SAGE VARIABLE ANNUITY ACCOUNT A, 485APOS, 1999-02-26

SAGE VARIABLE ANNUITY ACCOUNT A
485APOS, 1999-02-26

Previous: SAGE VARIABLE ANNUITY ACCOUNT A, 485APOS, 1999-02-26

Next: WEISS PECK & GREER FUNDS TRUST /MA, N-30D, 1999-02-26

<PAGE> 1
As filed with the Securities and Exchange Commission on February 26,
1999

File No. 333-43329
File No. 811-08581

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No.__ [ ]
Post-Effective Amendment No. 1 [X]

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]

Amendment No. 8 [X]

THE SAGE VARIABLE ANNUITY ACCOUNT A
(Exact Name of Registrant)

SAGE LIFE ASSURANCE OF AMERICA, INC.
(Name of Depositor)

300 Atlantic Street
Stamford, CT 06901
(Address of Depositor's Principal Executive Offices)

Depositor's Telephone Number: (203) 324-6338

James F. Bronsdon
Sage Life Assurance of America, Inc.
300 Atlantic Street
Stamford, CT 06901

(Name and Address of Agent for Service of Process)

Copy to:
Stephen E. Roth
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415

<PAGE> 2

It is proposed that this filing become effective:

__ immediately upon filing pursuant to paragraph (b) of Rule 485;
__ on May 1, 1999 pursuant to paragraph (b) of Rule 485;
__ 60 days after filing pursuant to paragraph (a)(1) on Rule 485;
_X on May 1, 1999 pursuant to paragraph (a)(1) of Rule 485;
__ 75 days after filing pursuant to paragraph (a)(2) of Rule 485; or
__ on ___ pursuant to paragraph (a)(2) of Rule 485.

Title of Securities: Interests in a separate account under flexible payment
deferred combination fixed and variable annuity contracts.

<PAGE> 3

CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a) AND 495(a)

Showing location in Part A (Prospectus) and Part B (Statement of Additional
Information) of Registration Statement of Information required by Form N-4

<TABLE>
<CAPTION>
PART A

ITEM OF FORM N-4 PROSPECTUS CAPTION

<S> <C>
1. Cover Page .................................. Cover Page
2. Definitions .................................. Index of Terms
3. Synopsis ..................................... Fee Table; Profile
4. Condensed Financial Information............... How is Contract Performance Presented?
5. General
(a) Depositor.............................. What other information should I know?
(b) Registrant............................. What other information should I know?
(c) Portfolio Company...................... What are my investment options?
(d) Fund Prospectus........................ Cover Page
(e) Voting Rights.......................... What other information should I know?
(f) Administrators......................... What other information should I know?
6. Deductions and Expenses
(a) General ............................... What are the expenses under a Contract?
(b) Sales Load %........................... Fee Table; Example
(c) Special Purchase Plan.................. What are the expenses under a Contract?
(d) Commissions............................ What other information should I know?
(e) Fund Expenses ......................... Fee Table; Example
(f) Expenses - Registrant.................. Fee Table; What are the expenses under a
Contract?
(g) Organizational Expenses................ N/A
7. Contracts
(a) Persons with Rights.................... What are the Contracts?; What are my
income payment options?; How do I
purchase a Contract?; How do I access my
money?; What other information should I
know?
(b) (i) Allocation of Purchase Payments What are my investment options?
(ii) Transfers What are my investment options?
(iii) Exchanges...................... N/A
(c) Changes ............................... What other information should I know?
(d) Inquiries ............................. What are my investment options?; What
other information should I know?
8. Annuity Period.................................. What are my income payment options?
9. Death Benefit................................... Does the Contract have a death benefit?
</TABLE>

<PAGE> 4

<TABLE>
<S> <C>
10. Purchase and Contract Value
(a) Purchases............................. How do I purchase a Contract?
(b) Valuation.............................. What are my investment options?
(c) Daily Calculation..................... What are my investment options?
(d) Underwriter............................ What other information should I know?
11. Redemptions
(a) By Owners............................. How do I access my money?
By Annuitant.......................... What are my income payment options?
(b) Texas OR............................... N/A
(c) Check Delay............................ How do I access my money?
(d) Lapse.................................. N/A
(e) Free Look.............................. What other information should I know?
12. Taxes.......................................... How will my Contract be taxed?
13. Legal Proceedings.............................. What other information should I know?
14. Table of Contents for the Statement of
Additional Information......................... Table of Contents of the Statement of
Additional Information
</TABLE>

PART B

<TABLE>
<CAPTION>
ITEM OF FORM N-4 PART B CAPTION

<S> <C>
15. Cover Page.................................... Cover Page
16. Table of Contents............................. Table of Contents
17. General Information and History............... N/A
18. Services
(a) Fees and Expenses of Registrant........ N/A
(b) Management Contracts................... N/A
(c) Custodian ............................. N/A
Independent Accountant........... Experts
(d) Assets of Registrant................... N/A
(e) Affiliated Person...................... N/A
(f) Principal Underwriter.................. Distribution of the Contracts
19. Purchase of Securities Being Offered Distribution of the Contracts
Offering Sales Load........................ N/A
20. Underwriters.................................. Distribution of the Contracts
21. Calculation of Performance Data............... Calculation of Historical Performance Data
22. Annuity Payments.............................. Income Payment Provisions
23. Financial Statements.......................... Financial Statements
</TABLE>

<PAGE> 5

PART C
OTHER INFORMATION

<TABLE>
<CAPTION>
ITEM OF FORM N-4 PART C CAPTION

<S> <C>
24. Financial Statements and Exhibits............. Financial Statements and Exhibits
(a) Financial Statements................... (a) Financial Statements
(b) Exhibits............................... (b) Exhibits
25. Directors and Officers of the Depositor....... Directors and Officers of the Depositor.
26. Persons Controlled By or Under Common......... Persons Controlled By or Under
Control with the Depositor or Registrant... Common Control with the Depositor or
Registrant
27. Number of Contract Owners..................... Number of Contract Owners
28. Indemnification............................... Indemnification
29. Principal Underwriters........................ Principal Underwriter
30. Location of Accounts and Records.............. Location of Books and Records
31. Management Services........................... Management Services
32. Undertakings.................................. Undertakings and Representations
Signature Page ............................ Signatures
</TABLE>

<PAGE> 6

PROFILE DATED _________________________, 1999
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS
Issued By
THE SAGE VARIABLE ANNUITY ACCOUNT A AND
SAGE LIFE ASSURANCE OF AMERICA, INC.

THIS PROFILE IS A SUMMARY OF SOME IMPORTANT POINTS THAT YOU
SHOULD KNOW AND CONSIDER BEFORE PURCHASING A CONTRACT. THE
CONTRACT IS MORE FULLY DESCRIBED IN THE FULL PROSPECTUS THAT
ACCOMPANIES THIS PROFILE. PLEASE READ THAT PROSPECTUS CAREFULLY.

"We," "us," "our", "Sage Life" or the "Company" refer to Sage Life Assurance
of America, Inc. "You" and "your" refer to the Owner of a Contract.

1. WHAT ARE THE CONTRACTS?

The Contracts are flexible payment fixed and variable annuity contracts
offered by Sage Life Assurance of America, Inc. Your Contract is a contract
between you, the Owner, and us, Sage Life.

We designed the Contract for use in your long-term financial and
retirement planning. It provides a means for allocating amounts on a
tax-deferred basis to our Variable Account and our Fixed Account.

INVESTMENT FLEXIBILITY. Through our Variable Account you can invest
among 33 Variable Sub-Accounts, each corresponding to a different investment
portfolio (each a "Fund"). These Funds, listed in Section 4, are
professionally managed and use a broad range of investment strategies (growth
and income, aggressive growth, etc.), styles (growth, value, etc.) and asset
classes (stocks, bonds, international, etc.). You can select a mix of Funds
to meet your financial and retirement needs and objectives, tolerance for
risk, and view of the market. Amounts you invest in these Funds will
fluctuate daily based on underlying investment performance. So, the value of
your investment may increase or decrease.

Through our Fixed Account, you can invest to receive guaranteed rates
of interest for periods of 1, 2, 3, 4, 5, 7, and 10 years ("Guarantee
Periods"). We also guarantee your principal while it remains in our Fixed
Account. However, if you decide to surrender your Contract, or transfer or
access amounts in the Fixed Account before the end of a Guarantee Period you
have chosen, we ordinarily will apply a Market Value Adjustment. This
adjustment reflects changes in interest rates since your allocation to the
Fixed Account. The Market Value Adjustment may result in an increase or
decrease in the amounts surrendered, transferred, or accessed.

1
<PAGE> 7

As your needs or financial or retirement goals change, your investment
mix can change with them. You may transfer funds among any of the investment
choices in our Fixed or Variable Accounts while continuing to defer current
income taxes.

SAFETY OF SEPARATE ACCOUNTS. Significantly, both our Fixed and
Variable Accounts are separate investment accounts of Sage Life. This
provides you with an important safety feature: we cannot charge the assets
supporting your allocations to these Accounts with liabilities arising out of
any other business we may conduct.

The Contract also provides you with other important features, including
a death benefit, access to your money, and income plan options.

ACCESS TO AMOUNTS INVESTED. The Contract provides access to your
investment should you need it. During the savings, or Accumulation Phase,
your investment grows tax-free until withdrawn. You decide how much to take
and when to take it (certain restrictions apply after the Accumulation
Phase).

Ordinarily, once you access earnings, they are taxed as income. If you
access earnings before you are 59 1/2 years old, you may have to pay an
additional 10% federal tax penalty. Amounts you surrender or withdraw may be
subject to a surrender charge, and a Market Value Adjustment (positive or
negative) may apply if you take the amount from the Fixed Account before the
end of the applicable Guarantee Period.

PROTECTION FOR YOUR BENEFICIARIES. The Contract also provides a death
benefit feature to protect your family should you die during the Accumulation
Phase. In the event of your untimely death, the Beneficiary of your choice
will never receive less than you have invested in the Contract, and may even
receive more. Your Beneficiary will decide how he or she wishes to receive
the death benefit.

INCOME PAYMENTS. The payout, or Income Phase, of your Contract begins
when you inform us you want to start receiving regular income payments under
one of the various income plans we offer. The amount you accumulated during
the Accumulation Phase determines the amount of income payments you receive
during the Income Phase. You can use your Account Value to provide income
payments that are guaranteed, or income payments that vary with underlying
investment performance, or a combination of both. The income payments can be
for life, which means you can't outlive them!

A portion of each income payment is ordinarily considered a return of
your investment in the Contract. So, only the portion in excess of this
amount is taxed as income!

2. WHAT ARE MY INCOME PAYMENT OPTIONS?

Once the Income Phase of your Contract begins, we apply your Account
Value to provide you with regular income payments.

2
<PAGE> 8

You can tailor your income to meet your needs by choosing from five
different income plans described below. In explaining the income plans, we
are assuming that you designate yourself as the Annuitant. Of course, you
always can designate someone other than yourself as Annuitant.

Income Plan 1 - Life Annuity: You will receive payments for your life.

Income Plan 2 - Life Annuity with 10 or 20 Years Certain: You will
receive payments for your life. However, if you die before the
end of the guaranteed certain period you select (10 or 20
years), your Beneficiary will receive the payments for the
remainder of that period.

Income Plan 3 - Joint and Last Survivor Life Annuity: You will receive
payments as long as either you or a second person you select
(such as your spouse) is alive.

Income Plan 4 - Payments for a Specified Period Certain: You will
receive payments for the number of years you select. However, if
you die before the end of that period, your Beneficiary will
receive the payments for the remainder of the guaranteed certain
period.

Income Plan 5 - Annuity Plan: You can use your Account Value to
purchase any other income plan we offer at the time you want to
begin receiving regular income payments for which you and the
Annuitant are eligible.

You tell us how much of your Account Value to apply to fixed income
payments and to variable income payments. During the Income Phase, you still
have all of the investment choices you had during the Accumulation Phase.
However, we currently limit transfers among your investment choices.

