FIRST INVESTORS LIFE LEVEL PREMIUM VARIABLE LIF INS SEP AC B, 497, 1998-05-01

FIRST INVESTORS LIFE LEVEL PREMIUM VARIABLE LIF INS SEP AC B
497, 1998-05-01

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FIRST INVESTORS LIFE LEVEL PREMIUM VARIABLE LIFE INSURANCE
(SEPARATE ACCOUNT B)
LEVEL PREMIUM VARIABLE LIFE INSURANCE POLICIES
ISSUED BY
FIRST INVESTORS LIFE INSURANCE COMPANY
95 Wall Street, New York, N.Y. 10005/(212) 858-8200

INVESTORS ARE ADVISED TO READ AND RETAIN THIS PROSPECTUS FOR FUTURE
REFERENCE.

This Prospectus describes the Level Premium Variable Life Insurance Policy
(the "Policy") offered by First Investors Life Insurance Company ("First
Investors Life"). The purpose of the Policy is to provide life insurance
coverage and to lessen the economic loss resulting from the death of the
Insured.

Policy premiums net of certain expenses ("net annual premiums") are paid
into First Investors Life Level Premium Variable Life Insurance (Separate
Account B) ("Separate Account B"). A Policyowner elects to have his or her
net premiums paid into one or more of the nine subaccounts of Separate
Account B ("Subaccounts"). The assets of each Subaccount are invested at net
asset value in shares of a related series of First Investors Life Series Fund
(the "Life Series Fund"), an open-end diversified management investment
company. Target Maturity 2007 Fund and Target Maturity 2010 Fund are not
offered to Policyowners of Separate Account B.

The Policy is similar to a limited payment whole life insurance policy
with a death benefit, level premiums, loan privileges and other features that
are usually associated with a limited payment insurance policy. Unlike the
usual whole life insurance policy, the Policy is "variable" because the
amount of the insurance coverage and the cash values may increase or decrease
depending on the investment performance of the chosen Subaccount or
Subaccounts of Separate Account B.

The death benefit during the first Policy year will be the face amount
shown on the Policy (the "Guaranteed Insurance Amount"). On each Policy
anniversary, the amount of coverage may increase or decrease depending on the
investment results of the designated Subaccount or Subaccounts, but it will
never be less than the Guaranteed Insurance Amount as long as there is no
outstanding Policy loan and premiums are paid when due.

The cash value of the Policy will vary from day to day, depending on the
investment results of the designated Subaccount or Subaccounts, but with no
guaranteed minimum. The Policyowner bears the entire investment risk and the
Policy's cash value (not the death benefit) could decline to zero.

Replacing existing insurance with the Policy described in this Prospectus
may not be to your advantage because of, among other things, the cost of the
Policy during the first few years.

This Prospectus sets forth the information about the Policies and Separate
Account B that a prospective investor should know before investing and should
be kept for future reference.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED THESE SECURITIES OR PASSED UPON
THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

THIS PROSPECTUS IS VALID ONLY WHEN ATTACHED TO THE
CURRENT PROSPECTUS FOR FIRST INVESTORS LIFE SERIES FUND.

The date of this Prospectus is April 30, 1998

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CHARGES AND EXPENSES

First Investors Life guarantees that it will not increase the amount of
premiums, charges deducted from premiums and the charges to the Subaccount(s)
for mortality and expense risks.

CHARGES DEDUCTED FROM PREMIUMS

AMOUNT ALLOCATED TO SELECTED SUBACCOUNT. The amount allocated to the
selected Subaccount(s) for a standard mortality risk Policy is the premium
you pay less the premiums for any optional insurance benefits and less the
charges listed below, which are allocated to First Investors Life's General
Account.

ANNUAL CHARGE. A $30 charge, which will be made in each Policy year, is
for annual administrative expenses, including premium billing and collection,
recordkeeping, processing death benefit claims, cash surrenders and Policy
changes, reporting and other communications to Policyowners.

ADDITIONAL FIRST YEAR ADMINISTRATIVE CHARGE. A charge in the first
Policy year at the rate of $5 per $1,000 of initial face amount of insurance
or a pro rata portion thereof, is made to cover administrative expenses in
connection with the issuance of the Policy. Such expenses include medical
examinations, insurance underwriting costs, and costs incurred in processing
applications and establishing permanent Policy records.

SALES LOAD. A charge, which is deemed to be a "sales load" as defined
in the 1940 Act, not to exceed the following percentages of the annual
premium, will be charged as follows:

<TABLE>

YEARS MAXIMUM PERCENTAGES
----- -------------------
<S> <C>
1..........................30%
2-4.........................10%
5 and thereafter....................6%

</TABLE>

The amount of the "sales load" in any Policy year is not specifically
related to sales expenses for that year.

STATE PREMIUM TAX CHARGE. This charge is 2% of the premium. Premium
taxes vary from state to state and the 2% rate is the average rate expected
to be paid on premiums received in all states over the lifetime of the
Insured covered by the Policy.

RISK CHARGE. This is a maximum 1.5% charge of the premium, to cover the
contingency that the Insured would die at a time when the guaranteed minimum
death benefit exceeds the death benefit which would have been payable in the
absence of the guaranteed minimum death benefit.

OTHER CHARGES. The extra premium charged for sub-standard life
insurance risk and the charge for premiums not paid on an annual basis is
deducted from the gross premium upon receipt.

Deductions and the accrual for the above charges begin on a Policy's
issue date. For the fiscal year ended December 31, 1997, First Investors
Life received $5,087,000 in sales charges.

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EXPENSES CHARGED TO SEPARATE ACCOUNT B

CHARGE FOR MORTALITY AND EXPENSE RISKS. First Investors Life makes a
daily charge to each Subaccount for mortality and expense risks assumed by
First Investors Life. The charge is computed at an effective annual rate of
.50% of the value of the Subaccount's assets attributable to the Policies.

The mortality risk assumed is that the Insured may live for a shorter
period of time than estimated and, therefore, a greater amount of death
benefits than expected will be payable in relation to the amount of the
premiums received. The expense risk assumed is that expenses incurred in
issuing and administering the Policies will be greater than estimated.

COST OF INSURANCE. After the net premium is placed into Separate Account
B, a charge is made for the cost of insurance protection (see "Cost of
Insurance Protection").

CHARGES FOR INCOME TAXES. First Investors Life currently does not charge
Separate Account B for its corporate Federal income taxes that may be
attributable to Separate Account B. However, First Investors Life may make
such a charge in the future. Charges for other applicable taxes attributable
to Separate Account B may also be made (see "Charges for First Investors
Life's Income Taxes").

EXPENSES CHARGED TO THE FUND

BROKERAGE CHARGES. The Funds bear the cost of brokerage commissions,
transfer taxes and other fees related to securities transactions.

OTHER CHARGES. Each Subaccount purchases shares of the corresponding
Fund at net asset value. The net asset value of those shares reflects
management fees and expenses already deducted from the assets of the Fund.
Those fees and expenses are described in detail in Life Series Fund's
Prospectus.

GENERAL DESCRIPTION

FIRST INVESTORS LIFE INSURANCE COMPANY

First Investors Life Insurance Company, 95 Wall Street, New York, New
York 10005 ("First Investors Life"), a stock life insurance company
incorporated under the laws of the State of New York in 1962, writes life
insurance, annuities and accident and health insurance. In addition to
Separate Account B, First Investors Life also maintains First Investors Life
Variable Annuity Fund A, First Investors Life Variable Annuity Fund C and
First Investors Life Variable Annuity Fund D. Variable annuity contracts
funded through those accounts are offered through their own prospectuses.
First Investors Consolidated Corporation ("FICC") owns all of the voting
common stock of First Investors Management Company, Inc. ("FIMCO" or
"Adviser") and all of the outstanding stock of First Investors Life, First
Investors Corporation ("FIC" or "Underwriter") and Administrative Data
Management Corp., the transfer agent for Life Series Fund. Mr. Glenn O. Head
controls FICC and, therefore, controls the Adviser and First Investors Life.

First Investors Life assumes all of the insurance risks under the Policy
and its assets support the Policy's benefits. At December 31, 1997, First
Investors Life had assets of over $826 million and

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over $3.189 billion of life insurance in force. (See First Investors Life's
financial statements under "Financial Statements.")

SEPARATE ACCOUNT B

First Investors Life Level Premium Variable Life Insurance (Separate
Account B), also known by its proprietary name, "Insured Series Plan"
("Separate Account B"), was established on June 4, 1985 under the provisions
of the New York Insurance Law. Separate Account B is a separate investment
account to which assets are allocated to support the benefits under the Level
Premium Variable Life Insurance Policy (the "Policy") offered by First
Investors Life. Separate Account B is registered with the Securities and
Exchange Commission ("Commission") as a unit investment trust under the
Investment Company Act of 1940, as amended (the "1940 Act"), but such
registration does not involve any supervision by the Commission of the
management or investment practices or policies of Separate Account B.

The assets of each subaccount of Separate Account B (the "Subaccount")
are invested at net asset value in shares of the corresponding Fund
(singularly, "Fund," and collectively, "Funds") of Life Series Fund. For
example, the Blue Chip Subaccount invests in the Blue Chip Fund, the
Government Subaccount invests in the Government Fund, and so on. Life Series
Fund's Prospectus describes the risks attendant to an investment in each Fund.

Any and all distributions received from a Fund will be reinvested to
purchase additional shares of the distributing Fund at net asset value for
the corresponding Subaccount. Accordingly, no capital distributions from the
Policies are anticipated. Shares of the Funds in the Subaccounts will be
valued at their net asset value.

Separate Account B is divided into the following Subaccounts, each of
which corresponds to the following Fund of Life Series Fund:

<TABLE>

SEPARATE ACCOUNT
B SUBACCOUNT FUND
---------------- ----
<S> <C>
Blue Chip Subaccount Blue Chip Fund
Cash Management Subaccount Cash Management Fund
Discovery Subaccount Discovery Fund
Government Subaccount Government Fund
Growth Subaccount Growth Fund
High Yield Subaccount High Yield Fund
International Securities Subaccount International Securities Fund
Investment Grade Subaccount Investment Grade Fund
Utilities Income Subaccount Utilities Income Fund

</TABLE>

The assets of Separate Account B are the property of First Investors
Life. Each Policy provides that the portion of the assets of Separate Account
B equal to the reserves and other liabilities under the Policy with respect
to Separate Account B shall not be chargeable with liabilities arising out of
any other business that First Investors Life may conduct. In addition to the
net assets and other liabilities for the Policies, the assets of Separate
Account B include amounts derived from expenses charged to Separate Account B
by First Investors Life (see "Charges and Expenses"). From time to time these
additional amounts will be transferred in cash by First Investors Life to its
General Account. Before making a transfer, First Investors Life will consider
any possible adverse impact

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that the transfer may have on Separate Account B.

First Investors Life reserves the right, subject to compliance with
applicable law, including approval of Policyowners if so required, (1) to
invest the assets of Separate Account B in the shares of any investment
companies or series thereof or any investment permitted by law; (2) to
transfer assets determined by First Investors Life to be associated with the
class of policies to which the Policies belong from Separate Account B to
another separate account by withdrawing the same percentage of each
investment in Separate Account B with appropriate adjustments to avoid odd
lots and fractions; (3) to operate Separate Account B as a "management
company" under the 1940 Act, or in any other form permitted by law, the
investment adviser of which would be First Investors Life or an affiliate;
(4) to deregister Separate Account B under the 1940 Act; and (5) to operate
Separate Account B under the general supervision of a committee any or all
the members of which may be interested persons (as defined in the 1940 Act)
of First Investors Life or an affiliate, or to discharge the committee.

INVESTMENT OBJECTIVES AND RISK FACTORS

When a Policy is purchased, the Policyowner decides to place the net
premium (premium less certain deductions) into at least one but not more than
five of the Subaccounts of Separate Account B to support the Policy's
benefits, provided the allocation to any one Subaccount is not less than 10%
of the net premium. The allocation is made on the Policy's issue date and at
the beginning of each Policy year thereafter. A portion of the allocated
amount covers the cost of insurance protection. Coverage under the Policy
begins in accordance with the terms of the Conditional Receipt or the issue
date of the Policy in accordance with the terms of the Policy. That
Subaccount in turn invests in the corresponding Fund of Life Series Fund, as
set forth above. Twice a year, at any time during the Policy year, the
Policyowner may transfer all or part of the cash value from one Subaccount to
another provided the cash value is not allocated to more than five of the
Subaccounts, and provided the allocation to any one Subaccount is not less
than 10% of the cash value. The transfer becomes effective on the date of
receipt of the transfer request. Each Subaccount corresponds to a Fund of
Life Series Fund.

The net premium increases over time as charges and expenses decline. As
an example, using the policies illustrated on pages 21 through 23, First
Investors Life would allocate to the selected Subaccount(s) the following
amounts for each Policy year:

<TABLE>

MALE ISSUE MALE ISSUE MALE ISSUE
AGE 10 AGE 25 AGE 40
BEGINNING $600 ANNUAL $1,200 ANNUAL $1,800 ANNUAL
OF POLICY PREMIUM FOR PREMIUM FOR PREMIUM FOR
YEAR STANDARD RISK STANDARD RISK STANDARD RISK
--------- ------------- ------------- -------------
<S> <C> <C> <C>
1st................... $170.81 $ 508.46 $ 927.23
2nd-4th............... 489.00 1,008.00 1,527.00
5th and later......... 513.00 1,056.00 1,599.00

</TABLE>

The investment objectives and general characteristics of each Fund of
Life Series Fund which are offered to Policyowners of Separate Account B are
set forth below. See "Life Series Fund." There is no assurance that the
investment objective of any Fund of Life Series Fund will be realized.
Because each Fund of Life Series Fund is intended to serve a different
investment objective, each is subject to varying degrees of financial and
market risks. When deciding which Subaccount to

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utilize, a Policyowner should consider that the Policy's investment return
will affect the death benefit, the cash value and the loan value of the
Policy.

Because the Life Series Fund sells its shares to more than one separate
account funding variable annuity contracts or variable life insurance
policies, the possibility arises that violation of the Federal tax laws by
another separate account investing in Life Series Fund could cause the
Policies funded through Separate Account B to lose their tax-deferred status,
unless remedial action were taken. There are also special risk factors which
should be considered before taking advantage of the Policy Loan Privilege.
These risk factors are discussed in the "Loan Provision" section of this
prospectus.

LIFE SERIES FUND

First Investors Life Series Fund is a diversified open-end management
investment company registered under the 1940 Act. Life Series Fund consists
of eleven separate Funds, nine of which are offered to Policyowners of
Separate Account B. Target Maturity 2007 Fund and Target Maturity 2010 Fund,
separate Funds of Life Series Fund, are not offered to Policyowners of
Separate Account B. The shares of the Funds are not sold directly to the
general public but are available only through the purchase of an annuity
contract or a variable life insurance policy issued by First Investors Life.

The investment objectives of each Fund of Life Series Fund which are
offered to Policyowners of Separate Account B are as follows:

BLUE CHIP FUND. The investment objective of Blue Chip Fund is to seek
high total investment return consistent with the preservation of capital.
This goal will be sought by investing, under normal market conditions,
primarily in equity securities of "Blue Chip" companies that the Adviser
believes have potential earnings growth that is greater than the average
company included in the Standard & Poor's 500 Composite Stock Price Index.

CASH MANAGEMENT FUND. The objective of Cash Management Fund is to seek
to earn a high rate of current income consistent with the preservation of
capital and maintenance of liquidity. The Cash Management Fund will invest in
money market obligations, including high quality securities issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, bank
obligations and high grade corporate instruments. An investment in the Fund
is neither insured nor guaranteed by the U.S. Government. There can be no
assurance that the Fund will be able to maintain a stable net asset value of
$1.00 per share.

DISCOVERY FUND. The investment objective of Discovery Fund is to seek
long-term capital appreciation, without regard to dividend or interest
income, through investment in the common stock of companies with small to
medium market capitalization that the Adviser considers to be undervalued or
less well known in the current marketplace and to have the potential for
capital growth.

GOVERNMENT FUND. The investment objective of Government Fund is to seek
to achieve a significant level of current income which is consistent with
security and liquidity of principal by investing, under normal market
conditions, primarily in obligations issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities (including
mortgage-backed securities).

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GROWTH FUND. The investment objective of Growth Fund is to seek long-term
capital appreciation. This goal will be sought by investing, under normal
market conditions, primarily in common stocks of companies and industries
selected for their growth potential.

HIGH YIELD FUND. The primary objective of High Yield Fund is to seek to
earn a high level of current income. The Fund actively seeks to achieve its
secondary objective of capital appreciation to the extent consistent with its
primary objective. The Fund seeks to attain its objectives primarily through
investments in lower-grade, high-yielding, high risk debt securities.
Investments in high yield, high risk securities, commonly referred to as
"junk bonds," may entail risks that are different or more pronounced than
those involved in higher-rated securities. See "Description of Certain
Securites, Other Investment Policies and Risk Factors -- High Yield
Securities" in Life Series Fund's Prospectus.

INTERNATIONAL SECURITIES FUND. The primary objective of International
Securities Fund is to seek long-term capital growth. As a secondary
objective, the Fund seeks to earn a reasonable level of current income.
These objectives are sought, under normal market conditions, through
investment in common stocks, rights and warrants, preferred stocks, bonds and
other debt obligations issued by companies or governments of any nation,
subject to certain restrictions with respect to concentration and
diversification.

INVESTMENT GRADE FUND. The investment objective of Investment Grade
Fund is to seek a maximum level of income consistent with investment in
investment grade debt securities. The Fund seeks to achieve its objective
primarily by investing, under normal market conditions, in debt securities of
U.S. issuers that are rated in one of the four highest rating categories by
Moody's Investors Service, Inc. or Standard & Poor's Ratings Group or, if
unrated, are deemed to be of comparable quality by the Adviser.

UTILITIES INCOME FUND. The primary objective of Utilities Income Fund
is to seek high current income. Long-term capital appreciation is a
secondary objective. These objectives are sought, under normal market
conditions, through investment in equity and debt securities issued by
companies primarily engaged in the public utilities industry.

No offer is made of a Policy funded by the underlying Fund unless a
current Life Series Fund Prospectus has been delivered. Each Fund of the
Life Series Fund may be referred to as "Fund" or "Series" in the Policies.
For more complete information about each of the Funds underlying Separate
Account B, including management fees and other expenses, see Life Series
Fund's Prospectus. The Prospectus details each Fund's investment goals,
management strategies, investment restrictions, portfolio turnover rate, the
market and financial risks of an investment in the Fund's shares, as well as,
the risk of investing in a fund that sells its shares to other separate
accounts including variable life insurance company separate accounts.

It is important to read the Prospectus carefully before you decide to
invest. Additional copies of Life Series Fund's Prospectus, which is attached
hereto, may be obtained by writing to First Investors Life Insurance Company,
95 Wall Street, New York, New York 10005 or by calling (212) 858-8200. There
can be no assurance that any of the objectives of the Funds will be achieved.

CHANGES IN FUND INVESTMENT POLICIES AND RESTRICTIONS

The investment policies and restrictions of the Funds are set forth
above and within Life Series

<PAGE>

Fund's Prospectus. Fundamental policies of a Fund may not be changed without
the approval of a majority vote of shareholders of that Fund in accordance
with the 1940 Act. Policyholders investing in the Subaccount which invests
in that Fund will have an opportunity to provide voting instructions in
connection with any such vote (see "Voting Rights"). Changes in such
investment policies may be made without such approval when required by state
insurance regulatory authorities. The investment policies may not be changed
if such change is disapproved by First Investors Life although any such
disapproval may not be unreasonable. Such a change would be disapproved only
if it violated state law or was prohibited by state regulatory authorities or
if First Investors Life determined that the change would have an adverse
effect on its general account because it would result in unsound or overly
speculative investments. If First Investors Life disapproves a change, a
summary of the change and the reasons for disapproval will be set forth in
the Proxy Statement for Life Series Fund's next Meeting of Shareholders.

ADVISER

First Investors Management Company, Inc. (the "Adviser") is the
investment adviser of each Fund. The Adviser supervises and manages the
investments and operations of each Fund, except for International Securities
Fund and Growth Fund. The Adviser is a New York Corporation located at 95
Wall Street, New York, New York 10005. The Adviser serves as such under an
advisory agreement dated June 13, 1994, which was approved, with respect to
each Fund, by Life Series Fund's Board of Trustees and by the shareholders of
each Fund. See Life Series Fund's Prospectus for the amount of advisory fees
paid by each Fund for the fiscal year ended December 31, 1997.

SUBADVISER

Wellington Management Company, 75 State Street, Boston, MA 02109 ("WMC"
or "Subadviser"), has been retained by the Adviser and Life Series Fund on
behalf of International Securities Fund and Growth Fund as each of those
Fund's investment subadviser. The Subadviser serves as such under a
subadvisory agreement dated June 13, 1994 which was approved by Life Series
Fund's Board of Trustees and by the shareholders of the International
Securities Fund and Growth Fund. The Adviser has delegated discretionary
trading authority to WMC with respect to all the assets of International
Securities Fund and Growth Fund, subject to the continuing oversight and
supervision of the Adviser and the Fund's Board of Trustees. As compensation
for its services, WMC is paid by the Adviser, and not by either Fund, a fee
which is computed daily and paid monthly.

UNDERWRITER

First Investors Life and Separate Account B have entered into an
Underwriting Agreement with their affiliate, FIC, 95 Wall Street, New York,
New York 10005. For the fiscal years ended December 31, 1995, 1996, and
1997, FIC received fees of $4,963,368, $5,207,230, and $4,360,945,
respectively, in connection with the distribution of Policies in a continuous
offering. First Investors Life has reserved the right in the Underwriting
Agreement to sell the Policies directly. The Policies are sold by insurance
agents licensed to sell variable life insurance policies, who are registered
representatives of the Underwriter or broker-dealers who have sales
agreements with the Underwriter.

<PAGE>

YEAR 2000. Like other separate accounts, Separate Account B could be
adversely affected if the computer and other information processing systems
used by First Investors Life, the underlying Funds, the Adviser, Transfer
Agent and other service providers are not properly programmed to process
date-related information on and after January 1, 2000. Such systems
typically have been programmed to use a two-digit number to represent the
year for any date. As a result, computer systems could incorrectly
misidentify "00" as 1900, rather than 2000, and make mistakes when performing
operations. First Investors Life, the Funds, the Adviser and Transfer Agent
are taking steps that they believe are reasonably designed to address the
Year 2000 problem for computer and other systems used by them and are
obtaining assurances that comparable steps are being taken by other service
providers. However, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Separate Account B. Nor can
the Separate Account B estimate the extent of any impact.

THE VARIABLE LIFE POLICY

GENERAL

The following discussion summarizes important provisions of the Policy
offered by this Prospectus. Appendix I to this Prospectus contains summaries
of other provisions. These discussions assume that premiums have been duly
paid and there have been no Policy loans. The death benefit and cash value
are affected if premiums are not duly paid or if a Policy loan is made. For
information about a default in premium payment, see "Premiums-Default and
Options on Lapse." For loan information, see "Loan Provision." Policy years
and anniversaries will be measured from the Date of Issue, and each Policy
year will commence on the anniversary of the Date of Issue. The Date of
Issue will generally be the date on which the application is approved. The
Date of Issue may be backdated to save age but it cannot be earlier than
either (a) the date the application is signed or (b) a date 15 days prior to
the date on which the application is approved.

DEATH BENEFIT

The death benefit is the amount paid to the beneficiary at the death of
the Insured. It will be the sum of the Guaranteed Insurance Amount (face
amount of the Policy) plus, if positive, the variable insurance amount for
each selected Subaccount as described below. The benefit will be increased to
reflect any insurance on the life of the Insured added by rider and any
premium paid which applies to a period of time beyond the Policy month in
which the Insured dies. It will be reduced by any Policy loan and loan
interest and any unpaid premium which applies to a period prior to and
including the Policy month in which the Insured dies.

Generally, payment is made within seven days after all claim
requirements are received by First Investors Life at its Home Office.
Interest is paid on death proceeds from the date of death until payment is
made at the annual rate First Investors Life is paying under the payment
option when proceeds are left on deposit with First Investors Life, or at a
higher rate if required by law.

THE GUARANTEED MINIMUM. The death benefit is guaranteed never to be less
than the Policy's face amount. The Policy's face amount is constant
throughout the life of the Policy. During the first Policy year, the death
benefit is equal to the Guaranteed Insurance Amount. Thereafter, the death
benefit is determined on each Policy anniversary, and it remains level during
the following Policy year. The death benefit payable, therefore, depends on
the Policy year in which the

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Insured dies.

THE VARIABLE INSURANCE AMOUNT. The death benefit is made up of two
parts: the Guaranteed Insurance Amount and, if positive, the variable
insurance amount for each selected Subaccount. The variable insurance amount
reflects the investment results of the selected Subaccount(s). During the
first Policy year, the death benefit is the Guaranteed Insurance Amount
because the variable insurance amount is zero. On the first Policy
anniversary, and on each anniversary thereafter, the investment results for
the preceding Policy year are ascertained. If the net investment return on
the Policy's benefit base ("Net Investment Return") for each selected
Subaccount is 4%, then the variable insurance amount does not change. The
"benefit base" is the amount at work earning a return under a Policy.

If the Net Investment Return for each selected Subaccount for the
preceding Policy year is greater than 4%, the variable insurance amount
increases. If the Net Investment Return is less than 4%, the variable
insurance amount decreases (but the death benefit never goes below the
Guaranteed Insurance Amount). The variable insurance amount is set on each
Policy anniversary and remains at that amount until the next Policy
anniversary. The percentage change in the death benefit is not the same as
the Net Investment Return.

We call the amount by which the Net Investment Return is more or less
than 4% the "investment return." The change in the variable insurance amount
on a Policy anniversary equals the amount of insurance purchased under a
Policy or the amount of insurance coverage cancelled under a Policy which
results from positive or negative investment return, respectively. To
calculate the change in the variable insurance amount, First Investors Life
uses a net single premium per $1 of paid-up whole life insurance based on the
Insured's age at the anniversary. Thus, if the investment return for a male
age 25 is $100, positive or negative, the variable insurance amount will
increase or decrease by $542 (see net single premium amounts on next page).

For example, using the policy illustration for a male issue age 25 on
Page 22, and assuming the 8% hypothetical gross annual investment return
(equivalent to a Net Investment Return of approximately 6.55%), the change in
the variable insurance amount on the 6th Policy anniversary and the change on
the 12th Policy anniversary are calculated as follows:

<TABLE>
CALCULATION OF CHANGE IN
VARIABLE INSURANCE ADJUSTMENT
AMOUNT AT END OF POLICY YEAR
----------------------------
6 12
--------- ----------
<S> <C> <C>
(1) Cash Value End of Prior Year................ $4,972.00 $14,529.00
(2) Net Premium................................. 1,056.00 1,056.00
(3) Benefit Base Beginning of
Current Policy Year: (1)+(2)................ 6,028.00 15,585.00
(4) Actual Net Investment Return
(.064399) less the Base
Rate of Return which is
the Assumed Rate (.04)...................... .024399 .024399
(5) Investment Return (3)x(4)................... 147.08 380.25
(6) Net Single Premium at
End of Current Year......................... 0.22416 0.27338
(7) Change in Variable Insurance Adjustment
Amounts (5) divided by (6).................. $ 656.14 $ 1,390.92
Figures are rounded.
</TABLE>

<PAGE>

It should be noted that, as shown in the table below, the net single
premium increases as the Insured advances in age and thus larger dollar
amounts of investment return are required each year to result in the same
increases or decreases in the variable insurance amount.

NET SINGLE PREMIUM. A Policy includes a table of net single premiums
used to convert the investment return for a Policy into increases or
decreases in the variable insurance amount. This purchase basis does not
depend upon the risk classification of a Policy or any changes in the
Insured's health after issue of a Policy. The net single premium will be
lower for a Policy issued to a female than for a Policy issued to a male, as
shown below.

<TABLE>
VARIABLE INSURANCE
ADJUSTMENT AMOUNT
NET SINGLE PREMIUM PURCHASED OR CANCELLED
MALE PER $1.00 OF VARIABLE BY $1.00 OF
ATTAINED AGE INSURANCE AMOUNT INVESTMENT RETURN
------------ --------------------- ----------------------
<S> <C> <C>
5 $.09884 $10.12
15 .13693 7.30
25 .18452 5.42
35 .25593 3.91
45 .35291 2.83
55 .47352 2.11
65 .60986 1.64

</TABLE>

<TABLE>
VARIABLE INSURANCE
ADJUSTMENT AMOUNT
NET SINGLE PREMIUM PURCHASED OR CANCELLED
FEMALE PER $1.00 OF VARIABLE BY $1.00 OF
ATTAINED AGE INSURANCE AMOUNT INVESTMENT RETURN
------------ --------------------- ----------------------
<S> <C> <C>

5 $.08195 $12.20
15 .11326 8.83
25 .15684 6.38
35 .21872 4.57
45 .30185 3.31
55 .40746 2.45
65 .54017 1.85

</TABLE>

The variable insurance amount is cumulative and reflects the
accumulation of increases and decreases from past Policy years. The amount
may be positive or may be negative, depending on the investment performance
of the designated Subaccount(s) during the time the Policy is in force. If,
at the time of the Insured's death, the variable insurance amount is
negative, then the insurance benefit is the Guaranteed Insurance Amount. Good
investment performance must first offset any negative variable insurance
amount before there can be a positive amount.

