upon the exercise of (i) a "free
look" right or (ii) an inspection right following a "replacement" of an existing
life insurance or annuity contract; or (b) as an Individual Retirement Annuity
(or as the initial investment of an Individual Retirement Account).

On the date of this Prospectus, the Company does not delay investment start
dates and, should it elect to do so, it will so advise prospective investors in
a Contract.

Ownership

The Owner has all rights and may receive all benefits under the Contract. Prior
to the Annuity Date, the Owner is the person designated in the Application,
unless changed. On and after the Annuity Date, the Annuitant is the Owner. Upon
the death of the Annuitant, the Beneficiary is the Owner.

The Owner may change the Owner at any time prior to the Annuity Date. A change
of Owner will automatically revoke any prior designation of Owner. A request for
change must be: (1) made in writing;

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<PAGE>

and (2) received by the Company at the Variable Service Center. The change will
become effective as of the date the written request is signed. A new designation
of Owner will not apply to any payment made or action taken by the Company prior
to the time it was received.

For Non-Qualified Contracts, in accordance with Internal Revenue Code Section
72(u), a deferred annuity contract held by a corporation or entity that is not a
natural person is not treated as an annuity contract for tax purposes. Income on
the contract is treated as ordinary income received by the Owner during the
taxable year. However, for purposes of Code Section 72(u), an annuity contract
held by a trust or other entity as agent for a natural person is considered held
by a natural person and treated as an annuity contract for tax purposes. Tax
advice should be sought prior to purchasing a Contract which is to be owed by a
trust or other non-natural person.

Annuitant

The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated in the Application, unless changed prior to
the Annuity Date. The Annuitant may not be changed in a Contract which is owned
by a non-natural person.

Assignment

The Owner may, at any time during his or her lifetime, assign his or her rights
under the Contract. The Company will not be bound by any assignment until
written notice is received by the Company. The Company is not responsible for
the validity of any assignment. The Company will not be liable as to any payment
or other settlement made by the Company before receipt of the assignment.

If the Contract is issued pursuant to a retirement plan which receives favorable
tax treatment under the provisions of Sections 401, 403(b), 408, or 457 of the
Internal Revenue Code, it may not be assigned, pledged or otherwise transferred
except as may be allowed under applicable law.

Transfers by the Company

The Company may, subject to applicable regulatory approvals, transfer its
obligations under the Contracts to another qualified life insurance company
under an assumption reinsurance arrangement without the prior consent of the
Owner.

Beneficiary

The Beneficiary is named in the Application and, unless changed, is entitled to
receive the benefits to be paid at the death of the Owner.

Unless the Owner provides otherwise, the Death Benefit will be paid in equal
shares or all to the survivor(s) as follows:

(1) to the primary Beneficiaries who survive the Owner's death; or if there are
none,

(2) to the contingent Beneficiaries who survive the Owner's death; or if there
are none,

(3) to the estate of the Owner.

Change of Beneficiary

Subject to the rights of any irrevocable Beneficiary(ies), the Owner may change
the primary Beneficiary(ies) or contingent Beneficiary(ies). A change may be
made by filing a written request with the

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<PAGE>

Company at its Variable Service Center. The change will take effect as of the
date the notice is signed. The Company will not be liable for any payment made
or action taken before it records the change.

Transfers of Contract Values During the Accumulation Period

Prior to the Annuity Date, an Owner may transfer all or part of an Account by
either written or telephone request without the imposition of any fee or charge
if there have been no more than 12 transfers made in the Contract Year. If more
than 12 transfers have been made in the Contract Year, the Company will deduct a
transfer fee. If the Owner is participating in the Dollar Cost Averaging program
providing for the automatic transfer of funds from the Cash Management
Sub-Account or the General Account to any other Sub-Account(s), such transfers
are not taken into account in determining any transfer fee. All transfers are
subject to the following:

(1) the deduction of any transfer fee that may be imposed (no charge for first
12 transfers in a Contract Year thereafter, the fee is $25 per transfer or,
if less, 2% of the amount transferred). The transfer fee will be deducted
from the Account from which the transfer is made. However, if the entire
interest in the Account is being transferred, the transfer fee will be
deducted from the amount which is transferred.

(2) The minimum amount which may be transferred is the lesser of (i) $1,000; or
(ii) the Owner's entire interest in the Account, if less. A minimum
Contract Value of $1,000 must remain in the Account after a transfer.

(3) All Purchase Payments and transfers allocated to the General Account must
remain in the General Account for one year prior to any transfer from the
General Account.

(4) Any transfer direction must clearly specify the amount which is to be
transferred and the Accounts which are to be affected.

(5) The Company reserves the right at any time and without prior notice to any
party including, but not limited to, the circumstances described in the
"Suspension of Payments or Transfers" provision, below, to terminate,
suspend or modify the transfer privileges described above.

Programmed or other frequent requests to transfer all or part of an Account by,
or on behalf of, an Owner may have a detrimental effect on Investment Option
share values held in the Separate Account. The Company may therefore limit the
number of permitted transfers in any Contract Year, or refuse to honor any
transfer request for an Owner or a group of Owners if it is informed that the
purchase or redemption of shares of one or more of the Investment Options is to
be restricted because of excessive trading, or if a specific transfer or group
of transfers is deemed to have a detrimental effect on Accumulation Unit Value
or Investment Option share prices.