We will allocate the amount of Account Value you apply to provide fixed
income payments to the Fixed Account and invest it in the Guarantee Periods
you select. The amount of each income payment is guaranteed and remains
level throughout the period you select.

We will allocate the amount of Account Value you apply to provide
variable income payments to the Variable Account and invest it in the Funds
you select. The amount of each income payment will vary according to the
investment performance of those Funds.

3. HOW DO I PURCHASE A CONTRACT?

In most cases, you may purchase a Contract with $5,000 or more through
one of our authorized registered representatives.

In addition, subject to limitations for tax-qualified Contracts, you
can make additional purchase payments of $250 or more to your Contract at any
time during the Accumulation Phase.

3
<PAGE> 9

4. WHAT ARE MY INVESTMENT OPTIONS?

There are 40 investment options under the Contracts available through
our Variable and Fixed Accounts. These choices are professionally managed
and allow for a broad range of investment strategies, styles and asset
classes. Additional investment options may be available in the future.

Through our Variable Account you can choose to have your money invested
in one or more of the Variable Sub-Accounts investing in the following 33
Funds:

- AIM Variable Insurance Funds, Inc.
[ ] AIM V.I. Government Securities Fund
[ ] AIM V.I. Growth and Income Fund
[ ] AIM V.I. International Equity Fund
[ ] AIM V.I. Value Fund

- The Alger American Fund
[ ] Alger American MidCap Growth Portfolio
[ ] Alger American Income and Growth Portfolio
[ ] Alger American Small Capitalization Portfolio

- Liberty Variable Investment Trust
[ ] Colonial High Yield Securities Fund, Variable Series
[ ] Colonial Small Cap Value Fund, Variable Series
[ ] Colonial Strategic Income Fund, Variable Series
[ ] Colonial U.S. Stock Fund, Variable Series
[ ] Liberty All-Star Equity Fund, Variable Series
[ ] Newport Tiger Fund, Variable Series
[ ] Stein Roe Global Utilities Fund, Variable Series

- SteinRoe Variable Investment Trust
[ ] Stein Roe Growth Stock Fund, Variable Series
[ ] Stein Roe Balanced Fund, Variable Series

- MFS(R) Variable Insurance Trust(TM)
[ ] MFS Growth With Income Series
[ ] MFS High Income Series
[ ] MFS Research Series
[ ] MFS Total Return Series
[ ] MFS Value Series

- Morgan Stanley Dean Witter Universal Funds, Inc.(SM)
[ ] Global Equity Portfolio
[ ] Mid Cap Value Portfolio

4
<PAGE> 10

[ ] Value Portfolio

- Oppenheimer Variable Account Funds
[ ] Oppenheimer Bond Fund
[ ] Oppenheimer Growth Fund
[ ] Oppenheimer Small Cap Growth Fund

- Sage Life Investment Trust
[ ] EAFE(R) Equity Index Fund
[ ] S&P 500 Equity Index Fund
[ ] Money Market Fund

- T. Rowe Price Equity Series, Inc.
[ ] T. Rowe Price Equity Income Portfolio
[ ] T. Rowe Price Mid-Cap Growth Portfolio
[ ] T. Rowe Price Personal Strategy Balanced Portfolio

The prospectuses for the Trusts describe the Funds in detail. These
Funds do not provide any performance guarantees, and their values will
increase or decrease depending upon investment performance.

Through our Fixed Account you can choose to invest your money in one or
more of 7 different Guarantee Periods. We will guarantee your principal and
interest rate when your investment is left in the Guarantee Period until it
ends. You currently can choose periods of 1, 2, 3, 4, 5, 7, and 10 years.
However, if you decide to surrender your Contract, or transfer or access
amounts before the end of a period you have chosen, we ordinarily will apply
a Market Value Adjustment. This Adjustment may be positive or negative
depending upon current interest rates.

5. WHAT ARE THE EXPENSES UNDER A CONTRACT?

The Contract has insurance and investment features. Each has related
costs. Below is a brief summary of the Contract's charges:

Annual Administration Charge - During the first seven Contract Years
only, we will deduct an annual $40 administration charge. However, there is
no charge if, at the time of deduction, your Account Value is at least
$50,000.

Asset-Based Charges - Each month we deduct Asset-Based Charges for
mortality and expense risks and for certain administrative costs from the
amounts you allocate to the Variable Account. These charges equal, on an annual
basis, 1.40% of your Variable Account Value, decreasing to 1.25% after the
seventh Contract Year.

Surrender Charge - During the first seven Contract Years only, we
ordinarily will deduct a surrender charge when you surrender your Contract or
withdraw money in excess of the Free

5
<PAGE> 11

Withdrawal Amount. The maximum applicable percentage is 7% in the first Contract
Year, and declines to 0% in the eighth Contract Year. We calculate the surrender
charge as a percentage of the purchase payment(s) you surrender or withdraw.

Purchase Payment Tax Charge - During the first seven Contract Years only,
we will deduct any state premium tax that we incur if you surrender your
Contract or begin receiving regular income payments. This tax charge currently
ranges from 0% to 3.5% depending upon the state. We currently do not intend to
deduct this charge on or after the eighth Contract Year.

Fund Fees and Expenses - There are also Fund fees and expenses that are
based on the average daily value of your money invested in the Funds.
Currently, these charges range on an annual basis from 0.__% to _.__%, depending
upon the Fund.

Sage Life's business philosophy rewards our long-term customers. So, as
you can see, after the seventh Contract Year we

- eliminate Surrender Charges,

- eliminate the Annual Administration Charge,

- eliminate the Purchase Payment Tax Charge, if any, and

- reduce Asset-Based Charges.

This means more of your investment is working for you over the long-term!

The following chart is designed to help you understand expenses under the
Contract.

<TABLE>
<CAPTION>
Examples of
Total Expenses
Total Annual Total Annual Total Annual Paid at the End
Fund Insurance Charges Fund Charges Charges of 1 Year
---- ----------------- ------------ ------- ---------
<S> <C>
AIM VARIABLE INSURANCE TO BE ADDED BY SUBSEQUENT POST-EFFECTIVE AMENDMENT.
FUNDS, INC.:
AIM V.I. Government
Securities Fund
AIM V.I. Growth and
Income Fund
AIM V.I. International
Equity Fund
AIM V.I. Value Fund
</TABLE>

6
<PAGE> 12

<TABLE>
<CAPTION>
Examples of
Total Expenses
Total Annual Total Annual Total Annual Paid at the End
Fund Insurance Charges Fund Charges Charges of 1 Year
---- ----------------- ------------ ------- ---------
<S> <C>
THE ALGER AMERICAN FUND:
Alger American MidCap
Growth Portfolio
Alger American Income and
Growth Portfolio
Alger American Small
Capitalization
Portfolio

LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities
Fund, Variable Series
Colonial Small Cap Value Fund,
Variable Series
Colonial Strategic Income Fund,
Variable Series
Colonial U.S. Stock Fund,
Variable Series
Liberty All-Star Equity Fund,
Variable Series
Newport Tiger Fund,
Variable Series
Stein Roe Global Utilities
Fund, Variable Series

STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock
Fund, Variable Series
Stein Roe Balanced Fund,
Variable Series

MFS(R) VARIABLE INSURANCE TRUST(TM):
MFS Growth With
Income Series
MFS High Income Series
MFS Research Series
MFS Total Return Series
MFS Value Series
</TABLE>

<PAGE> 13

<TABLE>
<CAPTION>
Examples of
Total Expenses
Total Annual Total Annual Total Annual Paid at the End
Fund Insurance Charges Fund Charges Charges of 1 Year
---- ----------------- ------------ ------- ---------
<S> <C>
MORGAN STANLEY DEAN WITTER
UNIVERSAL FUNDS, INC.(SM):
Global Equity Portfolio
Mid Cap Value Portfolio
Value Portfolio

OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund
Oppenheimer Growth Fund
Oppenheimer Small Cap
Growth Fund

SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund
S&P 500 Equity Index
Fund
Money Market Fund

T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity
Income Portfolio
T. Rowe Price Mid-Cap
Growth Portfolio
T. Rowe Price Personal Strategy
Balanced Portfolio
</TABLE>

Below is an explanation of what we included in each column of the chart:

The column "Total Annual Insurance Charges" shows the sum of the
Asset-Based Charges and the Annual Administration Charge (for purposes of the
chart, we assume the average Account Value is $30,000 and the Annual
Administration Charge to be 0.13% of the value of an average Contract).

The column "Total Annual Fund Charges" shows the fees and expenses for
each Fund.

The column "Total Annual Charges" shows the sum of "Total Annual
Insurance Charges" and "Total Annual Fund Charges."

<PAGE> 14

The last column shows you examples of the charges, in dollars, you could
pay under a Contract for each $1,000 you invested in that Fund. The example
assumes that your Contract earns 5% annually before charges.

For more information about expenses under a Contract, please refer to
the "Fee Table" in the full Prospectus that accompanies this Profile.

6. HOW WILL MY CONTRACT BE TAXED?

During the Accumulation Phase, your earnings are not taxed unless you
take them out. If you take money out, earnings come out first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you also may be
charged a 10% federal tax penalty on the withdrawn earnings.

Income payments during the Income Phase are considered partly a return
of your original investment. That part of each payment is not taxable as income.
However, once you have recovered all of your original investment, income
payments will then be fully taxable.

Special tax rules apply to withdrawals from a new type of IRA called the
Roth IRA.

7. HOW DO I ACCESS MY MONEY?

There are a number of ways to withdraw money from your Contract. You can
tailor your income to meet your near-term or lifelong liquidity needs.

During the Accumulation Phase, if you want to take money out of your
Contract, you can choose among several different options.

- You can withdraw some of your money.

- You can surrender your Contract and take all of your money.

- You can take withdrawals using our systematic partial withdrawal
program.

- You can apply your Account Value to an Income Plan.

Keep in mind that amounts you surrender or withdraw may be subject to a
surrender charge if taken during the first seven Contract Years. However, during
that period, the Contract does provide a Free Withdrawal Amount, an amount not
subject to a surrender charge, that is equal to your cumulative earnings, or if
greater, 10% of total purchase payments you have invested. In addition, if you
take the amount from the Fixed Account, a Market Value Adjustment ordinarily
will apply. If you are younger than 59 1/2 when you take money out, you may owe
a 10% federal tax penalty in addition to the income tax that will apply to any
gain in your Contract. Please remember that withdrawals will reduce your death
benefit.

<PAGE> 15

Once you start receiving regular income payments and if you selected the
"payments for a specified period certain" income plan, you may request a
withdrawal.

8. HOW IS CONTRACT PERFORMANCE PRESENTED?

Because our Variable Sub-Accounts have been in operation for less than a
year, we cannot show you how the Funds performed in the Variable Account. When
they have been in operation for a year or more, we will show you the Funds'
performance using standard methods prescribed by the SEC.

Please remember that the performance data represents past performance.
Amounts you invest in the Variable Account will fluctuate daily based on
underlying Fund investment performance, so the value of your investment may
increase or decrease.

9. DOES THE CONTRACT HAVE A DEATH BENEFIT?

Your Contract provides two different types of death benefits for your
Beneficiary. There is the basic death benefit and the accidental death benefit.

BASIC DEATH BENEFIT. We will pay the basic death benefit to the
Beneficiary of your choice in the event of your untimely death prior to the
Income Phase. This provides comfort knowing your Beneficiary will receive the
greatest of the following:

- the current Account Value on the date we receive proof of death;

- the sum of all purchase payments you have invested in your
Contract, less any withdrawals you have made (including any
associated surrender charge and Market Value Adjustment
incurred); or

- the highest anniversary value on or before you reach age 80.

We determine the highest anniversary value in the following manner. When
we receive proof of death, we will calculate an anniversary value for each
Contract Anniversary before the date of the Owner's death, but not beyond the
Owner's attained age 80. An anniversary value for a Contract Anniversary equals
(1) the Account Value on that Contract Anniversary, (2) increased by the dollar
amount of any purchase payments made since the Contract Anniversary, and (3)
reduced proportionately by any withdrawals (including any associated surrender
charge and Market Value Adjustment incurred) taken since that Contract
Anniversary. (By proportionately, we take the percentage by which the withdrawal
decreases the Account Value and we reduce the sum of (1) and (2) by that
percentage.) The greatest of these anniversary values is your highest
anniversary value.