An example of the death benefit using the policy illustration for a male
issue age 25 on Page 22, and assuming the 8% hypothetical gross annual
investment return (equivalent to a Net Investment Return of approximately
6.55%), the death benefit shown for the end of Policy year 5 would increase
to the amount shown for the end of Policy year 6 for the Policy, as follows:

<PAGE>

<TABLE>

GUARANTEED
INSURANCE VARIABLE
VARIABLE LIFE AMOUNT + INSURANCE = DEATH
POLICY MINIMUM AMOUNT BENEFIT
------------- ---------- --------- --------
<S> <C> <C> <C>
End of Policy Year 5.... $51,908 $1,489 $53,398
Increase................ -- 657 657 (1.2% Increase)
End of Policy Year 6.... $51,908 $2,146 $54,055

</TABLE>

If, instead, the gross annual investment return in the year illustrated
had been 0% (equivalent to a Net Investment Return of approximately -1.45%),
the death benefit would have decreased by $1,464 (a 2.7% decrease), and the
death benefit for the end of Policy year 6 would have been $51,934.

At a given Net Investment Return rate, the dollar amount of an increase
or decrease in the variable insurance amount is greater when assets in the
Subaccount(s) supporting the death benefit under a Policy are greater.
Therefore, the change in the variable insurance amount (which affects the
change in the death benefit) is expected to be greater in the later Policy
years when those assets are expected to be higher in relation to the death
benefit, than in the early Policy years when those assets are relatively low.

For example, as shown in the example above for a male issue age 25
assuming the 8% hypothetical gross annual investment return (equivalent to a
Net Investment Return of approximately 6.55%), the death benefit for the end
of Policy year 6 is 1.2% higher than the death benefit for the end of Policy
year 5. The death benefit for that Policy at the end of Policy year 12,
assuming the 8% hypothetical gross annual investment return, would be 2.4%
higher than the death benefit for the end of Policy year 11 (not shown on
Page 22), as follows:

<TABLE>

GUARANTEED
INSURANCE VARIABLE
VARIABLE LIFE AMOUNT + INSURANCE = DEATH
POLICY MINIMUM AMOUNT BENEFIT
------------- ---------- --------- --------
<S> <C> <C> <C>
End of Policy Year 11... $51,908 $7,258 $59,166
Increase................ -- 1,391 1,391 (2.4% Increase)
End of Policy Year 12... $51,908 $8,649 $60,557

</TABLE>

Where a Policy's death benefit for a Policy year (after the first Policy
year) was equal to the Guaranteed Insurance Amount because the variable
insurance amount was negative, the death benefit would increase above the
Guaranteed Insurance Amount on a Policy anniversary only if the Net
Investment Return for the preceding Policy year was sufficiently greater than
4% to result in a positive variable insurance amount and, accordingly, a
death benefit above the Guaranteed Insurance Amount. For example, assume the
Policy for a male issue age 25 illustrated on Page 22 had a 0% hypothetical
gross annual investment return for the first five Policy years (which results
in a negative variable insurance amount). In order for there to be an
increase in the death benefit above the Guaranteed Insurance Amount for
Policy year 7 (the amount shown for the end of Policy year 6), the Net
Investment Return for Policy year 6 would have to be at least 17.5%.

NET INVESTMENT RETURN. On each Policy anniversary, the Net Investment
Return of the designated Subaccount(s) is computed separately for each
Policy. The Net Investment Return

<PAGE>

reflects the investment performance of each selected Subaccount from the
first day of the Policy year until the last day of the Policy year. It
reflects each Subaccount's:

Investment income (net of Fund expenses);
Plus realized and unrealized capital gains;
Minus realized and unrealized capital losses;
Minus charges, if any, for taxes;
Minus a charge not exceeding .50% per year for mortality and expense risks.

The method of calculating the Net Investment Return is detailed in the
Policy. The Net Investment Return for a Policy year is not the same as the
Net Investment Return for the Subaccount(s) for a calendar year unless a
Policy's anniversary is the last day of the calendar year.

VALUATION OF ASSETS. For purposes of computing the Net Investment
Return, the value of the assets of each Subaccount are determined as of the
close of business on each business day.

First Investors Life daily calculates the asset valuation of each
Subaccount. The net asset value of a Fund's share is determined by the Fund
in the manner set forth in Life Series Fund's prospectus.

CASH VALUE

AMOUNT OF CASH VALUE. The cash value of the Policy on any date is the
sum of the cash value you have in each Subaccount in which you have invested.
The amounts of the cash value you have in each Subaccount will vary daily
depending on investment experience. The cash value of each Subaccount at the
end of each Policy year is the amount of the tabular cash value attributable
to the Subaccount(s) on that date plus or minus the net single premium for
the current variable insurance amount attributable to the Subaccount(s) on
that date. If the date is other than the Policy anniversary date, the cash
value will be increased or decreased depending on the investment results of
the Subaccount(s) selected for the time elapsed since the last Policy
anniversary. This assumes that no premium is due and unpaid. In calculating
the cash value, adjustments are made for the net premium, the investment
results and the cost of insurance protection. (See below for an explanation
of the Cost of Insurance Protection.)

For example, using the Policy illustration for a male issue age 25 on
Page 22, and assuming the 8% hypothetical gross annual investment return
(equivalent to a Net Investment Return of approximately 6.55%), the cash
value shown for the end of Policy year 5 would increase to the amount shown
for the end of Policy year 6 for the Policy as follows:

<TABLE>
<S> <C> <C>
(1) Cash Value End of Prior Year.............................. $4,972
(2) Net Premium............................................... 1,056
(3) Benefit Base Beginning of Current Policy Year 6: (1)+(2).. 6,028
(4) Actual Rate of Return..................................... .064399
(5) Actual Investment Return (3)x(4).......................... 388
(6) Benefit Base End of Policy Year 6: (3)+(5)................ 6,416
(7) Cost of Insurance During Policy Year 6.................... 84
(8) Cash Value End of Policy Year 6: (6)-(7).................. 6,332

</TABLE>

The cash value is not guaranteed. The Policy offers the possibility of
cash value appreciation resulting from good investment performance, although
there is no assurance that such appreciation will occur. It is also possible,
due to poor investment performance, for the cash value to decline to the
point of having no value or, in fact, a negative value. Subsequent net
premium payments and

<PAGE>

investment returns would be credited against the negative cash value. The
Policyowner bears all the investment risk as to the amount of the cash value. It
is unlikely that the Policy will have any cash value until the later months of
the first Policy year (see "Additional First Year Administrative Charge"). The
cash value stated in the illustrations on Pages 21 to 23 and Pages 33 to 35 are
at the end of the Policy years shown, assuming the various hypothetical
investment returns, the cash value as of the end of the preceding Policy year,
adjusted to reflect the Net Investment Return of each Subaccount in which you
have invested, the cost of the insurance protection and premiums paid since the
Policy's last anniversary.

TRANSFER RIGHTS. Twice a year, at any time during the Policy year, you may
transfer part or all of your cash value from the Subaccounts you are in to any
other Subaccounts provided the cash value is not allocated to more than five of
the Subaccounts, and provided the allocation to any one Subaccount is not less
than 10% of the cash value.

SURRENDER FOR CASH VALUE. The Policyowner may surrender the Policy for its
cash value at any time while the Insured is living. The amount payable will be
the cash value next computed after the request is received at the Home Office of
First Investors Life. On any Policy anniversary, a Policyowner may also make a
partial surrender of the Policy. This is effected by reducing the premium
amount. It is permitted only if there are no outstanding policy loans and the
new modal premium due on the Policy anniversary has been paid. All requirements
for a partial surrender must be received at the Home Office on or before the
Policy anniversary. The partial surrender will be effective on the Policy
anniversary. The amounts of the Guaranteed Insurance Amount (face amount of the
Policy), death benefit and cash value for the reduced Policy will be the same as
they would have been had the reduced premium been paid from inception. The
portion of the cash value of the original Policy which is in excess of the cash
value of the reduced Policy will be paid to the Policyowner as a surrender. The
cash value of the reduced Policy will be allocated among the subaccounts in the
same proportion as the cash value of the original Policy was allocated.
Surrender will be effective on the date First Investors Life has received both
the Policy and a written request in a form acceptable to First Investors Life.
First Investors Life will usually pay the surrender value within seven days, but
payment may be delayed if a recent payment by check has not yet cleared the
bank, when First Investors Life is not able to determine the amount because the
New York Stock Exchange is closed for trading or the Commission determines that
a state of emergency exists or for such other periods as the Commission may by
order permit for the protection of security holders. Interest will be paid if
payment of the surrender value is delayed beyond seven days. In addition, under
Federal tax laws withholding taxes may be deducted from the surrender value.

COST OF INSURANCE PROTECTION

First Investors Life issues variable life insurance policies to
individuals with standard mortality risks and to individuals with higher
mortality risks, as permitted by First Investors Life's underwriting rules. A
higher gross premium is charged for the person with the higher mortality
risk. Given the same age, sex and insurance face amount, the net premium
going into the Subaccount(s) is the same for the standard risk and the higher
risk person. Also, the cost of insurance deducted from the Subaccount(s)
(item 7 in the example above) would be the same for each such individual.
First Investors Life uses the 1980 Commissioners' Standard Ordinary Mortality
Table to actuarially compute the cost of insurance for each Policy, except
mortality rates for extended term insurance are from the Commissioners' 1980
Extended Term Table. The cost is based on the net amount of insurance at risk
(the Policy's face amount plus the variable insurance

<PAGE>

amount less the cash value) and the person's sex and attained age. The amount
that is deducted each year is different because as the person's age increases
the probability of death generally increases. The net amount of insurance at
risk may decrease or increase each year depending on investment experience of
the selected Subaccount(s).

LOAN PROVISION

LOAN PRIVILEGE. The Policyowner may borrow up to 75% of the cash value
during the first three Policy years or 90% of the cash value after the first
three Policy years upon assignment to First Investors Life of the Policy as sole
security. Interest will be charged daily at an effective annual rate of 6%
compounded on each Policy anniversary. In general, the loan amount is sent
within seven days of receipt of the request. Except when used to pay premiums, a
new loan will not be permitted unless it is at least $100. The Policyowner may
repay all or a portion of any loan and accrued interest while the Insured is
living and the Policy is in force.

EFFECTS OF LOANS. When a loan is taken out, a portion of the cash value
equal to the loan is transferred from the Subaccount(s) to First Investors
Life's General Account. The Loan is charged to each Subaccount in proportion to
the investment in each Subaccount as of the date of the Policy loan. A Policy
loan does not affect the amount of the premiums due. A Policy loan does,
however, reduce the death benefit and cash value by the amount of the loan. It
may also permanently affect the death benefit above the Guaranteed Insurance
Amount and the cash value whether or not the loan is repaid in whole or in
part. This is because the amount maintained in the General Account will not be
credited with the Net Investment Return earned by Subaccount(s) during the
period the loan is outstanding. Instead, it grows at the assumed interest rate
of 4%, in accordance with the tabular cash value calculations as filed with the
state insurance departments.

A Policy loan will have a negative impact on the growth of the cash value
during periods when the actual returns of the Subaccounts exceed the assumed
rate of 4%. Recall that the death benefit is made up of two parts: the
Guaranteed Insurance Amount and, if positive, the variable insurance amount (see
"The Guaranteed Minimum" and "The Variable Insurance Amount"). The cash value,
the Variable Insurance Amount and the death benefit in excess of the Guaranteed
Insurance Minimum, if any, are dependent upon the Net Investment Return of the
Subaccount(s). Thus, during periods of favorable investment return (a net rate
of return greater than 4%), an outstanding Policy loan will result in lower
Policy values than would have otherwise resulted in the absence of any
indebtedness.

For example, use the Policy for a male issue age 25 illustrated on Page 22,
and assume the 8% gross annual investment return and that a $3,000 loan was made
at the end of Policy year 9. For the end of Policy year 10, the death benefit
and cash value would be $57,612 and $12,612, respectively. (The outstanding
indebtedness would be deducted from these amounts upon death or surrender.) The
differences between these amounts and the $57,898 death benefit and $12,685 cash
value shown on Page 22 for Policy year 10 result because the portion of the cash
value equal to the indebtedness which is transferred from the Subaccount(s) does
not reflect the Subaccount(s) Net Investment Return of approximately 6.55%.

Conversely, outstanding indebtedness will diminish the adverse effect on
Policy values during a period of unfavorable investment return (a net rate of
return less than 4%) because the portion of the cash value transferred from
the Subaccount(s) to the General Account will grow at the assumed rate of 4%.
Thus, a Policy loan can protect the cash value from decreasing if the Net
Investment

<PAGE>

Return is less than 4%.

Interest will be charged daily at an effective annual rate of 6% compounded
on each Policy anniversary. Interest is payable at the end of each Policy year
and on the date the loan is repaid. If interest is not paid when due, the loan
will be increased by that amount and an equivalent amount of cash value will be
transferred from the Subaccount(s) to the General Account. Loan repayments will
be credited to each Subaccount in proportion to the investment in each
Subaccount as of the date of repayment.

The amount of any outstanding loan plus interest is subtracted from the
death benefit or the cash value on payment. Whenever the then outstanding loan
with accrued interest equals or exceeds the cash value, the Policy terminates 31
days after notice has been mailed by First Investors Life to the Policyowner and
any assignee of record at their last known addresses, unless a repayment is made
within that period.

Policy loans are taxable if a Policy is surrendered or terminates for any
reason prior to the owner's death to the extent that they exceed cost basis. As
a general rule the Policyowner is responsible for paying income taxes on the
difference between the surrender value and total premiums paid. Any outstanding
Policy loan will be added to the cash surrender value for the purpose of
calculating income tax liability. A termination could occur if the total amount
of outstanding loans exceeds the cash balance. An example might be adverse
market conditions causing this to occur. Consult with your representative or
tax advisor before taking Policy loans.

PREMIUMS

ALLOCATION OF PREMIUM. At the time of application, the Policyowner decides
to place his or her net premium (see "CHARGES AND EXPENSES--Charges Deducted
from Premiums") into any one or more of the Subaccounts. The death benefit and
cash value may increase or decrease depending on the investment performance of
the chosen Subaccount(s).

PAYMENT PERIODS AND FREQUENCY. Premiums are payable annually or may be paid
more frequently as elected by the Policyowner. Payments are due on or before the
due dates as specified in the Policy at the Home Office of First Investors Life.
Premium payments received before they are due will be placed in First Investors
Life's General Account. On the day the premium payment is due, the premium will
be credited to the Subaccount(s) selected by the Policyowner. Premiums for the
Policy are payable for twelve years. A refund will be made of premiums paid
which are applicable to any period which extends beyond the end of the month in
which the Insured's death occurs.

LEVEL PREMIUMS. The level premiums act as an averaging device to cover
expenses, which are highest in the early Policy years, and the cost of the
mortality risk, which increases with age. Thus, in the early Policy years,
premiums are higher than needed to pay death claims, while in the later years
premiums are less than required to meet the death claims. Accordingly, the
assets allocated to the Subaccount(s) in the early Policy years are used in
part to support the expected death claims in those years, with the balance
accumulated as a reserve to help meet the death claims in the later Policy
years. Also, assets are allocated to First Investors Life's General Account
to accumulate as a reserve to cover the contingency that the Insured will die
at a time when the guaranteed minimum death benefit exceeds the death benefit
which would have been payable in the absence of such guarantee. In setting
its premium rates, First Investors Life took into

<PAGE>

consideration actuarial estimates of death and surrender benefits, lapses,
expenses, investment experience and an amount to be contributed to First
Investors Life's surplus.

PREMIUM RATES. When payments are made on other than an annual basis, the
aggregate premium amounts for a Policy year are higher, reflecting charges for
loss of interest and additional billing and collection expenses. The additional
charge is deducted from these premiums when they are received.

<TABLE>
<CAPTION>
PREMIUMS ON INSTALLMENT BASIS
(AS A PERCENTAGE OF AN ANNUAL PREMIUM)
- -----------------------------------------------------------------------
AGGREGATE PREMIUMS
FREQUENCY EACH PREMIUM FOR POLICY YEAR
- -----------------------------------------------------------------------
<S> <C> <C>
Annual. . . . . . . . . . . 100.00% 100.00%
Semiannual. . . . . . . . . 51.00 102.00
Quarterly . . . . . . . . . 26.00 104.00
Pre-authorized Monthly. . . 8.83 105.96

</TABLE>

Under a pre-authorized monthly plan, premiums are automatically paid by
charges made against the Policyowner's bank account.

AUTOMATIC PREMIUM LOAN PROVISION. Any premium not paid before the end of
the grace period (described below) will be paid by charging the premium as a
Policy loan against the Policy provided (1) the Automatic Premium Loan provision
has been elected in the application for the Policy or is elected in writing and
received by First Investors Life at its Home Office while no premium is in
default and (2) the resulting Policy loan and loan interest to the next premium
due date do not exceed the loan value.

The Automatic Premium Loan Provision may be revoked at any time by written
request from the Policyowner received by First Investors Life at its Home
Office.

DEFAULT AND OPTIONS ON LAPSE. A premium not paid on or before its due date
is in default, but the Policy provides for a 31-day grace period for the payment
of each premium after the due date. The insurance continues in force during the
grace period, but, if the Insured dies during the grace period, the portion of
the premium due which is applicable to the period from the premium due date to
the end of the Policy month in which death occurs is deducted from the death
benefit.

Within 60 days after the date of default, if a Policy is not surrendered,
the cash value less any loans and interest may be applied to purchase continued
insurance. The options are for reduced paid-up whole life insurance or extended
term insurance. Under the Policy, the extended term insurance option would be
the automatic option if no other election was selected. However, that option is
available only in standard risk cases. If the Policy was rated for extra
mortality risks, the paid-up insurance will be the automatic option. Both
options are for fixed life insurance and neither option requires the further
payment of premiums.

The reduced paid-up whole life insurance option provides a fixed and level
amount of paid-up whole life insurance. The amount of coverage will be that
which the surrender value on the date

<PAGE>

the option becomes effective will purchase. The extended term insurance
option provides a fixed and level amount of term insurance equal to the death
benefit (less any indebtedness) as of the date the option became effective.
The insurance coverage under this option will continue for as long a period
as the surrender value on such date will purchase.

For example, use the Policy for a male issue age 25 illustrated on Page 22
and assume the 0% and 8% hypothetical gross annual investment returns. If an
option became effective at the end of Policy year 5, the fixed insurance
coverage under these Policies would be as follows:

<TABLE>
<CAPTION>
0% 8%
---- ----
<S> <C> <C>
Cash Value. . . . . . . . . . . . . . $ 3,992 $ 4,972
Reduced Paid-up Insurance . . . . . . 18,406 22,925
for life for life
Extended Term Insurance . . . . . . . 51,908 53,398
for 25 years for 28 years

</TABLE>

A Policy continued under either option may be surrendered for its cash
value while the Insured is living. Loans are available under the reduced paid-up
whole life insurance option, but not under the extended term insurance option.

REINSTATEMENT. A Policy not surrendered for its cash value may be
reinstated within five years from the date of default in accordance with the
Policy. To reinstate, the Policyowner must present evidence of insurability
acceptable to First Investors Life and must pay to First Investors Life the
greater of (a) (i) all premiums from the date of default with interest to the
date of reinstatement plus (ii) any Policy debt (plus interest to the date of
reinstatement) in effect when the Policy was continued as paid up insurance or
extended term insurance; or (b) 110% of the increase in cash value resulting
from reinstatement. Any Policy debt that arose after the Policy was continued as
paid up insurance and in effect immediately before reinstatement is then added
to the greater of (a) or (b) to comprise the payment required. Interest is
calculated at the rate of 6% per year compounded annually.

CANCELLATION RIGHTS

The Policyowner has a limited right to cancel and return the Policy to
First Investors Life. The Policyowner may examine the Policy and at any time
within ten days after receipt of the Policy or notice of right of withdrawal, or
within forty-five days after completion of Part I of the application for the
Policy, whichever is later, return it to First Investors Life or to the agent of
First Investors Life through whom it was purchased with a written request for
cancellation and obtain a full refund of the premiums paid.

EXCHANGE PRIVILEGE

Provided premiums are duly paid, within twenty-four months after the
issue date shown in the Policy, the Policyowner may exchange the Policy for a
permanent fixed life insurance policy specified in the Policy on the
Insured's life. The Policyowner also may exchange the Policy for a fixed life
insurance policy if a Fund changes its investment adviser or has a material
change in its investment objectives or restrictions. Evidence of
insurability is not required to exercise this privilege. The new policy will
have a level face amount equal to the face amount of the Policy and the same
benefit riders, issue dates and risk classification for the Insured as the
Policy. Premiums

<PAGE>

for the new policy will be based on the premium rates for the new policy
which were in effect on the Policy date. The Policyowner may elect either a
continuous-premium policy or a limited-payment policy.

In some cases, there may be a cash adjustment on exchange. The adjustment
will be the Policy's surrender value minus the new policy's tabular cash value.
If the result is positive, First Investors Life must pay the owner; if the
result is negative, the owner must pay First Investors Life. First Investors
Life will determine the amount of a cash adjustment as of the date the Policy
and written request is received by First Investors Life at its Home Office.

If a Policy is not issued for any reason, an applicant shall only be
refunded the amount of the premium without interest.

The foregoing description of Policy provisions is qualified by reference to
a specimen of the Policy which has been filed as an exhibit to the Registration
Statement of Separate Account B. Settlement options, optional insurance benefits
and general provisions of the Policies are discussed under Appendix I.

ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES AND ACCUMULATED PREMIUMS

The tables on Pages 21 to 23 illustrate the way in which the Policy
operates. They show how the death benefit and the cash value may vary over an
extended period of time assuming the Subaccount(s) experience hypothetical rates
of investment return (I.E., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross annual rates of 0%, 4% and
8%. The cash value on any day within a Policy year equals the cash value as of
the end of the preceding Policy year, adjusted to reflect the Subaccount(s) Net
Investment Return, the cost of the insurance protection and premiums paid since
the Policy's last anniversary. The tables are based on annual premiums of $600,
$1,200 and $1,800 to assist in a comparison of the death benefits and cash
values under the Policy with those under other variable life insurance policies
which may be issued by First Investors Life or other companies. The death
benefit and cash value for the Policy would be different from those shown if
premiums are paid more frequently than annually or if the actual rates of
investment return applicable to the Policy averaged 0%, 4% or 8% over a period
of years, but nevertheless fluctuated above or below that average for individual
Policy years. Please refer to Pages 33 to 35 for additional illustrations of
death benefits, cash values and accumulated premiums which assume a hypothetical
gross annual investment return of 0%, 6% and 12%.

The constant gross annual rate of investment return of 0%, 4% and 8% is reduced
by the following:

1. A daily charge to the Subaccount(s) for mortality and expense
risks equivalent to an annual charge of .50% at the beginning
of each year.

2. An investment advisory fee of 0.75% of each Fund's average
daily net assets.

3. Assumed other expenses of 0.20% of each Fund's average daily
net assets.

Taking into account all of these charges, the gross annual rates of
investment return of 0%, 4%, and 8% correspond to net annual rates of
approximately -1.45%, 2.55% and 6.55%, respectively. The assumed other
expenses of .20% exceeds the arithmetic average of the actual other expenses
of all of the Funds. Certain of the Funds had actual expenses in excess of
.20%. As of December 31, 1997, International Securities Fund had other
expenses of .38%. Absent reimbursement of a

<PAGE>

portion of the other expenses by the Adviser, Cash Management Fund would
have had other expenses of .31%. There is no assurance that the Adviser will
continue to reimburse other expenses for Cash Management Fund, or any other
Fund, into the future. If these expenses were taken into account, the
corresponding rates would be further reduced. The tables also reflect that
no charge is currently made to the Subaccount(s) for First Investors Life's
corporate Federal income taxes. However, First Investors Life may make such
charges in the future which would require higher rates of investment return
in order to produce after-tax returns of 0%, 4% and 8% (see "Charges for
First Investors Life's Income Taxes").

The second column of each table shows the amount which would be
accumulated if the annual premium (gross amount) was invested to earn
interest, after taxes, at 5% compounded annually. For a further discussion of
illustrations of death benefits, cash values and accumulated premiums, see
Appendix II.

First Investors Life will furnish upon request a comparable illustration
using the proposed Insured's age and the face amount or premium amount
requested, and assuming that premiums are paid on an annual basis and the
proposed Insured is a standard risk. In addition, a comparable illustration
will be included at the delivery of the Policy if a purchase is made,
reflecting the Insured's risk classification.

<PAGE>

MALE ISSUE AGE 10
$600 ANNUAL PREMIUM FOR STANDARD RISK (1)
$39,638 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)
<TABLE>
<CAPTION>

TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT RETURN OF
YEAR DUE INTEREST AT 5% 0% 4% 8% 0% 4% 8%
- ------ -------- -------------- ----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $600 $ 630 $39,638 $39,638 $ 39,673 $ 138 $ 145 $ 152
2 600 1,291 39,638 39,638 39,798 586 617 650
3 600 1,986 39,638 39,638 40,014 1,023 1,098 1,176
4 600 2,715 39,638 39,638 40,321 1,450 1,585 1,730
5 600 3,481 39,638 39,638 40,720 1,889 2,104 2,339
6 600 4,285 39,638 39,638 41,213 2,316 2,629 2,981
7 600 5,129 39,638 39,638 41,799 2,734 3,163 3,658
8 600 6,016 39,638 39,638 42,479 3,143 3,707 4,374
9 600 6,947 39,638 39,638 43,253 3,547 4,263 5,132
10 600 7,924 39,638 39,638 44,120 3,946 4,832 5,936

15 0 11,608 39,638 39,638 49,496 4,473 6,382 9,133

20 0 14,816 39,638 39,638 55,625 4,010 6,971 12,064

25 0 18,909 39,638 39,638 62,507 3,610 7,646 15,998

30 0 24,133 39,638 39,638 70,244 3,244 8,369 21,173

Attained Age

65 0 81,723 39,638 39,638 126,226 1,685 11,721 76,980

</TABLE>

(1) Corresponds to $306.00 semiannually, $156.00 quarterly, or $52.98 monthly.

(2) Assumes no policy loan is made.

Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction
of tax charges but before any other expenses charged against Life Series Fund
or Separate Account B. Actual rates may be higher or lower than hypothetical
rates. No representation can be made by First Investors Life or Life Series
Fund that hypothetical rates can be achieved for any one year or sustained
over any period of time. See prospectus for details of the calculations.

<PAGE>

MALE ISSUE AGE 25
$1,200 ANNUAL PREMIUM FOR STANDARD RISK (1)
$51,908 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)
<TABLE>
<CAPTION>

TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT RETURN OF
YEAR DUE INTEREST AT 5% 0% 4% 8% 0% 4% 8%
- ------ -------- -------------- ----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1,200 $ 1,260 $51,908 $51,908 $ 51,973 $ 409 $ 429 $ 449
2 1,200 2,583 51,908 51,908 52,154 1,308 1,385 1,462
3 1,200 3,972 51,908 51,908 52,451 2,197 2,366 2,543
4 1,200 5,431 51,908 51,908 52,864 3,076 3,375 3,695
5 1,200 6,962 51,908 51,908 53,398 3,992 4,459 4,972
6 1,200 8,570 51,908 51,908 54,054 4,897 5,572 6,332
7 1,200 10,259 51,908 51,908 54,832 5,791 6,713 7,778
8 1,200 12,032 51,908 51,908 55,732 6,673 7,882 9,315
9 1,200 13,893 51,908 51,908 56,754 7,544 9,080 10,949
10 1,200 15,848 51,908 51,908 57,898 8,404 10,308 12,685

15 0 23,217 51,908 51,908 64,950 9,524 13,635 19,577

20 0 29,631 51,908 51,908 72,999 8,504 14,836 25,762

25 0 37,818 51,908 51,908 82,058 7,539 16,033 33,680

30 0 48,266 51,908 51,908 92,259 6,628 17,185 43,687

Attained Age

65 0 78,620 51,908 51,908 116,712 4,947 19,096 71,178

</TABLE>

(1) Corresponds to $612.00 semiannually, $312.00 quarterly, or $105.96 monthly.
(2) Assumes no policy loan is made.