The Company may also at any time suspend or cancel its acceptance of third party
authorizations on behalf of an Owner; or restrict the Investment Options that
will be available for such transfers. Notice will be provided to the third party
in advance of the restrictions. The restrictions will not be imposed, however,
if the Company is given satisfactory evidence that : (a) the third party has
been appointed by the Owner to act on the Owner's behalf for all financial
affairs; or (b) the third party has been appointed by a court of competent
jurisdiction to act on the Owner's behalf.

Telephone Transactions

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<PAGE>

An Owner may initiate various transactions by telephone. The Variable Service
Center (1-800-845-0689) is available for telephone transfers of Account Value,
notification of change of address, change of premium allocations among
Investment Options, partial withdrawal requests and systematic withdrawals.

The Company's automated information line (1-800-59-FUNDS) is available for
current information on Accumulation Unit Values, and may be made available
for current account value, telephone transfers of Account Value.

If there are joint owners of a Contract, unless the Company is informed to the
contrary, instructions will be accepted from either one of the joint owners.
Requests for transfers or reallocations by telephone will be automatically
permitted. The Company will use reasonable procedures such as requiring certain
identifying information from the caller, tape recording the telephone
instructions, and providing written confirmation of the transaction, in order to
confirm that instructions communicated by telephone are genuine. Any telephone
instructions reasonably believed by the Company to be genuine will be the
Owner's responsibility, including losses arising from any errors in the
communication of instructions. As a result of this, the Owner will bear the risk
of loss. If the Company does not employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, the Company may be liable
for any losses due to dishonored or fraudulent instructions.

Death of the Annuitant

Upon the death of the Annuitant prior to the Annuity Date, the Owner must
designate a new Annuitant. If no designation is made within 30 days of the death
of the Annuitant, the Owner will become the Annuitant. However, if the Owner is
a non-natural person, then the death of the Annuitant will be treated as the
death of the Owner and a new Annuitant may not be designated. (See "Death of the
Owner," below.)

Upon the death of the Annuitant after the Annuity Date, the Death Benefit, if
any, will be as specified in the Annuity Option elected.

Death of the Owner

Upon the death of the Owner prior to the Annuity Date, the Death Benefit will be
paid to the Beneficiary designated by the Owner. In certain states, the Death
Benefit will be the greater of:

(1) the Purchase Payments, less any withdrawals including any applicable
Withdrawal Charges;

(2) the Contract Value; or

(3) the Contract Value as of the first day of the current five Contract Year
period plus any Purchase Payments made since that day and less any amounts
withdrawn since that day.

The first five Contract Year period begins on the Issue Date, the second five
Contract Year period begins on the fifth Contract Anniversary, and so forth. If
the Beneficiary is the spouse of the Owner and elects to continue the Contract,
the Contract Value remains unchanged and no determination of the Death Benefit
is made at that time.

In other states, the Death Benefit will be the greater of:

(1) the Purchase Payments, less any withdrawals including any applicable
Withdrawal Charges; or

(2) the Contract Value.

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Owners should refer to their Contract for the applicable Death Benefit
provision.

The Death Benefit will be determined and paid as of the Valuation Period next
following the date of receipt by the Company of both due proof of death and an
election for the payment method. The Beneficiary can elect to have a single lump
sum payment or choose one of the Annuity Options.

If a single sum payment is requested, the proceeds will be paid within seven (7)
days of receipt of proof of death and the election. Payment under an Annuity
Option may only be elected during the sixty-day period beginning with the date
of receipt of proof of death or a single sum payment will be made to the
Beneficiary at the end of the sixty-day period.

The entire Death Benefit must be paid within five (5) years of the date of death
unless:

(1) the Beneficiary elects to have the Death Benefit payable under an Annuity
Option over the life of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary with distribution beginning
within one year of the date of death; or

(2) if the Beneficiary is the spouse of the Owner, the Beneficiary may elect to
become the Owner of the Contract and the Contract will continue in effect.

If there are Joint Owners, any reference to the death of the Owner shall mean
the first death of an Owner.

The Contract can be held by Joint Owners. Any Joint Owner must be the spouse of
the other Owner. Upon the death of either Owner, the surviving spouse will be
the primary Beneficiary. Any other Beneficiary designated in the Application or
as subsequently changed will be treated as a contingent Beneficiary unless
otherwise indicated in writing to the Company.

If the Owner is a non-natural person, then for purposes of the Death Benefit the
Annuitant shall be treated as the Owner and the death of the Annuitant or a
change of the Annuitant shall be treated as the death of the Owner.

ANNUITY PROVISIONS

Annuity Date and Annuity Option

The Owner selects an Annuity Date and Annuity Option at the time of application.
The Annuity Date must always be the first day of a calendar month and must be at
least one month after the Issue Date. The Annuity Date may not be later than the
Annuitant's 85th birthday. If no Annuity Option is elected, Option B with a 120
month guarantee will automatically be applied.

Change in Annuity Date and Annuity Option

Prior to the Annuity Date, the Owner may change the Annuity Date. Any changes
must be in writing and must be requested at least seven (7) days prior to the
new Annuity Date. The Annuity Date must always be the first day of a calendar
month and must be at least one month after the Issue Date. The Annuity Date may
not be later than the Annuitant's 85th birthday.

The Owner may, upon written notice to the Company, at any time prior to the
Annuity Date, change the Annuity Option. Any change must be requested at least
seven (7) days prior to the Annuity Date.