ACCIDENTAL DEATH BENEFIT. If permitted in your state, the Contract also
provides an accidental death benefit during the Accumulation Phase at no
additional cost. If you die as a

<PAGE> 16

direct result of an accident before reaching age 81, we will pay an additional
death benefit to the Beneficiary of your choice. This additional benefit is
equal to 100% of the sum of all purchase payments you have invested in your
Contract, less any withdrawals you have made (including any associated surrender
charge and Market Value Adjustment incurred) up to a maximum of $250,000.

10. WHAT OTHER INFORMATION SHOULD I KNOW?

The Contract has several additional features available to you at no
additional charge:

FREE LOOK RIGHT: You have the right to return your Contract to us at our
Customer Service Center or to the registered representative who sold it to you,
and have us cancel the Contract within a certain number of days (usually 10 days
from the date you receive the Contract, but some states require different
periods).

If you exercise this right, we will cancel your Contract as of the
Business Day we receive it. We will send you a refund equal to your Account
Value plus any charges we have deducted on or before the date we received the
returned Contract. If required by the law of your state, we will refund your
initial purchase payment (less any withdraws previously taken). In the states
where we are required to return purchase payment less withdrawals, if you
allocated amounts to the Variable Account, we will temporarily allocate those
amounts to the Money Market Sub-Account (that is, the Variable Sub-Account
investing in the Money Market Fund of Sage Life Investment Trust) until the Free
Look Period ends.

DOLLAR-COST AVERAGING PROGRAM: Under our optional Dollar-Cost Averaging
Program, you may transfer a set dollar amount systematically from the Money
Market Sub-Account and/or from specially designated Fixed Sub-Accounts to any
other Variable Sub-Account, subject to certain limitations. By investing the
same amount on a regular basis, you don't have to worry about timing the market.
Since you invest the same amount each period, you automatically acquire more
units when market values fall and fewer units when they rise. The potential
benefit is to lower your average cost per unit. This strategy does not guarantee
that any Fund will gain in value. It also will not protect against a decline in
value if market prices fall. However, if you can continue to invest regularly
throughout changing market conditions, this program can be an effective way to
help meet your long-term or retirement goals. Due to the effect of interest that
continues to be paid on the amount remaining in the Money Market Sub-Account or
the specially designated Fixed Sub-Account, the amounts that we transfer will
vary slightly from month to month.

ASSET ALLOCATION PROGRAM: An optional Asset Allocation Program is
available if you do not wish to make your own particular investment decisions.
This investment planning tool is designed to find an asset mix that attempts to
achieve the highest expected return based upon your tolerance for risk, and
consistent with your needs and objectives. Bear in mind that the use of an
asset-allocation model does not guarantee investment results.

<PAGE> 17

AUTOMATIC PORTFOLIO REBALANCING PROGRAM: Our optional Automatic
Portfolio Rebalancing Program can help prevent a well-conceived investment
strategy from becoming diluted over time. Investment performance will likely
cause the allocation percentages you originally selected to shift. With this
program, you can instruct us to automatically rebalance your Contract to your
original percentages on a quarterly basis. Money invested in the Fixed Account
is not part of this program.

WAIVER OF SURRENDER CHARGE RIDER: This rider, which is automatically
included in your Contract at no additional cost, permits you to withdraw money
from your Contract without a surrender charge if you need it while you are
confined to a nursing care facility or hospital, or if you have a terminal
illness. Certain restrictions apply, and this feature may not be available in
all states.

11. HOW CAN I MAKE INQUIRIES?

If you need further information about the Contracts, please write or
call us at our Customer Service Center (877) TEL-SAGE (835-7243), or contact an
authorized registered representative. The address of our Customer Service Center
office is 1290 Silas Deane Highway, Wethersfield, CT 06109.

<PAGE> 18

PROSPECTUS DATED ___________, 1999
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY
CONTRACTS
ISSUED BY
THE SAGE VARIABLE ANNUITY ACCOUNT A AND
SAGE LIFE ASSURANCE OF AMERICA, INC.

Executive Office: Customer Service Center:
300 Atlantic Street 1290 Silas Deane Highway
Stamford, CT 06901 Wethersfield, CT 06109
Telephone: (877) 835-7243 (Toll Free)

This Prospectus describes flexible payment deferred combination fixed
and variable annuity contracts for individuals and groups offered by Sage Life
Assurance of America, Inc. We designed the Contracts for use in your long-term
financial and retirement planning. The Contracts provide a means for investing
on a tax-deferred basis in our Variable Account and our Fixed Account. You can
purchase a Contract by making a minimum initial purchase payment. After
purchase, you determine the amount and timing of any additional purchase
payments.

You may allocate purchase payments and transfer Account Value to our
Variable Account and our Fixed Account within certain limits. The Variable
Account has 33 Sub-Accounts. Through our Fixed Account, you can choose to invest
your money in one or more of 7 different Guarantee Periods.

Each Variable Sub-Account invests in a corresponding Fund of AIM
Variable Insurance Funds, Inc., The Alger American Fund, Liberty Variable
Investment Trust, SteinRoe Variable Investment Trust, MFS(R) Variable Insurance
Trust(TM), Morgan Stanley Dean Witter Universal Funds, Inc.(SM), Oppenheimer
Variable Account Funds, Sage Life Investment Trust, or T. Rowe Price Equity
Series, Inc. (collectively, the "Trusts").

Your Account Value will vary daily with the investment performance of
the Variable Sub-Accounts and any interest we credit under our Fixed Account. We
do not guarantee any minimum Account Value for amounts you allocate to the
Variable Account. We do guarantee principal and a minimum fixed rate of interest
for specified periods of time on amounts you allocate to the Fixed Account.
However, amounts you withdraw, surrender, transfer, or apply to an income plan
from the Fixed Account before the end of an applicable Guarantee Period
ordinarily will be subject to a Market Value Adjustment, which may increase or
decrease these amounts.

The Contracts provide additional benefits, including five alternative
income plan options, a death benefit upon any Owner's death before the Income
Date, and optional programs including dollar-cost averaging, asset allocation,
automatic portfolio rebalancing, and systematic partial withdrawals.

<PAGE> 19

The Statement of Additional Information contains more information about
the Contracts and the Variable Account, is dated the same as this Prospectus,
and is incorporated herein by reference. The Table of Contents for the Statement
of Additional Information is on page __ of this Prospectus. We filed it with the
Securities and Exchange Commission. You may obtain a copy of the Statement of
Additional Information free of charge by contacting our Customer Service Center,
or by accessing the Securities and Exchange Commission's website at
http://www.sec.gov.

THIS PROSPECTUS INCLUDES BASIC INFORMATION ABOUT THE CONTRACTS THAT YOU
SHOULD KNOW BEFORE INVESTING. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT
FOR FUTURE REFERENCE. THIS PROSPECTUS MUST BE ACCOMPANIED BY THE CURRENT
PROSPECTUS FOR EACH OF THE TRUSTS.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE CONTRACTS
OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
ENDORSED OR GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE
PROTECTED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

<PAGE> 20

<TABLE>
<CAPTION>
TABLE OF CONTENTS

<S> <C>
Index of Terms................................................................................
Fee Table.....................................................................................
1. What Are the Contracts?...................................................................
2. What Are My Income Payment Options?.......................................................
3. How Do I Purchase a Contract?.............................................................
Initial Purchase Payment...............................................................
Issuance of a Contract.................................................................
Free Look Right to Cancel Contract.....................................................
Making Additional Purchase Payments....................................................
4. What Are My Investment Options?...........................................................
Purchase Payment Allocations...........................................................
Variable Sub-Account Investment Options................................................
Fixed Account Investment Options.......................................................
Market Value Adjustment................................................................
Transfers..............................................................................
Telephone Transactions.................................................................
Power of Attorney......................................................................
Dollar-Cost Averaging Program..........................................................
Asset Allocation Program...............................................................
Automatic Portfolio Rebalancing Program................................................
Account Value..........................................................................
Surrender Value........................................................................
Variable Account Value.................................................................
Accumulation Unit Value................................................................
Net Investment Factor..................................................................
Fixed Account Value....................................................................
5. What Are the Expenses under a Contract?
Surrender Charge.......................................................................
Annual Administration Charge...........................................................
Transfer Charge........................................................................
Asset-Based Charges....................................................................
Purchase Payment Tax Charge............................................................
Fund Expenses..........................................................................
Additional Information.................................................................
6. How Will My Contract be Taxed?
Introduction...........................................................................
Tax Status of the Contract.............................................................
Tax Treatment of Annuities.............................................................
Taxation of a Non-Qualified Contract...................................................
</TABLE>

<PAGE> 21

<TABLE>
<S> <C>
Taxation of a Qualified Contract.......................................................
Other Tax Consequences.................................................................
7. How Do I Access My Money?
Withdrawals............................................................................
Systematic Partial Withdrawal Program..................................................
IRA Partial Withdrawal Program.........................................................
Requesting Payments....................................................................
8. How is Contract Performance Presented?
9. Does the Contract Have a Death Benefit?
Basic Death Benefit....................................................................
Accidental Death Benefit...............................................................
Proof of Death.........................................................................
10. What Other Information Should I Know?
Separate Accounts......................................................................
Modification...........................................................................
Distribution of the Contacts...........................................................
Experts................................................................................
Legal Proceedings......................................................................
Reports to Contract Owners.............................................................
Assignment.............................................................................
Change of Owner, Beneficiary, or Annuitant.............................................
Misstatement and Proof of Age, Sex, or Survival........................................
Incontestability.......................................................................
Authority to Make Agreements...........................................................
Preparing for the Year 2000............................................................
Financial Statements...................................................................
11. How Can I Make Inquiries?
12. Additional Information about Sage Life Assurance of America, Inc.
History and Business...................................................................
Selected Financial Data................................................................
Competition............................................................................
Transactions with Sage Insurance Group.................................................
Employees..............................................................................
Properties.............................................................................
State Regulation.......................................................................
Directors and Executive Officers.......................................................
Compensation...........................................................................
</TABLE>

FINANCIAL STATEMENTS OF SAGE LIFE ASSURANCE OF AMERICA, INC.

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

<PAGE> 22

APPENDIX A - MARKET VALUE ADJUSTMENT

APPENDIX B - DOLLAR COST AVERAGING PROGRAM

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.

iii

<PAGE> 23

INDEX OF TERMS

We have tried to make this Prospectus as readable and understandable as
possible. To help you to understand how the Contract works, we have used certain
terms that have special meanings.
We define these terms below.

ACCOUNT VALUE - The Account Value is the entire amount we hold under your
Contract during the Accumulation Phase. It equals the sum of the Variable
Account Value and Fixed Account Value.

ACCUMULATION PHASE - The Accumulation Phase is the period during which you
accumulate savings under your Contract.

ACCUMULATION UNIT - An Accumulation Unit is the unit of measure we use before
the Income Date to keep track of the value of each Variable Sub-Account.

ANNUITANT - The Annuitant is the natural person whose age determines the maximum
Income Date and the amount and duration of income payments involving life
contingencies. The Annuitant may also be the person to whom we will make any
payment starting on the Income Date.

ASSET-BASED CHARGES - The Asset-Based Charges are charges for mortality and
expense risks and for administrative costs assessed monthly against the assets
of the Variable Account. After the Income Date, we call these charges Variable
Sub-Account Charges and deduct them daily from the assets of the Variable
Account.

BENEFICIARY - The Beneficiary is the person or persons to whom we pay a death
benefit if any Owner dies before the Income Date.

BUSINESS DAY - A Business Day is any day the New York Stock Exchange ("NYSE") is
open for trading and we are open for business, exclusive of (i) Federal
holidays, (ii) any day on which an emergency exists making the disposal or fair
valuation of assets in the Variable Account not reasonably practicable, and
(iii) any day on which the Securities and Exchange Commission ("SEC") permits a
delay in the disposal or valuation of assets in the Variable Account.