<PAGE>

MALE ISSUE AGE 40
$1,800 ANNUAL PREMIUM FOR STANDARD RISK (1)
$47,954 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)

TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT RETURN OF
YEAR DUE INTEREST AT 5% 0% 4% 8% 0% 4% 8%
- ------ -------- -------------- ----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1,800 $ 1,890 $47,954 $47,954 $48,027 $ 762 $ 799 $ 835
2 1,800 3,874 47,954 47,954 48,206 2,097 2,225 2,355
3 1,800 5,958 47,954 47,954 48,492 3,406 3,678 3,964
4 1,800 8,146 47,954 47,954 48,883 4,689 5,161 5,667
5 1,800 10,443 47,954 47,954 49,386 6,020 6,747 7,549
6 1,800 12,856 47,954 47,954 49,999 7,328 8,367 9,543
7 1,800 15,388 47,954 47,954 50,724 8,615 10,023 11,656
8 1,800 18,048 47,954 47,954 51,560 9,884 11,717 13,898
9 1,800 20,840 47,954 47,954 52,509 11,137 13,450 16,276
10 1,800 23,772 47,954 47,954 53,571 12,375 15,225 18,798

15 0 34,825 47,954 47,954 60,126 13,764 19,765 28,471

20 0 44,447 47,954 47,954 67,618 11,963 20,956 36,545

25 0 56,727 47,954 47,954 76,062 10,274 21,963 46,387

30 0 72,399 47,954 47,954 85,589 8,695 22,699 58,095

Attained Age
65 0 56,727 47,954 47,954 76,062 10,274 21,963 46,387

</TABLE>

(1) Corresponds to $918.00 semi annually; $468.00 quarterly, or $158.94
monthly.
(2) Assumes no policy loan is made.

<PAGE>

FEDERAL INCOME TAX STATUS

POLICY PROCEEDS

The discussion herein is general in nature and not intended as tax advice.
It is based upon First Investors Life's understanding of Federal income tax laws
and regulations as they are currently interpreted. No representation is made
regarding the likelihood of continuation of such laws and regulations or the
current interpretations by the Internal Revenue Service. Any changes in such
laws, regulations or in interpretations may be given retroactive effect.
Moreover, no attempt is made to consider any applicable state or other (E.G.,
estate, gift, or inheritance) tax laws. Each interested person should consult
his tax advisor concerning the matters set forth herein.

First Investors Life believes that the Policy qualifies as a life insurance
contract as defined in Section 7702(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). Consequently, the death benefit should be fully excludable
from the beneficiary's gross income and the Policyowner should generally not be
taxed on the cash values (including increments thereof) under the Policy, until
its actual surrender. With respect to a corporate Policyowner, however, such
"inside build-up" of the Policy may be subject to the alternative minimum tax.

Qualification as a life insurance contract for Federal income tax purposes
depends, in part, upon the satisfaction by Separate Account B of certain
diversification requirements contained in Section 817(h) of the Code. The
Adviser is expected to manage the assets of the Funds in a manner that complies
with these diversification requirements, and under a special "look-through"
rule, satisfaction of such requirements by the Funds will be attributed to
Separate Account B. The look-through rule is applicable because all shares of
the Funds comprising Life Series Fund will be owned only by Separate Account B
(and similar accounts of First Investors Life or other insurance companies) and
access to the Funds will be available exclusively through the purchase of
Policies (and additional variable annuity or life insurance products of First
Investors Life or other insurance companies). Fund shares also may be held by
the Adviser provided such shares are being held in connection with the creation
or management of the Fund and the Adviser does not intend to sell any Fund
shares it owns to the general public. The Treasury Department has indicated
that the diversification regulations do not provide guidance as to any
circumstances in which a Policyowner's control over allocation of Separate
Account B assets among underlying investments may cause an owner to be treated
as the owner of those assets. Such treatment would result in current taxation
of the owner on increases in the value of Separate Account B. We reserve the
right to amend the Policy in any way necessary to avoid any such result. As of
the date of this prospectus, no regulation or ruling has been issued on the
subject, although the Treasury Department has informally indicated that a
regulation or ruling could limit the number of underlying funds or the frequency
of transfers among those funds. Such regulation or ruling may apply only
prospectively, although retroactive effect is possible if the regulation is
considered not to embody a new position. It is possible that future guidelines,
if any, concerning diversification could restrict the rights of a Policyowner
with respect to the selection of investment options.

First Investors Life does not believe that any Policy will be
characterized, at issuance, as a "modified endowment contract" within the
meaning of Section 7702A of the Code. Section 7702A and the characterizations
given thereunder generally apply to a Policy that was received in exchange
for another that was issued, on or after June 21, 1988, but only if the
policy surrendered in exchange therefor was deemed to be a modified endowment
contract. A Policy that escapes characterization as a modified endowment
contract may nonetheless be treated as such if a

<PAGE>

material term of the Policy, E.G., death benefits, is altered or if the
Policy is converted from a term life insurance contract to a life insurance
contract providing a different form of coverage (whether or not issued before
June 21, 1988). If a Policy is treated as a modified endowment contract, then
distributions thereunder (including the proceeds of any surrender or loan
made under, or in result of a pledge or assignment of, the Policy), after the
Policy becomes a modified endowment contract, or within two years prior
thereto, will be includable in gross income and subject to regular Federal
income taxation to the extent of the income in the Policy (basically, cash
value less premium paid). An additional 10% tax will also be imposed on the
taxable amount of any such portion, subject to certain exceptions.

All modified endowment contracts issued by the same insurer (or
affiliates) to the Policyowner during any calendar year generally will be
treated as one Policy for the purpose of applying the modified endowment
contract rules. You should consult your tax advisor if you have questions
regarding the possible impact of the modified endowment contract rules on
your Policy.

If a Policy is not a modified endowment contract, any loans made under a
Policy will be treated as indebtedness and no part of such loans will
constitute income to the Policyowner, unless the Policy is surrendered or
terminated for any reason prior to the Policyowner's death. See "Effects of
Loans" on page 15 to 16 of this Prospectus. In addition, the interest on
such loan generally will not be deductible.

Upon surrender of a Policy, taxation of the Surrender Value will depend
on the Payment Option that the Policyowner has selected. If payment is in
one sum, the Policyowner will be taxed on the income in the Policy at the
time payment is made. If payment is in installments, the Policyowner may be
taxed (1) on all or a portion of each installment until the income in the
Policy has been paid; (2) only after all investment in the Policy has been
paid; or (3) on a portion of each payment. You should consult your tax
advisor if you have questions about the taxation of a Policy surrender.

Under the Code, income tax must generally be withheld from the taxable
portion of the proceeds paid upon surrender of a Policy, unless the
Policyowner notifies First Investors Life in writing, before the payment
date, that such withholding is not to be made. Failure to withhold or
withholding of an insufficient amount may subject the Policyowner to
taxation. In addition, insufficient withholding and insufficient estimated
tax payments may subject the Policyowner to penalties.

CHARGES FOR FIRST INVESTORS LIFE'S INCOME TAXES

First Investors Life is taxed as a "life insurance company" under
Subchapter L of the Code. Under the applicable provisions of the Code, First
Investors Life will be required to include its variable life insurance
operations in its Federal income tax return. Currently, no charges are made
against the Subaccount(s) for First Investors Life's Federal income taxes
attributable to the Subaccount(s). However, First Investors Life may make
such charges in the future. First Investors Life may charge the Subaccount(s)
for its Federal income taxes attributable to the Subaccount(s) when First
Investors Life's tax treatment and obligations become clarified. Any such
charges against a Subaccount would reduce its Net Investment Return.

Under current laws, First Investors Life may incur state and local taxes
(in addition to premium taxes) in several states. At present, these taxes are
not significant. After First Investors Life's Federal income tax treatment is
clarified, or if prior to that time there is a material change in

<PAGE>

applicable state or local tax laws, charges for such taxes, if any,
attributable to the Subaccount(s) may be made.

If any tax charges are made in the future they will be accumulated daily
and transferred from the Subaccount(s) to First Investors Life's General
Account. Any investment earnings on tax charges accumulated in the Subaccount(s)
will be retained by First Investors Life.

VOTING RIGHTS

First Investors Life will vote the shares of any Fund held in a
corresponding Subaccount or directly, at any Fund shareholders meeting, in
accordance with its view of present law. It will vote Fund shares held in any
corresponding Subaccount as follows: shares attributable to Policyowners for
which it receives instructions, in accordance with the instructions; shares
attributable to Policyowners for which it does not receive instructions, in the
same proportion that it votes shares held in the Subaccount for which it
receives instructions; and shares not attributable to Policyowners, in the same
proportion that it votes shares held in the Subaccount that are attributable to
Policyowners and for which it receives instructions. First Investors Life will
vote Fund shares held directly by it in the same proportion that it votes shares
held in any corresponding Subaccounts that are attributable to Policyowners and
for which it receives instructions, except where there are no shares held in any
Subaccount it will vote its own shares as it deems appropriate. All of the
shares of any Fund held by First Investors Life through a Subaccount or directly
will be presented at any Fund shareholders meeting for purposes of determining a
quorum.

The number of Fund shares held in a corresponding Subaccount that is
attributable to each Policyowner is determined by dividing the Subaccount's
Accumulated Value by the net asset value of one Fund share. The number of votes
that a Policyowner has the right to cast will be determined as of the record
date established by Life Series Fund.

Voting instructions will be solicited by written communication prior to the
date of the meeting at which votes are to be cast. Each Policyowner having a
voting interest in a Subaccount will be sent meeting and other materials
relating to the Fund.

First Investors Life reserves the right to proceed other than as described
above, including the right to vote shares of any Fund in its own right, to the
extent permitted by law.

The voting rights described in this Prospectus are created under applicable
Federal securities laws. To the extent that such laws or regulations promulgated
thereunder eliminate the necessity to submit such matters for approval by
persons having voting rights in separate accounts of insurance companies or
restrict such voting rights, First Investors Life reserves the right to proceed
in accordance with any such laws or regulations.

OFFICERS AND DIRECTORS OF FIRST INVESTORS LIFE INSURANCE COMPANY

NAME OFFICE PRINCIPAL OCCUPATION FOR LAST 5 YEARS
- ---- ------ -------------------------------------
<S> <C> <C>
Jay G. Baris Director Partner, Kramer, Levin, Naftalis &
Frankel, New York, Attorneys; Secretary
and Counsel, First Financial Savings
Bank, S.L.A., New Jersey.
</TABLE>

<PAGE>

OFFICERS AND DIRECTORS OF FIRST INVESTORS LIFE INSURANCE COMPANY

NAME OFFICE PRINCIPAL OCCUPATION FOR LAST 5 YEARS
- ---- ------ -------------------------------------
<S> <C> <C>
Glenn T. Dallas Director Retired since April 1996; Division President and Senior Vice President,
ADT Security Systems, Parsippany, New Jersey, prior thereto.

William H. Drinkwater First Vice First Vice President and Chief Actuary,
President and First Investors Life.
Chief Actuary

Lawrence M. Falcon Senior Senior Vice President and Comptroller,
Vice President and Comptroller First Investors Life.
Richard H. Gaebler President President, First Investors Life.
and Director

George V. Ganter Director Vice President, First Investors Asset Management Company, Inc.,
Portfolio Manager, FIMCO.

Robert J. Grosso Director Director of Compliance, FIC since April 1997; Assistant Counsel since
January 1995; Business Consultant from August 1994 to January 1995;
Assistant Vice President and Assistant General Counsel, Alliance Fund
Distributors, Inc. from September 1993 to August 1994; Of Counsel, Law
Office of Richard S. Mazawey from May 1991 to September 1993.

Glenn O. Head Chairman and Director Chairman and Director, FICC, FIMCO and FIC.

Kathryn S. Head Director President, FICC and FIMCO; Vice President and Director, FIC; President
and Director, First Financial Savings Bank, S.L.A.

Scott Hodes Director Partner, Ross & Hardies, Chicago, Illinois, Attorneys.
Carol Lerner Brown Secretary Assistant Secretary, FIC; Secretary, FIMCO and FICC.
William M. Lipkus Vice President Chief Financial Officer, FIC since December 1997, FICC since June 1997;
and Chief Accounting Officer Vice President, First Investors Life since May 1996; Chief Accounting
Officer since June 1992.

Jackson Ream Director Senior Vice President, Nations Bank of Texas (formerly NCNB Texas
National Bank), Dallas, Texas.

Nelson Schaenen Jr. Director Partner, Weiss, Peck & Greer, New York, Investment Managers.

Martin A. Smith Vice President Vice President, First Investors Life since March 1998; Vice President,
The United States Life Insurance Company, prior thereto.

Ada M. Suchow Vice President Vice President, First Investors Life.

</TABLE>

27
<PAGE>
<TABLE>

OFFICERS AND DIRECTORS OF FIRST INVESTORS LIFE INSURANCE COMPANY

NAME OFFICE PRINCIPAL OCCUPATION FOR LAST 5 YEARS
- ---- ------ -------------------------------------
<S> <C> <C>
John T. Sullivan Director Director, FIMCO and FIC; Of Counsel to Hawkins, Delafield & Wood,
New York, Attorneys.
</TABLE>

A fidelity bond in the amount of $5,000,000 covering First Investors Life's
officers and employees has been issued by Gulf Insurance Company. A directors
and officers liability policy in the amount of $3,000,000 covering First
Investors Life's directors and officers has been issued by the Great American
Insurance Companies.

DISTRIBUTION OF POLICIES

The Policies distributed by First Investors Life are sold by insurance
agents who are licensed to sell variable life insurance. These agents are paid
a commission of 28.55% of the first year premium payment and 1% of the premium
payments for years two through twelve.

The Policies are offered for sale in Alabama, Arizona, Arkansas,
California, Colorado, Connecticut, Delaware, District of Columbia, Florida,
Georgia, Iowa, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland,
Michigan, Minnesota, Missouri, Mississippi, North Carolina, Nebraska, New
Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode
Island, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin
and Wyoming.

CUSTODIAN

First Investors Life, subject to applicable laws and regulations, is to be the
custodian of the securities of the Subaccounts. First Investors Life will
maintain the records and accounts of Separate Account B.

REPORTS

At least once each Policy year, First Investors Life shall mail a report to
the Policyowner within 31 days after the Policy anniversary. The report shall
be mailed to the last address known to First Investors Life. The report will
show the death benefit, cash value and policy debt on the anniversary and any
loan interest for the prior year. The report will also show the allocation of
the investment base on that anniversary. No report will be sent if the Policy is
continued as reduced paid-up or extended term insurance.

STATE REGULATION

First Investors Life is subject to the laws of the State of New York
governing insurance companies and to regulations by the New York State
Insurance Department. An annual statement in a prescribed form is filed with the
Department of Insurance each year covering the operations of First Investors
Life for the preceding year and its financial condition as of the end of such
year.

First Investors Life's books and accounts are subject to review by the
Insurance Department at any time and a full examination of its operations is
conducted periodically. Such regulation does

28
<PAGE>

not, however, involve any supervision of management or investment practices
or policies except to determine compliance with the requirements of the New
York Insurance Law. In addition, First Investors Life is subject to
regulation under the insurance laws of other jurisdictions in which it may
operate.

EXPERTS

The financial statements included in this Prospectus have been examined by
Tait, Weller & Baker, independent certified public accountants, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.

RELEVANCE OF FINANCIAL STATEMENTS

The values of the interests of Policyowners under the Policies will be
affected solely by the investment results of the Subaccount(s). The financial
statements of First Investors Life as contained herein should be considered only
as bearing upon First Investors Life's ability to meet its obligations to
Policyowners under the Policies, and they should not be considered as bearing on
the investment performance of the Subaccount(s).

APPENDIX I - OTHER POLICY PROVISIONS

SETTLEMENT OPTIONS

In lieu of a single sum payment of Policy proceeds on death or surrender,
an election may be made to apply all or a portion of the proceeds under any one
of the fixed benefit settlement options provided in the Policy. Tax consequences
may vary depending on the settlement option chosen. The options are stated
below.

PROCEEDS LEFT AT INTEREST. Left on deposit to accumulate with First
Investors Life with interest payable at a rate of 2 1/2% per year.

PAYMENT OF A DESIGNATED AMOUNT. Payable in installments until proceeds
applied under the option and interest on unpaid balance at 2 1/2% per year and
any additional interest are exhausted.

PAYMENT FOR A DESIGNATED NUMBER OF YEARS. Payable in installments for up to
25 years, including interest at 2 1/2% per year. Payments may be increased by
additional interest which would be paid at the end of each installment year.

LIFE INCOME OPTION, GUARANTEED PERIOD. Payments are guaranteed for 10 or 20
years, as elected, and for life thereafter. During the guaranteed period of 10
or 20 years, the payments may be increased by additional interest.

LIFE INCOME, GUARANTEED RETURN. The sum of the payments made and any
payments due at the death of the person on whom the payments are based will
never be less than the proceeds applied.

LIFE INCOME ONLY. Payments will be made only while the person on whom the
payments are based is alive.

<PAGE>

OPTIONAL INSURANCE BENEFITS

On payment of an additional premium and subject to certain age and
insurance underwriting requirements, the following optional provisions, which
are subject to the restrictions and limitations set forth therein, may be
included in a Policy.

ACCIDENTAL DEATH BENEFIT. The Accidental Death Benefit rider is
available at issue ages 0 to 60. It provides for an additional fixed amount
of death benefit in the event the Insured dies from accidental bodily injury
while the Policy is in force and before the Policy anniversary when the
Insured attains age 70. The premium is $1.75 per $1,000 of benefit and is
payable for 12 years. The amount of the benefit that will be issued is equal
to the face amount of the Policy but cannot exceed an amount equal to
$200,000 minus the sum of the Insured's Accidental Death Benefit coverage in
all companies.

12 YEAR LEVEL TERM RIDER. The 12 Year Level Term Insurance rider is
available at ages 18 to 58 for an amount equal to the Policy face amount. The
rider is convertible, without evidence of insurability, for an amount up to the
face amount of the rider to a new Policy or other permanent plan of insurance at
any time during the 12 year of rider coverage but not later than the Policy
anniversary when the Insured attains age 65.

WAIVER OF PREMIUM. The Waiver of Premium rider is available at ages 15 to
55. It provides that, in the event of the Insured's total disability which (a)
commences before the Policy anniversary when the Insured attains age 60 and (b)
continues for six months, the Company will waive all premiums falling due after
the date of commencement of the disability as long as such disability continues.

PAYOR BENEFIT. The Payor Benefit rider is available on Policies where the
Insured is age 0 to 14 and the Applicant is age 18 to 55. It provides insurance
on the life of the Applicant who is responsible for paying the premiums. If the
Applicant dies or becomes disabled before reaching age 60 and before the Insured
is age 21, all premiums which become due before the Insured's age 21 will be
waived by the Company.

GENERAL PROVISIONS

BENEFICIARY. The beneficiary is as designated in the application for the
Policy, unless thereafter changed by the Policyowner during the Insured's
lifetime. A change of designation may be made by filing a written request with
the Home Office of First Investors Life in a form acceptable to First Investors
Life.

ASSIGNMENT. The Policy may be assigned by the Policyowner but no assignment
shall be binding on First Investors Life unless it is in writing and filed with
First Investors Life at its Home Office. First Investors Life will assume no
responsibility for the validity or sufficiency of any assignment. Unless
otherwise provided in the assignment, the interest of any revocable beneficiary
shall be subordinate to the interest of any assignee, regardless of when the
assignment was made and the assignee shall receive any sum payable to the extent
of his or her interest.

AGE AND SEX. If the age or sex of the Insured has been misstated, the
benefits available under the Policy will be those which the premiums paid would
have purchased for the correct age and sex.

30
<PAGE>
SUICIDE. If the Insured commits suicide within two years from the Policy's
date of issue, the liability of First Investors Life under the Policy will be
limited to all premiums paid less any indebtedness.

INCONTESTABILITY. Except for nonpayment of premiums, the validity of the
Policy and its riders will not be contestable after it has been in force during
the lifetime of the Insured for two years from the Date of Issue.

GRACE PERIOD. A Grace Period of thirty-one days will be allowed for payment
of each premium after the first. The Policy will continue in force during the
Grace Period unless surrendered.

PAYMENTS AND DEFERMENT. Payment of the death benefit or surrender value or
loan proceeds will usually be made within seven days after receipt by First
Investors Life of all documents required for such payments. However, payment may
be delayed if the amount cannot be determined because the New York Stock
Exchange is closed for trading or the Commission determines that a state of
emergency exists.

Under a Policy continued as paid-up or extended term insurance, the payment
of the surrender value or loan proceeds may be deferred for up to six months. If
the payment is postponed more than thirty days, interest at a rate of not less
than 3% will be paid on the Surrender Value. The interest will be paid from the
date of surrender to the date payment is made.

DIVIDENDS. The Policies do not provide for dividend payments and therefore
are considered "non-participating" in the earnings of First Investors Life.

APPENDIX II
ADDITIONAL ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES AND ACCUMULATED PREMIUMS

Tables on Pages 33 to 35 illustrate the way in which a Policy operates.
They show how the death benefit and the cash value may vary over an extended
period of time assuming hypothetical rates of investment return for the
Subaccount(s) equivalent to constant gross annual rates of 0%, 6% and 12%. The
table on Page 33 is based on an annual premium of $600 for a male issue age 10,
the table on Page 34 is based on an annual premium of $1,200 for a male issue
age 25, and the table on Page 35 is based on an annual premium of $1,800 for a
male issue age 40. The illustrations assume a standard risk classification and
will assist in the comparison of death benefits and cash values under the
Policies with those under other variable life policies issued by First Investors
Life or other companies. Please refer to Page 19 for additional discussion and
to Pages 21 to 23 for additional illustrations of death benefits, cash values
and accumulated premiums which assume a hypothetical gross annual investment
return of 0%, 4% and 8%.

The amounts shown are as of the end of each Policy year and take into
account deductions from the annual premium and the daily charge for investment
advisory services and mortality and expense risk equivalent to an effective
annual charge of 1.45%. Taking account of the daily charges, the gross annual
rates of investment return of 0%, 6% and 12% correspond to net annual rates of
approximately -1.45%, 4.55% and 10.55%, respectively. The returns shown are also
net of any tax charges attributable to the Subaccount(s).

<PAGE>

The second column of each table shows the amount to which the total
premiums paid to the end of the Policy year during the premium paying period
would accumulate if an amount equal to those premiums were invested to earn
interest, after taxes, at 5% compounded annually.

First Investors Life will furnish upon request a comparable illustration
reflecting the proposed Insured's age and the face amount or premium amount
requested, and assuming that premiums are paid on an annual basis and the
proposed Insured is a standard risk. In addition, a comparable illustration will
be included at the delivery of a Policy if a purchase is made reflecting the
Insured's risk classification if other than standard.

32
<PAGE>

MALE ISSUE AGE 10
$600 ANNUAL PREMIUM FOR STANDARD RISK (1)
$39,638 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)

<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT RETURN OF
YEAR DUE INTEREST AT 5% 0% 6% 12% 0% 6% 12%
- ------ ------- -------------- ---------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $600 $ 630 $39,638 $ 39,645 $ 39,729 $ 138 $ 148 $ 158
2 600 1,291 39,638 39,669 40,061 586 633 682
3 600 1,986 39,638 39,710 40,642 1,023 1,136 1,256
4 600 2,715 39,638 39,767 41,482 1,450 1,656 1,884
5 600 3,481 39,638 39,841 42,599 1,889 2,219 2,597
6 600 4,285 39,638 39,932 44,005 2,316 2,800 3,375
7 600 5,129 39,638 40,039 45,711 2,734 3,402 4,227
8 600 6,016 39,638 40,161 47,732 3,143 4,026 5,160
9 600 6,947 39,638 40,299 50,081 3,547 4,676 6,184
10 600 7,924 39,638 40,453 52,774 3,946 5,354 7,309

15 0 11,608 39,638 41,363 70,965 4,473 7,632 13,094

20 0 14,816 39,638 42,310 95,773 4,010 9,176 20,771

25 0 18,909 39,638 43,278 129,224 3,610 11,076 33,073

30 0 24,133 39,638 44,269 174,378 3,244 13,343 52,561

Attained Age
65 0 81,723 39,638 49,597 785,431 1,685 30,247 479,001

</TABLE>

(1) Corresponds to $306.00 semi annually; $156.00 quarterly, or $52.98 monthly.
(2) Assumes no policy loan is made.

Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction of
tax charges but before any other expenses charged against Life Series Fund or
Separate Account B. Actual rates may be higher or lower than hypothetical
rates. No representation can be made by First Investors Life or Life Series
Fund that hypothetical rates can be achieved for any one year or sustained over
any period of time. See prospectus for details of the calculations.

33
<PAGE>

MALE ISSUE AGE 25
$1,200 ANNUAL PREMIUM FOR STANDARD RISK (1)
$51,908 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)

<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT RETURN OF
YEAR DUE INTEREST AT 5% 0% 6% 12% 0% 6% 12%
- ------ ------- -------------- ---------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1,200 $ 1,260 $51,908 $51,921 $ 52,078 $ 409 $ 439 $ 469
2 1,200 2,583 51,908 51,955 52,558 1,308 1,423 1,542
3 1,200 3,972 51,908 52,011 53,359 2,197 2,454 2,727
4 1,200 5,431 51,908 52,088 54,495 3,076 3,532 4,037
5 1,200 6,962 51,908 52,188 55,994 3,992 4,710 5,535
6 1,200 8,570 51,908 52,308 57,870 4,897 5,941 7,187
7 1,200 10,259 51,908 52,450 60,141 5,791 7,226 9,008
8 1,200 12,032 51,908 52,612 62,823 6,673 8,568 11,014
9 1,200 13,893 51,908 52,794 65,934 7,544 9,969 13,222

10 1,200 15,848 51,908 52,996 69,495 8,404 11,430 15,653

15 0 23,217 51,908 54,188 93,429 9,524 16,333 28,161

20 0 29,631 51,908 55,430 126,119 8,504 19,562 44,508

25 0 37,818 51,908 56,702 170,313 7,539 23,273 69,903

30 0 48,266 51,908 58,005 230,101 6,628 27,467 108,958

Attained Age
65 0 78,620 51,908 60,711 420,822 4,947 37,025 256,641

</TABLE>

(1) Corresponds to $612.00 semi annually; $312.00 quarterly, or $105.96
monthly.

(2) Assumes no policy loan is made.

Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction of
tax charges but before any other expenses charged against Life Series Fund or
Separate Account B. Actual rates may be higher or lower than hypothetical
rates. No representation can be made by First Investors Life or Life Series
Fund that hypothetical rates can be achieved for any one year or sustained over
any period of time. See prospectus for details of the calculations.

34
<PAGE>
MALE ISSUE AGE 40
$1,800 ANNUAL PREMIUM FOR STANDARD RISK (1)
$47,954 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)

<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT RETURN OF
YEAR DUE INTEREST AT 5% 0% 6% 12% 0% 6% 12%
- ------ ------- -------------- ---------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1,800 $ 1,890 $47,954 $47,968 $ 48,144 $ 762 $ 817 $ 872
2 1,800 3,874 47,954 48,002 48,621 2,097 2,289 2,488
3 1,800 5,958 47,954 48,056 49,393 3,406 3,819 4,263
4 1,800 8,146 47,954 48,129 50,473 4,689 5,409 6,211
5 1,800 10,443 47,954 48,222 51,886 6,020 7,138 8,431
6 1,800 12,856 47,954 48,335 53,645 7,328 8,937 10,869
7 1,800 15,388 47,954 48,467 55,766 8,615 10,809 13,548
8 1,800 18,048 47,954 48,617 58,266 9,884 12,760 16,491
9 1,800 20,840 47,954 48,786 61,164 11,137 14,792 19,724
10 1,800 23,772 47,954 48,973 64,480 12,375 16,911 23,276

15 0 34,825 47,954 50,080 86,798 13,764 23,714 41,101

20 0 44,447 47,954 51,233 117,342 11,963 27,690 63,419

25 0 56,727 47,954 52,416 158,741 10,274 31,966 96,809

30 0 72,399 47,954 53,630 214,919 8,695 36,402 145,879

Attained Age
65 0 56,727 47,954 52,416 158,741 10,274 31,966 96,809

</TABLE>

(1) Corresponds to $918.00 semi annually; $468.00 quarterly, or $158.94
monthly.
(2) Assumes no policy loan is made.

Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction of
tax charges but before any other expenses charged against Life Series Fund or
Separate Account B. Actual rates may be higher or lower than hypothetical
rates. No representation can be made by First Investors Life or Life Series
Fund that hypothetical rates can be achieved for any one year or sustained over
any period of time. See prospectus for details of the calculations.