Allocation of Annuity Payments

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If all of the Contract Value on the seventh calendar day before the Annuity Date
is allocated to the General Account, the Annuity will be paid as a Fixed
Annuity. If all of the Contract Value on that date is allocated to the Separate
Account, the Annuity will be paid as a Variable Annuity. If the Contract Value
on that date is allocated to both the General Account and the Separate Account,
the Annuity will be paid as a combination of a Fixed Annuity and a Variable
Annuity to reflect the allocation between the Accounts.

Transfers During the Annuity Period

During the Annuity Period, the Owner may transfer, by written request, Contract
Values among the Accounts subject to the following:

(1) the deduction of any transfer fee that may be imposed (no charge for first
six (6) transfers per Contract Year made among the Sub-Accounts;
thereafter, the fee is $25 per transfer or, if less, 2% of the amount
transferred).

(2) the Owner may, once each Contract Year, make a transfer from one or more
Sub-Accounts to the General Account. The Owner may not make a transfer from
the General Account to the Separate Account. Amounts transferred from a
Sub-Account to the General Account are subject to certain procedures set
out in the Contract.

Annuity Options

The actual dollar amount of Variable Annuity Payments is dependent upon (i) the
Contract Value on the Annuity Date, (ii) the annuity table specified in the
Contract, (iii) the Annuity Option selected, and (iv) the investment performance
of the Sub-Account selected.

The annuity tables contained in the Contract for Variable Annuity Payments are
based on a four percent (4%) assumed investment rate. If the actual net
investment rate exceeds four percent (4%), payments will increase. Conversely,
if the actual rate is less than four percent (4%), Variable Annuity Payments
will decrease. If a higher assumed investment rate was used, the initial payment
would be higher, but the actual net investment rate would have to be higher in
order for Variable Annuity Payments to increase.

Variable Annuity Payments will reflect the investment performance of the
Separate Account in accordance with the allocation of the Contract Value to the
Sub-Account on the Annuity Date. Thereafter, allocations may not be changed
except as provided in "Transfers During the Annuity Period", above. The total
dollar amount of each Annuity Payment is the sum of the Variable Annuity Payment
and the Fixed Annuity Payment reduced by the applicable portion of the Annual
Contract Maintenance Charge.

The amount payable under the Contract may be made under one of the following
options or any other option acceptable to the Company:

Option A. Life Annuity. An annuity payable monthly during the lifetime of the
Annuitant. Payments cease at the death of the Annuitant.

Option B. Life Annuity with Periods Certain of 60, 120, 180 or 240 Months. An
annuity payable monthly during the lifetime of the Annuitant and in any event
for sixty (60), one hundred twenty (120), one hundred eighty (180) or two
hundred forty (240) months certain as selected.

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<PAGE>

be made to the survivor Payee. The survivor's Annuity Payments will be equal to
100%, 75%, 662/3% or 50% of the amount payable during the joint lifetime, as
chosen.

Option D. Joint and Contingent Annuity. An annuity payable monthly during the
lifetime of the Annuitant and continuing during the lifetime of a designated
second person after the Annuitant's death. The second person's annuity payments
will be equal to 100%, 75%, 66 2/3 % or 50% of the amount payable, as chosen.

Option E. Fixed Payments for a Period Certain. An annuity payable monthly for a
fixed amount for any specified period (at least five (5) years but not exceeding
thirty (30) years), as chosen.

Annuity Options A, B, C & D are available on a Fixed Annuity basis, a Variable
Annuity basis or a combination of both. Annuity Option E is available on a Fixed
Annuity basis only.

Frequency and Amount of Annuity Payments

Annuity Payments will be paid as monthly installments. However, if the net
amount available to apply under any Annuity Option is less than $5,000, the
Company has the right to pay the amount in one single lump sum in lieu of
Annuity Payments. If the Annuity Payment would be or become less than $200 where
only a Fixed Annuity Payment or a Variable Annuity is selected, or if the
Annuity Payment would be or become less than $100 on each basis when a
combination of Fixed and Variable Annuities is selected, the Company will reduce
the frequency of payments to an interval which will result in each payment being
at least $200, or $100 on each basis if a combination of Fixed and Variable
Annuities is selected.

PURCHASE PAYMENTS AND CONTRACT VALUE

Purchase Payments

The Contracts are purchased under a flexible Purchase Payment plan. The initial
Purchase Payment is due on the Issue Date. For Non-Qualified Contracts, the
minimum initial Purchase Payment is $5,000. The minimum initial Purchase Payment
for Qualified Contracts is $1,000. For all Contracts, the maximum subsequent
Purchase Payment is $1,000,000 and the minimum subsequent Purchase Payment is
$100. The Company reserves the right to decline any Application or Purchase
Payment.

Allocation of Purchase Payments

Purchase Payments are allocated to the General Account or appropriate
Sub-Account(s) within the Separate Account as selected by the Owner. Unless
elected otherwise by the Owner, subsequent Purchase Payments are allocated in
the same manner as the initial Purchase Payment. For each Sub-Account, Purchase
Payments are converted into Accumulation Units. The number of Accumulation Units
credited to the Contract is determined by dividing the Purchase Payment
allocated to the Sub-Account by the value of the Accumulation Unit for the
Sub-Account as of the Valuation Period during which the Purchase Payment is
allocated to the Sub-Account. Purchase Payments allocated to the General Account
are credited in dollars.

Under certain circumstances, the Company may delay the initial investment of
Purchase Payments to be allocated to Investment Options in the Separate Account,
but it does not currently do so. (See "The Contracts - Application and Issuance
of a Contract -- Delayed Investment Start Date.")