CONTRACTS - The Contracts are flexible payment deferred combination fixed and
variable annuity contracts. In some jurisdictions, we issue the Contracts
directly to individuals. In most jurisdictions, however, the Contracts are only
available as a group contract. We issue a group Contract to or on behalf of a
group. Individuals who are part of a group to which we issue a Contract receive
a certificate that recites substantially all of the provisions of the group
Contract. Throughout this Prospectus and unless otherwise stated, the term
"Contract" refers to individual contracts, group Contracts, and certificates for
group Contracts.

<PAGE> 24

CONTRACT ANNIVERSARY - A Contract Anniversary is each anniversary of the
Contract Date.

CONTRACT DATE - The Contract Date is the date an individual Contract or a
certificate for a group Contract is issued at our Customer Service Center.

CONTRACT YEAR - A Contract Year is each consecutive twelve-month period
beginning on the Contract Date and the anniversaries thereof.

EXCESS WITHDRAWAL - An Excess Withdrawal is a withdrawal of Account Value that
exceeds the Free Withdrawal Amount.

EXPIRATION DATE - The Expiration Date is the last day in a Guarantee Period. In
the Contract, this is referred to as the "Expiry Date."

FIXED ACCOUNT - The Fixed Account is The Sage Fixed Interest Account A. It is a
separate investment account of ours into which you may invest purchase payments
or transfer Account Value. In certain states we refer to the Fixed Account as
the Interest Account.

FREE WITHDRAWAL AMOUNT - A Free Withdrawal Amount is the maximum amount that you
can withdraw within a Contract Year during the Accumulation Phase without being
subject to a surrender charge.

FUND - A Fund is an investment portfolio in which a Variable Sub-Account
invests.

GENERAL ACCOUNT - The General Account consists of all our assets other than
those held in any separate investment accounts.

INCOME DATE - The Income Date is the date you select for your income payments to
begin.

INCOME PHASE - The Income Phase starts on the Income Date and is the period
during which you receive income payments.

INCOME UNIT - An Income Unit is the unit of measure we use to calculate the
amount of income payments under a variable income plan option.

MARKET VALUE ADJUSTMENT - A Market Value Adjustment is a positive or negative
adjustment that may apply to a surrender, withdrawal, or transfer, and to
amounts applied to an income plan from a Fixed Sub-Account before the end of its
Guarantee Period.

NET ASSET VALUE - Net Asset Value is the price of one share of a Fund.

<PAGE> 25

OWNER - The Owner is the person or persons who owns (or own) a Contract.
Provisions relating to action by the Owner mean, in the case of joint Owners,
both Owners acting jointly. In the context of a Contract issued on a group
basis, Owners refer to holders of certificates under the group Contract.

SATISFACTORY NOTICE - Satisfactory Notice is a notice or request you make or
authorize, in a form satisfactory to us, received at our Customer Service
Center.

SURRENDER VALUE - The Surrender Value is the amount we pay you upon surrender of
your Contract before the Income Date.

VALUATION PERIOD - The Valuation Period is the period between one calculation of
an Accumulation Unit value and the next calculation.

VARIABLE ACCOUNT - The Variable Account is The Sage Variable Annuity Account A.
It is a separate investment account of ours into which you may invest purchase
payments or transfer Account Value.

"We", "us", "our", "Sage Life" or the "Company" is Sage Life Assurance of
America, Inc.

"You" or "your" is the Owner of a Contract.

<PAGE> 26

FEE TABLE

The purpose of this Fee Table is to assist you in understanding the expenses
that you will pay directly or indirectly when you invest in the Contract.

TRANSACTION EXPENSES

Sales Load Imposed on Purchases (as a percentage of purchase
payments)..........................................................None

Surrender Charge(1) (as a percentage of purchase payments withdrawn or
surrendered.)

<TABLE>
<CAPTION>
Applicable Applicable Surrender
Contract Year Charge Percentage
<S> <C>
1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 1%
8 and thereafter 0%

Transfer Charge(2)............................................................. $ 0

Annual Administration Charge
Contract Years 1-7(3)....................................................... $ 40
After Contract Year 7..................................................... $ 0
</TABLE>

In addition, we may deduct the amount of any state and local taxes on purchase
payments from your Account Value when we incur such taxes. We reserve the right
to defer collection of this charge and deduct it against your Account Value when
you surrender your Contract on an Excess Withdrawal, or apply your Account Value
to provide income payments. We refer to this as the Purchase Payment Tax Charge.

VARIABLE ACCOUNT ANNUAL EXPENSES(4) (deducted monthly as a percentage of the
Variable Account Value)

<TABLE>
<CAPTION>
Contract Years
--------------
1 - 7 8 +
----- ---
<S> <C> <C>
Mortality and Expense Risk Charge 1.25% 1.10%
Asset-Based Administrative Charge 0.15% 0.15%
----- -----
Total Asset-Based Charges 1.40% 1.25%

</TABLE>

<PAGE> 27

FUND CHARGES. The fees and expenses for each of the Funds (as a percentage of
net assets) for the year ended December 31, 1998 are shown in the following
table. For more information on these fees and expenses, see the prospectuses for
the Trusts that accompany this Prospectus.

FUND ANNUAL EXPENSES (as a percentage of average daily net assets of a Fund)

<TABLE>
<CAPTION>
Total Expenses
(after fee
Management Fees Other Expenses waivers and
(after fee waiver (after reimbursement- reimbursements,
Fund as applicable) as applicable) as applicable) as applicable)
---- -------------- -------------- -------------- --------------
<S> <C>
AIM VARIABLE INSURANCE TO BE
ADDED BY SUBSEQUENT
POST-EFFECTIVE AMENDMENT.
FUNDS, INC.:
AIM V.I. Government
Securities Fund
AIM V.I. Growth and
Income Fund
AIM V.I. International
Equity Fund
AIM V.I. Value Fund

THE ALGER AMERICAN FUND:
Alger American MidCap
Growth Portfolio
Alger American Income and
Growth Portfolio
Alger American Small
Capitalization Portfolio

<PAGE> 28

<TABLE>
<CAPTION>
Total Expenses
(after fee
Management Fees Other Expenses waivers and
(after fee waiver (after reimbursement- reimbursements,
Fund as applicable) as applicable) as applicable)
---- -------------- -------------- --------------
<S> <C>
Liberty All-Star Equity Fund,
Variable Series
Newport Tiger Fund,
Variable Series
Stein Roe Global Utilities
Fund, Variable Series

STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock
Fund, Variable Series
Stein Roe Balanced Fund,
Variable Series

MFS(R) VARIABLE INSURANCE TRUST(TM):
MFS Growth With Income Series
MFS High Income Series
MFS Research Series
MFS Total Return Series
MFS Value Series

MORGAN STANLEY DEAN WITTER UNIVERSAL
FUNDS, INC.(SM):
Global Equity Portfolio
Mid Cap Value Portfolio
Value Portfolio

OPPENHEIMER VARIABLE FUNDS:
Oppenheimer Bond Fund
Oppenheimer Growth Fund
Oppenheimer Small Cap
Growth Fund

SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund
S&P 500 Equity Index Fund
Money Market Fund
</TABLE>

<PAGE> 29

<TABLE>
<CAPTION>
Total Expenses
(after fee
Management Fees Other Expenses waiver and
(after fee waiver (after reimbursement- reimbursements,
Fund as applicable) as applicable) as applicable)
---- -------------- -------------- --------------
<S> <C>
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity
Income Portfolio

T. Rowe Price Mid-Cap
Growth Portfolio
T. Rowe Price Personal Strategy
Balanced Portfolio
</TABLE>

- --------------------------------------
1/ You may withdraw a portion of your Account Value without incurring a
surrender charge. This amount is called the Free Withdrawal Amount and is equal
to the greater of (i) 10% of your total purchase payments less all prior
withdrawals (including any associated surrender charge and Market Value
Adjustment incurred) in that Contract Year, or (ii) cumulative earnings (i.e.,
the excess of the Account Value on the date of withdrawal over unliquidated
purchase payments).

2/ Currently, we do not assess a transfer charge. However, we reserve the right
to charge up to $25 for the 13th and each subsequent transfer during a Contract
Year.

3/ We waive the Annual Administration Charge if the Account Value is at least
$50,000 on the date of deduction.

4/ We call the Asset-Based Charges Variable Sub-Account Charges and deduct them
on a daily basis after the Income Date. See "What Are the Expenses under the
Contract?" on page __.

EXAMPLES

The purpose of the following examples is to demonstrate the expenses
that you would pay on a $1,000 investment in the Variable Account. We calculate
the examples based on the fees and charges shown in the tables above. For a more
complete description of these expenses, see "What Are the Expenses under a
Contract?" beginning on page __ of this Prospectus, and see the prospectuses for
the Trusts. The Examples assume that the average Account Value is $30,000, and
that you have invested all your money in the Variable Account.

You should not consider the Examples a representation of past or future
expenses. Actual expenses may be greater or less than those shown. In addition,
we do not reflect Purchase

<PAGE> 30

Payment Tax Charges. These charges may apply depending on the state where the
Contract is sold. You might also incur transfer fees if you make more than
twelve transfers in a Contract Year. See "Transfer Charge," page _.

The assumed 5% annual rate of return is hypothetical. You should not
consider it to be a representation of past or future annual returns; both may be
greater or less than this assumed rate.

You would pay the following expenses on a $1,000 initial purchase
payment, assuming a 5% annual return on assets and the charges listed in the Fee
Table above.

<TABLE>
<CAPTION>
1. If you surrender 2. If you do not surrender
your Contract at the end of your Contract at the end of
Fund each time period each time period
----
1 Year 3Years 1 Year 3 Years
------ ------ ------ -------
<S> <C> <C> <C> <C>

AIM VARIABLE INSURANCE
FUNDS, INC.:
AIM V.I. Government
Securities Fund
AIM V.I. Growth and
Income Fund
AIM V.I. International
Equity Fund
AIM V.I. Value Fund

THE ALGER AMERICAN FUND:
Alger American MidCap
Growth Portfolio
Alger American Income and
Growth Portfolio
Alger American Small
Capitalization Portfolio

<PAGE> 31

Liberty All-Star Equity Fund,
Variable Series
Newport Tiger Fund,
Variable Series
Stein Roe Global Utilities
Fund, Variable Series

STEINROE VARIABLE INVESTMENT
TRUST:
Stein Roe Growth Stock
Fund, Variable Series
Stein Roe Balanced Fund,
Variable Series

MFS(R) VARIABLE INSURANCE
TRUST(TM):
MFS Growth With Income
Series
MFS High Income Series
MFS Research Series
MFS Total Return Series
MFS Value Series

MORGAN STANLEY DEAN WITTER
UNIVERSAL FUNDS, INC.(SM):
Global Equity Portfolio
Mid Cap Value Portfolio
Value Portfolio

OPPENHEIMER VARIABLE ACCOUNT
FUNDS:
Oppenheimer Bond Fund
Oppenheimer Growth Fund
Oppenheimer Small Cap
Growth Fund

SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund
S&P 500 Equity Index Fund
Money Market Fund
</TABLE>

<PAGE> 32

T. ROWE PRICE EQUITY SERIES,
INC.:
T. Rowe Price Equity
Income Portfolio
T. Rowe Price Mid-Cap
Growth Portfolio
T. Rowe Price Personal
Strategy Balanced
Portfolio
</TABLE>

1. WHAT ARE THE CONTRACTS?

The Contracts are flexible payment deferred combination fixed and
variable annuity Contracts offered by us. We designed the Contracts for use in
your long-term financial and retirement planning. They provide a means for
investing amounts on a tax-deferred basis in our Variable Account and our Fixed
Account.

Under the terms of the Contract, we promise to pay you (or the
Annuitant, if the Owner is other than an individual) regular income payments
after the Income Date. Until the Income Date, you may make additional purchase
payments under the Contract, and will ordinarily not be taxed on increases in
the value of your Contract as long as you do not take distributions. When you
use the Contract in connection with tax-qualified retirement plans, federal
income taxes may be deferred on your purchase payments, as well as on increases
in the value of your Contract. See "How Will My Contract be Taxed?" on page __.
The Contracts may not be available in all states.