35
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
First Investors Life Insurance Company
New York, New York

We have audited the accompanying balance sheets of First Investors Life
Insurance Company as of December 31, 1997 and 1996, and the related statements
of income, stockholder's equity and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Investors Life
Insurance Company as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
February 19, 1998

36
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
BALANCE SHEETS
ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
Investments (note 2):
Available-for-sale securities. . . . . . . . . . . . . . . $125,380,627 $114,011,891
Held-to-maturity securities. . . . . . . . . . . . . . . . 5,529,687 5,549,214
Short term investments . . . . . . . . . . . . . . . . . . 3,083,769 7,667,491
Policy loans . . . . . . . . . . . . . . . . . . . . . . . 21,527,810 18,865,648
------------- -------------

Total investments . . . . . . . . . . . . . . . . . . . 155,521,893 146,094,244

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,145,215 901,980
Premiums and other receivables, net of allowances of
$30,000 in 1997 and 1996 . . . . . . . . . . . . . . . . . 4,749,099 3,998,210
Accrued investment income. . . . . . . . . . . . . . . . . . 3,180,924 2,903,566
Deferred policy acquisition costs (note 6) . . . . . . . . . 18,446,716 17,547,129
Deferred Federal income taxes (note 7) . . . . . . . . . 1,039,000 934,000
Furniture, fixtures and equipment, at cost, less accumulated
depreciation of $1,075,336 in 1997 and $925,736 in 1996. . 97,379 146,078
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 120,044 136,302
Separate account assets. . . . . . . . . . . . . . . . . . . 642,453,414 465,456,848
------------- -------------
Total assets. . . . . . . . . . . . . . . . . . . . . . $826,753,684 $638,118,357
------------ -------------
------------ -------------

LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:
Policyholder account balances (note 6) . . . . . . . . . . . $115,281,318 $113,295,474
Claims and other contract liabilities. . . . . . . . . . . . 12,548,096 12,190,281
Accounts payable and accrued liabilities . . . . . . . . . . 4,426,355 3,730,943
Separate account liabilities . . . . . . . . . . . . . . . . 642,453,314 464,852,507
------------ -------------
Total liabilities . . . . . . . . . . . . . . . . . . . 774,709,083 594,069,205
------------ -------------

STOCKHOLDER'S EQUITY:
Common Stock, par value $4.75; authorized,
issued and outstanding 534,350 shares. . . . . . . . . . . 2,538,163 2,538,163
Additional paid in capital . . . . . . . . . . . . . . . . . 6,496,180 6,496,180
Unrealized holding gains (losses) on available-for-sale
securities (note 2). . . . . . . . . . . . . . . . . . . . 1,608,000 644,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . 41,402,258 34,370,809
------------ -------------
Total stockholder's equity. . . . . . . . . . . . . . . 52,044,601 44,049,152
------------ -------------
Total liabilities and stockholder's equity. . . . . . . $826,753,684 $638,118,357
------------ -------------
------------ -------------
</TABLE>

See accompanying notes to financial statements.

37
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF INCOME

YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31,1996 DECEMBER 31,1995
----------------- ---------------- ----------------
<S> <C> <C> <C>
REVENUES
Policyholder fees. . . . . . . . . . . . . . . . . . . . . . $24,826,454 $22,955,165 $19,958,420
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 6,279,137 6,725,329 7,293,719
Investment income (note 2) . . . . . . . . . . . . . . . . . 10,259,601 9,771,389 9,363,212
Realized gain (loss) on investments. . . . . . . . . . . . . 158,874 (221,025) 373,582
Other income . . . . . . . . . . . . . . . . . . . . . . . . 702,644 704,678 835,703
------------ ------------ ------------
Total income. . . . . . . . . . . . . . . . . . . . . . . 42,226,710 39,935,536 37,824,636
------------ ------------ ------------

BENEFITS AND EXPENSES
Benefits and increases in contract liabilities . . . . . . . 14,370,510 12,912,810 13,027,516
Dividends to policyholders . . . . . . . . . . . . . . . . . 1,033,663 964,913 954,384
Amortization of deferred acquisition costs (note 6). . . . . 663,200 1,454,408 1,672,429
Commissions and general expenses . . . . . . . . . . . . . . 15,445,888 16,287,498 15,773,968
------------ ------------ ------------
Total benefits and expenses . . . . . . . . . . . . . . . 31,513,261 31,619,629 31,428,297
------------ ------------ ------------

Income before Federal income tax . . . . . . . . . . . . . . . 10,713,449 8,315,907 6,396,339

Federal income tax (note 7):
Current . . . . . . . . . . . . . . . . . . . . . . . . . . 4,285,000 3,099,000 2,553,000
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . (603,000) (286,000) (376,000)
------------ ------------ ------------

3,682,000 2,813,000 2,177,000
------------ ------------ ------------

Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,031,449 $ 5,502,907 $ 4,219,339
------------ ------------ ------------
------------ ------------ ------------

Income per share, based on 534,350 shares outstanding. . . . . $ 13.16 $ 10.30 $ 7.90
------------ ------------ ------------
------------ ------------ ------------

</TABLE>

See accompanying notes to financial statements.

38
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY

YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31,1996 DECEMBER 31,1995
----------------- ---------------- ----------------
<S> <C> <C> <C>
Balance at beginning of year . . . . . . . . . . . . . . . . . $ 44,049,152 $ 39,780,245 $ 31,196,906

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 7,031,449 5,502,907 4,219,339
Increase (decrease) in unrealized holding gains on
available-for-sale securities. . . . . . . . . . . . . . . . 964,000 (1,234,000) 4,364,000
------------ ------------ ------------
Balance at end of year . . . . . . . . . . . . . . . . . . . . $ 52,044,601 $ 44,049,152 $ 39,780,245
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

STATEMENTS OF CASH FLOWS

YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31,1996 DECEMBER 31,1995
----------------- ---------------- ----------------
<S> <C> <C> <C>
Increase (decrease) in cash:
Cash flows from operating activities:
Policyholder fees received. . . . . . . . . . . . . . . . $ 24,587,113 $ 22,925,131 $ 19,374,522
Premiums received . . . . . . . . . . . . . . . . . . . . 6,088,582 6,413,009 6,895,096
Amounts received on policyholder accounts . . . . . . . . 125,818,334 105,489,481 87,156,662
Investment income received. . . . . . . . . . . . . . . . 10,263,095 9,964,169 9,360,894
Other receipts. . . . . . . . . . . . . . . . . . . . . . 57,287 55,779 69,621
Benefits and contract liabilities paid. . . . . . . . . . (138,420,373) (117,321,389) (101,642,156)
Commissions and general expenses paid . . . . . . . . . . (20,899,476) (20,857,687) (18,176,870)
------------ ------------ ------------
Net cash provided by (used for) operating activities. . . 7,494 562 6,668,493 3,037,769
------------ ------------ ------------

Cash flows from investing activities:
Proceeds from sale of investment securities . . . . . . . 38,900,851 39,062,702 58,755,827
Purchase of investment securities . . . . . . . . . . . . (44,021,791) (44,134,604) (58,622,646)
Purchase of furniture, equipment and other assets . . . . (62,170) (34,485) (128,442)
Net increase in policy loans. . . . . . . . . . . . . . . (2,662,162) (1,848,956) (2,330,591)
Investment in Separate Account . . . . . . . . . . . . . 593,945 (200) (500,000)
------------ ------------ ------------
Net cash provided by (used for) investing activities. . . (7,251,327) (6,955,543) (2,825,852)
------------ ------------ ------------
Net increase (decrease) in cash . . . . . . . . . . . . . 243,235 (287,050) 211,917

Cash
Beginning of year . . . . . . . . . . . . . . . . . . . . . 901,980 1,189,030 977,113
------------ ------------ ------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . $ 1,145,215 $ 901,980 $ 1,189,030
------------ ------------ ------------
------------ ------------ ------------

</TABLE>

The Company received a refund of Federal income tax of $79,000 in 1997 and
$102,000 in 1996 and paid Federal income tax of $4,283,000 in 1997, $3,243,000
in 1996 and $2,125,000 in 1995.

See accompanying notes to financial statements.

39
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

STATEMENTS OF CASH FLOWS

YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
Reconciliation of net income to net cash
provided by (used for) operating activities:

Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 7,031,449 $ 5,502,907 $ 4,219,339

Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization. . . . . . . . . . . 117,804 130,924 141,121
Amortization of deferred policy acquisition costs. 663,200 1,454,408 1,672,429
Realized investment (gains) losses . . . . . . . . . . . . (158,874) 221,025 (373,582)
Amortization of premiums and discounts on
investments. . . . . . . . . . . . . . . . . . . 280,852 262,785 237,472
Deferred Federal income taxes. . . . . . . . . . . (603,000) (286,000) (376,000)
Other items not requiring cash - net . . . . . . . 9,771 6,794 (112,268)

(Increase) decrease in:
Premiums and other receivables, net. . . . . . . . (750,889) 336,385 (433,106)
Accrued investment income. . . . . . . . . . . . . (277,358) (70,005) (239,790)
Deferred policy acquisition costs, exclusive
of amortization. . . . . . . . . . . . . . . . . (1,866,787) (1,275,323) (1,117,752)
Other assets . . . . . . . . . . . . . . . . . . . 9,323 (18,574) 64,490

Increase (decrease) in:
Policyholder account balances. . . . . . . . . . . 1,985,844 (78,699) (1,882,591)
Claims and other contract liabilities. . . . . . . 357,815 901,173 551,392
Accounts payable and accrued liabilities . . . . . 695,412 (419,307) 686,615
------------ ----------- ------------

$ 7,494,562 $ 6,668,493 $ 3,037,769
------------ ----------- ------------
------------ ----------- ------------
</TABLE>

See accompanying notes to financial statements.

40
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- BASIS OF FINANCIAL STATEMENTS

The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles (GAAP). Such basis of presentation
differs from statutory accounting practices permitted or prescribed by insurance
regulatory authorities primarily in that:
(a) policy reserves are computed according to the Company's estimates
of mortality, investment yields, withdrawals and other benefits and expenses,
rather than on the statutory valuation basis;
(b) certain expenditures, principally for furniture and equipment and
agents' debit balances, are recognized as assets rather than being non-admitted
and therefore charged to retained earnings;
(c) commissions and other costs of acquiring new business are
recognized as deferred acquisition costs and are amortized over the premium
paying period of policies and contracts, rather than charged to current
operations when incurred;
(d) income tax effects of temporary differences, relating primarily
to policy reserves and acquisition costs, are provided;
(e) the statutory asset valuation and interest maintenance reserves
are reported as retained earnings rather than as liabilities;

NOTE 2 -- OTHER SIGNIFICANT ACCOUNTING PRACTICES

(a) ACCOUNTING ESTIMATES. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosures of contingent assets and liabilities, at the date
of the financial statements and revenues and expenses during the reported
period. Actual results could differ from those estimates.

(b) DEPRECIATION. Depreciation is computed on the useful service life
of the depreciable asset using the straight line method of depreciation over
three to seven years.

(c) INVESTMENTS. Investments in equity securities that have readily
determinable fair values and all investments in debt securities are classified
in separate categories and accounted for as follows:

HELD-TO-MATURITY SECURITIES
Debt securities the Company has the positive intent and ability to hold to
maturity are recorded at amortized cost.

AVAILABLE-FOR-SALE SECURITIES
Debt and equity securities not classified in the other two categories are
recorded at fair value with unrealized gains and losses excluded from earnings
and reported as "unrealized holding gains or losses on available-for-sale
securities" in stockholder's equity.

41
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Short term investments are reported at market value which approximates
cost.

Gains and losses on sales of investments are determined using the
specific identification method. Investment income for the years indicated
consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31,1997 DECEMBER 31, 1996 DECEMBER 31,1995
---------------- ----------------- ----------------

<S> <C> <C> <C>
Interest on fixed maturities . . . . . . . . . . . . . . . . $ 9,029,979 $ 8,559,429 $ 8,243,748
Interest on short term investments . . . . . . . . . . . . . 307,656 410,930 451,475
Interest on policy loans . . . . . . . . . . . . . . . . . . 1,268,834 1,151,681 973,242
Dividends on equity securities . . . . . . . . . . . . . . . -- 43,756 58,305
------------ ----------- ------------

Total investment income . . . . . . . . . . . . . . . . 10,606,469 10,165,796 9,726,770
Investment expense. . . . . . . . . . . . . . . . . . . 346,868 394,407 363,558
------------ ----------- ------------

Net investment income. . . . . . . . . . . . . . . . . . . . $10,259,601 $ 9,771,389 $ 9,363,212
------------ ----------- ------------
------------ ----------- ------------
</TABLE>

The amortized cost and estimated market values of investments at December 31,
1997 and 1996 are as follows:

GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
DECEMBER 31, 1997

U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies. . . . . . . . . . . . . . . . . $ 39,532,729 $ 975,819 $ -- $ 40,508,548
Debt Securities issued by
States of the U.S.. . . . . . . . . . . . . . 7,309,135 92,015 -- 7,401,150
Corporate Debt Securities. . . . . . . . . . . . 67,900,325 1,739,318 75,913 69,563,730
Other Debt Securities . . . . . . . . . . . . . 7,606,438 300,761 -- 7,907,199
------------ ----------- ------- ------------

$122,348,627 $ 3,107,913 $75,913 $125,380,627
------------ ----------- ------- ------------
------------ ----------- ------- ------------

DECEMBER 31,1996

U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies. . . . . . . . . . . . . . . . . $ 41,254,552 $ 569,803 $ 157,020 $ 41,667,335
Debt Securities issued by
States of the U.S.. . . . . . . . . . . . . . 5,525,022 -- 172,264 5,352,758
Corporate Debt Securities. . . . . . . . . . . . 56,013,590 1,217,747 297,752 56,933,585
Other Debt Securities. . . . . . . . . . . . . . 9,952,727 133,266 27,780 10,058,213
------------- ------------ --------- -------------

$ 112,745,891 $ 1,920,816 $ 654,816 $ 114,011,891
------------ ------------ --------- -------------
------------ ------------ --------- -------------
</TABLE>

42
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

At December 31, 1997 and 1996, the Company recognized "Unrealized Holding
Gains on Available-For-Sale Securities" of $1,608,000 and $644,000, net of
applicable deferred income taxes and amortization of deferred acquisition costs.
The change in the Unrealized Holding Gains (Losses) of $964,000, ($1,234,000)
and $4,364,000 for 1997, 1996 and 1995, respectively is reported as a separate
component of stockholders' equity.

<TABLE>
<CAPTION>
HELD-TO-MATURITY SECURITIES
DECEMBER 31,1997
<S> <C> <C> <C> <C>
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies*. . . . . . . . . . . . . . . . . . $ 3,419,687 $ 90,126 $ 700 $ 3,509,113
Corporate Debt Securities. . . . . . . . . . . . . 2,000,000 109,000 -- 2,109,400
Other Debt Securities. . . . . . . . . . . . . . . 110,000 -- -- 110,000
------------ ---------- ------------- -----------

$ 5,529,687 $ 199,126 $ 700 $ 5,728,513
------------ ---------- ------------- -----------
------------ ---------- ------------- -----------

DECEMBER 31,1996

U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies*. . . . . . . . . . . . . . . . . . $ 3,439,214 $ 36,945 $ 10,944 $ 3,465,215
Corporate Debt Securities. . . . . . . . . . . . . 2,000,000 -- 66,200 1,933,800
Other Debt Securities. . . . . . . . . . . . . . . 110,000 -- -- 110,000
------------ ---------- ------------- -----------

$ 5,549,214 $ 36,945 $ 77,144 $ 5,509,015
------------ ---------- ------------- -----------
------------ ---------- ------------- -----------
</TABLE>

*These securities are on deposit for various state insurance departments and are
therefore restricted as to sale.

The amortized cost and estimated market value of debt securities at December
31, 1997, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
----------------------------- --------------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST MARKET VALUE COST MARKET VALUE
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Due in one year or less. . . . . . . . . . $ 363,473 $ 362,773 $ 6,608,708 $ 6,633,659
Due after one year through five years. . . 2,634,603 2,715,715 37,905,751 38,828,513
Due after five years through ten years . . 531,611 540,625 50,889,338 52,290,280
Due after ten years. . . . . . . . . . . . 2,000,000 2,109,400 26,944,831 27,628,175
----------- ----------- ------------- ------------

$5,529,687 $5,728,513 $122,348,628 $125,380,627
----------- ----------- ------------- ------------
----------- ----------- ------------- ------------
</TABLE>

Proceeds from sales of investments in fixed maturities were $34,316,604,
$39,046,422 and $56,949,635 in 1997, 1996 and 1995, respectively. Gross gains
of $374,583 and gross losses of $215,709 were realized on those sales in 1997.
Gross gains of $185,708 and gross losses of $406,733 were realized on those
sales in 1996. Gross gains of $578,810 and gross losses of $205,228 were
realized on those sales in 1995.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(d) RECOGNITION OF REVENUE, POLICYHOLDER ACCOUNT BALANCES AND POLICY BENEFITS

TRADITIONAL ORDINARY LIFE AND HEALTH

Revenues from the traditional life insurance policies represent
premiums which are recognized as earned when due. Health insurance premiums
are recognized as revenue over the time period to which the premiums
relate. Benefits and expenses are associated with earned premiums so as to
result in recognition of profits over the lives of the contracts. This
association is accomplished by means of the provision for liabilities for
future policy benefits and the deferral and amortization of policy
acquisition costs.

UNIVERSAL LIFE AND VARIABLE LIFE

Revenues from universal life and variable life policies represent
amounts assessed against policyholders. Included in such assessments are
mortality charges, surrender charges and policy service fees.

Policyholder account balances on universal life consist of the
premiums received plus credited interest, less accumulated policyholder
assessments. Amounts included in expense represent benefits in excess of
policyholder account balances. The value of policyholder accounts on
variable life are included in separate account liabilities as discussed
below.

ANNUITIES

Revenues from annuity contracts represent amounts assessed against
contractholders. Such assessments are principally sales charges,
administrative fees, and in the case of variable annuities, mortality and
expense risk charges. The carrying value and fair value of fixed annuities
are equal to the policyholder account balances, which represent the net
premiums received plus accumulated interest.

(e) SEPARATE ACCOUNTS. Separate account assets and the related liabilities,
both of which are valued at market, represent segregated variable annuity and
variable life contracts maintained in accounts with individual investment
objectives. All investment income (gains and losses of these accounts) accrues
directly to the contractholders and therefore does not affect net income of the
Company.

NOTE 3 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts for cash, short-term investments and policy loans as
reported in the accompanying balance sheet approximate their fair values. The
fair values for fixed maturities and equity-securities are based upon quoted
market prices, where available or are estimated using values from independent
pricing services.

44
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The carrying amounts for the Company's liabilities under investment - type
contracts approximate their fair values because interest rates credited to
account balances approximate current rates paid on similar investments and are
generally not guaranteed beyond one year. Fair values for the Company's
insurance contracts other than investment - type contracts are not required to
be disclosed. However, the fair values of liabilities for all insurance
contracts are taken into consideration in the overall management of interest
rate risk, which minimizes exposure to changing interest rates.

NOTE 4 -- RETIREMENT PLANS

The Company participates in a non-contributory profit sharing plan for the
benefit of its employees and those of other wholly-owned subsidiaries of its
parent. The Plan provides for retirement benefits based upon earnings. Vesting
of benefits is based upon years of service. For the years ended December 31,
1997, 1996 and 1995, the Company charged operations approximately $70,000,
$100,000 and $40,000 respectively for its portion of the contribution.

The Company also has a non-contributory retirement plan for the benefit of
its sales agents. The plan provides for retirement benefits based upon
commission on first-year premiums and length of service. The plan is unfunded.
Vesting of benefits is based upon graduated percentages dependent upon the
number of allocations made in accordance with the plan by the Company for each
participant. The Company charged to operations pension expenses of
approximately $419,000 in 1997, $414,000 in 1996 and $375,000 in 1995. The
accrued liability of approximately $2,913,000 in 1997 and $2,858,000 in 1996 was
sufficient to cover the value of benefits provided by the plan.

In addition, the Company participates in a 401(k) savings plan covering all
of its eligible employees and those of other wholly-owned subsidiaries of its
parent whereby employees may voluntarily contribute a percentage of their
compensation with the Company matching a portion of the contributions of certain
employees. The amount contributed by the Company in 1997 and 1996 was not
material.

NOTE 5 -- COMMITMENTS AND CONTINGENT LIABILITIES

The Company has agreements with affiliates and non-affiliates as follows:

(a) The Company's maximum retention on any one life is $100,000. The
Company reinsures a portion of its risk with other insurance companies and
reserves are reduced by the amount of reserves for such reinsured risks. The
Company is liable for any obligations which any reinsurance company may be
unable to meet. The Company had reinsured approximately 10% of its net life
insurance in force at December 31, 1997, 1996 and 1995. The Company also had
assumed reinsurance amounting to approximately 20%, 21% and 20% of its net life
insurance in force at the respective year ends. None of these transactions had
any material effect on the Company's operating results.

45
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(b) The Company and certain affiliates share office space, data processing
facilities and management personnel. Charges for these services are based upon
space occupied, usage of data processing facilities and time allocated to
management. During the years ended December 31, 1997, 1996 and 1995, the
Company paid approximately $1,114,000, $1,222,000 and $1,282,000, respectively,
for these services. In addition, the Company reimbursed an affiliate
approximately $9,814,000 in 1997, $9,709,000 in 1996,and $8,739,000 in 1995 for
commissions relating to the sale of its products.
The Company maintains a checking account with a financial institution,
which is also a wholly-owned subsidiary of its parent. The balance in this
account was approximately $332,000 at December 31, 1997 and $326,000 at December
31, 1996.

(c) The Company is subject to certain claims and lawsuits arising in the
ordinary course of business. In the opinion of management, all such claims
currently pending will not have a material adverse effect on the financial
position of the Company or its results of operations.

NOTE 6 -- ADJUSTMENTS MADE TO STATUTORY ACCOUNTING PRACTICES

Note 1 describes some of the common differences between statutory practices
and generally accepted accounting principles. The effects of these differences
for the years ended December 31, 1997, 1996 and 1995 are shown in the following
table in which net income and capital shares and surplus reported therein on a
statutory basis are adjusted to a GAAP basis.

<TABLE>
<CAPTION>
NET INCOME CAPITAL SHARES AND SURPLUS
YEAR ENDED DECEMBER 31 AT DECEMBER 31
---------------------- --------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Reported on a statutory basis. . . . . . $5,809,629 $5,002,533 $3,705,334 $32,159,721 $26,580,877 $21,600,537
----------- ---------- ---------- ----------- ----------- -----------

Adjustments:
Deferred policy acquisition costs (b). 351,239 (179,085) (554,677) 18,446,716 17,547,129 17,318,214
Future policy benefits (a) . . . . . . 133,848 514,086 422,387 (3,000,589) (2,398,397) (2,912,483)
Deferred income taxes. . . . . . . . . 603,000 286,000 376,000 1,039,000 934,000 12,000
Premiums due and deferred (e). . . . . 84,291 85,461 80,133 (1,274,816) (1,359,107) (1,444,568)
Cost of colletion and other statutory
liabilities . . . . . . . . . . . . (924) (12,283) (16,318) 36,060 36,984 49,267
Non-admitted assets. . . . . . . . . . -- -- -- 224,411 298,731 395,758
Asset valuation reserve. . . . . . . . -- -- -- 1,325,986 1,136,664 1,016,830
Interest maintenance reserve . . . . . (55,019) (48,542) (40,804) 56,112 6,271 200,690
Gross unrealized holding gains on
available-for-sale securities . . -- -- -- 3,032,000 1,266,000 3,544,000
Net realized capital gains (losses). . 158,874 (221,025) 373,582 -- -- --
Other . . . . . . . . . . . . . . . (53,489) 75,762 (126,298) -- -- --
----------- ---------- ---------- ----------- ----------- -----------
1,221,820 500,374 514,005 19,884,880 17,468,275 18,179,708
----------- ---------- ---------- ----------- ----------- -----------

In accordance with generally accepted
accounting principles. . . . . . . . . $7,031,449 $5,502,907 $4,219,339 $52,044,601 $44,049,152 $39,780,245
----------- ---------- ---------- ----------- ----------- -----------
----------- ---------- ---------- ----------- ----------- -----------

Per share, based on 534,350 shares
outstanding. . . . . . . . . . . . . . $13.16 $10.30 $7.90 $97.40 $82.44 $74.45
----------- ---------- ---------- ----------- ----------- -----------
----------- ---------- ---------- ----------- ----------- -----------
</TABLE>

46
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The following is a description of the significant policies used to adjust the
net income and capital shares and surplus from a statutory to a GAAP basis.

(a) Liabilities for future policy benefits have been computed primarily by the
net level premium method with assumptions as to anticipated mortality,
withdrawals and investment yields. The composition of the policy liabilities
and the more significant assumptions pertinent thereto are presented below:

DISTRIBUTION OF LIABILITIES* BASIS OF ASSUMPTIONS
- ------------------------------------------------------------------------------------------
1996 1995 YEARS OF ISSUE INTEREST MORTALITY TABLE WITHDRAWAL
- ---- ---- -------------- -------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Non-par:
$1,505,551 $ 1,655,040 1962-1967 4 1/2% 1955-60 Basic Select plus Ultimate Linton B
5,310,394 5,814,885 1968-1988 5 1/2% 1955-60 Basic Select plus Ultimate Linton B
2,433,724 2,546,702 1984-1988 7 1/2% 85% of 1965-70 Basic Select Modified
plus Ultimate Linton B
101,775 86,508 1989-Present 7 1/2% 1975-80 Basic Select plus Ultimate Linton B
108,985 113,117 1989-Present 7 1/2% 1975-80 Basic Select plus Ultimate Actual
28,971 34,185 1989-Present 8% 1975-80 Basic Select plus Ultimate Actual
32,412,007 31,902,122 1985-Present 6% Accumulation of Funds --
Par:
224,913 223,500 1966-1967 4 1/2% 1955-60 Basic Select plus Ultimate Linton A
13,273,949 13,357,249 1968-1988 5 1/2% 1955-60 Basic Select plus Ultimate Linton A
899,407 975,132 1981-1984 7 1/4% 90% of 1965-70 Basic Select
plus Ultimate Linton B
4,699,324 4,772,595 1983-1988 9 1/2% 80% of 1965-70 Basic Select
plus Ultimate Linton B
15,977,808 14,031,404 1990-Present 8% 66% of 1975-80 Basic Select
plus Ultimate Linton B
Annuities:
19,581,382 21,779,771 1976-Present 5 1/2% Accumulation of Funds --
Miscellaneous:
19,604,218 16,939,829 1962-Present 2 1/2%-3 1/2% 1958-CSO None

</TABLE>

* The above amounts are before deduction of deferred premiums of $881,090 in
1997 and $936,565 in 1996.

(b) The costs of acquiring new business, principally commissions and
related agency expenses, and certain costs of issuing policies, such as medical
examinations and inspection reports, all of which vary with and are primarily
related to the production of new business, have been deferred. Costs deferred
on universal life and variable life are amortized as a level percentage of the
present value of anticipated gross profits resulting from investment yields,
mortality and surrender charges. Costs deferred on traditional ordinary life
and health are amortized over the premium-paying period of the related policies
in proportion to the ratio of the annual premium revenue to the total
anticipated premium revenue. Anticipated premium revenue was estimated using
the same assumptions which were used for computing liabilities for future policy
benefits. Amortization of $663,200 in 1997 and $1,454,408 in 1996, $1,672,429
in 1995 was charged to operations.

(c) Participating business represented 9.5% and 9.8% of individual life
insurance in force at December 31, 1997 and 1996, respectively.

The Board of Directors annually approves a dividend formula for calculation
of dividends to be distributed to participating policyholders.

47
<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The portion of earnings of participating policies that can inure to the
benefit of shareholders is limited to the larger of 10% of such earnings or $.50
per thousand dollars of participating insurance in force. Earnings in excess of
that limit must be excluded from shareholders' equity by a charge against
operations. No such charge has been made, since participating business has
operated at a loss to date on a statutory basis. It is anticipated, however,
that the participating lines will be profitable over the lives of the policies.

(d) New York State insurance law prohibits the payment of dividends to
stockholders from any source other than the statutory unassigned surplus. The
amount of said surplus was $22,374,879, $16,796,135 and $11,815,645 at December
31, 1997, 1996 and 1995, respectively.

(e) Statutory due and deferred premiums are adjusted to conform to the
expected premium revenue used in computing future benefits and deferred policy
acquisition costs. In this regard, the GAAP due premium is recorded as an asset
and the GAAP deferred premium is applied against future policy benefits.

NOTE 7 -- FEDERAL INCOME TAXES

The Company joins with its parent company and other affiliated companies in
filing a consolidated Federal income tax return. The provision for Federal
income taxes is determined on a separate company basis.

Retained earnings at December 31, 1997 included approximately $146,000
which is defined as "policyholders' surplus" and may be subject to Federal
income tax at ordinary corporate rates under certain future conditions,
including distributions to stockholders.

Deferred tax liabilities (assets) are comprised of the following:

<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Policyholder dividend provision. . . . . . . . . . . . . . . $ (357,219) $ (332,719)
Non-qualified agents' pension plan reserve . . . . . . . . . (1,161,304) 1,127,384)
Deferred policy acquisition costs. . . . . . . . . . . . . . 2,215,873 2,507,526
Future policy benefits . . . . . . . . . . . . . . . . . . . (2,575,365) 2,346,908)
Bond discount. . . . . . . . . . . . . . . . . . . . . . . . 39,184 28,677
Unrealized holding gains on Available-For-Sale Securities . 829,000 331,000
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,169) 5,808
------------ -----------
$(1,039,000) $ (934,000)
------------ -----------
------------ -----------
</TABLE>

The currently payable Federal Income tax provision of $3,099,000 for 1996
is net of a $75,000 Federal tax benefit resulting from a capital loss carryback
of $221,025.