Dollar Cost Averaging

Dollar Cost Averaging is a program which, if elected, permits an Owner to
systematically transfer amounts for each month or quarter from the Prime Money
Fund II Sub-Account or the General Account to any

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<PAGE>

Sub-Account(s). By allocating amounts on a regularly scheduled basis as opposed
to allocating the total amount at one particular time, an Owner may be less
susceptible to the impact of market fluctuations. The minimum amount which may
be transferred is $500. An Owner must have a minimum of $6,000 of Contract Value
in the Prime Money Fund II Sub-Account or the General Account, or the amount
required to complete the Owner's designated program, in order to participate in
the Dollar Cost Averaging program.

All Dollar Cost Averaging transfers will be made on the same day of each month
or quarter (or the next Valuation Date if the same day of the month or quarter
is not a Valuation Date). If the Owner is participating in the Dollar Cost
Averaging program, such transfers are not taken into account in determining any
transfer fee. Under certain circumstances, there may be restrictions with
respect to an Owner's ability to participate in the Dollar Cost Averaging
program and limitations on the amounts that can be transferred from the General
Account to any Sub-Accounts. An Owner participating in the Dollar Cost Averaging
program may not make systematic withdrawals of his or her Contract Value. (See
"Withdrawals--Systematic Withdrawals.")

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<PAGE>

Distribution

First Variable Capital Services, Inc. ("FVCS"), 10 Post Office Square, 12th
Floor, Boston, MA 02109 acts as the distributor of the Contracts. FVCS is a
wholly-owned subsidiary of the Company. The Contracts are offered on a
continuous basis through FVCS and approved broker-dealers who are members of the
National Association of Securities Dealers, Inc.

The Company and FVCS have agreements with various broker-dealers under which the
Contracts will be sold by registered representatives of the broker-dealers. The
registered representatives are required to be authorized under applicable state
regulations to sell variable annuity contracts. The commissions payable to a
broker-dealer may vary with the sales agreement, but are not expected to exceed
7% of Purchase Payments. Broker-dealers may also receive expense allowances,
wholesaler fees, bonuses and training fees.

Contract Value

The Contract Value of the Contract on any Valuation Date is the sum of the
Owner's interest in the Sub-Accounts of the Separate Account and in the General
Account. The value of each Sub-Account is determined by multiplying the number
of Accumulation Units attributable to the Sub-Account by the value of an
Accumulation Unit for the Sub-Account.

Accumulation Unit

Purchase Payments allocated to the Separate Account and amounts transferred to
or within the Separate Account are converted into Accumulation Units. This is
done by dividing each Purchase Payment by the value of an Accumulation Unit as
of the Valuation Period during which the Purchase Payment is allocated to the
Separate Account or the transfer is made. The Accumulation Unit value for each
Sub-Account was arbitrarily set initially at $10. The Accumulation Unit value
for any later Valuation Period is determined by subtracting (2) from (1) and
dividing the result by (3) where:

(1) is the net result of:

(a) the assets of the Sub-Account attributable to Accumulation Units;
plus or minus

(b) the cumulative charge or credit for taxes reserved which is
determined by the Company to have resulted from the operation or
maintenance of the Sub-Account;

(2) is the cumulative unpaid charge for the Mortality and Expense Risk
Charge and for the Administrative Charge (see "Charges and
Deductions"); and

(3) is the number of Accumulation Units outstanding at the end of such
Valuation Period.

The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.

WITHDRAWALS

While the Contract is in force and before the Annuity Date, the Owner may elect
in writing to withdraw all of a Contract's Withdrawal Value, or may elect in
either writing or by telephone to withdraw part of a Contract's Withdrawal
Value. (See "Telephone Transactions".) Withdrawals will result in the
cancellation of Accumulation Units from each applicable Sub-Account of the
Separate Account or a reduction in the General Account Value in the ratio that
the Sub-Account Value and/or the General Account Value bears to the total
Contract Value. The Owner must specify in writing in advance which units are to
be cancelled or values are to be reduced if other than the above-mentioned
method of cancellation is desired. The Company

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<PAGE>

will pay the amount of any withdrawal within seven (7) days of receipt of a
request in good order, unless the "Suspension of Payments or Transfers"
provision is in effect. The Withdrawal Value is the Contract Value for the
Valuation Period next following the Valuation Period during which a written
request for withdrawal is received at the Company reduced by the sum of:

(a) any applicable taxes not previously deducted;

(b) any applicable Annual Contract Maintenance Charge; and

Certain tax withdrawal penalties and restrictions may apply to withdrawals from
Contracts. For Contracts purchased in connection with 403(b) plans, the Code
limits the withdrawal of amounts attributable to contributions made pursuant to
a salary reduction agreement (as defined in Section 403(b)(11) of the Code) to
circumstances only when the Owner: (1) attains age 59 1/2; (2) separates from
service; (3) dies; (4) becomes disabled (within the meaning of Section 72(m)(7)
of the Code); or (5) in the case of hardship.

However, withdrawals for hardship are restricted to the portion of the Owner's
Contract Value which represents contributions made by the Owner and does not
include any investment results. The limitations on withdrawals became effective
on January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. However, these limitations
will apply to all amounts (regardless of when or how the contributions were
originally made) which are transferred or rolled over from a custodial account
(as defined in Section 403(b)(7) of the Code) into the Owner's Account. The
limitations on withdrawals do not affect rollovers or transfers between certain
Qualified Plans. Owners should consult their own tax counsel or other tax
adviser regarding any distributions.