When you make purchase payments, you can allocate those purchase
payments to one or more of the 33 subdivisions of the Variable Account, known as
"Variable Sub-Accounts." We will invest purchase payments you allocate to a
Variable Sub-Account solely in its corresponding Fund. Your Account Value into a
Variable Sub-Account will vary according to the investment performance of that
Fund. Depending on market conditions, your value in each Variable Sub-Account
could increase or decrease. We do not guarantee a minimum value. You bear the
risk of investing in the Variable Account. We call the total of the values in
the Variable Sub-Accounts the "Variable Account Value."

You can also allocate purchase payments to our Fixed Account. See "Fixed
Account Investment Option, " page __. The Fixed Account includes "Fixed
Sub-Accounts" to which we credit fixed rates of interest for the Guarantee
Periods you select. We call the total of the values in the Fixed Sub-Accounts,
the "Fixed Account Value." We currently offer Guarantee Periods with durations
of 1, 2, 3, 4, 5, 7, and 10 years. If any amount allocated or transferred
remains in a Guarantee Period until the Expiration Date, its value will equal
the amount originally allocated or transferred, multiplied, on an annually
compounded basis, by its guaranteed interest rate. We

<PAGE> 33

will ordinarily apply a Market Value Adjustment to any surrender, withdrawal,
transfer, or amount applied to an income plan from a Fixed Sub-Account before
its Expiration Date. The Market Value Adjustment may increase or decrease the
value of the Fixed Sub-Account (or portion thereof) being surrendered,
withdrawn, transferred, or applied to an income plan. See "Market Value
Adjustment" page __.

Subject to certain conditions, (See "Transfers," page __) you can
transfer Account Value three ways:

- From one Variable Sub-Account to another;
- From a Fixed Sub-Account to a Variable Sub-Account; or
- From a Variable Sub-Account to a Fixed Sub-Account.

Sage Life may offer other variable annuity contracts that also invest in
the same Funds offered under the Contracts. These contracts may have different
charges and they may offer different benefits.

2. WHAT ARE MY INCOME PAYMENT OPTIONS?

You choose the Income Date when you want regular income payments to
begin. The Income Date you choose must be on or before the first calendar month
following the Annuitant's 95th birthday. We reserve the right to require that
your Income Date be at least two years after the Contract Date. After you choose
the Income Date, you select an income plan from the list below, and indicate
whether you want your income payments to be fixed or variable or a combination
of fixed and variable. You must give Satisfactory Notice of your choices at
least 30 days prior to the Income Date, and you must have at least $5,000 of
Account Value to apply to a variable or fixed income option.

On the Income Date, we will use the Account Value under the Contract
(adjusted for any Market Value Adjustment, if applicable) to provide income
payments. Unless you request otherwise, we will use any Variable Account Value
to provide variable income payments, and we will use any Fixed Account Value to
provide fixed income payments. If you have not chosen an income plan by the
Income Date, a "life annuity with 10 years certain" (described below) will be
used.

The available income plans are:

- INCOME PLAN 1 - LIFE ANNUITY. You will receive payments for
your life.

- INCOME PLAN 2 - LIFE ANNUITY WITH 10 OR 20 YEARS CERTAIN. You
will receive payments for your life. However, if you die before
the end of the guaranteed certain period you select (10 or 20
years), your Beneficiary will receive the payments for the
remainder of that period.

<PAGE> 34

- INCOME PLAN 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY. You will
receive payments as long as either you or a second person you
select (such as your spouse) is alive.

- INCOME PLAN 4 - PAYMENTS FOR A SPECIFIED PERIOD CERTAIN. You
will receive payments for the number of years you select.
However, if you die before the end of that period, your
Beneficiary will receive the payments for the remainder of the
guaranteed certain period.

- INCOME PLAN 5 - ANNUITY PLAN. You can use your Account Value
to purchase any other income plan we offer at the time you want
to begin receiving regular income payments for which you and the
Annuitant are eligible.

<PAGE> 35

We will base your first income payment, whether fixed or variable, on
the amount of proceeds applied under the income plan you have selected and on
the "annuity purchase rates." These rates vary based on the Annuitant's age and
sex, and if applicable upon the age and sex of a second designated person. The
annuity purchase rate we apply will never be lower than the rate shown in your
Contract.

If you told us you want fixed income payments, the amount of each income
payment is guaranteed and remains level throughout the period you selected.

If you told us you want variable income payments, the amount of each
payment will vary according to the investment performance of the Funds you
selected.

To calculate your initial and future variable income payments, we need
to make an assumption regarding the investment performance of the Funds you
select. We call this your assumed investment rate. This rate is simply the total
return, after expenses, you need to earn to keep your variable income payments
level. Rather than building in our own estimate, we will allow you to tailor
your variable income payments to meet your needs by giving you a choice of
rates. Currently, you may select either 3% or 6%; if you do not select a rate,
we will apply the 3% rate. (We may offer other rates in the future). The lower
the rate, the lower your initial variable income payment, but the better your
payments will keep pace with inflation (assuming positive investment
performance). Conversely, the higher the rate, the higher your initial variable
income payment, but the less likely your payments will keep pace with inflation
(assuming positive investment performance).

For example, if you select 6%, this means that if the investment
performance, after expenses, of your Funds is less than 6%, then the dollar
amount of your variable income payment will decrease; but, if the investment
performance, after expenses, of your Funds is greater than 6%, then the dollar
amount of your income payments will increase.

If you told us that you want a life annuity, it is possible that you
could only receive one payment.

Your income payments will be made monthly, unless you choose quarterly,
semi-annual or annual payments by giving us Satisfactory Notice at least 30 days
before the Income Date. Payments start on the Income Date. If any payment would
be less than $100, we may change the payment frequency to the next longer
interval, but in no event less frequent than annual. Also, if on the Income
Date, the Account Value is less than $5,000, we may pay the Surrender Value on
that date in one sum.

3. HOW DO I PURCHASE A CONTRACT?

INITIAL PURCHASE PAYMENT. You may purchase a Contract for use in
connection with tax-qualified plans ("Qualified Contracts") or on a non-tax
qualified basis ("Non-Qualified Contracts"). To purchase a Contract, you and the
Annuitant you select may not be more than 85

<PAGE> 36

years old on the Contract Date. We require a different minimum initial purchase
payment depending on whether you are purchasing a Non-Qualified or Qualified
Contract, as shown in the following table:

<TABLE>
<CAPTION>
Minimum Initial Purchase Payment Required

<S> <C>
Non-Qualified Contract $5,000
Qualified Contract $2,000
</TABLE>

ISSUANCE OF A CONTRACT. Once we receive your initial purchase payment
and your application at our Customer Service Center, we will usually issue your
Contract within two Business Days. However, if you did not give us all the
information we need, we will try to contact you to get the needed information.
If we cannot complete the application within five Business Days, we will either
send your money back or obtain your permission to keep your money until we
receive the necessary information. Your Contract Date will be the date we issue
your Contract at our Customer Service Center.

FREE LOOK RIGHT TO CANCEL CONTRACT. During your "Free Look" Period, you
may cancel your Contract. The Free Look Period usually ends 10 days after you
receive your Contract. Some states may require a longer period. If you decide to
cancel your Contract, you must return it to our Customer Service Center or to
one of our authorized registered representatives. We will send you a refund
equal to your Account Value plus any charges we have deducted on or before the
date we receive your returned Contract at our Customer Service Center. If
required by the law of your state, we will refund your initial purchase payment
(less any withdrawals previously taken). In those latter states where this
requirement exists, we will temporarily invest amounts you allocated to the
Variable Account to the Money Market Sub-Account until the Free Look Period
ends. See "What Are My Investment Options," page __.

MAKING ADDITIONAL PURCHASE PAYMENTS. You may make additional purchase
payments of $250 or more at any time before the Income Date, subject to the
following conditions. We will accept additional purchase payments under a
Non-Qualified Contract until the earlier of the year in which you attain age 85
or the year in which the Annuitant attains age 85. We will accept additional
purchase payments under a Qualified Contract until the year in which you attain
70 1/2, except contributions to a Roth IRA or rollover contributions may be made
until the year in which you attain age 85. You must obtain our prior approval
before you make a purchase payment that causes the Account Value of all
annuities that you maintain with us to exceed $1,000,000. We will credit any
purchase payment received after the Contract Date to your Contract as of the
Business Day on which we receive it at our Customer Service Center. We will deem
purchase payments received on other than a Business Day as received on the next
following Business Day.

If you have not made a purchase payment for more than two years and your
Account Value is less than $2,000 on a Contract Anniversary, we may cancel your
Contract and pay you the Surrender Value as though you had surrendered. We will
give you written notice at your address of record. However, we will allow you 61
days from the date of that notice to submit an

<PAGE> 37

additional purchase payment in an amount sufficient to maintain your Account
Value at $2,000 or more. If we have not received the required additional
purchase payment by the end of this period, we may cancel your Contract.

4. WHAT ARE MY INVESTMENT OPTIONS?

PURCHASE PAYMENT ALLOCATIONS. When you apply for a Contract, you specify
the percentage of your purchase payment to be allocated to each Variable
Sub-Account and/or to each Fixed Sub-Account. You can change the allocation
percentages at any time by sending Satisfactory Notice to our Customer Service
Center. The change will apply to all purchase payments we receive on or after
the date we receive your request. Purchase payment allocations must be in
percentages totaling 100%, and each allocation percentage must be a whole
number.

We may, however, require that an initial purchase payment allocated to a
Variable Sub-Account be temporarily invested in the Money Market Sub-Account
during the Free Look Period. We will require this if the law of your state
requires us to refund your full initial purchase payment less any withdrawals
previously taken, should you cancel your Contract during the Free Look Period.
At the end of the Free Look Period, if we temporarily allocated your initial
purchase payment to the Money Market Sub-Account by us, we will transfer the
value of what is in the Money Market Sub-Account to the Variable Sub-Account(s)
you specified in your application. Solely for the purpose of processing
transfers from the Money Market Sub-Account, we will deem the Free Look Period
to end 15 days after the Contract Date. This transfer from the Money Market
Sub-Account to the Variable Sub-Accounts at the end of the Free Look Period does
not count as a transfer for any other purposes under the Contract.

VARIABLE SUB-ACCOUNT INVESTMENT OPTIONS. The Variable Account has 33
Sub-Accounts, each investing in a specific Fund. Each of the Funds is either an
open-end diversified management investment company or a separate investment
portfolio of such a company, and is managed by a registered investment adviser.
The Funds, as well as brief descriptions of their investment objectives, are
provided below. There is no assurance that these objectives will be met. Not
every fund may be available in every state or in every market.

AIM VARIABLE INSURANCE FUNDS, INC.

AIM V.I. GOVERNMENT SECURITIES FUND. This Fund seeks to achieve a high
level of current income consistent with reasonable concern for safety of
principal by investing in debt securities issued, guaranteed, or otherwise
backed by the U.S. Government.

AIM V.I. GROWTH AND INCOME FUND. This Fund seeks to provide growth of
capital, with current income as a secondary objective. The Fund seeks to achieve
its objective by generally investing at least 65% of its net assets in stocks of
companies believed by the management to have the potential for above average
growth in revenues and earnings.

<PAGE> 38

AIM V.I. INTERNATIONAL EQUITY FUND. This Fund seeks to provide long-term
growth of capital by investing in a diversified portfolio of international
equity securities, the issuers of which are considered by the Fund's investment
advisor to have strong earnings momentum.

AIM V.I. VALUE FUND. This Fund seeks to achieve long-term growth of
capital by investing primarily in equity securities judged by the Fund's
investment advisor to be undervalued relative to the current or projected
earnings of the companies issuing the securities, or relative to current market
values of assets owned by the companies issuing the securities or relative to
the equity market generally. Income is a secondary objective.

A I M Advisors, Inc. advises the AIM Variable Insurance Funds, Inc.