<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
First Investors Life Insurance Company
New York, New York

We have audited the statement of assets and liabilities of First Investors
Life Level Premium Variable Life Insurance (a separate account of First
Investors Life Insurance Company, registered as a unit investment trust under
the Investment Company Act of 1940), as of December 31, 1997, and the related
statement of operations for the year then ended and changes in net assets for
each of the two years in the period then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Investors Life Level
Premium Variable Life Insurance as of December 31, 1997, and the results of its
operations for the year then ended and the changes in its net assets for each
of the two years in the period then ended, in conformity with generally
accepted accounting principles.

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
February 19, 1998

<PAGE>

FIRST INVESTORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997
<TABLE>
<CAPTION>

<S> <C>
ASSETS
Investments at net asset value (Note 3):
First Investors Life Series Fund.....................$175,153,705

LIABILITIES
Payable to First Investors Life Insurance Company......... 2,997,943
------------

NET ASSETS.....................................................$172,155,762
------------
------------

Net assets represented by Contracts............................$172,155,762
------------
------------

</TABLE>

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>

<S> <C>
INVESTMENT INCOME
Income:
Dividends..........................................$ 10,220,599
--------------
Total income.................................. 10,220,599
--------------
Expenses:
Cost of insurance charges (Note 4)................. 3,301,612
Mortality and expense risks (Note 4)............... 783,666
------------

Total expenses................................ 4,085,278
--------------

NET INVESTMENT INCOME........................................ 6,135,321
--------------

UNREALIZED APPRECIATION ON INVESTMENTS
Beginning of year....................................... 32,071,931
End of year............................................. 48,303,546
--------------

Change in unrealized appreciation on investments............. 16,231,615
--------------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.........$ 22,366,936
--------------
--------------
</TABLE>
See notes to financial statements.

50
<PAGE>
FIRST INVESTORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE

STATEMENTS OF CHANGES IN NET ASSETS

YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>

<S> <C> <C>
1997 1996
------------ ------------
Increase (Decrease) in Net Assets
From Operations
Net investment income..................................... $ 6,135,321 $ 2,182,740
Change in unrealized appreciation on investments.......... 16,231,615 12,426,813
------------ ------------

Net increase in net assets resulting from operations...... 22,366,936 14,609,553
------------ ------------

From Unit Transactions
Net insurance premiums.................................... 30,069,380 27,107,376
Contract payments......................................... (13,435,961) (10,946,422)
------------ ------------

Net increase in net assets derived from unit transactions. 16,633,419 16,160,954
------------ ------------

Net increase in net assets................................ 39,000,355 30,770,507

Net Assets
Beginning of year............................................ 133,155,407 102,384,900
------------ ------------
End of year.................................................. $172,155,762 $133,155,407
------------ ------------
------------ ------------

</TABLE>

See notes to financial statements.

<PAGE>

FIRST INVESTORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

NOTE 1 -- ORGANIZATION

First Investors Life Level Premium Variable Life Insurance
(Separate Account B), a unit investment trust registered under the Investment
Company Act of 1940 (the 1940 Act), is a segregated investment account
established by First Investors Life Insurance Company (FIL). Assets of the
Separate Account B have been used to purchase shares of First Investors Life
Series Fund (The Fund), an open-end diversified management investment company
registered under the 1940 Act.

NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS
Shares of the Fund held by Separate Account B are valued at net asset
value per share. All distributions received from the Fund are reinvested
to purchase additional shares of the Fund at net asset value.

NET ASSETS REPRESENTED BY CONTRACTS
The net assets represented by contracts represents the cash value of
the policyholder accounts which is the estimated liability for future
policy benefits. The liability for future policy benefits is computed
based upon assumptions as to anticipated mortality, withdrawals and
investment yields. The mortality assumption is based upon the 1975-80
Basic Select plus Ultimate mortality table.

FEDERAL INCOME TAXES
Separate Account B is not taxed separately because its operations are
part of the total operations of FIL, which is taxed as a life insurance
company under the Internal Revenue Code. Separate Account B will not be
taxed as a regulated investment company under Subchapter M of the Code.
Under existing Federal income tax law, no taxes are payable on the
investment income or on the capital gains of Separate Account B.

<PAGE>
NOTE 3 -- INVESTMENTS
Investments consist of the following:
<TABLE>
<CAPTION>
NET ASSET MARKET
SHARES VALUE VALUE COST
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
First Investors Life
Series Fund
Cash Management........... 1,218,583 $ 1.00 $ 1,218,583 $ 1,218,583
High Yield................ 2,866,013 12.30 35,263,773 30,677,508
Growth.................... 1,229,555 29.24 35,952,308 22,296,807
Discovery................. 1,171,410 27.77 32,524,259 23,774,385
Blue Chip................. 1,527,030 23.71 36,205,436 21,909,874
International Securities.. 1,588,324 16.91 26,864,926 21,086,069
Government................ 87,661 10.33 905,557 904,587
Investment Grade.......... 200,185 11.67 2,335,956 2,119,101
Utility Income............ 259,643 14.95 3,882,907 2,863,245
----------- -----------
$175,153,705 $126,850,159
----------- -----------
----------- -----------

</TABLE>

The High Yield Series' investments in high yield securities whether rated
or unrated may be considered speculative and subject to greater market
fluctuations and risks of loss of income and principal than lower yielding,
higher rated, fixed income securities.

NOTE 4 -- MORTALITY AND EXPENSE RISKS AND DEDUCTIONS

In consideration for its assumption of the mortality and expense risks
connected with the Variable Life Contracts, FIL deducts an amount equal on an
annual basis to .50% of the daily net asset value of Separate Account B. The
deduction for the year ended December 31, 1997 was $783,666.

A monthly charge is also made to Separate Account B for the cost of
insurance protection. This amount varies with the age and sex of the insured
and the net amount of insurance at risk. For further discussion, see "Cost of
Insurance Protection" in the Prospectus. For the year ended December 31, 1997
cost of insurance charges amounted to $3,301,612.

53
<PAGE>

First Investors Life
Level Premium
Variable Life
Insurance
(Separate Account B)

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

Prospectus

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

April 30, 1998

First Investors Logo

Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."

Verticle line from top to bottom in center of page about 1/2 inch in thickness

To the left of the verticle line is the following language:

TABLE OF CONTENTS
- -------------------------------------

Charges and Expenses............................... 2
General Description................................ 3
The Variable Life Policy........................... 9
Illustration of Death Benefits,
Cash Values and Accumulated Premiums.............. 19
Federal Income Tax Status.......................... 24
Voting Rights...................................... 26
Officers and Directors of
First Investors Life Insurance Company............ 26
Distribution of Policies........................... 28
Custodian.......................................... 28
Reports............................................ 28
State Regulation................................... 28
Experts............................................ 29
Relevance of Financial Statements.................. 29
Appendix I -- Other Policy Provisions.............. 29
Appendix II -- Additional Illustrations of Death
Benefits, Cash Values and
Accumulated Premiums.............................. 31
Financial Statements of First Investors Life....... 36
Financial Statements of Separate Account B......... 49

LIFE 318

<PAGE>

FIRST INVESTORS LIFE SERIES FUND

95 Wall Street, New York, New York 10005/(212) 858-8200

This is a Prospectus for FIRST INVESTORS LIFE SERIES FUND ("Life Series
Fund"), an open-end, diversified management investment company. The Fund offers
eleven separate investment series, each of which has different investment
objectives and policies: FIRST INVESTORS LIFE BLUE CHIP FUND ("BLUE CHIP
FUND"), FIRST INVESTORS LIFE CASH MANAGEMENT FUND ("CASH MANAGEMENT FUND"),
FIRST INVESTORS LIFE DISCOVERY FUND ("DISCOVERY FUND"), FIRST INVESTORS LIFE
GOVERNMENT FUND ("GOVERNMENT FUND"), FIRST INVESTORS LIFE GROWTH FUND ("GROWTH
FUND"), FIRST INVESTORS LIFE HIGH YIELD FUND ("HIGH YIELD FUND"), FIRST
INVESTORS LIFE INTERNATIONAL SECURITIES FUND ("INTERNATIONAL SECURITIES FUND"),
FIRST INVESTORS LIFE INVESTMENT GRADE FUND ("INVESTMENT GRADE FUND"), FIRST
INVESTORS LIFE TARGET MATURITY 2007 FUND ("TARGET MATURITY 2007 FUND"), FIRST
INVESTORS LIFE TARGET MATURITY 2010 FUND ("TARGET MATURITY 2010 FUND") and FIRST
INVESTORS LIFE UTILITIES INCOME FUND ("UTILITIES INCOME FUND") (each, a Fund,
and collectively, "Funds"). Each Fund's investment objectives are listed on the
inside cover.

Investments in a Fund are only available through purchases of the Level Premium
Variable Life Insurance Policies ("Policies") or the Individual Variable Annuity
Contracts ("Contracts") offered by First Investors Life Insurance Company
("First Investors Life"). Policy premiums, net of certain expenses, are paid
into a unit investment trust, First Investors Life Insurance Company Separate
Account B ("Separate Account B"). Purchase payments for the Contracts, net of
certain expenses, are also paid into a unit investment trust, First Investors
Life Variable Annuity Fund C ("Separate Account C"). Purchase payments for the
Contracts are also paid into a unit investment trust, First Investors Life
Variable Annuity Fund D ("Separate Account D"). Separate Account B, Separate
Account C and Separate Account D ("Separate Accounts") pool these proceeds to
purchase shares of a Fund designated by purchasers of the Policies or Contracts.
Investments in a Fund are used to fund benefits under the Policies and
Contracts. TARGET MATURITY 2007 FUND and TARGET MATURITY 2010 FUND are only
offered to Contractowners of Separate Account C and Separate Account D.

AN INVESTMENT IN LIFE SERIES FUND, INCLUDING CASH MANAGEMENT FUND, IS NEITHER
INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT
THE CASH MANAGEMENT FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE. INVESTMENTS BY THE HIGH YIELD FUND IN HIGH-YIELD, HIGH RISK
SECURITIES, COMMONLY REFERRED TO AS "JUNK BONDS," MAY ENTAIL RISKS THAT ARE
DIFFERENT OR MORE PRONOUNCED THAN THOSE THAT WOULD RESULT FROM INVESTMENT IN
HIGHER-RATED SECURITIES. SEE "DESCRIPTION OF CERTAIN SECURITIES, OTHER
INVESTMENT POLICIES AND RISK FACTORS-HIGH YIELD SECURITIES."

This Prospectus sets forth concisely the information about the Funds that a
prospective investor should know before investing and should be retained for
future reference. First Investors Management Company, Inc. ("FIMCO" or
"Adviser") serves as investment adviser to the Funds. A Statement of Additional
Information ("SAI"), dated April 30, 1998, as amended July 21, 1997 (which is
incorporated by reference herein), has been filed with the Securities and
Exchange Commission. The SAI is available at no charge upon request to the
Funds at the address or telephone number indicated above.

AN INVESTMENT IN THESE SECURITIES IS NOT A DEPOSIT OR OBLIGATION OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK AND IS NOT federally INSURED OR PROTECTED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY.

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

The date of this Prospectus is April 30, 1998

<PAGE>

The investment objectives of each Fund of Life Series Fund offered by this
Prospectus are as follows:

BLUE CHIP FUND. The investment objective of the Fund is to seek high total
investment return consistent with the preservation of capital. This goal will
be sought by investing, under normal market conditions, primarily in equity
securities of "Blue Chip" companies that the Adviser believes have potential
earnings growth that is greater than the average company included in the
Standard & Poor's 500 Composite Stock Price Index. It is the Fund's policy to
remain relatively fully invested in equity securities under all market
conditions rather than to attempt to time the market by maintaining large cash
or fixed-income securities positions when market declines are anticipated. The
Fund is appropriate for investors who are comfortable with a fully invested
stock portfolio.

CASH MANAGEMENT FUND. The objective of the Fund is to seek to earn a high
rate of current income consistent with the preservation of capital and
maintenance of liquidity. The Fund will invest in money market obligations,
including high quality securities issued or guaranteed by the U.S. Government or
its agencies and instrumentalities, bank obligations and high grade corporate
instruments.

DISCOVERY FUND. The investment objective of the Fund is to seek long-term
capital appreciation, without regard to dividend or interest income, through
investment in the common stock of companies with small to medium market
capitalization that the Adviser considers to be undervalued or less well known
in the current marketplace and to have the potential for capital growth.

GOVERNMENT FUND. The investment objective of the Fund is to seek to achieve
a significant level of current income which is consistent with security and
liquidity of principal by investing, under normal market conditions, primarily
in obligations issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities (including mortgage-backed
securities).

GROWTH FUND. The investment objective of the Fund is to seek long-term
capital appreciation. This goal will be sought by investing, under normal
market conditions, primarily in common stocks of companies and industries
selected for their growth potential.

HIGH YIELD FUND. The primary objective of the Fund is to seek to earn a high
level of current income. The Fund actively seeks to achieve its secondary
objective of capital appreciation to the extent consistent with its primary
objective. The Fund seeks to attain its objectives primarily through
investments in lower-grade, high-yielding, high risk debt securities, commonly
referred to as "junk bonds" ("High Yield Securities"). Investments in High
Yield Securities may entail risks that are different or more pronounced than
those involved in higher-rated securities. See "High Yield Securities."

INTERNATIONAL SECURITIES FUND. The primary objective of the Fund is to seek
long-term capital growth. As a secondary objective, the Fund seeks to earn a
reasonable level of current income. These objectives are sought, under normal
market conditions, through investment in common stocks, rights and warrants,
preferred stocks, bonds and other debt obligations issued by companies or
governments of any nation, subject to certain restrictions with respect to
concentration and diversification.

INVESTMENT GRADE FUND. The investment objective of the Fund is to seek a
maximum level of income consistent with investment in investment grade debt
securities. The Fund seeks to

2
<PAGE>

achieve its objective primarily by investing, under normal market conditions,
in debt securities of U.S. issuers that are rated in one of the four highest
rating categories by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group or, if unrated, are deemed to be of comparable quality by the
Adviser.

TARGET MATURITY 2007 FUND. The investment objective of the Fund is to seek a
predictable compounded investment return for investors who hold their Fund
shares until the Fund's maturity, consistent with preservation of capital. The
Fund intends to terminate in the year 2007.

TARGET MATURITY 2010 FUND. The investment objective of the Fund is to seek a
predictable compounded investment return for investors who hold their Fund
shares until the Fund's maturity, consistent with preservation of capital. The
Fund intends to terminate in the year 2010.

TARGET MATURITY 2007 FUND and TARGET MATURITY 2010 FUND each will seek its
objective by investing, under normal market conditions, at least 65% of its
total assets in zero coupon securities which are issued by the U.S. Government,
its agencies or instrumentalities or created by third parties using securities
issued by the U.S. Government, its agencies or instrumentalities.

AS A RESULT OF THE VOLATILE NATURE OF THE MARKET FOR ZERO COUPON SECURITIES,
THE VALUE OF SHARES OF TARGET MATURITY 2007 FUND AND TARGET MATURITY 2010 FUND
PRIOR TO EACH FUND'S MATURITY MAY FLUCTUATE SIGNIFICANTLY. THUS, TO ACHIEVE A
PREDICTABLE RETURN, INVESTORS SHOULD HOLD THEIR INVESTMENTS IN EITHER OF THESE
TWO FUNDS UNTIL THE FUND LIQUIDATES SINCE THE FUND'S VALUE CHANGES DAILY WITH
MARKET CONDITIONS. ACCORDINGLY, ANY INVESTOR WHO REDEEMS HIS OR HER SHARES
PRIOR TO A FUND'S MATURITY IS LIKELY TO ACHIEVE A DIFFERENT INVESTMENT RESULT
THAN THE RETURN THAT WAS PREDICTED ON THE DATE THE INVESTMENT WAS MADE, AND MAY
EVEN SUFFER A SIGNIFICANT LOSS.

UTILITIES INCOME FUND. The primary investment objective of the Fund is to
seek high current income. Long-term capital appreciation is a secondary
objective. These objectives are sought, under normal market conditions, through
investment in equity and debt securities issued by companies primarily engaged
in the public utilities industry.

There can be no assurance that any Fund will achieve its investment
objectives. See "Investment Objectives and Policies" for a detailed description
of each Fund's investment objectives and policies.

Life Series Fund offers shares of each Fund to insurance company separate
accounts that fund Policies and Contracts. Due to differences in tax treatment
or other considerations, the interests of various Contract owners and Policy
owners might at some point be in conflict. Life Series Fund currently does not
foresee any such conflict. If such a conflict were to occur, one or more
Policies or Contracts offered by First Investors Life might be required to
withdraw its investments in one or more Funds. This might force a Fund to sell
securities at disadvantageous prices.

3
<PAGE>

FINANCIAL HIGHLIGHTS

The following table sets forth the per share operating performance data for a
share outstanding, total return, ratios to average net assets and other
supplemental data for each period indicated. Additional performance information
is contained in Life Series Fund's Annual Report which may be obtained without
charge by contacting First Investors Life at 212-858-8200. The table below has
been derived from financial statements which have been audited by Tait, Weller &
Baker, independent certified public accountants, whose report thereon appears in
the SAI. This information should be read in conjunction with the Financial
Statements and Notes thereto, which also appear in the SAI, available at no
charge upon request to the Funds.

4
<PAGE>

<TABLE>
<CAPTION>
PER SHARE DATA
--------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS FROM
NET ASSET -------------------------------------------- ------------------------
VALUE NET REALIZED
------------ NET AND UNREALIZED TOTAL FROM NET NET TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BLUE CHIP
3/8/90* to 12/31/90 . . . . $10.00 $ .07 $(.02) $ .05 $ -- $ -- $ --
1991 . . . . . . . . . . . . 10.05 .12 2.50 2.62 .05 -- .05
1992 . . . . . . . . . . . . 12.62 .16 .67 .83 .21 -- .21
1993 . . . . . . . . . . . . 13.24 .15 .97 1.12 .15 -- .15
1994 . . . . . . . . . . . . 14.21 .18 (.39) (.21) .08 .17 .25
1995 . . . . . . . . . . . 13.75 .26 4.11 4.37 .19 .95 1.14
1996 . . . . . . . . . . . . 16.98 .22 3.31 3.53 .25 .49 .74
1997 . . . . . . . . . . . . 19.77 .19 4.88 5.07 .22 .91 1.13

CASH MANAGEMENT **

1989 . . . . . . . . . . . . $ 1.00 $.075 $ -- $ .075 $.075 $ -- $.075
1990 . . . . . . . . . . . . 1.00 .072 -- .072 .072 -- .072
1991 . . . . . . . . . . . . 1.00 .054 -- .054 .054 -- .054
1992 . . . . . . . . . . . . 1.00 .029 -- .029 .029 -- .029
1993 . . . . . . . . . . . . 1.00 .027 -- .027 .027 -- .027
1994 . . . . . . . . . . . . 1.00 .037 -- .037 .037 -- .037
1995 . . . . . . . . . . . . 1.00 .054 -- .054 .054 -- .054
1996 . . . . . . . . . . . . 1.00 .049 -- .049 .049 -- .049
1997 . . . . . . . . . . . . 1.00 .050 -- .050 .050 -- .050

DISCOVERY
1989 . . . . . . . . . . . . $10.38 $ .19 $2.19 $2.38 $ .27 $ .09 $ .36
1990 . . . . . . . . . . . . 12.40 .14 (.78) (.64) .15 .90 1.05
1991 . . . . . . . . . . . . 10.71 .07 5.42 5.49 .18 -- .18
1992 . . . . . . . . . . . . 16.02 -- 2.51 2.51 .03 .15 .18
1993 . . . . . . . . . . . . 18.35 -- 3.92 3.92 -- .91 .91
1994 . . . . . . . . . . . . 21.36 .06 (.62) (.56) -- .94 .94
1995 . . . . . . . . . . . . 19.86 .11 4.62 4.73 .06 1.26 1.32
1996 . . . . . . . . . . . . 23.27 .13 2.66 2.79 .11 .89 1.00
1997 . . . . . . . . . . . . 25.06 .08 3.93 4.01 .14 1.16 1.30
</TABLE>

(a) Annualized
* Commencement of operations
** Adjusted to reflect ten-for-one stock split on May 1, 1991.
+ Some or all expenses have been waived or assumed by the
investment adviser from commencement of operations through
++ December 31, 1997.
+++ The effect of fees and charges incurred at the separate
account level are not reflected in these performance figures.
Average commission rate (per share of security) as required
by amended disclosure requirements effective in 1996.

5
<PAGE>

- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.05 .61(a) $ 3,656 -- 2.95(a) 1.92(a) 1.03(a) 15 $ --
12.62 26.17 13,142 1.00 1.88 1.55 1.34 21 --
13.24 6.67 23,765 .79 1.66 .86 1.60 40 --
14.21 8.51 34,030 .88 1.27 N/A N/A 37 --
13.75 (1.45) 41,424 .88 1.49 N/A N/A 82 --
16.98 34.00 66,900 .86 1.91 N/A N/A 26 --
19.77 21.52 100,078 .84 1.39 N/A N/A 45 .0692
23.71 26.72 154,126 .81 .99 N/A N/A 63 .0649

1.00 7.79 $ 2,210 -- 7.84 1.35 6.49 N/A $ --
1.00 7.49 8,203 .39 6.90 1.15 6.15 N/A --
1.00 5.71 9,719 .57 5.39 .93 5.03 N/A --
1.00 3.02 8,341 .79 2.99 .98 2.81 N/A --
1.00 2.70 4,243 .60 2.67 1.05 2.22 N/A --
1.00 3.77 3,929 .60 3.69 1.04 3.25 N/A --
1.00 5.51 4,162 .60 5.36 1.10 4.87 N/A --
1.00 5.00 4,297 .60 4.89 1.11 4.38 N/A --
1.00 5.08 4,760 .70 4.97 1.06 4.61 N/A --

12.40 23.62 $ 283 -- 2.43 4.78 (2.35) 231 $ --
10.71 (5.47) 960 -- 2.97 2.68 .28 104 --
16.02 51.73 4,661 .70 .48 1.49 (.31) 93 --
18.35 15.74 10,527 .91 .02 1.05 (.12) 91 --
21.36 22.20 21,221 .87 (.03) N/A N/A 69 --
19.86 (2.53) 30,244 .88 .36 N/A N/A 53 --
23.27 25.23 50,900 .87 .63 N/A N/A 78 --
25.06 12.48 70,899 .85 .63 N/A N/A 98 .0689
27.77 16.84 99,530 .82 .34 N/A N/A 85 .0648

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
PER SHARE DATA
--------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS FROM
NET ASSET -------------------------------------------- ------------------------
VALUE NET REALIZED
------------ NET AND UNREALIZED TOTAL FROM NET NET TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT
1/7/92* to 12/31/92 . . . . $10.00 $ .47 $ .51 $ .98 $ .33 $ -- $ .33
1993 . . . . . . . . . . . . 10.65 .64 .02 .66 .70 .19 .89
1994 . . . . . . . . . . . . 10.42 .79 (1.21) (.42) .25 .05 .30
1995 . . . . . . . . . . . 9.70 .66 .78 1.44 .62 -- .62
1996 . . . . . . . . . . . . 10.52 .68 (.33) .35 .68 -- .68
1997 . . . . . . . . . . . . 10.19 .72 .11 .83 .69 -- .69

GROWTH
1989 . . . . . . . . . . . . $10.79 $ .02 $ 2.51 $ 2.53 $ .18 $ .12 $ .30
1990 . . . . . . . . . . . . 13.02 .16 (.55) (.39) .06 -- .06
1991 . . . . . . . . . . . . 12.57 .17 4.15 4.32 .18 -- .18
1992 . . . . . . . . . . . . 16.71 .08 1.41 1.49 .18 1.38 1.56
1993 . . . . . . . . . . . . 16.64 .07 .93 1.00 .09 .10 .19
1994 . . . . . . . . . . . . 17.45 .09 (.60) (.51) -- .21 .21
1995 . . . . . . . . . . . . 16.73 .18 3.94 4.12 .09 .29 .38
1996 . . . . . . . . . . . . 20.47 .18 4.68 4.86 .18 .59 .77
1997 . . . . . . . . . . . . 24.56 .15 6.57 6.72 .18 1.86 2.04

HIGH YIELD
1989 . . . . . . . . . . . . $11.56 $ .74 $ (.92) $ (.18) $ .56 $ .11 $ .67
1990 . . . . . . . . . . . . 10.71 1.08 (1.79) (.71) .83 -- .83
1991 . . . . . . . . . . . . 9.17 1.16 1.66 2.82 1.18 -- 1.18
1992 . . . . . . . . . . . . 10.81 1.11 .21 1.32 1.69 -- 1.69
1993 . . . . . . . . . . . . 10.44 .96 .88 1.84 1.12 -- 1.12
1994 . . . . . . . . . . . . 11.16 .87 (1.14) (.27) .31 -- .31
1995 . . . . . . . . . . . . 10.58 1.00 .95 1.95 .96 -- .96
1996 . . . . . . . . . . . . 10.57 1.02 .35 1.37 1.01 -- 1.01
1997 . . . . . . . . . . . . 11.93 .98 .41 1.39 1.02 -- 1.02

</TABLE>

(a) Annualized
* Commencement of operations
+ Some or all expenses have been waived or assumed by the
investment adviser from commencement of operations through
December 31, 1997.
++ The effect of fees and charges incurred at the separate
account level are not reflected in the performance figures.
+++ Average commission rate (per share of security) as required
by amended disclosure requirements effective in 1996.

<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.65 9.95(a) $ 5,064 .03(a) 6.64(a) .89(a) 5.79(a) 301 $ --
10.42 6.35 8,234 .35 6.60 .84 6.11 525 --
9.70 (4.10) 7,878 .35 6.74 .90 6.19 457 --
10.52 15.63 9,500 .40 6.79 .93 6.26 198 --
10.19 3.59 9,024 .60 6.75 .94 6.41 199 --
10.33 8.61 9,120 .60 6.95 .92 6.63 134 --

13.02 24.00 $ 570 -- 2.91 5.21 (2.30) 24 $ --
12.57 (2.99) 2,366 -- 3.03 1.64 1.40 28 --
16.71 34.68 7,743 .69 1.21 1.34 .55 148 --
16.64 9.78 16,385 .76 .75 1.20 .30 45 --
17.45 6.00 25,658 .91 .43 N/A N/A 51 --
16.73 (2.87) 32,797 .90 .60 N/A N/A 40 --
20.47 25.12 51,171 .88 1.11 N/A N/A 64 --
24.56 24.45 78,806 .85 .92 N/A N/A 49 .0485
29.24 29.28 127,585 .82 .64 N/A N/A 27 .0506

10.71 (1.76) $ 14,354 -- 12.05 .88 11.17 22 $ --
9.71 (5.77) 18,331 -- 13.21 .91 12.30 35 --
10.81 33.96 23,634 .53 11.95 .89 11.60 40 --
10.44 13.15 24,540 .91 10.48 .96 10.43 84 --
11.16 18.16 30,593 .91 9.49 N/A N/A 96 --
10.58 (1.56) 32,285 .88 9.43 N/A N/A 50 --
11.57 19.82 41,894 .87 9.86 N/A N/A 57 --
11.93 12.56 49,474 .85 9.43 N/A N/A 34 --
12.30 12.47 59,619 .83 8.88 N/A N/A 40 --

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
PER SHARE DATA
--------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS FROM
NET ASSET -------------------------------------------- ------------------------
VALUE NET REALIZED
------------ NET AND UNREALIZED TOTAL FROM NET NET TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL SECURITIES
------------------------
4/16/90* to 12/31/90 . . . $10.00 $ .03 $ .34 $ .37 $ -- $ -- $ --
1991 . . . . . . . . . . . . 10.37 .09 1.49 1.58 .03 .05 .08
1992 . . . . . . . . . . . . 11.87 .15 (.28) (.13) .15 .22 .37
1993 . . . . . . . . . . . . 11.37 .10 2.41 2.51 .14 -- .14
1994 . . . . . . . . . . . . 13.74 .14 (.32) (.18) .05 -- .05
1995 . . . . . . . . . . . 13.51 .19 2.25 2.44 .12 .25 .37
1996 . . . . . . . . . . . . 15.58 .18 2.12 2.30 .19 .50 .69
1997 . . . . . . . . . . . . 17.19 .18 1.26 1.44 .20 1.52 1.72

INVESTMENT GRADE
----------------
1/7/92* to 12/31/92 . . . $10.00 $ .43 $ .44 $ .87 $ .34 $ -- $ .34
1993 . . . . . . . . . . . . 10.53 .65 .49 1.14 .71 .01 .72
1994 . . . . . . . . . . . . 10.95 .67 (1.06) (.39) .16 .09 .25
1995 . . . . . . . . . . . . 10.31 .67 1.28 1.95 .53 -- .53
1996 . . . . . . . . . . . . 11.73 .72 (.42) .30 .67 -- .67
1997 . . . . . . . . . . . . 11.36 .74 .31 1.05 .74 -- .74

TARGET MATURITY 2007
--------------------
4/26/95* to 12/31/95 . . . $10.00 $ .26 $ 2.00 $2.26 $ -- $ -- $ --
1996 . . . . . . . . . . . . 12.26 .56 (.83) (.27) .23 .05 .28
1997 . . . . . . . . . . . . 11.71 .59 .90 1.49 .57 -- .57

TARGET MATURITY 2010
--------------------
4/30/96* to 12/31/96 . . . . $10.00 $ .26 $ .90 $1.16 $ -- $ -- --
1997 . . . . . . . . . . . . 11.16 .45 1.29 1.74 .20 -- .20

UTILITIES INCOME
----------------
11/15/93* to 12/31/93 . . . $10.00 $ .01 $ (.07) $(.06) $ -- $ -- --
1994 . . . . . . . . . . . . 9.94 .24 (.96) (.72) .03 -- .03
1995 . . . . . . . . . . . . 9.19 .28 2.46 2.74 .19 -- .19
1996 . . . . . . . . . . . . 11.74 .32 .78 1.10 .27 -- .27
1997 . . . . . . . . . . . . 12.57 .37 2.64 3.01 .36 .27 .63

</TABLE>

(a) Annualized
* Commencement of operations
+ Some or all expenses have been waived or assumed by the
investment adviser from commencement of operations through
++ December 31, 1997.
+++ The effect of fees and charges incurred at the separate
account level are not reflected in the performance figures.
Average commission rate (per share of security) as required
by amended disclosure requirements effective in 1996.