Systematic Withdrawals

As stated above, an Owner may request a withdrawal of the Contract's Withdrawal
Value. In addition, and subject to any conditions and fees the Company may
impose, an Owner may elect by either written or telephone request to make equal
periodic withdrawals ("systematic withdrawals") of his or her Contract Values.
(See "Telephone Transactions.") Currently, there are no charges for systematic
withdrawals.

Under the program, systematic withdrawals are made on the same day (or next
Valuation Date of each month or quarter. Systematic withdrawals are transferred
automatically to an Owner's bank account, provided the account is maintained at
a bank that is a member of the Automated Clearing House (ACH). the right to a
10% free single sum withdrawal is forfeited. Systematic withdrawals are not
allowed simultaneously with the dollar cost averaging program. Owners less than
59 1/2 who participate in this program may be subject to a 10% penalty tax
surcharge. (See "Tax Status - Tax Treatment of Withdrawals -Non-Qualified
Contracts" and "Tax Treatment of Withdrawals - Qualified Contracts.")

Texas Optional Retirement Program

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<PAGE>

surrender of the Contract or otherwise, until the participant dies, accepts
retirement, terminates employment in all Texas institutions of higher education
or attains the age of 70 1/2. The value of the Contract may, however, be
transferred to other contracts or carriers during the period of ORP
participation. A participant in the ORP is required to obtain a certificate of
termination from the participant's employer before the value of a Contract can
be withdrawn.

Suspension of Payments or Transfers

The Company reserves the right to suspend or postpone payments for withdrawals
or transfers for any period when:

(1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings);

(2) trading on the New York Stock Exchange is restricted;

(3) an emergency exists as a result of which disposal of securities held
in the Separate Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate
Account's net assets; or

(4) during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners; provided that
applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2)
and (3) exist.

The Company reserves the right to defer payment for a withdrawal or transfer
from the General Account for the period permitted by law but not for more than
six months after written election is received by the Company.

PERFORMANCE INFORMATION

Prime Money Fund II Portfolio

From time to time, the Prime Money Fund II Sub-Account of the Separate Account
may advertise its "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Prime Money Fund II Sub-Account refers to the income generated by
Contract Values in the Prime Money Fund II Sub-Account over a seven-day period
(which period will be stated in the advertisement). This income is "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the Contract Values in the Prime Money Fund II Sub-Account. The
"effective yield" is calculated similarly. However, when annualized, the income
earned by Contract Values is assumed to be reinvested. This results in the
"effective yield" being slightly higher than the "yield" because of the
compounding effect of the assumed reinvestment. The yield figure will reflect
the deduction of any asset-based charges and any applicable Annual Contract
Maintenance Charge, but will not reflect the deduction of any Withdrawal Charge.
The deduction of any Withdrawal Charge would reduce any percentage increase or
make greater any percentage decrease.

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<PAGE>

Other Portfolios

From time to time, the Company may advertise performance data for the various
other Portfolios under the Contract. Such data will show the percentage change
in the value of an Accumulation Unit based on the performance of an investment
medium over a period of time, usually a calendar year, determined by dividing
the increase (decrease) in value for that Unit by the Accumulation Unit value at
the beginning of the period. This percentage figure will reflect the deduction
of any asset-based charges and any applicable Annual Contract Maintenance
Charges under the Contracts, but will not reflect the deduction of any
Withdrawal Charge. The deduction of any Withdrawal Charge would reduce any
percentage increase or make greater any percentage decrease.

Any advertisement will also include total return figures calculated as described
in the Statement of Additional Information. The total return figures reflect the
deduction of any applicable Annual Contract Maintenance Charges and Withdrawal
Charges, as well as any asset-based charges.

The Company may make available yield information with respect to some of the
Portfolios. Such yield information will be calculated as described in the
Statement of Additional Information. The yield information will reflect the
deduction of any applicable Annual Contract Maintenance Charge and Withdrawal
Charge as well as any asset-based charges.

The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.

In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the Portfolios against
established market indices such as the Standard & Poor's 500 Composite Stock
Price Index, the Dow Jones Industrial Average or other management investment
companies which have investment objectives similar to the Portfolio being
compared. The Standard & Poor's Composite 500 Stock Price Index is an unmanaged,
unweighted average of 500 stocks, the majority of which are listed on the New
York Stock Exchange. The Dow Jones Industrial Average is an unmanaged, weighted
average of thirty blue chip industrial corporations listed on the New York Stock
Exchange. Both the Standard & Poor's 500 Composite Stock Price Index and the Dow
Jones Industrial Average assume quarterly reinvestment of dividends.

The Company may also distribute sales literature which compares the performance
of the Accumulation Unit values of the Contracts issued through the Separate
Account with the unit values of variable annuities issued through the separate
accounts of other insurance companies. Such information will be derived from the
Lipper Variable Insurance Products Performance Analysis Service, Morningstar or
from the VARDS Report.

The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data which
tracks the performance of investment companies. The rankings compiled by Lipper
may or may not reflect the deduction of asset-based insurance charges. The
Company's sales literature utilizing these rankings will indicate whether or not
such charges have been deducted. Where the charges have not been deducted, the
sales literature will indicate that if the charges had been deducted, the
ranking might have been lower.

The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Miami and published by Financial
Planning Resources, Inc. The VARDS rankings may or may not reflect the deduction
of asset-based insurance charges.

Morningstar rates a variable annuity sub-account against its peers with similar
investment objectives. Morningstar does not rate any sub-account that has less
than three years of performance data.