THE ALGER AMERICAN FUND

ALGER AMERICAN MIDCAP GROWTH PORTFOLIO. This Fund seeks long-term
capital appreciation by investing in a diversified, actively managed portfolio
of equity securities, primarily of companies with total market capitalization
within the range included in the S&P MidCap 400 Index.

ALGER AMERICAN INCOME AND GROWTH PORTFOLIO. This Fund seeks to provide a
high level of dividend income through investments in equity securities. Capital
appreciation is a secondary objective of this Fund.

ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO. This Fund seeks long-term
capital appreciation through investment primarily in equity securities that, at
the time of purchase, have total market capitalization within the range of
companies included in the Russell 2000 Growth Index or the S&P SmallCap 600
Index.

Fred Alger Management, Inc. advises The Alger American Fund.

LIBERTY VARIABLE INVESTMENT TRUST

COLONIAL HIGH YIELD SECURITIES FUND, VARIABLE SERIES ("High Yield
Securities Fund"). This Fund seeks high current income and total return by
investing primarily in lower rated corporate debt securities (commonly referred
to as "junk bonds").

COLONIAL SMALL CAP VALUE FUND, VARIABLE SERIES ("Small Cap Value Fund").
This Fund seeks long-term growth by investing primarily in smaller
capitalization equity securities.

COLONIAL STRATEGIC INCOME FUND, VARIABLE SERIES ("Strategic Income
Fund"). This Fund seeks a high level of current income, as is consistent with
prudent risk and maximizing

<PAGE> 39

total return, by diversifying investments primarily in U.S. and foreign
government and lower rated corporate debt securities.

COLONIAL U.S. STOCK FUND, VARIABLE SERIES ("U.S. Stock Fund"). This Fund
seeks long- term growth by investing primarily in large capitalization equity
securities.

LIBERTY ALL-STAR EQUITY FUND, VARIABLE SERIES ("All-Star Fund"). This
Fund seeks total investment return, comprised of long-term capital appreciation
and current income, through investment primarily in a diversified portfolio of
equity securities.

NEWPORT TIGER FUND, VARIABLE SERIES ("Tiger Fund"). This Fund seeks
long-term capital growth by investing primarily in equity securities of
companies located in the nine Tigers of Asia (Hong Kong, Singapore, South Korea,
Taiwan, Malaysia, Thailand, Indonesia, China and the Philippines).

STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES ("Global Utilities
Fund"). This Fund seeks current income and long-term growth of capital. The
Global Utilities Fund normally invests at least 65% of its total assets in U.S.
and foreign equity and debt securities of companies engaged in the manufacture,
production, generation, transmission, sale or distribution of electricity,
natural gas or other types of energy, or water or other sanitary services, and
companies engaged in telecommunication, including telephone, telegraph,
satellite, microwave and other communications media.

Liberty Advisory Services Corp. (formerly "Keyport Advisory Services
Corp.") provides investment management and advisory services to the Liberty
Variable Investment Trust. Colonial Management Associates, Inc. subadvises the
High Yield Securities Fund, the U.S. Stock Fund, the Small Cap Value Fund, and
the Strategic Income Fund. Stein Roe & Farnham Incorporated subadvises the
Global Utility Fund. Newport Fund Management, Inc. subadvises the Tiger Fund.
Liberty Asset Management Company subadvises the All-Star Fund.

STEINROE VARIABLE INVESTMENT TRUST

STEIN ROE GROWTH STOCK FUND. This Fund seeks long-term growth of capital
through investment primarily in common stocks.

STEIN ROE BALANCED FUND. This Fund seeks high total investment return
through a changing mix of equities, debt securities, and cash.

Stein Roe & Farnham Incorporated advises the SteinRoe Variable
Investment Trust.

<PAGE> 40
MFS(R) VARIABLE INSURANCE TRUST(SM)

MFS GROWTH WITH INCOME SERIES. This Fund seeks to provide reasonable
current income and long-term growth of capital and income. Under normal market
conditions, the MFS Growth with Income Series will invest at least 65% of its
assets in equity securities of companies that are believed to have long-term
prospects for growth and income.

MFS HIGH INCOME SERIES. This Fund seeks high current income by investing
primarily in a professionally managed diversified portfolio of fixed income
securities, some of which may involve equity features. Fixed income securities
offering the high current income sought by the High Income Series normally
include those fixed income securities which offer a current yield above that
generally available on debt securities in the three highest rating categories by
recognized rating agencies (commonly known as "junk bonds" if rated below the
four highest categories of recognized rating agencies). See the prospectus for
the Trust for more information.

MFS RESEARCH SERIES. This Fund seeks to provide long-term growth of
capital and future income. The MFS Research Series' policy is to invest a
substantial proportion of its assets in equity securities of companies believed
to possess better than average prospects for long-term growth.

MFS TOTAL RETURN SERIES. This Fund seeks primarily to provide
above-average income (compared to a portfolio invested entirely in equity
securities) consistent with the prudent employment of capital, and secondarily
to provide a reasonable opportunity for growth of capital and income.

MFS VALUE SERIES. This Fund seeks capital appreciation. Dividend income,
if any, is a consideration incidental to the Fund's objective of capital
appreciation.

MFS Investment Management(R) advises the MFS(R) Variable Insurance
Trust.(SM)

MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.(SM)

GLOBAL EQUITY PORTFOLIO. This Fund seeks long-term capital appreciation
by investing primarily in equity securities of issuers throughout the world,
including U.S. issuers, using an approach that is oriented to the selection of
individual stocks that the Fund's investment adviser believes are undervalued.

MID CAP VALUE PORTFOLIO. This Fund seeks above-average total return over
a market cycle of three to five years by investing in common stocks and other
equity securities of issuers with equity capitalizations in the range of
companies represented in the S&P MidCap 400 Index.

VALUE PORTFOLIO. This Fund seeks above-average return over a market
cycle of three to five years by investing primarily in a diversified portfolio
of common stocks and other equity securities that are deemed by the Fund's
investment adviser to be relatively undervalued based on various measures such
as price/earnings ratios and price/book ratios.

<PAGE> 41

Morgan Stanley Dean Witter Investment Management, Inc. advises the
Global Equity Portfolio. Miller Anderson & Sherrerd, LLP advises the Value
Portfolio and the Mid Cap Value Portfolio.

OPPENHEIMER VARIABLE ACCOUNT FUNDS

OPPENHEIMER BOND FUND. This Fund seeks a high level of current income.
Secondarily, this Fund seeks capital growth when consistent with its primary
objective. The Fund will, under normal market conditions, invest at least 65% of
its total assets in investment grade debt securities.

OPPENHEIMER GROWTH FUND. This Fund seeks to achieve capital appreciation
by investing in securities of well-known, established companies.

OPPENHEIMER SMALL CAP GROWTH FUND. This Fund seeks capital appreciation.
Current income is not an objective. In seeking its investment objective, the
Fund emphasizes investments in securities of "growth type" companies with market
capitalizations of less than $1 billion, including common stocks, preferred
stocks, convertible securities, rights, warrants and options, in proportions
which may vary from time to time.

Oppenheimer Funds, Inc. manages Oppenheimer Variable Account Funds.

SAGE LIFE INVESTMENT TRUST

EAFE(R) EQUITY INDEX FUND. This Fund seeks to replicate as closely as
possible the performance of the Morgan Stanley Capital International Europe,
Australasia, Far East Index before the deduction of Fund expenses.

S&P 500 EQUITY INDEX FUND. This Fund seeks to replicate as closely as
possible the performance of the S&P 500 Composite Stock Price Index before the
deduction of Fund expenses.

MONEY MARKET FUND. This Fund seeks to provide high current income
consistent with the preservation of capital and liquidity. Although the Fund
seeks to maintain a constant net asset value of $1.00 per share, there can be no
assurance that the Fund can do so on a continuous basis. An investment in the
Money Market Fund is not guaranteed.

Sage Advisors, Inc. is the investment manager to the Sage Life
Investment Trust. State Street Global Advisors subadvises the EAFE(R) Equity
Index Fund and S&P 500 Equity Index Fund. Conning Asset Management Company
subadvises the Money Market Fund.

<PAGE> 42

T. ROWE PRICE EQUITY SERIES, INC.

T. ROWE PRICE EQUITY INCOME PORTFOLIO. This Fund seeks to provide
substantial dividend income and also long-term capital appreciation.

T. ROWE PRICE MID-CAP GROWTH PORTFOLIO. This Fund seeks to provide
long-term capital appreciation by investing primarily in common stocks of
medium-sized (mid-cap) growth companies.

T. ROWE PRICE PERSONAL STRATEGY BALANCED PORTFOLIO. The Fund seeks to
provide the highest total return over time consistent with an emphasis on both
capital appreciation and income. The Personal Strategy Balanced Portfolio
invests in a diversified portfolio of stocks, bonds, and money market
securities.

T. Rowe Price Associates, Inc. provides investment management to the T.
Rowe Price Equity Series, Inc.

The investment objectives and policies of certain Funds may be similar
to those of other retail mutual funds which can be purchased outside of a
variable insurance product, and that are managed by the same investment adviser
or manager. The investment results of the Funds, however, may be higher or lower
than the results of such other retail mutual funds. There can be no assurance,
and no representation is made, that the investment results of any of the Funds
will be comparable to the investment results of any other retail mutual fund,
even if the other retail mutual fund has the same investment adviser or manager.

Shares of the Funds may be sold to separate accounts of insurance
companies that are not affiliated with us or each other, a practice known as
"shared funding." They also may be sold to separate accounts to serve as the
underlying investment for both variable annuity contracts and variable life
insurance contracts, a practice known as "mixed funding." As a result, there is
a possibility that a material conflict may arise between the interests of Owners
who allocate Account Values to the Variable Account, and owners of other
contracts who allocate contract values to one or more other separate accounts
investing in any of the Funds. Shares of some of the Funds may also be sold
directly to certain qualified pension and retirement plans qualifying under
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"). As a
result, there is a possibility that a material conflict may arise between the
interest of Owners or owners of other contracts (including contracts issued by
other companies), and such retirement plans or participants in such retirement
plans. In the event of any such material conflicts, we will consider what action
may be appropriate, including removing a Fund from the Variable Account or
replacing the Fund with another Fund. There are certain risks associated with
mixed and shared funding and with the sale of shares to qualified pension and
retirement plans, as disclosed in each Trust's prospectus.

We have entered into agreements with either the investment adviser or
distributor for each of the Funds in which the adviser or distributor pays us a
fee ordinarily based upon an

<PAGE> 43

annual percentage of the average aggregate net amount we have invested on behalf
of the Variable Account and other separate accounts. These percentages differ,
and some investment advisers or distributors pay us a greater percentage than
other advisers or distributors. These agreements reflect administrative services
we provide.

More detailed information concerning the investment objectives,
policies, and restrictions of the Funds, the expenses of the Funds, the risks
attendant to investing in the Funds and other aspects of their operations is
found in the current prospectus for each Trust which accompanies this
Prospectus. You should read the Trusts' prospectuses carefully before you decide
to allocate amounts to the Variable Sub-Accounts.

FIXED ACCOUNT INVESTMENT OPTIONS. Each time you allocate purchase
payments or transfer funds to the Fixed Account, we establish a Fixed
Sub-Account. We guarantee an interest rate (the "Guaranteed Interest Rate") for
each Fixed Sub-Account for a period of time (a "Guarantee Period"). On the date
that you make an allocation to the Fixed Sub-Account, we apply the Guaranteed
Interest Rate then in effect.