<PAGE>

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.37 5.21(a) $ 3,946 -- .99(a) 3.43(a) (2.43)(a) 29 $ --
11.87 15.24 8,653 1.70 .75 2.27 .18 70 --
11.37 (1.13) 12,246 1.03 1.55 1.38 1.20 36 --
13.74 22.17 21,009 1.14 .97 N/A N/A 37 --
13.51 (1.29) 31,308 1.03 1.22 N/A N/A 36 --
15.58 18.70 41,012 1.02 1.42 N/A N/A 45 --
17.19 15.23 57,955 1.12 1.25 N/A N/A 67 .0093
16.91 9.09 74,463 1.13 1.15 N/A N/A 71 .0042

10.53 8.91(a) $ 4,707 .23(a) 6.16(a) .93(a) 5.46(a) 72 $ --
10.95 10.93 10,210 .35 6.32 .85 5.82 64 --
10.31 (3.53) 11,602 .37 6.61 .92 6.06 15 --
11.73 19.69 16,262 .51 6.80 .91 6.40 26 --
11.36 2.84 16,390 .60 6.47 .88 6.19 19 --
11.67 9.81 17,220 .60 6.54 .87 6.27 41 --

12.26 22.60 $ 9,860 .04(a) 6.25(a) .87(a) 5.42(a) 28 $ --
11.71 (2.16) 14,647 .60 6.05 .82 5.83 13 --
12.63 13.38 20,300 .60 5.91 .82 5.69 1 --

11.16 11.60 $ 2,195 .60(a) 6.05(a) .98(a) 5.67(a) 0 $ --
12.70 15.86 5,209 .60 5.88 .87 5.61 13 --

9.94 (4.66)(a) $ 494 -- 1.46(a) 3.99(a) (2.52)(a) 0 $ --
9.19 (7.24) 4,720 .17 4.13 .95 3.35 31 --
11.74 30.26 14,698 .41 4.23 .91 3.73 17 --
12.57 9.57 24,108 .60 3.48 .86 3.22 45 .0707
14.95 25.07 33,977 .67 3.12 .85 2.94 64 .0681

</TABLE>

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

BLUE CHIP FUND

BLUE CHIP FUND seeks to provide investors with high total investment
return consistent with the preservation of capital. The Fund seeks to
achieve its objective by investing, under normal market conditions, at least
65% of its total assets in equity securities of "Blue Chip" companies,
including common and preferred stocks and securities convertible into common
stock, that the Adviser believes have potential earnings growth that is
greater than the average company included in the Standard & Poor's 500
Composite Stock Price Index ("S&P 500"). The Fund also may invest up to 35%
of its total assets in the equity securities of non-Blue Chip companies that
the Adviser believes have significant potential for growth of capital or
future income consistent with the preservation of capital. When market
conditions warrant, or when the Adviser believes it is necessary to achieve
the Fund's objective, the Fund may invest up to 25% of its total assets in
fixed income securities. It is the Fund's policy to remain relatively fully
invested in equity securities under all market conditions rather than to
attempt to time the market by maintaining large cash or fixed-income
securities positions when market declines are anticipated. The Fund is
appropriate for investors who are comfortable with a fully invested stock
portfolio.

The Fund defines Blue Chip companies as those companies that are
included in the S&P 500. Blue Chip companies are considered to be of
relatively high quality and generally exhibit superior fundamental
characteristics, which may include: potential for consistent earnings
growth, a history of profitability and payment of dividends, leadership
position in their industries and markets, proprietary products or services,
experienced management, high return on equity and a strong balance sheet.
Blue Chip companies usually exhibit less investment risk and share price
volatility than smaller, less established companies. Examples of Blue Chip
companies are Microsoft Corp., General Electric Co., Pepsico Inc. and
Bristol-Myers Squibb Co.

The fixed-income securities in which the Fund may invest include money
market instruments (including prime commercial paper, certificates of deposit
of domestic branches of U.S. banks and bankers' acceptances), obligations
issued or guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities ("U.S. Government Obligations") (including
mortgage-backed securities) and corporate debt securities. However, no more
than 5% of the Fund's net assets may be invested in corporate debt securities
rated below Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's Ratings Group ("S&P"). The Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total
assets. The Fund may also invest up to 10% of its total assets in American
Depository Receipts ("ADRs"), enter into repurchase agreements and make loans
of portfolio securities. See "Description of Certain Securities, Other
Investment Policies and Risk Factors" and the SAI for additional information
concerning these securities.

CASH MANAGEMENT FUND

CASH MANAGEMENT FUND seeks to earn a high rate of current income
consistent with the preservation of capital and maintenance of liquidity.
The Fund generally can invest only in securities that mature or are deemed to
mature within 397 days from the date of purchase. In addition, the Fund
maintains a dollar-weighted average portfolio maturity of 90 days or less.
In

<PAGE>

managing the Fund's investment portfolio, the Adviser may employ various
professional money management techniques in order to respond to changing
economic and money market conditions and to shifts in fiscal and monetary
policy. These techniques include varying the composition and the
average-weighted maturity of the Fund's portfolio based upon the Adviser's
assessment of the relative values of various money market instruments and
future interest rate patterns. The Adviser also may seek to improve the
Fund's yield by purchasing or selling securities to take advantage of yield
disparities among money market instruments that regularly occur in the money
market.

The Fund invests primarily in (1) high quality marketable securities
issued or guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities, (2) bank certificates of deposit, bankers'
acceptances, time deposits and other short-term obligations issued by banks
and (3) prime commercial paper and high quality, U.S. dollar denominated
short-term corporate bonds and notes. The U.S. Government securities in
which the Fund may invest include a variety of U.S. Treasury securities that
differ in their interest rates, maturities and dates of issue. Securities
issued or guaranteed by agencies or instrumentalities of the U.S. Government
may be supported by the full faith and credit of the United States or by the
right of the issuer to borrow from the U.S. Treasury. See the SAI for
additional information on U.S. Government securities. The Fund may invest in
domestic bank certificates of deposit (insured up to $100,000) and bankers'
acceptances (not insured) issued by domestic banks and savings institutions
which are insured by the Federal Deposit Insurance Corporation ("FDIC") and
that have total assets exceeding $500 million. The Fund also may invest in
certificates of deposit issued by London branches of domestic or foreign
banks ("Eurodollar CDs"). The Fund may invest in time deposits and other
short-term obligations, including uninsured, direct obligations bearing
fixed, floating or variable interest rates, issued by domestic banks, foreign
branches of domestic banks, foreign subsidiaries of domestic banks and
domestic and foreign branches of foreign banks. The Fund also may invest in
repurchase agreements with banks that are members of the Federal Reserve
System or securities dealers that are members of a national securities
exchange or are market makers in U.S. Government securities, and, in either
case, only where the debt instrument subject to the repurchase agreement is a
U.S. Treasury or agency obligation. Repurchase agreements maturing in over 7
days are deemed illiquid securities, and can constitute no more than 10% of
the Fund's net assets. See "Description of Certain Securities, Other
Investment Policies and Risk Factors" for additional information on
repurchase agreements.

The Fund also may purchase high quality, U.S. dollar denominated
short-term bonds and notes, including variable rate and master demand notes
issued by domestic and foreign corporations (including banks). The Fund may
invest in floating and variable rate demand notes and bonds that permit the
Fund, as the holder, to demand payment of principal at any time, or at
specified intervals not exceeding 397 days, in each case upon not more than
30 days' notice. The Fund may borrow money for temporary or emergency
purposes in amounts not exceeding 5% of its total assets. When market
conditions warrant, the Fund may purchase short-term, high quality fixed and
variable rate instruments issued by state and municipal governments and by
public authorities. See "Description of Certain Securities, Other Investment
Policies and Risk Factors" for additional information concerning these
securities.

The Fund may purchase only obligations that (1) the Adviser determines
present minimal credit risks based on procedures adopted by the Life Series
Board of Trustees, and (2) are either (a) rated in one of the top two rating
categories by any two nationally recognized statistical rating

<PAGE>

organizations ("NRSROs") (or one, if only one rated the security) or (b)
unrated securities that the Adviser determines are of comparable quality.
Securities qualify as being in the top rating category ("First Tier
Securities") if at least two NRSROs (or one, if only one rated the security)
have given it the highest rating, or unrated securities that the Adviser
determines are of comparable quality. The Fund's purchases of commercial
paper are limited to First Tier Securities. The Fund may not invest more than
5% of its total assets in securities rated in the second highest rating
category ("Second Tier Securities"). Investments in Second Tier Securities
of any one issuer are limited to the greater of 1% of the Fund's total assets
or $1 million. The Fund generally may invest no more than 5% of its total
assets in the securities of a single issuer (other than securities issued by
the U.S. Government, its agencies or instrumentalities).

In periods of declining interest rates, the Fund's yield will tend to be
somewhat higher than prevailing market rates, and in periods of rising
interest rates the opposite will be true. Also, when interest rates are
falling, net cash inflows from the continuous sale of the Fund's shares
likely will be invested in portfolio instruments producing lower yields than
the balance of the Fund's portfolio, thereby reducing the Fund's yield. In
periods of rising interest rates, the opposite may be true.

DISCOVERY FUND

DISCOVERY FUND seeks long-term capital appreciation, without regard to
dividend or interest income. The Fund seeks to achieve its objective by
investing, under normal market conditions, in the common stock of companies
with small to medium market capitalization that the Adviser considers to be
undervalued or less well known in the current marketplace and to have
potential for capital growth.

The Fund seeks to invest in the common stock of companies that the
Adviser believes are undervalued in the current market in relation to
fundamental economic values such as earnings, sales, cash flow and tangible
book value; that are early in their corporate development (I.E., before they
become widely recognized and well known and while their reputations and track
records are still emerging); or that offer the possibility of greater
earnings because of revitalized management, new products or structural
changes in the economy. Such companies primarily are those with small to
medium market capitalization, which the Fund considers to be market
capitalization of up to $1.5 billion. The Adviser believes that, over time,
these securities are more likely to appreciate in price than securities whose
market prices have already reached their perceived economic value. In
addition, the Fund intends to diversify its holdings among as many companies
and industries as the Adviser deems appropriate.

Companies that are early in their corporate development may be dependent
on relatively few products or services, may lack adequate capital reserves,
may be dependent on one or two management individuals and may have less of a
track record or historical pattern of performance. In addition, there may be
less information available as to the issuers and their securities may not be
well known to the general public and may not yet have wide institutional
ownership. Securities of these companies may have more potential for growth
but also greater risk than that normally associated with larger, older or
better-known companies.

Investments in securities of companies with small to medium market
capitalization are generally considered to offer greater opportunity for
appreciation and to involve greater risk of

<PAGE>

depreciation than securities of companies with larger market capitalization.
These include the equity securities of companies which represent new or
changing industries and those which, in the opinion of the Adviser, represent
special situations, the potential future value of which has not been fully
recognized. Growth securities of companies with small to medium market
capitalization which represent a special situation bear the risk that the
special situation will not develop as favorably as expected, or the situation
may deteriorate. For example, a merger with favorable implications may be
blocked, an industrial development may not enjoy anticipated market
acceptance or a bankruptcy may not be as profitably resolved as had been
expected. Because the securities of most companies with small to medium
market capitalization are not as broadly traded as those of companies with
larger market capitalization, these securities are often subject to wider and
more abrupt fluctuations in market price. In the past, there have been
prolonged periods when these securities have substantially underperformed or
outperformed the securities of larger capitalization companies. In addition,
smaller capitalization companies generally have fewer assets available to
cushion an unforeseen adverse occurrence and thus such an occurrence may have
a disproportionately negative impact on these companies.

The majority of the Fund's investments are expected to be securities
listed on the New York Stock Exchange ("NYSE") or other national securities
exchanges, or securities that have an established over-the-counter ("OTC")
market, although the depth and liquidity of the OTC market may vary from time
to time and from security to security.

The Fund may invest up to 15% of its total assets in common stocks
issued by foreign companies which are traded on a recognized domestic or
foreign securities exchange. In addition to the fundamental analysis of
companies and their industries which it performs for U.S. issuers, the
Adviser evaluates the economic and political climate of the country in which
the company is located and the principal securities markets in which such
securities are traded. Although the foreign stocks in which the Fund invests
are primarily denominated in foreign currencies, the Fund also may invest in
ADRs. The Adviser does not attempt to time actively either short-term market
trends or short-term currency trends in any market. See "Foreign Securities"
and "American Depository Receipts."

The Fund may borrow money for temporary or emergency purposes in amounts
not exceeding 5% of its total assets. The Fund also may enter into
repurchase agreements and make loans of portfolio securities. For temporary
defensive purposes, the Fund may invest all of its assets in U.S. Government
Obligations, prime commercial paper. Certificates of deposit and bankers'
acceptances. See "Description of Certain Securities, Other Investment
Policies and Risk Factors" and the SAI for more information regarding these
securities.

GOVERNMENT FUND

GOVERNMENT FUND seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal by investing,
under normal market conditions, at least 65% of its assets in U.S. Government
Obligations (including mortgage-backed securities). The Fund has no fixed
policy with respect to the duration of U.S. Government Obligations it
purchases. Securities issued or guaranteed as to principal and interest (but
not market value) by the U.S. Government include a variety of Treasury
securities, which differ only in their interest rates, maturities and times
of issuance. Although the payment of interest and principal on a portfolio
security may be guaranteed by the U.S. Government or one of its agencies or

<PAGE>

instrumentalities, shares of the Fund are not insured or guaranteed by the
U.S. Government or any agency or instrumentality. The net asset value of
shares of the Fund generally will fluctuate in response to interest rate
levels. When interest rates rise, prices of fixed income securities
generally decline; when interest rates decline, prices of fixed income
securities generally rise. See "U.S. Government Obligations" and "Debt
Securities," below.

The Fund may invest in mortgage-backed securities, including those
involving Government National Mortgage Association ("GNMA") certificates,
Federal National Mortgage Association ("FNMA") certificates and Federal Home
Loan Mortgage Corporation ("FHLMC") certificates. The Fund also may invest
in securities issued or guaranteed by other U.S. Government agencies or
instrumentalities, including: the Federal Farm Credit System (which may not
borrow from the U.S. Treasury and the securities of which are not guaranteed
by the U.S. Government); the Federal Home Loan Bank (which may borrow from
the U.S. Treasury to meet its obligations but the securities of which are not
guaranteed by the U.S. Government); the Tennessee Valley Authority and the
U.S. Postal Service (each of which may borrow from the U.S. Treasury to meet
it obligations); and the Farmers Home Administration and the Export-Import
Bank (the securities of which are backed by the full faith and credit of the
United States). The Fund may invest in collateralized mortgage obligations
("CMOs") and stripped mortgage-backed securities issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities. See
"Mortgage-Backed Securities," below.

The Fund may invest up to 35% of its assets in securities other than
U.S. Government Obligations and mortgage-backed securities. These may
include: prime commercial paper, certificates of deposit of domestic branches
of U.S. banks, bankers' acceptances, repurchase agreements (applicable to
U.S. Government Obligations), insured certificates of deposit and
certificates representing accrual on U.S. Treasury securities. The Fund also
may make loans of portfolio securities and invest in zero coupon securities.
The Fund may borrow money for temporary or emergency purposes in amounts not
exceeding 5% of its total assets and may invest up to 35% of its net assets
in securities issued on when-issued or delayed delivery basis. See
"Description of Certain Securities, Other Investment Policies and Risk
Factors," below, and the SAI for a further discussion of these securities.

For temporary defensive purposes, the Fund may invest all of its assets
in cash, cash equivalents and money market instruments, including bank
certificates of deposit, bankers' acceptances and commercial paper issued by
domestic corporations, short-term fixed income securities or U.S. Government
Obligations. See the SAI for a description of these securities.

GROWTH FUND

The investment objective of GROWTH FUND is long-term capital
appreciation. Current income through the receipt of interest or dividends
from investments will merely be incidental to the Fund's efforts in pursuing
its goal. It is the policy of the Fund to invest, under normal market
conditions, primarily in common stocks and it is anticipated that the Fund
will usually be so invested. It also may invest to a limited degree in
convertible securities and preferred stocks. At least 75% of the value of
the Fund's total assets (excluding securities held for defensive purposes)
shall be invested in securities of companies in industries in which the
Adviser, or the Fund's investment subadviser, Wellington Management Company,
LLP ("Subadviser" or "WMC"), believes opportunities for capital growth exist.
The Fund does not intend to concentrate its

<PAGE>

investments in a particular industry, but it may invest up to 25% of the
value of its assets in a particular industry. The Fund may invest up to 5% of
its total assets in common stocks issued by foreign companies that are
denominated in U.S. currency; provided, however, that the Fund may invest
without limit in U.S. dollar denominated foreign securities listed on the
NYSE. The Fund may also invest in ADRs and Global Depository Receipts
("GDRs"), purchase securities on a when-issued or delayed delivery basis and
make loans of portfolio securities. The Fund may borrow money for temporary
or emergency purposes in amounts not exceeding 5% of its total assets and may
invest up to 5% of its net assets in securities issued on a when-issued or
delayed delivery basis. For temporary defensive purposes, the Fund may
invest all of its assets in U.S. Government Obligations, investment grade
bonds, prime commercial paper, certificates of deposit, bankers' acceptances,
repurchase agreements and participation interests. See the SAI for a
description of these securities.

HIGH YIELD FUND

HIGH YIELD FUND primarily seeks high current income and secondarily
seeks growth of capital. The Fund actively seeks to achieve its secondary
objective to the extent consistent with its primary objective. The Fund
seeks to achieve its objectives by investing, under normal market conditions,
at least 65% of its total assets in high risk, high yield securities,
commonly referred to as "junk bonds" ("High Yield Securities"). High Yield
Securities include the following instruments: fixed, variable or floating
rate debt obligations (including bonds, debentures and notes) which are rated
below Baa by Moody's or below BBB by S&P, or, if unrated, are deemed to be of
comparable quality by the Adviser; preferred stocks and dividend-paying
common stocks that have yields comparable to those of high yielding debt
securities; any of the foregoing securities of companies that are financially
troubled, in default or undergoing bankruptcy or reorganization ("Deep
Discount Securities"); and any securities convertible into any of the
foregoing. See "High Yield Securities" and "Deep Discount Securities," below.

The Fund may invest up to 5% of its total assets in debt securities
issued by foreign governments and companies located outside the United States
and denominated in U.S. or foreign currency. The Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total
assets, make loans of portfolio securities, enter into repurchase agreements
and invest in zero coupon and pay-in-kind securities. The Fund may also
invest up to 5% of its net assets in securities issued on a when-issued or
delayed delivery basis. See "Description of Certain Securities, Other
Investment Policies and Risk Factors," below, and the SAI for more
information concerning these securities.

The Fund may invest up to 35% of its total assets in securities other
than High Yield Securities, including: dividend-paying common stocks;
securities convertible into, or exchangeable for, common stock; debt
obligations of all types (including bonds, debentures and notes) rated A or
better by Moody's or S&P; U.S. Government Obligations; warrants; and money
market instruments consisting of prime commercial paper, certificates of
deposit of domestic branches of U.S. banks, bankers' acceptances and
repurchase agreements. The Adviser continually monitors the investments in
the Fund's portfolio and carefully calculates on a case-by-case basis whether
to dispose of or retain a debt obligation that has been downgraded.

In any period of market weakness or of uncertain market or economic
conditions, the Fund may establish a temporary defensive position to preserve
capital by having all or part of its assets

<PAGE>

invested in investment grade debt securities or retained in cash or cash
equivalents, including bank certificates of deposit, bankers' acceptances,
U.S. Government Obligations and commercial paper issued by domestic
corporations. See "Description of Certain Securities, Other Investment
Policies and Risk Factors," below.

The medium- to lower-rated, and certain of the unrated securities in
which the Fund invests tend to offer higher yields than higher-rated
securities with the same maturities because the historical financial
condition of the issuers of such securities may not be as strong as that of
other issuers. Debt obligations rated lower than Baa or BBB by Moody's or
S&P, respectively, are speculative and generally involve more risk of loss of
principal and income than higher-rated securities. Also, their yields and
market value tend to fluctuate more than higher quality securities. The
greater risks and fluctuations in yield and value occur because investors
generally perceive issuers of lower-rated and unrated securities to be less
creditworthy. These risks cannot be eliminated, but may be reduced by
diversifying holdings to minimize the portfolio impact of any single
investment. In addition, fluctuations in market value does not affect the
cash income from the securities, but are reflected in the Fund's net asset
value. When interest rates rise, the net asset value of the Fund tends to
decrease. When interest rates decline, the net asset value of the Fund tends
to increase.

Variable or floating rate debt obligations in which the Fund may invest
periodically adjust their interest rates to reflect changing economic
conditions. Thus, changing economic conditions specified by the terms of the
security would serve to change the interest rate and the return offered to
the investor. This reduces the effect of changing market conditions on the
security's underlying market value.

A High Yield Security may itself be convertible into or exchangeable for
equity securities, or may carry with it the right to acquire equity
securities evidenced by warrants attached to the security or acquired as part
of a unit with the security. Although the Fund invests primarily in High
Yield Securities, securities received upon conversion or exercise of warrants
and securities remaining upon the break-up of units or detachment of warrants
may be retained to permit orderly disposition, to establish a long-term
holding period for Federal income tax purposes or to seek capital
appreciation.

Because of the greater number of investment considerations involved in
investing in High Yield Securities, the achievement of the Fund's investment
objectives depends more on the Adviser's research abilities than would be the
case if the Fund were investing primarily in securities in the higher rated
categories. Because medium- to lower-rated securities generally involve
greater risks of loss of income and principal than higher-rated securities,
investors should consider carefully the relative risks associated with
investments in securities that carry medium to lower ratings or, if unrated,
deemed to be of comparable quality by the Adviser. See "High Yield
Securities" and Appendix A for a description of corporate bond ratings.

The dollar weighted average of credit ratings of all bonds held by the
Fund during the 1997 fiscal year, computed on a monthly basis, is set forth
below. This information reflects the average composition of the Fund's assets
during the 1997 fiscal year and is not necessarily representative of the Fund
as of the end of its 1997 fiscal year, the current fiscal year or at any
other time in the future.

<PAGE>

COMPARABLE QUALITY OF
UNRATED SECURITIES TO
RATED BY MOODY'S BONDS RATED BY MOODY'S
---------------- ----------------------
<S> <C> <C>
Baa 0.0% 0.50%
Ba 8.18 0.0
B 81.18 3.45
Caa 0.46 3.47
----- ----
Total 89.36% 7.42%

</TABLE>

INTERNATIONAL SECURITIES FUND

INTERNATIONAL SECURITIES Fund primarily seeks long-term capital growth
and secondarily seeks to earn a reasonable level of current income. The Fund
may invest in all types of securities issued by companies and government
instrumentalities of any nation approved by the Board, subject only to
industry concentration and issuer diversification restrictions described
below and in the SAI. This investment flexibility permits the Fund to react
to rapidly changing economic conditions among countries which cause the
relative attractiveness of investments within national markets to be subject
to frequent reappraisal. It is a fundamental policy of the Fund that no more
than 35% of its total assets will be invested in securities issued by U.S.
companies and U.S. Government Obligations or cash and cash equivalents
denominated in U.S. currency. In addition, the Fund presently does not
intend to invest more than 35% of its total assets in any one particular
country. Further, except for temporary defensive purposes, the Fund's assets
will be invested in securities of at least three different countries outside
the United States. See "Foreign Securities". For defensive purposes, the
Fund may temporarily invest in securities issued by U.S. companies and the
U.S. Government and its agencies and instrumentalities, or cash equivalents
denominated in U.S. currency, without limitation as to amount.

The Fund may purchase securities traded on any foreign stock exchange.
The Fund may also purchase ADRs and GDRs. See "American Depository Receipts
and Global Depository Receipts," below. The Fund also may invest up to 25% of
its total assets in unlisted securities of foreign issuers; provided,
however, that no more than 15% of the value of its net assets may be invested
in unlisted securities with a limited trading market and other illiquid
investments. The investment standards for the selection of unlisted
securities are the same as those used in the purchase of securities traded on
a stock exchange.

The Fund may invest in warrants, which may or may not be listed on a
recognized United States or foreign exchange. The Fund also may enter into
repurchase agreements, invest up to 5% of its net assets in securities issued
on a when-issued or delayed delivery basis and make loans of portfolio
securities. The Fund also may borrow money for temporary or emergency
purposes in amounts not exceeding 5% of its total assets. In addition, the
Fund can engage in hedging and options strategies. See the SAI for further
information concerning these securities.

INVESTMENT GRADE FUND

INVESTMENT GRADE FUND seeks to generate a maximum level of income
consistent with investment in investment grade debt securities. The Fund
seeks to achieve its objective by investing, under normal market conditions,
at least 65% of its total assets in debt securities of

<PAGE>

U.S. issuers that are rated in the four highest rated categories by Moody's
or S&P, or in unrated securities that are deemed to be of comparable quality
by the Adviser ("investment grade securities"). The Fund may invest up to
35% of its total assets in U.S. Government Obligations (including
mortgage-backed securities) dividend-paying common and preferred stocks,
obligations convertible into common stocks, repurchase agreements, debt
securities rated below investment grade and money market instruments. The
Fund may invest up to 5% of its net assets in corporate or government debt
securities of foreign issuers which are U.S. dollar denominated and traded in
U.S. markets. The Fund may also borrow money for temporary or emergency
purposes in amounts not exceeding 5% of its total assets. The Fund may invest
up to 5% of its net assets in securities issued on a when-issued or delayed
delivery basis, make loans of portfolio securities and invest in zero coupon
or pay-in-kind securities. See "Description of Certain Securities, Other
Investment Policies and Risk Factors," below, and the SAI for additional
information concerning these securities.

The published reports of rating services are considered by the Adviser
in selecting rated securities for the Fund's portfolio. The Adviser also
relies, among other things, on its own credit analysis, which includes a
study of the existing debt's capital structure, the issuer's ability to
service debt (or to pay dividends, if investing in common or preferred stock)
and the current trend of earnings for the issuer. Although up to 100% of the
Fund's total assets can be invested in debt securities rated at least Baa by
Moody's or at least BBB by S&P, or unrated debt securities deemed to be of
comparable quality by the Adviser, no more than 5% of the Fund's net assets
may be invested in debt securities rated lower than Baa by Moody's or BBB by
S&P (including securities that have been downgraded), or, if unrated, deemed
to be of comparable quality by the Adviser, or in any equity securities of
any issuer if a majority of the debt securities of such issuer are rated
lower than Baa by Moody's or BBB by S&P. Securities rated BBB or Baa by S&P
or Moody's, respectively, are considered to be speculative with respect to
the issuer's ability to make principal and interest payments. The Adviser
continually monitors the investments in the Fund's portfolio and carefully
evaluates on a case-by-case basis whether to dispose of or retain a debt
security which has been downgraded to a rating lower than investment grade.
See "Debt Securities" and Appendix A for a description of corporate bond
ratings.

For temporary defensive purposes, the Fund may invest all of its assets
in money market instruments, short-term fixed income securities or U.S.
Government Obligations. See "Description of Certain Securities, Other
Investment Policies and Risk Factors," below, and the SAI.