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<PAGE>

TAX STATUS

General

NOTE: The following description is based upon the Company's understanding of
current federal income tax law applicable to annuities in general. The Company
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. The Company does not guarantee the tax status of the Contracts.
Purchasers bear the complete risk that the Contracts may not be treated as
"annuity contracts" under federal income tax laws. It should be further
understood that the following discussion is not exhaustive and that special
rules not described in this Prospectus may be applicable in certain situations.
Moreover, no attempt has been made to consider any applicable state or other tax
laws.

Section 72 of the Code governs taxation of annuities in general. An Owner is not
taxed on increases in the value of a Contract until distribution occurs, either
in the form of a lump sum payment or as annuity payments under the Annuity
Option selected. For a lump sum payment received as a total withdrawal (total
surrender), the recipient is taxed on the portion of the payment that exceeds
the cost basis of the Contract. For Non-Qualified Contracts, this cost basis is
generally the Purchase Payments, while for Qualified Contracts there may be no
cost basis. The taxable portion of the lump sum payment is taxed at ordinary
income tax rates.

For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludable amounts equals the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income tax rates. For certain
types of Qualified Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Owners, Annuitants and Beneficiaries under
the Contracts should seek competent financial advice about the tax consequences
of any distributions.

The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company and its operations form a part of the Company.

Diversification

Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in imposition of federal income tax
to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract.

The Company intends that all Portfolios of VIST underlying the Contracts will be
managed by the Investment Adviser for VIST, and that Prime Money Fund II will be
managed by its investment adviser, to comply with the diversification
requirements set forth in section 817(h) of the Code and Treas. Reg. 1-817-5
promulgated thereunder.

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<PAGE>

The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.

The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered the owner of the assets of the Separate Account
resulting in the imposition of federal income tax to the Owner with respect to
earnings allocable to the Contract prior to receipt of payments under the
Contract.

In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owners being
retroactively determined to be the owners of the assets of the Separate Account.

Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.

Contracts Owned by Other than Natural Persons

Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the owner is a non-natural
person, e.g., a corporation, or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to Contracts held by a trust or other entity as an
agent for a natural person or to Contracts held by a tax-qualified retirement
plan described in sections 401,403(a), 403(b), 408, or 457 of the Code.
Purchasers should consult their own tax counsel or other tax adviser before
purchasing a Contract to be owned by a non-natural person.

Multiple Contracts

The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.

Tax Treatment of Assignments

An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.

Income Tax Withholding

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<PAGE>

as wages and at the rate of 10% from non- periodic payments. However, the Owner,
in most cases, may elect not to have taxes withheld or to have withholding done
at a different rate.

Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
(a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or distributions for a specified
period of 10 years or more; or (b) distributions which are required minimum
distributions; or (c) the portion of the distributions not includible in gross
income (i.e. return of after-tax contributions). Participants should consult
their own tax counsel or other tax adviser regarding withholding requirements.

Tax Treatment of Withdrawals--Non-Qualified Contracts

Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received:
(a)after the taxpayer reaches age 59 1/2; (b) after the death of the Owner;
(c) if the taxpayer is totally disabled (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her Beneficiary; (e) under an
immediate annuity; or (f) which are allocable to purchase payments made prior
to August 14, 1982.

The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals- Qualified Contracts," below.)

Qualified Plans

The Contracts offered by this Prospectus are designed to be suitable for use
under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and terms and conditions of each
specific plan. Owners, Annuitants and Beneficiaries are cautioned that benefits
under a Qualified Plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts issued pursuant to the
plan. Some retirement plans are subject to distribution and other requirements
that are not incorporated into the Company's administrative procedures. Contract
Owners, participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the Contract
comply with applicable law. Following are general descriptions of the types of
Qualified Plans with which the Contracts may be used. Such descriptions are not
exhaustive and are for general informational purposes only. The tax rules
regarding Qualified Plans are very complex and will have differing applications
depending on individual facts and circumstances. Each purchaser should obtain
competent tax advice prior to purchasing a Contract issued under a Qualified
Plan.

Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described in
this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts", below.)

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<PAGE>

On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.

H.R. 10 Plans. Section 401 of the Code permits self-employed individuals to
establish Qualified Plans for themselves and their employees, commonly referred
to as "H.R. 10" or "Keogh" plans. Contributions made to the Plan for the benefit
of the employees will not be included in the gross income of the employees until
distributed from the Plan. The tax consequences to participants may vary
depending upon the particular plan design. However, the Code places limitations
and restrictions on all Plans including on such items as: amount of allowable
contributions; form, manner and timing of distributions; transferability of
benefits; vesting and nonforfeitability of interests; nondiscrimination in
eligibility and participation; and the tax treatment of distributions,
withdrawals and surrenders. (See "Tax Treatment of Withdrawals--Qualified
Contracts" below.) Purchasers of Contracts for use with an H.R. 10 Plan should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.

Tax-Sheltered Annuities. Section 403(b) of the Code permits the purchase of
"tax-sheltered annuities" by public schools and certain charitable, educational
and scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the benefit of
their employees. Such contributions are not includible in the gross income of
the employees until the employees receive distributions from the Contracts. The
amount of contributions to the tax-sheltered annuity is limited to certain
maximums imposed by the Code. Furthermore, the Code sets forth additional
restrictions governing such items as transferability, distributions,
nondiscrimination and withdrawals. (See "Tax Treatment of Withdrawals--Qualified
Contracts" and "Tax Sheltered Annuities--Withdrawal Limitations" below.) Any
employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.