We have no specific formula for establishing the Guaranteed Interest
Rates for the different Guarantee Periods. The determination we make will be
influenced by, but not necessarily correspond to, interest rates available on
fixed income investments that we may acquire with the amounts we receive as
purchase payments or transfers of Account Value under the Contracts. We will
invest these amounts primarily in investment-grade fixed income securities
including: securities issued by the U.S. Government or its agencies or
instrumentalities, which issues may or may not be guaranteed by the U.S.
Government; debt securities that have an investment grade, at the time of
purchase, within the four highest grades assigned by Moody's Investor Services,
Inc., Standard & Poor's Corporation, or any other nationally recognized rating
service; mortgage-backed securities collateralized by real estate mortgage
loans, or securities collateralized by other assets, that are insured or
guaranteed by the Federal Home Loan Mortgage Association, the Federal National
Mortgage Association, or the Government National Mortgage Association, or that
have an investment grade at the time of purchase within the four highest grades
described above; other debt instruments; commercial paper; cash or cash
equivalents. You will have no direct or indirect interest in these investments,
and you do not share in the investment performance of the assets of the Fixed
Account. We will also consider other factors in determining the Guaranteed
Interest Rates, including regulatory and tax requirements, sales commissions,
administrative expenses borne by us, general economic trends, and competitive
factors. THE COMPANY'S MANAGEMENT WILL MAKE THE FINAL DETERMINATION OF THE
GUARANTEED INTEREST RATES IT DECLARES. WE CANNOT PREDICT OR GUARANTEE THE LEVEL
OF FUTURE INTEREST RATES. HOWEVER, OUR GUARANTEED INTEREST RATES WILL BE AT
LEAST 3% PER YEAR. GUARANTEED INTEREST RATES DO NOT DEPEND UPON AND DO NOT
REFLECT THE PERFORMANCE OF THE FIXED ACCOUNT.

We measure the length of a Guarantee Period from the end of the calendar
month in which you allocated or transferred the amount to the Fixed Sub-Account.
This means that the Expiration Date of any Guarantee Period will always be the
last day of a calendar month. The

<PAGE> 44

currently available Guarantee Periods are 1, 2, 3, 4, 5, 7, and 10 years. We may
offer different Guarantee Periods in the future. Not all Guarantee Periods may
be available in all states. Any Guarantee Period you select cannot be longer
than the number of full years remaining until your Income Date.

We will notify you of your options for renewal at least thirty days
before an Expiration Date of a Fixed Sub-Account in which you are invested. Your
options are:

- Take no action and we will transfer the value of the expiring
Fixed Sub-Account to the Fixed Sub-Account with the same
Guarantee Period, but not longer than five years or extending
beyond the Income Date, as of day the previous Fixed Sub-Account
expires. If such Guarantee Period is not currently available, we
will transfer your value to the next shortest Guarantee Period.
If there is no shorter Guarantee Period, we will transfer your
value to the Money Market Sub-Account.

- Elect a new Guarantee Period(s) from among those we offer as of
the day the previous Fixed Sub-Account expires.

- Elect to transfer the value of the Fixed Sub-Account to one or
more Variable Sub- Accounts.

Any amounts surrendered, withdrawn, transferred or applied to an income
plan other than during the thirty days before the Expiration Date of the
Guarantee Period are subject to a Market Value Adjustment with the exception of
the following transactions:

- Transfers from specially designated Fixed Sub-Accounts made
automatically under our Dollar Cost Averaging Program, and

- Withdrawals of earned interest made automatically under our
Systematic Partial Withdrawal Program.

We currently waive any Market Value Adjustment on withdrawals you take
to satisfy IRS minimum distribution requirements.

MARKET VALUE ADJUSTMENT. A Market Value Adjustment reflects the change
in interest rates since we established a Fixed Sub-Account. It compares: (1) the
current Index Rate for a period equal to the time remaining in the Guarantee
Period, and (2) the Index Rate at the time we established the Fixed Sub-Account
for a period equal to the Guarantee Period.

Ordinarily, if the current Index Rate for a period equal to the time
remaining in the Guarantee Period is higher than the applicable Index Rate at
the time we established the Fixed Sub-Account, the Market Value Adjustment will
be negative. Similarly, if the current Index Rate for a period equal to the time
remaining in the Guarantee Period is lower than the applicable

<PAGE> 45

Index Rate at the time we established the Fixed Sub-Account, the Market Value
Adjustment will be positive.

We will apply a Market Value Adjustment as follows:

- For a surrender, withdrawal, transfer, or amount applied to an
income plan, we will calculate the Market Value Adjustment on
the total amount (including any applicable surrender charge)
that must be surrendered, withdrawn, transferred or applied to
an income plan to provide the amount requested.

- If the Market Value Adjustment is negative, it reduces any
remaining value in the Fixed Sub-Account, or amount of Surrender
Value. Any remaining Market Value Adjustment then reduces the
amount withdrawn, transferred, or applied to an income plan.

- If the Market Value Adjustment is positive, it increases any
remaining value in the Fixed Sub-Account. In the case of
surrender, or if the full amount of the Fixed Sub-Account is
withdrawn, transferred or applied to an income plan, the Market
Value Adjustment increases the amount surrendered, withdrawn,
transferred, or applied to an income plan.

We will compute the Market Value Adjustment by multiplying the factor
below by the total amount (including any applicable surrender charge) that must
be surrendered, withdrawn, transferred, or applied to an income plan from the
Fixed Sub-Account in order to provide the amount you requested.

N/365
[(1+I)/(1+J+.0025)] - 1

Where
I is the Index Rate for a maturity equal to the Fixed
Sub-Account's Guarantee Period at the time we established the
Sub-Account;

J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Fixed Sub-Account's
Guarantee Period at the time of calculation; and

N is the remaining number of days in the Guarantee Period at the
time of calculation.

We currently base the Index Rate for a calendar week on the reported
rate for the preceding calendar week. We reserve the right to set it less
frequently than weekly but in no event less often than monthly. If there is no
Index Rate for the maturity needed to calculate I or J, we will use
straight-line interpolation between the Index Rate for the next highest and next

<PAGE> 46

lowest maturities to determine that Index Rate. If the maturity is one year or
less, we will use the Index Rate for a one-year maturity.

In the states of Maryland and Washington, state insurance law requires
that the Market Value Adjustment be computed by multiplying the amount being
surrendered, withdrawn, transferred, or applied to an income plan, by the
((G-N)/365))
greater of the factor above and the following factor: [(1.03)/(1+K)]
- - 1, where N is as defined above, K equals the Guarantee Interest Rate for the
Guarantee Period, and G equals the initial number of days in the Guarantee
Period.

Examples of how the Market Value Adjustment works are shown in Appendix
A.

TRANSFERS. Before the Income Date and while the Annuitant is living, you
may transfer Account Value from and among the Variable and Fixed Sub-Accounts at
any time. However, in certain states, your right to transfer Account Value is
restricted until after the end of the Free Look Period. See "What Are My
Investment Options? " page __. The minimum amount of Account Value that you may
transfer from a Sub-Account is $250, or, if less, the entire remaining Account
Value held in that Sub-Account. You must give us Satisfactory Notice of the
Sub-Accounts from which and to which we are to make the transfers. Otherwise, we
will not transfer your Account Value. A transfer from a Fixed Sub-Account
ordinarily will be subject to a Market Value Adjustment. There is currently no
limit on the number of transfers from and among the Sub-Accounts.

A transfer ordinarily takes effect on the Business Day we receive
Satisfactory Notice at our Customer Service Center. We will deem requests
received on other than a Business Day as received on the next following Business
Day. We may, however, defer transfers to, from, and among the Variable
Sub-Accounts under the same conditions that we may delay paying proceeds.

We reserve the right to impose a transfer charge of up to $25 on each
transfer in a Contract Year in excess of twelve, and to limit, upon notice, the
maximum number of transfers you may make per calendar month or per Contract
Year. For purposes of assessing any transfer charge, we will consider each
transfer request to be one transfer, regardless of the number of Sub-Accounts
affected by the transfer.

After the Income Date, you must have our prior consent to transfer value
from the Fixed Account to the Variable Account or from the Variable Account to
the Fixed Account. A Market Value Adjustment ordinarily will apply to transfers
from the Fixed Account. We reserve the right to limit the number of transfers
among the Variable Sub-Accounts to one transfer per Contract Year after the
Income Date.

TELEPHONE TRANSACTIONS. You may request transfers or withdrawals by
telephone. We will not be liable for following instructions communicated by
telephone that we reasonably believe to be genuine. To request transfers or
withdrawals by telephone, you must elect the option on our authorization form.
We will employ reasonable procedures to confirm that

<PAGE> 47

instructions communicated by telephone are genuine. We may only be liable for
any losses due to unauthorized or fraudulent instructions where we fail to
follow our procedures properly. These procedures include: (a) asking you or your
authorized representative to provide certain identifying information; (b) tape
recording all such conversations; and (c) sending you a confirmation statement
after all such telephone transactions.

Our telephone transaction authorization form also allows you to create a
power of attorney by authorizing another person to give telephone instructions.
Unless prohibited by state law, we will treat such power as a durable power of
attorney. The Owner's subsequent incapacity, disability, or incompetency will
not affect the power of attorney. We may cease to honor the power by sending
written notice to you at your last known address. Neither we nor any person
acting on our behalf shall be subject to liability for any act done in good
faith reliance upon your power of attorney.

POWER OF ATTORNEY. As a general rule and as a convenience to you, we
allow the use of powers of attorney whereby you can give a third party the right
to make transfers on your behalf. However, when the same third party possesses
powers of attorney executed by many Owners, the result can be simultaneous
transfers involving large amounts of Account Value. Such transfers can disrupt
the orderly management of the Funds, can result in higher costs to Owners, and
are ordinarily not compatible with the long-range goals of purchasers of the
Contracts. We believe that such simultaneous transfers made by such third
parties are not in the best interest of all shareholders of the Funds. The
managements of the Funds share this position.

Therefore, to the extent necessary to reduce the adverse effects of
simultaneous transfers made by third parties holding multiple powers of
attorney, we may not honor such powers of attorney and have instituted or will
institute procedures to assure that the transfer requests that we receive have,
in fact, been made by the Owners in whose names they are submitted. However,
these procedures will not prevent you from making your own transfer requests.

DOLLAR-COST AVERAGING PROGRAM. Our optional dollar-cost averaging
program permits you to systematically transfer (monthly, or as frequently as we
allow), a set dollar amount from the Money Market Sub-Account to any combination
of Variable Sub-Accounts. We also allow dollar-cost averaging from specially
designated Fixed Sub-Accounts ("DCA Fixed Sub-Accounts"). These DCA Fixed
Sub-Accounts may have different Guarantee Periods and different Guaranteed
Interest Rates than the Fixed Sub-Accounts.

The dollar-cost averaging method of investment is designed to reduce the
risk of making purchases only when the price of Accumulation Units is high.
However, you should carefully consider your financial ability to continue the
program over a long enough period of time to purchase units when their value is
low as well as when high. Dollar-cost averaging does not assure a profit or
protect against a loss. Due to the effect of interest that continues to be
earned interest on the balance in the Money Market Sub-Account or a DCA Fixed
Sub-Account, the amounts we transfer will vary slightly from month to month. An
example of how our dollar-cost averaging program works is shown in Appendix B.

<PAGE> 48

You may elect to participate in the dollar-cost averaging program at any
time before the Income Date by sending us Satisfactory Notice. The minimum
transfer amount is $250 from the Money Market Sub-Account or from a DCA Fixed
Sub-Account. All dollar-cost averaging transfers will be made on the day of each
month that corresponds to your Contract Date unless that date is not a Business
Day. Otherwise, the transfer will be made on the next following Business Day. If
you want to dollar-cost average from more than one DCA Fixed Sub-Account at the
same time, certain restrictions may apply.

Once elected, dollar-cost averaging remains in effect from the date we
receive your request until the Income Date, until you surrender the Contract,
until the value of the Sub-Account from which transfers are being made is
depleted, or until you cancel the program by written request. If you request to
cancel dollar-cost averaging from a DCA Fixed Sub-Account before the end of the
selected period, we reserve the right to treat this request as a transfer
request, and we ordinarily will assess a Market Value Adjustment on the amount
canceled. You can request changes by writing us at our Customer Service Center.
There is no additional charge for dollar-cost averaging. We do not consider a
transfer under this program a transfer for purposes of assessing a transfer
charge. We reserve the right to discontinue offering this program at any time
and for any reason. Dollar-cost averaging is not available while you are
participating in the systematic withdrawal program.