TARGET MATURITY 2007 FUND
TARGET MATURITY 2010 FUND

TARGET MATURITY 2007 FUND seeks to provide a predictable compounded
investment return for investors who hold their Fund shares until the Fund's
maturity, consistent with preservation of capital.

TARGET MATURITY 2010 FUND seeks to provide a predictable compounded
investment return for investors who hold their Fund shares until the Fund's
maturity consistent with the preservation of capital.

<PAGE>

Each Fund will seek its objective by investing, under normal market
conditions, at least 65% of its total assets in zero coupon securities which
are issued by the U.S. Government and its agencies and instrumentalities or
created by third parties using securities issued by the U.S. Government and
its agencies and instrumentalities. With respect to TARGET MATURITY 2007
FUND, these investments will mature no later than December 31, 2007 and, with
respect to TARGET MATURITY 2010 FUND, these investments will mature no later
than December 31, 2010. December 31, 2007 and December 31, 2010 are herein
collectively referred to as the "Maturity Date." On the Maturity Date, each
Fund will be converted to cash and distributed or reinvested in another Fund
of Life Series Fund at the investor's choice.

Each Fund seeks to provide investors with a positive total return at the
Maturity Date which, together with the reinvestment of all dividends and
other distributions, exceeds their original investment in a Fund by a
relatively predictable amount. While the risk of fluctuation in the values
of zero coupon securities is greater when the period to maturity is longer,
that risk tends to diminish as the Maturity Date approaches. Although an
investor can redeem shares at the current net asset value at any time, any
investor who redeems his or her shares prior to the Maturity Date is likely
to achieve a different investment result than the return that was predicted
on the date the investment was made, and may even suffer a significant loss.

Zero coupon securities are debt obligations that do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
date when the securities begin paying current interest. They are issued and
traded at a discount from their face amount or par value. This discount
varies depending on the time remaining until maturity, prevailing interest
rates, liquidity of the security and the perceived credit quality of the
issuer. When held to maturity, the entire return of a zero coupon security,
which consists of the accretion of the discount, comes from the difference
between its issue price and its maturity value. This difference is known at
the time of purchase, so investors holding zero coupon securities until
maturity know the amount of their investment return at the time of their
investment. The market values are subject to greater market fluctuations
from changing interest rates prior to maturity than the values of debt
obligations of comparable maturities that bear interest currently. See "Zero
Coupon Securities-Risk Factors."

A portion of the total realized return from conventional interest-paying
bonds comes from the reinvestment of periodic interest. Since the rate to be
earned on these reinvestments may be higher or lower than the rate quoted on
the interest-paying bonds at the time of the original purchase, the total
return of interest-paying bonds is uncertain even for investors holding the
security to its maturity. This uncertainty is commonly referred to as
reinvestment risk and can have a significant impact on total realized
investment return. With zero coupon securities, however, there are no cash
distributions to reinvest, so investors bear no reinvestment risk if they
hold the zero coupon securities to maturity.

Each Fund primarily will purchase three types of zero coupon securities:
(1) U.S. Treasury STRIPS (Separately Traded Registered Interest and
Principal Securities), which are created when the coupon payments and the
principal payment are stripped from an outstanding Treasury security by the
Federal Reserve Bank. Bonds issued by the Resolution Funding Corporation
(REFCORP) can also be stripped in this fashion. (2) STRIPS which are
created when a dealer deposits a Treasury security or a Federal agency
security with a custodian for safekeeping and then sells the coupon payments
and principal payment that will be generated by this security.

<PAGE>

Bonds issued by the Financing Corporation (FICO) can be stripped in this
fashion. (3) Zero coupon securities of federal agencies and
instrumentalities either issued directly by an agency in the form of a zero
coupon bond or created by stripping an outstanding bond.

Each Fund may invest up to 35% of its total assets in the following
instruments: interest-bearing obligations issued by the U.S. Government and
its agencies and instrumentalities (see "U.S. Government Obligations"),
including, for Target Maturity 2007 Fund, zero coupon securities maturing
beyond 2007, and, for Target Maturity 2010 Fund, zero coupon securities
maturing beyond 2010; corporate debt securities, including corporate zero
coupon securities; repurchase agreements; and money market instruments
consisting of prime commercial paper, certificates of deposit of domestic
branches of U.S. banks and bankers' acceptances. Each Fund may only invest
in debt securities rated A or better by Moody's or S&P or in unrated
securities that are deemed to be of comparable quality by the Adviser. Debt
obligations rated A or better by Moody's or S&P comprise what are known as
high-grade bonds and are regarded as having a strong capacity to repay
principal and make interest payments. See Appendix A for a description of
corporate bond ratings. Each Fund may also invest in restricted and illiquid
securities, make loans of portfolio securities and invest up to 5% of its net
assets in securities issued on a when-issued or delayed delivery basis. See
"Description of Certain Securities, Other Investment Policies and Risk
Factors," below, and the SAI for more information regarding these types of
investments.

UTILITIES INCOME FUND

The primary investment objective of UTILITIES INCOME FUND is to seek
high current income. Long-term capital appreciation is a secondary
objective. The Fund seeks its objectives by investing, under normal market
conditions, at least 65% of its total assets in equity and debt securities
issued by companies primarily engaged in the public utilities industry.
Equity securities in which the Fund may invest include common stocks,
preferred stocks, securities convertible into common stocks or preferred
stocks, and warrants to purchase common or preferred stocks. Debt securities
in which the Fund may invest will be rated at the time of investment at least
A by Moody's or S&P or, if unrated, will be deemed to be of comparable
quality as determined by the Adviser. Debt securities rated A or higher by
Moody's or S&P or, if unrated, deemed to be of comparable quality by the
Adviser, are regarded as having a strong capacity to pay principal and
interest. The Fund's policy is to attempt to sell, within a reasonable time
period, a debt security in its portfolio which has been downgraded below A,
provided that such disposition is in the best interests of the Fund and its
shareholders. See Appendix A for a description of corporate bond ratings.
The portion of the Fund's assets invested in equity securities and in debt
securities will vary from time to time due to changes in interest rates and
economic and other factors.

The utilities companies in which the Fund invests include companies
primarily engaged in the ownership or operation of facilities used to provide
electricity, gas, water or telecommunications (including telephone, telegraph
and satellite, but not companies engaged in public broadcasting or cable
television). For these purposes, "primarily engaged" means that (1) more
than 50% of the company's assets are devoted to the ownership or operation of
one or more facilities as described above, or (2) more than 50% of the
company's operating revenues are derived from the business or combination of
any of the businesses described above. It should be

<PAGE>

noted that based on this definition, the Fund may invest in companies which
are also involved to a significant degree in non-public utilities activities.

Utilities stocks generally offer dividend yields that exceed those of
industrial companies and their prices tend to be less volatile than stocks of
industrial companies. However, utilities stocks can still be affected by the
risks of the stock of industrial companies. Because the Fund concentrates
its investments in public utilities companies, the value of its shares will
be especially affected by factors peculiar to the utilities industry, and may
fluctuate more widely than the value of shares of a fund that invests in a
broader range of industries. See "Utilities Industries."

The Fund may invest up to 35% of its total assets in the following
instruments: debt securities (rated at least A by Moody's or S&P) and common
and preferred stocks of non-utilities companies; U.S. Government Obligations
(including mortgage-backed securities); cash; and money market instruments
consisting of prime commercial paper, bankers' acceptances, certificates of
deposit and repurchase agreements. The Fund may make loans of portfolio
securities and invest up to 5% of its net assets in securities issued on a
when-issued or delayed delivery basis. The Fund may invest up to 10% of its
total assets in ADRs. The Fund may borrow money for temporary or emergency
purposes in amounts not exceeding 5% of its net assets. The Fund also may
invest in zero coupon and pay-in-kind securities. In addition, in any period
of market weakness or of uncertain market or economic conditions, the Fund
may establish a temporary defensive position to preserve capital by having
all of its assets invested in short-term fixed income securities or retained
in cash or cash equivalents. See the SAI for a description of these
securities.

GENERAL. Each Fund's net asset value fluctuates based mainly upon
changes in the value of its portfolio securities. Each Fund's investment
objectives and certain investment limitations set forth in the SAI are
fundamental policies that may not be changed without shareholder approval.
There can be no assurance that any Fund will achieve its investment
objectives.

DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS

AMERICAN DEPOSITORY RECEIPTS AND GLOBAL DEPOSITORY RECEIPTS. BLUE CHIP
FUND, INTERNATIONAL SECURITIES FUND, GROWTH FUND, UTILITIES INCOME FUND and
DISCOVERY FUND may invest in sponsored and unsponsored ADRs. ADRs are
receipts typically issued by a U.S. bank or trust company evidencing
ownership of the underlying securities of foreign issuers, and other forms of
depository receipts for securities of foreign issuers. Generally, ADRs, in
registered form, are denominated in U.S. dollars and are designed for use in
the U.S. securities markets. Thus, these securities are not denominated in
the same currency as the securities into which they may be converted. In
addition, the issuers of the securities underlying unsponsored ADRs are not
obligated to disclose material information in the United States and,
therefore, there may be less information available regarding such issuers and
there may not be a correlation between such information and the market value
to the ADRs. INTERNATIONAL SECURITIES FUND and GROWTH FUND may also invest
in sponsored and unsponsored GDRs. GDRs are issued globally and evidence a
similar ownership arrangement. Generally, GDRs are designed for trading in
non-U.S. securities markets. GDRs are considered to be foreign securities by
INTERNATIONAL SECURITIES FUND and GROWTH FUND. See the SAI for more
information on ADRs.

<PAGE>

BANKERS' ACCEPTANCES. Each Fund may invest in bankers' acceptances.
Bankers' acceptances are short-term credit instruments used to finance
commercial transactions. Generally, an acceptance is a time draft drawn on a
bank by an exporter or importer to obtain a stated amount of funds to pay for
specific merchandise. The draft is then "accepted" by a bank that, in
effect, unconditionally guarantees to pay the face value of the instrument on
its maturity date. The acceptance may then be held by the accepting bank as
an asset or it may be sold in the secondary market at the going rate of
interest for a specific maturity. Although maturities for acceptances can be
as long as 270 days, most acceptances have maturities of six months or less.

CERTIFICATES OF DEPOSIT. Each Fund may invest in bank certificates of
deposit. The FDIC is an agency of the U.S. Government which insures the
deposits of certain banks and savings and loan associations up to $100,000
per deposit. The interest on such deposits may not be insured if this limit
is exceeded. Current Federal regulations also permit such institutions to
issue insured negotiable CDs in amounts of $100,000 or more, without regard
to the interest rate ceilings on other deposits. To remain fully insured,
these investments currently must be limited to $100,000 per insured bank or
savings and loan association.

COMMERCIAL PAPER. Commercial paper is a promissory note issued by a
corporation to finance short-term credit needs which may either be unsecured
or backed by a letter of credit. Commercial paper includes notes, drafts or
similar instruments payable on demand or having a maturity at the time of
issuance not exceeding nine months, exclusive of days of grace or any renewal
thereof. See Appendix A to the SAI for a description of commercial paper
ratings.

CONVERTIBLE SECURITIES. A convertible security is a bond, debenture,
note, preferred stock or other security that may be converted into or
exchanged for a prescribed amount of common stock of the same or a different
issuer within a particular period of time at a specified price or formula. A
convertible security entitles the holder to receive interest paid or accrued
on debt or dividends paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Convertible securities have
unique investment characteristics in that they generally (1) have higher
yields than common stocks, but lower yields than comparable non-convertible
securities, (2) are less subject to fluctuation in value than the underlying
stock because they have fixed income characteristics, and (3) provide the
potential for capital appreciation if the market price of the underlying
common stock increases. See the SAI for more information on convertible
securities.

DEBT SECURITIES. The market value of debt securities is influenced
primarily by changes in the level of interest rates. Generally, as interest
rates rise, the market value of debt securities decreases. Conversely, as
interest rates fall, the market value of debt securities increases. Factors
which could result in a rise in interest rates, and a decrease in the market
value of debt securities, include an increase in inflation or inflation
expectations, an increase in the rate of U.S. economic growth, an expansion
in the Federal budget deficit or an increase in the price of commodities such
as oil. In addition, the market value of debt securities is influenced by
perceptions of the credit risks associated with such securities. Credit risk
is the risk that adverse changes in economic conditions can affect an
issuer's ability to pay principal and interest. Sale of debt securities
prior to maturity may result in a loss and the inability to replace the sold
securities with debt securities with a similar yield. Debt obligations rated
lower than Baa by Moody's or BBB by S&P, commonly referred to as "junk
bonds," are speculative and generally

<PAGE>

involve a higher risk of loss of principal and income than higher-rated debt
securities. See "High Yield Securities " and Appendix A for a description of
corporate bond ratings.

DEEP DISCOUNT SECURITIES. HIGH YIELD FUND may invest up to 15% of its
total assets in securities of companies that are financially troubled, in
default or undergoing bankruptcy or reorganization. Such securities are
usually available at a deep discount from the face value of the instrument.
The Fund will invest in Deep Discount Securities when the Adviser believes
that there exist factors that are likely to restore the company to a healthy
financial condition. Such factors include a restructuring of debt,
management changes, existence of adequate assets or other unusual
circumstances. Debt instruments purchased at deep discounts may pay very
high effective yields. In addition, if the financial condition of the issuer
improves, the underlying value of the security may increase, resulting in a
capital gain. If the company defaults on its obligations or remains in
default, or if the plan of reorganization is insufficient for debtholders,
the Deep Discount Securities may stop paying interest and lose value or
become worthless. The Adviser will attempt to balance the benefits of
investing in Deep Discount Securities with their risks. While a diversified
portfolio may reduce the overall impact of a Deep Discount Security that is
in default or loses its value, the risk cannot be eliminated. See "High Yield
Securities," below. High Yield Securities are subject to certain risks that
may not be present with investments in higher grade debt securities.

EURODOLLAR CERTIFICATES OF DEPOSIT. CASH MANAGEMENT FUND may invest in
Eurodollar CDs, which are issued by London branches of domestic or foreign
banks. Such securities involve risks that differ from certificates of
deposit issued by domestic branches of U.S. banks. These risks include
future political and economic developments, the possible imposition of United
Kingdom withholding taxes on interest income payable on the securities, the
possible establishment of exchange controls, the possible seizure or
nationalization of foreign deposits or the adoption of other foreign
governmental restrictions that might adversely affect the payment of
principal and interest on such securities.

FOREIGN SECURITIES. INTERNATIONAL SECURITIES FUND, HIGH YIELD FUND and
DISCOVERY FUND may sell a security denominated in a foreign currency and
retain the proceeds in that foreign currency to use at a future date (to
purchase other securities denominated in that currency) or a Fund may buy
foreign currency outright to purchase securities denominated in that foreign
currency at a future date. Investing in foreign securities involves more
risk than investing in securities of U.S. companies. Because none of these
Funds currently intend to hedge their foreign investments, the Fund will be
affected by changes in exchange control regulations and fluctuations in the
relative rates of exchange between the currencies of different nations, as
well as by economic and political developments. GROWTH FUND may invest in
securities issued by foreign companies that are denominated in U.S. currency.
Risks involved in foreign securities include the following: there may be
less publicly available information about foreign companies comparable to the
reports and ratings that are published about companies in the United States;
foreign companies are not generally subject to uniform accounting, auditing
and financial reporting standards and requirements comparable to those
applicable to U.S. companies; some foreign stock markets have substantially
less volume than U.S. markets, and securities of some foreign companies are
less liquid and more volatile than securities of comparable U.S. companies;
there may be less government supervision and regulation of foreign stock
exchanges, brokers and listed companies than exist in the United States; and
there may be the possibility of expropriation

<PAGE>

or confiscatory taxation, political or social instability or diplomatic
developments which could affect assets of a Fund held in foreign countries.

INTERNATIONAL SECURITIES FUND'S and DISCOVERY FUND'S investments in
emerging markets include investments in countries whose economies or
securities markets are not yet highly developed. Special considerations
associated with these emerging market investments (in addition to the
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development
assistance, currency transfer restrictions, a limited number of potential
buyers for such securities and delays and disruptions in securities
settlement procedures.

HIGH YIELD SECURITIES. High Yield Securities are subject to certain risks
that may not be present with investments in higher grade securities.

EFFECT OF INTEREST RATE AND ECONOMIC CHANGES. High Yield Securities rated
lower than Baa by Moody's or BBB by S&P, commonly referred to as "junk
bonds," are speculative and generally involve a higher risk or loss of
principal and income than higher-rated securities. The prices of High Yield
Securities tend to be less sensitive to interest rate changes than
higher-rated investments, but may be more sensitive to adverse economic
changes or individual corporate developments. Periods of economic
uncertainty and changes generally result in increased volatility in the
market prices and yields of High Yield Securities and thus in a Fund's net
asset value. A strong economic downturn or a substantial period of rising
interest rates could severely affect the market for High Yield Securities.
In these circumstances, highly leveraged companies might have greater
difficulty in making principal and interest payments, meeting projected
business goals, and obtaining additional financing. Thus, there could be a
higher incidence of default. This would affect the value of such securities
and thus a Fund's net asset value. Further, if the issuer of a security owned
by a Fund defaults, that Fund might incur additional expenses to seek
recovery.

Generally, when interest rates rise, the value of fixed rate debt
obligations, including High Yield Securities, tends to decrease; when interest
rates fall, the value of fixed rate debt obligations tends to increase. If an
issuer of a High Yield Security containing a redemption or call provision
exercises either provision in a declining interest rate market, a Fund would
have to replace the security, which could result in a decreased return for
shareholders. Conversely, if a Fund experiences unexpected net redemptions in a
rising interest rate market, it might be forced to sell certain securities,
regardless of investment merit. This could result in decreasing the assets to
which Fund expenses could be allocated and in a reduced rate of return for that
Fund. While it is impossible to protect entirely against this risk,
diversification of a Fund's portfolio and the Adviser's careful analysis of
prospective portfolio securities should minimize the impact of a decrease in
value of a particular security or group of securities in a Fund's portfolio.

THE HIGH YIELD SECURITIES MARKET. The market for below investment grade
bonds expanded rapidly in recent years and its growth paralleled a long
economic expansion. In the past, the prices of many lower-rated debt
securities declined substantially, reflecting an expectation that many
issuers of such securities might experience financial difficulties. As a
result, the yields on lower-rated debt securities rose dramatically.
However, such higher yields did not reflect the value of the income streams
that holders of such securities expected, but rather

<PAGE>

the risk that holders of such securities could lose a substantial portion of
their value as a result of the issuers' financial restructuring or default.
There can be no assurance that such declines in the below investment grade
market will not reoccur. The market for below investment grade bonds
generally is thinner and less active than that for higher quality bonds,
which may limit a Fund's ability to sell such securities at fair value in
response to changes in the economy or the financial markets. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and liquidity of lower rated
securities, especially in a thinly traded market.

CREDIT RATINGS. The credit ratings issued by credit rating services may
not fully reflect the true risks of an investment. For example, credit
ratings typically evaluate the safety of principal and interest payments, not
market value risk, of High Yield Securities. Also, credit rating agencies
may fail to change on a timely basis a credit rating to reflect changes in
economic or company conditions that affect a security's market value.
Although the Adviser considers ratings of recognized rating services such as
Moody's and S&P, the Adviser primarily relies on its own credit analysis,
which includes a study of existing debt, capital structure, ability to
service debt and to pay dividends, the issuer's sensitivity to economic
conditions, its operating history and the current trend of earnings. HIGH
YIELD FUND may invest in securities rated as low as D by S&P or C by Moody's
or, if unrated, deemed to be of comparable quality by the Adviser. Debt
obligations with these ratings either have defaulted or are in great danger
of defaulting and are considered to be highly speculative. See "Deep
Discount Securities." The Adviser continually monitors the investments in a
Fund's portfolio and carefully evaluates whether to dispose of or retain High
Yield Securities whose credit ratings have changed. See Appendix A for a
description of corporate bond ratings.

LIQUIDITY AND VALUATION. Lower-rated bonds are typically traded among a
smaller number of broker-dealers than in a broad secondary market.
Purchasers of High Yield Securities tend to be institutions, rather than
individuals, which is a factor that further limits the secondary market. To
the extent that no established retail secondary market exists, many High
Yield Securities may not be as liquid as higher-grade bonds. A less active
and thinner market for High Yield Securities than that available for higher
quality securities may result in more volatile valuations of a Fund's
holdings and more difficulty in executing trades at favorable prices during
unsettled market conditions.

The ability of a Fund to value or sell High Yield Securities will be
adversely affected to the extent that such securities are thinly traded or
illiquid. During such periods, there may be less reliable objective
information available and thus the responsibility of Life Series Fund's Board
of Trustees to value High Yield Securities becomes more difficult, with
judgment playing a greater role. Further, adverse publicity about the
economy or a particular issuer may adversely affect the public's perception
of the value, and thus liquidity, of a High Yield Security, whether or not
such perceptions are based on a fundamental analysis.

MORTGAGE-BACKED SECURITIES

Mortgage loans made by banks, savings and loan institutions and other lenders
are often assembled into pools, the interests in which are issued and guaranteed
by an agency or instrumentality of the U.S. Government, though not necessarily
by the U.S. Government itself. Interests in such pools are referred to herein as
"mortgage-backed securities." The market value

<PAGE>

of these securities will fluctuate as interest rates and market conditions
change. In addition, prepayment of principal by the mortgagees, which often
occurs with mortgage-backed securities when interest rates decline, can
significantly change the realized yield of these securities.

GNMA certificates are backed as to the timely payment of principal and
interest by the full faith and credit of the U.S. Government. Payments of
principal and interest on FNMA certificates are guaranteed only by FNMA
itself, not by the full faith and credit of the U.S. Government. FHLMC
certificates represent mortgages for which FHLMC has guaranteed the timely
payment of principal and interest but, like a FNMA certificate, they are not
guaranteed by the full faith and credit of the U.S. Government.

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTICLASS PASS-THROUGH
SECURITIES. Collateralized mortgage obligations ("CMOs") are debt obligations
collateralized by mortgage loans or mortgage pass-through securities.
Typically, CMOs are collateralized by GNMA certificates or other government
mortgage-backed securities (such collateral collectively hereinafter referred
to as "Mortgage Assets"). Multiclass pass-through securities are interests
in trusts that are comprised of Mortgage Assets. Unless the context
indicates otherwise, references herein to CMOs include multiclass
pass-through securities. Payments of principal of, and interest on, the
Mortgage Assets, and any reinvestment income thereon, provide the funds to
pay debt service on the CMOs or to make scheduled distributions on the
multiclass pass-through securities. CMOs in which Government Fund may invest
are issued or guaranteed by U.S. Government agencies or instrumentalities,
such as FNMA and FHLMC. See the SAI for more information on CMOs.

STRIPPED MORTGAGE-BACKED SECURITIES. GOVERNMENT FUND, TARGET MATURITY
2007 FUND AND TARGET MATURITY 2010 FUND may invest in stripped
mortgage-backed securities ("SMBS"), which are derivative multiclass mortgage
securities. SMBS are usually structured with two classes that receive
different proportions of the interest and principal distributions from a pool
of mortgage assets. A common type of SMBS will have one class receiving most
of the interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest while the other class will
receive all of the principal. If the underlying Mortgage Assets experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities. The market value of the
class consisting primarily or entirely of principal payments generally is
unusually volatile in response to changes in interest rates.

RISKS OF MORTGAGE-BACKED SECURITIES. Investments in mortgage-backed
securities entail market, prepayment and extension risk. Fixed-rate
mortgage-backed securities are priced to reflect, among other things, current
and perceived interest rate conditions. As conditions change, market values
will fluctuate. In addition, the mortgages underlying mortgage-backed
securities generally may be prepaid in whole or in part at the option of the
individual buyer. Prepayment generally increases when interest rates
decline. Prepayments of the underlying mortgages can affect the yield to
maturity on mortgage-backed securities and, if interest rates decline, the
prepayment may only be invested at the then prevailing lower interest rate.
As a result, mortgage-backed securities may have less potential for capital
appreciation during periods of declining interest rates as compared with
other U.S. Government securities with comparable stated maturities.
Conversely, rising interest rates may cause prepayment rates to occur at a
slower than expected rate. This may effectively lengthen the life of a
security, which is known as

<PAGE>

extension risk. Longer term securities generally fluctuate more widely in
response to changes in interest rates than shorter term securities. Changes
in market conditions, particularly during periods of rapid or unanticipated
changes in market interest rates, may result in volatility and reduced
liquidity of the market value of certain mortgage-backed securities.

PREFERRED STOCK. A preferred stock is a blend of the characteristics of a
bond and common stock. It can offer the higher yield of a bond and has
priority over common stock in equity ownership, but does not have the
seniority of a bond and, unlike common stock, its participation in the
issuer's growth may be limited. Preferred stock has preference over common
stock in the receipt of dividends and in any residual assets after payment to
creditors should the issuer be dissolved. Although the dividend is set at a
fixed annual rate, in some circumstances it can be changed or omitted by the
issuer.

REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a
Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to
the coupon rate or maturity of the purchased securities. Each Fund's risk is
limited primarily to the ability of the seller to repurchase the securities
at the agreed-upon price upon the delivery date. See the SAI for more
information regarding repurchase agreements.

RESTRICTED SECURITIES AND ILLIQUID INVESTMENTS. Each Fund, other than
CASH MANAGEMENT FUND, may invest up to 15% of its net assets in illiquid
securities. CASH MANAGEMENT FUND may invest up to 10% of its net assets in
illiquid securities. These securities include (1) securities that are
illiquid due to the absence of a readily available market or due to legal or
contractual restrictions on resale and (2) repurchase agreements maturing in
more than seven days. However, illiquid investments for purposes of this
limitation do not include restricted securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933, as amended ("Rule 144A
Securities"), which Life Series Fund's Board of Trustees or the Adviser or
the Subadviser, as applicable, has determined are liquid under Board-approved
guidelines. In addition, there is a risk of increasing illiquidity during
times when qualified institutional buyers are uninterested in purchasing Rule
144A Securities. See the SAI for more information regarding restricted and
illiquid securities.

Under current guidelines of the staff of the SEC, interest-only and
principal-only classes of fixed-rate mortgage-backed securities in which
GOVERNMENT FUND may invest are considered illiquid. However, such securities
issued by the U.S. Government or one of its agencies or instrumentalities
will not be considered illiquid if the Adviser has determined that they are
liquid pursuant to guidelines established by Life Series Fund's Board of
Trustees. GOVERNMENT FUND, TARGET MATURITY 2007 FUND and TARGET MATURITY 2010
FUND may not be able to sell illiquid securities when the Adviser considers
it desirable to do so or may have to sell such securities at a price lower
than could be obtained if they were more liquid. Also the sale of illiquid
securities may require more time and may result in higher dealer discounts
and other selling expenses than does the sale of securities that are not
illiquid. Illiquid securities may be more difficult to value due to the
unavailability of reliable market quotations for such securities, and
investment in illiquid securities may have an adverse impact on these Fund's
net asset value.

TIME DEPOSITS. CASH MANAGEMENT FUND may invest in time deposits. Time
deposits are non-negotiable deposits maintained in a banking institution for
a specified period of time at a

<PAGE>

stated interest rate. For the most part, time deposits that may be held by
the Fund would not benefit from insurance from the Bank Insurance Fund or the
Savings Association Insurance Fund administered by the FDIC.

U.S. GOVERNMENT OBLIGATIONS. Securities issued or guaranteed as to
principal or interest by the U.S. Government include (1) U.S. Treasury
obligations which differ only in their interest rates, maturities and times
of issuance as follows: U.S. Treasury bills (maturities of one year or
less), U.S. Treasury notes (maturities of one to ten years), and U.S.
Treasury bonds (generally maturities of greater than ten years); and (2)
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are backed by the full faith and credit of the United
States, such as securities issued by the Federal Housing Administration,
GNMA, the Department of Housing and Urban Development, the Export-Import
Bank, the General Services Administration and the Maritime Administration and
certain securities issued by the Farmers Home Administration and the Small
Business Administration. The range of maturities of U.S. Government
Obligations is usually three months to thirty years.

UTILITIES INDUSTRIES. Many utilities companies, especially electric and
gas and other energy-related utilities companies, have historically been
subject to the risk of increases in fund and other operating costs, changes
in interest rates on borrowing for capital improvement programs, changes in
applicable laws and regulations, and costs and operating constraints
associated with compliance with environmental regulations.

In recent years, regulatory changes in the United States have increasingly
allowed utilities companies to provide services and products outside their
traditional geographical areas and line of business, creating new areas of
competition with the utilities industries. This trend towards deregulation
and the emergence of new entrants have caused non-regulated providers of
utilities services to become a significant part of the utilities industries.
The Adviser believes that the emergence of competition and deregulation will
result in certain utilities companies being able to earn more than their
traditional regulated rates of return, while others may be forced to defend
their core business from increased competition and may be less profitable.