Individual Retirement Annuities. Section 408(b) of the Code permits eligible
individuals to contribute to an individual retirement program known as an
"Individual Retirement Annuity" ("IRA"). Under applicable limitations, certain
amounts may be contributed to an IRA which will be deductible from the
individual's gross income. These IRAs are subject to limitations on eligibility,
contributions, transferability and distributions. (See "Tax Treatment of
Withdrawals - Qualified Contracts" below.) Under certain conditions,
distributions from other IRAs and other Qualified Plans may be rolled over or
transferred on a tax-deferred basis into an IRA. Sales of Contracts for use with
IRAs are subject to special requirements imposed by the Code, including the
requirement that certain informational disclosure be given to persons desiring
to establish an IRA. Purchasers of Contracts to be qualified as Individual
Retirement Annuities should obtain competent tax advice as to the tax treatment
and suitability of such an investment.

Corporate Pension and Profit-Sharing Plans. Sections 401(a) and 401(k) of the
Code permit corporate employers to establish various types of retirement plans
for employees. These retirement plans may permit the purchase of the Contracts
to provide benefits under the Plan. Contributions to the Plan for the benefit of
employees will not be includible in the gross income of the employees until
distributed from the Plan. The tax consequences to participants may vary
depending upon the particular plan design. However, the Code places limitations
and restrictions on all plans including on such items as: amount of allowable
contributions; form, manner and timing of distributions; transferability of
benefits; vesting and nonforfeitability of interests; nondiscrimination in
eligibility and participation; and the tax treatment of distributions,
withdrawals and surrenders. (See "Tax Treatment of Withdrawals - Qualified
Contracts" below.) Purchasers of Contracts for use with Corporate Pension or
Profit-Sharing Plans should obtain competent tax advice as to the tax treatment
and suitability of such an investment.

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<PAGE>

Section 457 Plans. Under Section 457 of the Code, governmental and certain other
tax-exempt employers may establish deferred compensation plans for the benefit
of their employees which may invest in annuity contracts. The Code, as in the
case of Qualified Plans, establishes limitations and restrictions on
eligibility, contributions and distributions. Under these Plans, contributions
made for the benefit of the employees will not be includible in the employee's
gross income until distributed from the Plan.

Tax Treatment of Withdrawals--Qualified Contracts

In the case of a withdrawal under a Qualified Contract, a ratable portion of
the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Contract. Section 72(t) of the Code imposes a 10% penalty
tax on the taxable portion of any distribution from qualified retirement
plans, including Contracts issued and qualified under Code Sections 401 (H.R.
10 and Corporate Pension and Profit-Sharing Plans), 403(b) (Tax-Sheltered
Annuities) and 408(b) (Individual Retirement Annuities). To the extent
amounts are not includible in gross income because they have been rolled over
to an IRA or to another eligible Qualified Plan, no tax penalty will be
imposed. The tax penalty will not apply to the following distributions:
(a) if distribution is made on or after the date on which the Owner or
Annuitant (as applicable) reaches age 59 1/2; (b) distributions following the
death or disability of the Owner or Annuitant (as applicable) (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of substantially equal
periodic payments made not less frequently than annually for the life (or
life expectancy) of the Owner or Annuitant (as applicable) or the joint lives
(or joint life expectancies) of such Owner or Annuitant (as applicable) and
his or her designated Beneficiary; (d) distributions to an Owner or Annuitant
(as applicable) who has separated from service after he has attained age 55;
(e) distributions made to the Owner or Annuitant (as applicable) to the
extent such distributions do not exceed the amount allowable as a deduction
under Code Section 213 to the Owner or Annuitant (as applicable) for amounts
paid during the taxable year for medical care; (f) distributions made to an
alternate payee pursuant to a qualified domestic relations order; and
(g) distributions from an Individual Retirement Annuity for the purchase of
medical insurance (as described in Section 213(d)(1)(D) of the Code) for the
Owner or Annuitant (as applicable) and his or her spouse and dependents if
the Owner or Annuitant (as applicable)has received unemployment compensation
for at least 12 weeks. This exception will no longer apply after the Owner or
Annuitant (as applicable) has been re-employed for at least 60 days. The
exceptions stated in (d) and (f) above do not apply in the case of an
Individual Retirement Annuity. The exception stated in (c) above applies to
an Individual Retirement Annuity without the requirement that there be a
separation from service.

Generally, distributions from a qualified plan must commence no later than April
1 of the calendar year, following the year in which the employee attains age
70 1/2 or retires, whichever is later. Required distributions must be over a
period not exceeding the life expectancy of the individual or the joint lives or
life expectancies of the individual and his or her designated beneficiary. If
the required minimum distributions are not made, a 50% penalty tax is imposed as
to the amount not distributed. In addition, distributions in excess of $150,000
per year may be subject to an additional 15% excise tax unless an exemption
applies.

Tax-Sheltered Annuities--Withdrawal Limitations

The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's
Contract Value which represents contributions made by the Owner and does not
include any investment results. The limitations on withdrawals became
effective on January 1, 1989 and apply only to salary reduction contributions
made after December 31, 1988, to income attributable to such contributions
and to income attributable to amounts held as of December 31, 1988. The
limitations on

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<PAGE>

withdrawals do not affect rollovers or transfer between certain Qualified Plans.
Owners should consult their own tax counsel or other tax adviser regarding any
distributions.

FINANCIAL STATEMENTS

Financial statements of the Company and the Separate Account have been included
in the Statement of Additional Information.

LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Separate Account,
the Distributor or the Company is a party.

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

Item Page
- ---- ----
Company................................................................... 2
Independent Auditors...................................................... 2
Legal Opinions............................................................ 2
Distributor............................................................... 2
Yield Calculation for Prime Money Fund II Sub-Account..................... 2
Performance Information................................................... 3
Annuity Provisions........................................................ 4
Variable Annuity....................................................... 4
Fixed Annuity.......................................................... 4
Annuity Unit........................................................... 4
Mortality and Expense Guarantee........................................ 5
Financial Statements...................................................... 5

34
<PAGE>

{LOGO] FIRST
VARIABLE
LIFE INSURANCE
COMPANY

Marketing and Executive Office: Variable Service Center:
10 Post Office Square P.O. Box 1317
Boston, MA 02109 Des Moines, IA 50305-1317
Automated Information Line: (800) 59-FUNDS (800) 228-1035

VISTA
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
Funded in
FIRST VARIABLE ANNUITY FUND E

Prospectus
Dated: May 1, 1997

The Individual Flexible Purchase Payment Deferred Variable and Fixed Annuity
Contracts (the "Contracts") described in this Prospectus were issued by First
Variable Life Insurance Company (the "Company") prior to May 15, 1994 and on the
date of this Prospectus are available in a limited number of states ( FL, ID,
MT, NJ, OR, WA). The Contracts provide for accumulation of Contract Values and
payment of monthly annuity payments on a fixed and variable basis and are
designed for use by individuals in retirement plans on a Qualified or
Non-Qualified basis. (See "Definitions.")

This Prospectus contains information that an investor should know before
investing. A Statement of Additional Information about the Contracts and the
Separate Accounts, 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 can
be found on page 28 of this Prospectus. For a copy of the Statement of
Additional Information, which is available at no cost, write the Company at its
Variable Service Center or call the number shown above.

<PAGE>

TABLE OF CONTENTS

DEFINITIONS...................................................................1

HIGHLIGHTS....................................................................2

FEE TABLE.....................................................................3

CONDENSED FINANCIAL INFORMATION...............................................5

THE COMPANY...................................................................8

THE SEPARATE ACCOUNT..........................................................8
INVESTMENT OPTIONS ...........................................................9
Variable Investors Series Trust....................................9
Federated Insurance Series........................................10
General Account Option ...........................................10
Voting Rights.....................................................11
Substitution of Other Securities..................................11

CHARGES AND DEDUCTIONS.......................................................11
Deduction for Withdrawal Charge (Sales Load)......................11
Deduction for Mortality and Expense Risk Charge...................12
Deduction for Administrative Charge...............................12
Deduction for Annual Contract Maintenance Charge..................13
Deduction for Premium Taxes.......................................13
Deduction for Income Taxes........................................13
Deduction for Expenses of the Funds...............................13
Transfer Charge...................................................13
Elimination or Reduction of Charges and Deductions................13

THE CONTRACTS................................................................14
Application and Issuance of a Contract............................14
Ownership.........................................................14
Annuitant.........................................................15
Assignment........................................................15
Transfers by the Company..........................................15
Beneficiary.......................................................15
Change of Beneficiary.............................................15
Transfers of Contract Values During the Accumulation Period.......15
Telephone Transactions............................................16
Death Benefit Provided by the Contract............................16
Amount of Death Benefit Prior to Annuity Date.....................17
Amounts Payable on Death of Payee.................................17

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<PAGE>

ANNUITY PROVISIONS...........................................................18
Annuity Date and Annuity Option...................................18
Change in Annuity Date and Annuity Option.........................18
Allocation of Annuity Payments....................................18
Transfers During the Annuity Period...............................18
Annuity Options...................................................18
Frequency and Amount of Annuity Payments..........................19

PURCHASE PAYMENTS AND CONTRACT VALUE.........................................19
Purchase Payments.................................................19
Allocation of Purchase Payments...................................19
Dollar Cost Averaging.............................................20
Distribution......................................................20
Contract Value....................................................20
Accumulation Unit.................................................20

PERFORMANCE INFORMATION......................................................22
Prime Money Fund II Portfolio.....................................22
Other Portfolios..................................................22

TAX STATUS ..................................................................23
General...........................................................23
Diversification...................................................24
Contracts Owned by Other than Natural Persons.....................24
Multiple Contracts................................................25
Tax Treatment of Assignments......................................25
Income Tax Withholding............................................25
Tax Treatment of Withdrawals--Non-Qualified Contracts.............25
Qualified Plans...................................................25
Tax Treatment of Withdrawals--Qualified Contracts.................27
Tax-Sheltered Annuities--Withdrawal Limitations...................27

FINANCIAL STATEMENTS.........................................................27

LEGAL PROCEEDINGS............................................................27

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.................28

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<PAGE>

DEFINITIONS

Account - General Account and/or one or more of the Sub-Accounts of the Separate
Account.

Accumulation Period - The period during which Purchase Payments may be made
prior to the Annuity Date.

Accumulation Unit - A unit of measure used to calculate the Contract Value of a
Sub-Account of the Separate Account prior to the Annuity Date.

Annuitant - The natural person on whose life Annuity Payments are based.

Annuity Date - The date on which Annuity Payments begin.

Annuity Payments - The series of payments made to the Annuitant after the
Annuity Date under the Annuity Option elected.

Annuity Period - The period after the Annuity Date during which Annuity Payments
are made.