Certain utilities, especially gas and telephone utilities, have in recent
years been affected by increased competition, which could adversely affect
the profitability of such utilities companies. In addition, expansion by
companies engaged in telephone communication services of their non-regulated
activities into other businesses (such as cellular telephone services, data
processing equipment retailing, computer services and financial services) has
provided the opportunity for increases in earnings and dividends at faster
rates than have been allowed in traditional regulated businesses. However,
technological innovations and other structural changes also could adversely
affect the profitability of such companies. Although the Adviser seeks to
take advantage of favorable investment opportunities that may arise from
these structural changes there can be no assurance that the Fund will benefit
from any such changes.

Foreign utilities companies may be more heavily regulated than U.S.
utilities companies which may result in increased costs or otherwise
adversely affect the operations of such companies. The securities of foreign
utilities companies also have lower dividend yields than U.S. utilities
companies. The Fund's investments in foreign issuers may include recently
privatized enterprises, in which the Fund's participation may be limited or
otherwise affected by local law.

<PAGE>

There can be no assurance that governments with privatization programs will
continue such programs or that privatization will succeed in such countries.

Because securities issued by utilities companies are particularly
sensitive to movement in interest rates, the equity securities of such
companies are more affected by movements in interest rates than are the
equity securities of other companies.

Each of these risks could adversely affect the ability and inclination of
public utilities companies to declare or pay dividends and the ability of
holders of common stock, such as UTILITIES INCOME FUND, to realize any value
from the assets of the company upon liquidation or bankruptcy.

VARIABLE RATE AND FLOATING RATE NOTES. CASH MANAGEMENT FUND may invest in
derivative variable rate and floating rate notes. Issuers of such notes
include corporations, banks, broker-dealers and finance companies. Variable
rate notes include master demand notes which are obligations permitting the
holder to invest fluctuating amounts, that may change daily without penalty,
pursuant to direct arrangements between the Fund, as lender, and the
borrower. The interest rates on these notes fluctuate from time to time. The
issuer of such obligations normally has a corresponding right, after a given
period, to prepay in its discretion the outstanding principal amount of the
obligations plus accrued interest upon a specified number of days' notice to
the holders of such obligations. See the SAI for more information on these
securities.

The interest rate on a floating rate obligation is based on a known
lending rate, such as a bank's prime rate, and is adjusted automatically each
time such rate is adjusted. The interest rate on a variable rate obligation
is adjusted automatically at specified intervals. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there is generally no
established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not
secured by letters of credit or other credit support arrangements, the right
of the Fund to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations frequently are not rated
by credit rating agencies. The Fund will invest in obligations that are
unrated only if the Adviser determines that, at the time of investment, the
obligations are of comparable quality to the other obligations in which the
Fund may invest. The Adviser, on behalf of the Fund, will consider on an
ongoing basis the creditworthiness of the issuers of the floating and
variable rate obligations in the Fund's portfolio.

VARIABLE RATE DEMAND INSTRUMENTS. CASH MANAGEMENT FUND may invest in
variable rate demand instruments ("VRDIs"). VRDIs generally are revenue
bonds, issued primarily by or on behalf of public authorities, and are not
backed by the taxing power of the issuing authority. The interest on VRDIs
is adjusted periodically, and the holder of a VRDI can demand payment of all
unpaid principal plus accrued interest from the issuer on not more than seven
calendar days' notice. An unrated VRDI purchased by the Fund must be backed
by a standby letter of credit of a creditworthy financial institution or a
similar obligation of at least equal quality. The Fund periodically
reevaluates the credit risks of such unrated instruments. There is a
recognized after-market for VRDIs. VRDIs may include instruments where
adjustments to interest rates are

<PAGE>

limited either by state law or the instruments themselves. As a result,
these instruments may experience greater changes in value than would
otherwise be the case. The maturity of VRDIs is deemed to be the longer of
the (a) demand period or (b) time remaining until the next adjustment to the
interest rate thereon, regardless of the stated maturity on the instrument.
Benefits of investing in VRDIs may include reduced risk of capital
depreciation and increased yield when market interest rates rise. However,
owners of such instruments forego the opportunity for capital appreciation
when market interest rates fall. See the SAI for more information concerning
VRDIs.

WARRANTS. HIGH YIELD FUND, INTERNATIONAL SECURITIES FUND and UTILITIES
INCOME FUND may purchase warrants, which are instruments that permit the Fund
to acquire, by subscription, the capital stock of a corporation at a set
price, regardless of the market price for such stock. Warrants may be either
perpetual or of limited duration. There is a greater risk that warrants
might drop in value at a faster rate than the underlying stock. HIGH YIELD
FUND may invest up to 35% of its total assets in warrants. International
Securities Fund may invest up to 15% of its total assets in warrants.
UTILITIES INCOME FUND may invest up to 65% of its total assets in warrants.

WHEN-ISSUED SECURITIES. GROWTH FUND, HIGH YIELD FUND, INTERNATIONAL
SECURITIES FUND, INVESTMENT GRADE FUND, TARGET MATURITY 2007 FUND, TARGET
MATURITY 2010 FUND AND UTILITIES INCOME FUND each may invest up to 5%, and
Government Fund may invest up to 25%, of its net assets in securities issued
on a when-issued or delayed delivery basis at the time the purchase is made.
Under such an arrangement, delivery of, and payment for, a security occurs up
to 60 days after the agreement to purchase the security is made by a Fund.
The purchase price to be paid by a Fund and the interest rate on the
instruments to be purchased are both selected when a Fund agrees to purchase
the securities "when-issued." When a Fund purchases securities on a
when-issued basis, it assumes the risks of ownership, including the risk of
price fluctuation, at the time of purchase, not at the time of receipt.
Failure of the issuer to deliver a security purchased by a Fund on a
when-issued basis may result in a Fund incurring a loss or missing an
opportunity to make an alternative investment. Each Fund is permitted to sell
when-issued securities prior to issuance of such securities, but will not
purchase such securities with that purpose intended. Securities purchased on
a when-issued basis are subject to the risk that yields available in the
market, when delivery takes place, may be higher than the rate to be received
on the securities a Fund is committed to purchase. For a further discussion
of when-issued securities, see "When-Issued Securities" in the SAI.

ZERO COUPON AND PAY-IN-KIND SECURITIES. Zero coupon securities are debt
obligations that do not entitle the holder to any periodic payment of
interest prior to maturity or a specified date when the securities begin
paying current interest. They are issued and traded at a discount from their
face amount or par value, which discount varies depending on the time
remaining until cash payments begin, prevailing interest rates, liquidity of
the security and the perceived credit quality of the issuer. Pay-in-kind
securities are those that pay interest through the issuance of additional
securities. Original issue discount earned each year on zero coupon
securities and the "interest" on pay-in-kind securities must be accounted for
by the Fund that holds the securities for purposes of determining the amount
it must distribute that year to continue to qualify for tax treatment as a
regulated investment company. Thus, a Fund may be required to distribute as a
dividend an amount that is greater than the total amount of cash it actually
receives. See "Taxes" in the SAI. These distributions must be made from a
Fund's cash assets or, if necessary, from the

<PAGE>

proceeds of sales of portfolio securities. A Fund will not be able to
purchase additional income-producing securities with cash used to make such
distributions, and its current income ultimately could be reduced as a result.

ZERO COUPON SECURITIES-RISK FACTORS. Zero coupon securities are debt
securities and thus are subject to the same risk factors as all debt
securities. See "Debt Securities-Risk Factors." The market prices of zero
coupon securities, however, generally are more volatile than the prices of
securities that pay interest periodically and in cash and are likely to
respond to changes in interest rates to a greater degree than do other types
of debt securities having similar maturities and credit quality. As a
result, the net asset value of shares of the TARGET MATURITY 2007 FUND and
TARGET MATURITY 2010 FUND may fluctuate over a greater range than shares of
the other Funds or mutual funds that invest in debt obligations having
similar maturities but that make current distributions of interest.

Zero coupon securities can be sold prior to their due date in the
secondary market at their then prevailing market value, which depends
primarily on the time remaining to maturity, prevailing levels of interest
rates and the perceived credit quality of the issuer. The prevailing market
value may be more or less than the securities' value at the time of purchase.
While the objective of both the TARGET MATURITY 2007 FUND and TARGET
MATURITY 2010 FUND is to seek a predictable compounded investment return for
investors who hold their Fund shares until that Fund's maturity, a Fund
cannot assure that it will be able to achieve a certain level of return due
to the possible necessity of having to sell certain zero coupon securities to
pay expenses, dividends or to meet redemptions at times and at prices that
might be disadvantageous or, alternatively, the need to invest assets
received from new purchases at prevailing interest rates, which would expose
a Fund to reinvestment risk. In addition, no assurance can be given as to
the liquidity of the market for certain of these securities. Determination
as to the liquidity of such securities will be made in accordance with
guidelines established by Life Series Fund's Board of Trustees. In
accordance with such guidelines, the Adviser will monitor each Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.

OTHER INVESTMENT POLICIES -- PORTFOLIO TURNOVER

The GOVERNMENT FUND was substantially restructured during 1997 to improve
its total return. In particular, the Fund purchased seasoned, high coupon
mortgage-backed bonds with very low prepayments; and the Fund purchased U.S.
Treasury and Agency securities to extend its duration. In addition, the Fund
occasionally bought or sold Treasury and Agency securities to make
incremental changes in the Fund's duration. This resulted in a portfolio
turnover rate for the fiscal year ended December 31, 1997 of 134%. A high
rate of portfolio turnover (100% or more) generally leads to increased
transaction costs and may result in a greater number of taxable transactions.
See "Allocation of Portfolio Brokerage" in the SAI. See the SAI for the
other Funds' portfolio turnover rate and for more information on portfolio
turnover.

HOW TO BUY SHARES

Investments in a Fund are only available through purchases of the Policies
or the Contracts offered by First Investors Life. Policy premiums, net of
certain expenses, are paid into a unit investment trust, Separate Account B.
Purchase payments for the Contracts, net of certain

<PAGE>

expenses, are also paid into a unit investment trust, Separate Account C.
Purchase payments for the Contracts are also paid into a unit investment
trust, Separate Account D. The Separate Accounts pool these proceeds to
purchase shares of a Fund designated by purchasers of the Policies or
Contracts. Orders for the purchase of Fund shares received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), generally
4:00 P.M. (New York City time), on any business day the NYSE is open for
trading, will be processed and shares will be purchased at the net asset
value determined at the close of regular trading on the NYSE on that day.
Orders received after the close of regular trading on the NYSE will be
processed at the net asset value determined at the close of regular trading
on the NYSE on the next trading day. See "Determination of Net Asset Value."
For a discussion of pricing when FIC's Woodbridge offices are unable to open
for business due to an emergency, see the SAI.

HOW TO REDEEM SHARES

Shares of a Fund may be redeemed at the direction of Policyowners or
Contractowners, in accordance with the terms of the Policies or Contracts.
Redemptions will be made at the next determined net asset value, less any
applicable contingent deferred sales charge, of the respective Fund upon
receipt of a proper request for redemption or repurchase. Payment will be
made by check as soon as possible but within seven days after presentation.
However, Life Series Fund's Board of Trustees may suspend the right of
redemption or postpone the date of payment during any period when (a) trading
on the NYSE is restricted as determined by the Securities and Exchange
Commission ("SEC") or the NYSE is closed for other than weekends and
holidays, (b) the SEC has by order permitted such suspension, or (c) an
emergency, as defined by rules of the SEC, exists during which time the sale
or valuation of portfolio securities held by a Fund is not reasonably
practicable.

MANAGEMENT

BOARD OF TRUSTEES. Life Series Fund's Board of Trustees, as part of its
overall management responsibility, oversees various organizations responsible
for each Fund's day-to-day management.

ADVISER. First Investors Management Company, Inc. supervises and manages
each Fund's investments, supervises all aspects of each Fund's operations
and, except for INTERNATIONAL SECURITIES FUND and GROWTH FUND, determines
each Fund's portfolio transactions. The Adviser is a New York corporation
located at 95 Wall Street, New York, NY 10005. First Investors Consolidated
Corporation ("FICC") owns all of the voting common stock of the Adviser and
all of the outstanding stock of First Investors Corporation and
Administrative Data Management Corp. Mr. Glenn O. Head controls FICC and,
therefore, controls the Adviser.

As compensation for its services, the Adviser receives an annual fee from
each Fund, which is payable monthly. For the fiscal year ended December 31,
1997, the advisory fees were 0.75% of average daily net assets for each of
BLUE CHIP FUND, DISCOVERY FUND, GROWTH FUND, HIGH YIELD FUND and
INTERNATIONAL SECURITIES FUND, 0.60% of average daily net assets, net of
waiver, for each of CASH MANAGEMENT FUND, GOVERNMENT FUND, INVESTMENT GRADE
FUND, TARGET MATURITY 2007 FUND, TARGET MATURITY 2010 FUND and UTILITIES
INCOME FUND.

<PAGE>

SUBADVISER. Wellington Management Company, LLP has been retained by the
Adviser and Life Series Fund, on behalf of INTERNATIONAL SECURITIES FUND and
GROWTH FUND, as each of those Fund's investment subadviser. The Adviser has
delegated discretionary trading authority to WMC with respect to all the
assets of INTERNATIONAL SECURITIES FUND and GROWTH FUND, subject to the
continuing oversight and supervision of the Adviser and the Board of
Trustees. As compensation for its services, WMC is paid by the Adviser, and
not by either Fund, a fee which is computed daily and paid monthly.

WMC, located at 75 State Street, Boston, MA 02109, is a Massachusetts
limited liability partnership of which Robert W. Doran, Duncan M. McFarland
and John R. Ryan are Managing Partners. WMC is a professional investment
counseling firm which provides investment services to investment companies,
employee benefit plans, endowment funds, foundations and other institutions
and individuals. As of January 31, 1998, WMC held investment management
authority with respect to approximately $178 billion of assets. Of that
amount, WMC acted as investment adviser or subadviser to approximately 93
registered investment companies or series of such companies, with net assets
of approximately $117 billion as of December 31, 1997. WMC is not affiliated
with the Adviser or any of its affiliates.

For the fiscal year ended December 31, 1997, the Subadviser's fees
amounted to 0.30% of GROWTH FUND'S average daily net assets and 0.37% of
INTERNATIONAL SECURITIES FUND'S average daily net assets, all of which was
paid by the Adviser and not by the Funds.

PORTFOLIO MANAGERS. Patricia D. Poitra, Director of Equities, has been
primarily responsible for the day-to-day management of the DISCOVERY FUND
since 1988. Ms. Poitra also is responsible for the management of certain
other First Investors funds. Ms. Poitra joined FIMCO in 1985 as a Senior
Equity Analyst

Since January 1, 1998, THE BLUE CHIP FUND has been co-managed by Dennis T.
Fitzpatrick and Kimberly Speegle. Mr. Fitzpatrick and Ms. Speegle also
co-manage certain other First Investors funds. Mr. Fitzpatrick joined FIMCO
in October 1995 as a Large Cap Analyst. From July 1995 to October 1995, Mr.
Fitzpatrick was a Regional Surety Manager at United States Fidelity &
Guaranty Co. and from 1988 to 1995 he was Northeast Surety Manager at
American International Group. Ms. Speegle joined FIMCO in August 1997 as an
Assistant Portfolio Manager. From March 1997 to August 1997, Ms. Speegle was
an Investment Analyst at Sale Asset Management and from 1992 to 1995, she was
a Portfolio Manager for the Clark Family.

George V. Ganter has been Portfolio Manager of the HIGH YIELD FUND since
1989. Mr. Ganter is also Portfolio Manager of certain other First Investors
funds. Mr. Ganter joined FIMCO in 1985 as a Senior Investment Analyst.

Since early January 1998, Jack B. Wolfman has been Portfolio Manager of
the UTILITIES INCOME FUND. Mr. Wolfman also is Portfolio Manager of the
Utilities Income Fund of First Investors Series Fund II, Inc. Prior to
joining FIMCO on January 7, 1998, Mr. Wolfman was an Analyst with the New
York City Housing Authority, Office of Administrative Methods and Analysis
from 1996 to 1998, a Senior Economist, North American Director with Wharton
Econometric Forecasting Associates, Inc. from 1992 to 1993, a Senior
Economist with Economic

<PAGE>

Consulting & Planning, Inc. from 1987 to 1992 and an Economist with Merrill
Lynch Economics, Inc. from 1980 to 1987.

Since late May 1997, the INVESTMENT GRADE FUND has been co-managed by Ms.
Nancy Jones and Mr. Clark D. Wagner. From its inception to May 1997, Ms.
Jones had primarily responsibility for the day-to-day management of the
INVESTMENT GRADE FUND. Ms. Jones also is Portfolio Manager of certain other
First Investors funds. Ms. Jones joined FIMCO in 1983 as Director of
Research in the High Yield Department.

Since October 1995, Clark D. Wagner has been primarily responsible for the
day-to-day management of the GOVERNMENT FUND and the TARGET MATURITY 2007
FUND. Mr. Wagner has also been primarily responsible for the day-to-day
management of TARGET MATURITY 2010 FUND since its inception in 1996. Mr.
Wagner has also been co-manager of the INVESTMENT GRADE FUND since May 1997.
Mr. Wagner is also Portfolio Manager of certain other First Investors funds.
Mr. Wagner has been Chief Investment Officer of FIMCO since 1992.

Since August 1995, WMC's Growth Investment Team, a group of equity
portfolio managers and senior investment professionals, has assumed
responsibility for managing the GROWTH FUND.

Since April 1994, INTERNATIONAL SECURITIES FUND has been managed by WMC's
Global Equity Strategy Group, a group of global portfolio managers and senior
investment professionals headed by Trond Skramstad. Trond Skramstad, Senior
Vice President and Director of International Equity Investments, and Andrew
S. Offit, Vice President and Associate Portfolio Manger, have primary
responsibility for the day to day management of the INTERNATIONAL SECURITIES
FUND. Mr. Skramstad is chairman of WMC's Global Equity Strategy Group which
is a group of regional equity portfolio managers and senior investment
professionals responsible for providing investment research and
recommendations.

Prior to joining WMC in 1993, Mr. Skramstad was an international equity
portfolio manager and principal at Scudder, Steven & Clark since 1990. Prior
to joining WMC in 1997, Mr. Offit was a portfolio manager at Chestnut Hill
Management during 1997, and at Fidelity Investments since 1987.

BROKERAGE. Each Fund may allocate brokerage commissions, if any, to
broker-dealers in consideration of Fund share distribution, but only when
execution and price are comparable to that offered by other broker-dealers.
Brokerage may be directed to brokers who provide research. See the SAI for
more information on allocation of portfolio brokerage.

DETERMINATION OF NET ASSET VALUE

The net asset value of shares of each Fund is determined as of the close
of regular trading on the NYSE (generally 4:00 P.M., New York City time) on
each day the NYSE is open for trading, and at such other times as Life Series
Fund's Board of Trustees deems necessary by dividing the value of the
securities held by a Fund, plus any cash and other assets, less all
liabilities, by the number of shares outstanding. If there is no available
market value, securities will be valued at their fair value as determined in
good faith pursuant to procedures adopted by the Board of Trustees. The NYSE
currently observes the following holidays: New Year's Day, Martin Luther

<PAGE>

King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

The investments in CASH MANAGEMENT FUND, when purchased at a discount, are
valued at amortized cost and when purchased at face value, are valued at cost
plus accrued interest.

DIVIDENDS AND OTHER DISTRIBUTIONS

Dividends from net investment income are generally declared and paid
annually by each Fund, other than CASH MANAGEMENT FUND, which generally
declares dividends from net investment income daily and pays them monthly.
For the purposes of determining dividends, the net investment income of each
Fund, other than CASH MANAGEMENT FUND, consists of interest and dividends,
earned discount and other income earned on portfolio securities less
expenses. Net investment income of CASH MANAGEMENT FUND for those purposes
consists of (i) accrued interest, plus or minus (ii) all realized short-term
gains and losses on the Fund's securities, less (iii) accrued expenses.
Distributions of a Fund's net capital gain (the excess of net long-term
capital gain over net short-term capital loss), if any, after deducting any
available capital loss carryovers, are declared and paid annually by each
Fund, other than CASH MANAGEMENT FUND, which does not anticipate realizing
any such gain. INTERNATIONAL SECURITIES FUND and HIGH YIELD FUND also
distribute any net realized gains from foreign currency transactions with
their annual distribution. Each dividend and other distribution is paid in
shares of the distributing Fund at net asset value (without sales charge),
generally determined as of the close of business on the business day
immediately following the record date of such distribution.

TAXES

Each Fund intends to continue to qualify for treatment as a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code of
1986, as amended ("Code"), so that it will be relieved of Federal income tax
on that part of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and, for INTERNATIONAL
SECURITIES FUND and HIGH YIELD FUND, net gains from certain foreign currency
transactions) and net capital gain that it distributes to its shareholders.

Shares of the Funds are offered only to the Separate Accounts, which are
insurance company separate accounts that fund the Policies and Contracts.
Under the Code, no tax is imposed on an insurance company with respect to
income of a qualifying separate account that is properly allocable to the
value of eligible variable annuity or variable life insurance contract.
Please refer to "Federal Income Tax Status" in the Prospectuses of the
Separate Accounts for information as to the tax status of those accounts and
the holders of the Contracts or Policies.

Each Fund intends to continue to comply with the diversification
requirements imposed by section 817(h) of the Code and the regulations
thereunder. These requirements, which are in addition to the diversification
requirements imposed on the Funds by the Investment Company Act of 1940, as
amended, and Subchapter M of the Code, place certain limitations on the
assets of each Separate Account -- and of each Fund, because section 817(h)
and those regulations treat the assets of a Fund as assets of the related
Separate Account -- that may be invested in securities of a single issuer.
Specifically, the regulations provide that, except as permitted by the "safe
harbor" described below, as of the end of each calendar quarter (or within 30
days

<PAGE>

thereafter) no more than 55% of a Fund's total assets may be represented by
any one investment, no more than 70% by any two investments, no more than 80%
by any three investments and no more than 90% by any four investments. For
this purpose, all securities of the same issuer are considered a single
investment, and while each U.S. Government agency and instrumentality is
considered a separate issuer, a particular foreign government and its
agencies, instrumentalities and political subdivisions are considered the
same issuer. Section 817(h) provides, as a safe harbor, that a separate
account will be treated as being adequately diversified if the
diversification requirements under Subchapter M are satisfied and no more
than 55% of the value of the account's total assets are cash and cash items,
government securities and securities of other RICs. Failure of a Fund to
satisfy the section 817(h) requirements would result in taxation of First
Investors Life and treatment of the Contract holders and Policyowners other
than as described in the Prospectuses of the Separate Accounts.

The foregoing is only a summary of some of the important Federal income
tax considerations generally affecting each Fund and its shareholders; see
the SAI for a more detailed discussion. Shareholders are urged to consult
their tax advisers.

GENERAL INFORMATION

ORGANIZATION. Life Series Fund is a Massachusetts business trust
organized on June 12, 1985. The Board of Trustees of Life Series Fund has
authority to issue an unlimited number of shares of beneficial interest of
separate series, no par value, of Life Series Fund. The shares of beneficial
interest of Life Series Fund are presently divided into eleven separate and
distinct series. Life Series Fund does not hold annual shareholder meetings.
If requested to do so by the holders of at least 10% of Life Series Fund's
outstanding shares, the Board of Trustees will call a special meeting of
shareholders for any purpose, including the removal of Trustees.

CUSTODIAN. The Bank of New York, 48 Wall Street, New York, NY 10286, is
custodian of the securities and cash of each Fund, except the INTERNATIONAL
SECURITIES FUND. Brown Brothers Harriman & Co., 40 Water Street, Boston, MA
02109, is custodian of the securities and cash of the INTERNATIONAL
SECURITIES FUND and employs foreign sub-custodians to provide custody of the
Fund's foreign assets.

TRANSFER AGENT. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer
agent for each Fund and as redemption agent for regular redemptions.

SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by calling First
Investors Life at 212-858-8200.

ANNUAL AND SEMI-ANNUAL REPORTS AND PROSPECTUSES TO SHAREHOLDERS. It is
each Life Series Fund's practice to mail only one copy of its annual and
semi-annual reports to any address at which more than one shareholder with
the same last name has indicated that mail is to be delivered. Additional
copies of the reports will be mailed if requested in writing or by telephone
by any shareholder. In addition, if the SEC adopts a currently pending
proposed rule, it is the Life Series Fund's intention to mail only one copy
of its Prospectus to any address at which more than one shareholder with the
same last name has indicated that mail is to be delivered.

<PAGE>

Additional copies of the Prospectus will be mailed if requested in writing or
by telephone by any shareholder.

YEAR 2000. Like other mutual funds, the Funds could be adversely affected
if the computer and other information processing systems used by the Adviser,
Subadviser, Transfer Agent and other service providers are not properly
programmed to process date-related information on and after January 1, 2000.
Such systems typically have been programmed to use a two-digit number to
represent the year for any date. As a result, computer systems could
incorrectly misidentify "00" as 1900, rather than 2000, and make mistakes
when performing operations. The Adviser and Transfer Agent are taking steps
that they believe are reasonably designed to address the Year 2000 problem
for computer and other systems used by them and are obtaining assurances that
comparable steps are being taken by the Funds' other service providers.
However, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Funds. Nor can the Funds estimate the extent
of any impact.

<PAGE>

APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS

STANDARD & POOR'S RATINGS GROUP

The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not
perform any audit in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed, suspended, or
withdrawn as a result of changes in, or unavailability of, such information,
or based on other circumstances.

The ratings are based, in varying degrees, on the following considerations:

1. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with
the terms of the obligation;

2. Nature of and provisions of the obligation;

3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.

AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

A Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.

BB, B, CCC, CC, C Debt rated "BB," "B," "CCC," "CC" and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of speculation
and "C" the highest. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

BB Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and

<PAGE>

principal payments. The "BB" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied "BBB-"
rating.

B Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.

CCC Debt rated "CCC" has a currently identifiable vulnerability to
default and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.

CC The rating "CC" typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.

C The rating "C" typically is applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.

CI The rating "CI" is reserved for income bonds on which no interest is
being paid.

D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The "D" rating also will
be used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the
major categories.

MOODY'S INVESTORS SERVICE, INC.

Aaa Bonds which are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.

Aa Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat greater than
the Aaa securities.

<PAGE>

A Bonds which are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment some time in the
future.

Baa Bonds which are rated "Baa" are considered as medium-grade
obligations (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

Ba Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B Bonds which are rated "B" generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.

Caa Bonds which are rated "Caa" are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.

Ca Bonds which are rated "Ca" represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C Bonds which are rated "C" are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.

<PAGE>

TABLE OF CONTENTS

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . 11
How to Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . 35
Dividends and Other Distributions. . . . . . . . . . . . . . . . . . . . 36
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

INVESTMENT ADVISER CUSTODIANS
First Investors Management The Bank of New York
Company, Inc. 48 Wall Street
95 Wall Street New York, NY 10286
New York, NY 10005
Brown Brothers
SUBADVISER Harriman & Co.
Wellington Management 40 Water Street
Company, LLP Boston, MA 02109
75 State Street
Boston, MA 02109 AUDITORS
Tait, Weller & Baker
TRANSFER AGENT 8 Penn Center Plaza
Administrative Data Philadelphia, PA 19103
Management Corp.
581 Main Street LEGAL COUNSEL
Woodbridge, NJ 07095-1198 Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036

THIS PROSPECTUS IS INTENDED TO CONSTITUTE AN OFFER BY LIFE SERIES FUND ONLY OF
THE SECURITIES OF WHICH IT IS THE ISSUER AND IS NOT INTENDED TO CONSTITUTE AN
OFFER BY ANY FUND OF THE SECURITIES OF ANY OTHER FUND WHOSE SECURITIES ARE ALSO
OFFERED BY THIS PROSPECTUS. NO FUND INTENDS TO MAKE ANY REPRESENTATION AS TO
THE ACCURACY OR COMPLETENESS OF THE DISCLOSURE IN THIS PROSPECTUS RELATING TO
ANY OTHER FUND. NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY LIFE SERIES FUND, FIRST INVESTORS CORPORATION, OR ANY AFFILIATE
THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SHARES OFFERED HEREBY IN ANY STATE TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.

<PAGE>

First Investors Life
Level Premium Variable
Life Insurance
(Separate Account B)
- -----------------------
First Investors
Life Series Fund
- -----------------------
Blue Chip Fund
Cash Management Fund
Discovery Fund
Government Fund
Growth Fund
High Yield Fund
International Securities Fund
Investment Grade Fund
Target Maturity 2007 Fund
Target Maturity 2010 Fund
Utilities Income Fund

Prospectuses
- ----------------------------
April 30, 1998

First Investors Logo

Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."

Verticle line from top to bottom in center of page about 1/2 inch in thickness

The following language appears to the left of the above language in the printed
piece:

The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" in a box to the right of
a circle containing the words "MAILED FROM ZIP CODE 11201" appears on the
righthand side.

The following language appears on the lefthand side.

FIRST INVESTORS LIFE SERIES FUND
95 WALL STREET
NEW YORK, NY 10005

First Investors Logo (as described above)
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK

LIFE316