ASSET ALLOCATION PROGRAM. You may select from six asset allocation model
portfolios, or you may use these models as a guide to help you develop your own
asset allocation model.
The models are as follows:

<TABLE>
<CAPTION>
Model Investment and Risk Profile
----- ---------------------------
<S> <C>
I Stable Capital
II Stable Income
III Moderate Income
IV Moderate Growth
V Capital Growth
VI Aggressive Growth
</TABLE>

If you participate in the asset allocation program, we will
automatically allocate all initial and additional purchase payments among the
Variable Sub-Accounts indicated by the model you select. The models do not
include allocations to the Fixed Account. Although you may only use one model at
a time, you may elect to change your selection as your tolerance for risk,
and/or your needs and objectives change. Bear in mind, the use of an asset
allocation model does not guarantee investment results. You may use a
questionnaire that is offered to determine the model that best meets your risk
tolerance and time horizons.

Because each Variable Sub-Account performs differently over time, your
portfolio mix may vary from its initial allocations. We will automatically
rebalance your Fund mix quarterly to bring your portfolio back to its original
allocation percentages.

<PAGE> 49

From time to time the models are reviewed. It may be found that
allocation percentages among the Variable Sub-Accounts or even some of the
Variable Sub-Accounts within a particular model need to be changed. You will be
sent notice at least 30 days before any such change is made, and you will be
given an opportunity not to make the change.

If you participate in the asset allocation program, the transfers made
under the program are not taken into account in determining any transfer charge.
There is no additional charge for this program. We reserve the right to
discontinue offering this program at any time and for any reason.

AUTOMATIC PORTFOLIO REBALANCING PROGRAM. Once you allocate your money
among the Variable Sub-Accounts, the investment performance of each Variable
Sub-Account may cause your allocation to shift. Before the Income Date, you may
instruct us to automatically rebalance (on a calendar quarter, semi-annual, or
annual basis) Variable Account Value to return to your original allocation
percentages. Your request will be effective on the Business Day on which we
receive your request at our Customer Service Center. We will deem requests
received on other than a Business Day as received on the next following Business
Day. Your allocation percentages must be in whole percentages. You may start and
stop automatic portfolio rebalancing at any time and make changes to your
allocation percentages by written request. There is no additional charge for
using this program. We do not consider a transfer under this program a transfer
for purposes of assessing any transfer charge. We reserve the right to
discontinue offering this program at any time and for any reason. We do not
include any money allocated to the Fixed Account in the rebalancing.

ACCOUNT VALUE. The Account Value is the entire amount we hold under your
Contract for you. The Account Value serves as a starting point for calculating
certain values under your Contract. It equals the sum of your Variable Account
Value and your Fixed Account Value. We first determine your Account Value on the
Contract Date, and after that, on each Business Day.
The Account Value will vary to reflect:

- the performance of the Variable Sub-Accounts you have selected;

- interest credited on amounts allocated to the Fixed Account;

- any additional purchase payments; and

- charges, transfers, withdrawals, and surrenders.

Your Account Value may be more or less than purchase payments you made.

SURRENDER VALUE. The Surrender Value on a Business Day before the Income
Date is the Account Value, plus or minus any applicable Market Value Adjustment,
reduced by any applicable surrender charge that would be deducted if your
Contract were surrendered that day,

<PAGE> 50

less any applicable annual administration charge and any applicable Purchase
Payment Tax Charge.

VARIABLE ACCOUNT VALUE. On any Business Day, the Variable Account Value
equals the sum of the values in each Variable Sub-Account. The value in each
Variable Sub-Account equals the number of Accumulation Units attributable to
that Variable Sub-Account multiplied by the Accumulation Unit value for that
Variable Sub-Account on that Business Day. When you allocate a purchase payment
or transfer Account Value to a Variable Sub-Account, we credit your Contract
with Accumulation Units in that Variable Sub-Account. We determine the number of
Accumulation Units by dividing the dollar amount allocated or transferred to the
Variable Sub-Account by the Sub-Account's Accumulation Unit value for that
Business Day. Similarly, when you transfer, withdraw, or surrender an amount
from a Variable Sub-Account, we cancel Accumulation Units in that Variable
Sub-Account. We determine the number of Accumulation Units canceled by dividing
the dollar amount you transferred, withdrew, or surrendered by the Variable
Sub-Account's Accumulation Unit value for that Business Day.

ACCUMULATION UNIT VALUE. An Accumulation Unit value varies to reflect
the investment experience of the underlying Fund, and may increase or decrease
from one Business Day to the next. We arbitrarily set the Accumulation Unit
value for each Variable Sub-Account at $10 when we established the Sub-Account.
For each Valuation Period after the date of establishment, we determine the
Accumulation Unit value by multiplying the Accumulation Unit value for a
Sub-Account for the prior Valuation Period by the net investment factor for the
Variable Sub-Account for the Valuation Period.

NET INVESTMENT FACTOR. The net investment factor is an index we use to
measure the investment performance of a Variable Sub-Account from one Valuation
Period to the next during the Accumulation Phase. We determine the net
investment factor for any Valuation Period by dividing (a) by (b) where:

(a) is the net result of:

(i) the Net Asset Value of the Fund in which the Variable
Sub-Account invests determined at the end of the current
Valuation Period, PLUS

(ii) the per share amount of any dividend or capital gain
distributions made by the Fund on shares held in the Variable
Sub-Account if the "ex-dividend" date occurs during the current
Valuation Period, and PLUS OR MINUS

(iii) a per share charge or credit for any taxes reserved for
which we determine to have resulted from the operations of the
Variable Sub-Account; and

(b) is the Net Asset Value of the Fund in which the Variable Sub-Account
invests determined at the end of the immediately preceding Valuation
Period.

<PAGE> 51

The net investment factor may be more or less than, or equal to, one.

FIXED ACCOUNT VALUE. The Fixed Account Value is the sum of the Fixed
Account Value in each Fixed Sub-Account (including a DCA Fixed Sub-Account) on
any particular day. The value in each Fixed Sub-Account equals:

- the portion of the purchase payment(s) allocated or amount
transferred to the Sub-Account; PLUS

- interest at the Guaranteed Interest Rate; MINUS

- any transfers from the Sub-Account; MINUS

- any withdrawals (including any associated surrender charges)
from the Sub-Account; and MINUS

- any charges allocated to the Sub-Account.

We also adjust the Fixed Sub-Account Value for any Market Value Adjustment, the
value of which could be positive or negative.

5. WHAT ARE THE EXPENSES UNDER A CONTRACT?

We deduct the charges described below. The charges are for the services
and benefits we provide, costs and expenses we incur, and risks we assume under
the Contracts. Services and benefits we provide include:

- the ability of Owners to make withdrawals and surrenders under
the Contracts;

- the death benefit paid on the death of the Owner;

- the available investment options, including dollar-cost
averaging, asset allocation, automatic portfolio rebalancing,
and systematic partial withdrawal programs;

- administration of the income plan options available under the
Contracts; and

- the distribution of various reports to Owners.

Costs and expenses we incur include:

- those related to various overhead and other expenses associated
with providing the services and benefits guaranteed by the
Contracts;

- sales and marketing expenses; and

<PAGE> 52

- other costs of doing business.

Risks we assume include:

- the risks that Annuitants may live longer than we estimated when
we established the annuity purchase rates under the Contracts;

- that the amount of the death benefit will be greater than
Account Value; and

- that the costs of providing the services and benefits under the
Contracts will exceed the charges deducted.

We may also deduct a charge for taxes. See "Fee Table," page __.

We may realize a profit or loss on one or more of the charges. We may
use any such profits for any corporate purpose, including, among other things,
payment of sales expenses.

Unless we otherwise specify, we will deduct charges proportionately from
all Variable Sub-Accounts and Fixed Sub-Accounts in which you are invested.

We may reduce or eliminate charges under the Contracts when sales result
in savings, reduction of expenses and/or risks to the Company. Generally, we
will make such reductions based on the following factors:

- the size of the group;

- the total amount of purchase payments to be received from the
group;

- the purposes for which the Contracts are purchased;

- the nature of the group for which the Contracts are purchased;
and

- any other circumstances that could reduce Contract costs and
expenses.

We may also sell the Contracts with lower or no charges to a person who
is an officer, director or employee of Sage Life or of certain affiliates of
ours. Reductions in Contract charges will not be unfairly discriminatory against
any person. Please contact our Customer Service Center for more information
about these cost reductions.

SURRENDER CHARGE

If you make an Excess Withdrawal or surrender your Contract during the
first seven Contract Years, we may deduct a surrender charge calculated as a
percentage of the amount of

<PAGE> 53

purchase payment(s) withdrawn or surrendered. The applicable percentage is 7% in
the first Contract Year, and declines until it reaches 0% in the eighth Contract
Year.

If you surrender your Contract, we deduct the surrender charge from the
Account Value in determining the Surrender Value. If you take an Excess
Withdrawal, we deduct the surrender charge from the Account Value remaining
after we pay you the amount requested. We include any surrender charge we assess
in the calculation of any applicable Market Value Adjustment for withdrawals
from the Fixed Account. Each year you may withdraw a "Free Withdrawal Amount"
without incurring a surrender charge. For a table of surrender charges and a
description of the Free Withdrawal Amount, see the "Fee Table," page __.

With an Excess Withdrawal, we will liquidate purchase payments in whole
or in part on a "first-in, first-out" basis. This means we liquidate purchase
payments in the order you made them: the oldest unliquidated purchase payment
first, the next oldest unliquidated purchase payment second, until all purchase
payments have been liquidated.

The total surrender charge will be the sum of the surrender charges for
each purchase payment being liquidated. The amount you request from a
Sub-Account may not exceed the value of that Sub-Account less any applicable
surrender charge.

EXAMPLE OF CALCULATION OF SURRENDER CHARGE. Assume the applicable
surrender charge is 7%, you have requested a withdrawal of $1,000, and no Market
Value Adjustment is applicable. Your initial purchase payment was $5,000, your
current Account Value is $5,250, and you made no prior withdrawals during that
Contract Year. Your Free Withdrawal Amount is the greater of (a) or (b), where:

(a) is the excess of 10% of the total purchase payments over 100% of all
prior withdrawals (including any associated surrender charge and Market
Value Adjustment incurred) in that Contract Year (10% x $5,000 = $500);
and

(b) is the excess of the Account Value on the date of withdrawal over
the unliquidated purchase payments ($5,250 - $5,000 = $250).

Therefore, the Free Withdrawal Amount is $500. A surrender charge will apply to
the excess of $1,000 over $500. The surrender charge equals $35 (7% x $500).

WAIVER OF SURRENDER CHARGE. We will not deduct a surrender charge if, at
the time we receive your request for a withdrawal or a surrender, we have also
received due proof that you (or the Annuitant, if the Owner is not an
individual) have a "Qualifying Terminal Illness" or have been confined
continuously to a "Qualifying Hospital or Nursing Care Facility" for at least 45
days in a 60 day period. We define "Qualifying Terminal Illness" and "Qualifying
Hospital or Nursing Care Facility" in your Contract.

<PAGE> 54

ANNUAL ADMINISTRATION CHARGE

We will deduct an annual administration charge of $40 for the first
seven Contract Years (i) on each Contract Anniversary, and (ii) on the day of
any surrender if the surrender is not on the Contract Anniversary. We will waive
this fee on and after the eighth Contract Anniversary, or if the Account Value
is at least $50,000 when we would have otherwise deducted the annual
administration charge.

TRANSFER CHARGE

We currently do not deduct this charge. However, we reserve the right to
deduct a transfer charge of up to $25 for the 13th and each subsequent transfer
during a Contract Year. For the purpose of assessing the transfer charge, we
consider each written or telephone request to be one transfer, regardless of the
number of Sub-Accounts affected by the transfer. In the event that the transfer
charge becomes applicable, we will deduct it proportionately from the
Sub-Accounts from which you made the transfer. Transfers made in connection with
the dollar-cost averaging, asset allocation, and automatic portfolio rebalancing
programs will not count as transfers for purposes of assessing this charge.

ASSET-BASED CHARGES

We deduct Asset-Based Charges for mortality and expense risks and
administrative costs we assume. Before the Income Date, we deduct Asset-Based
Charges monthly and calculate the charges as a percentage of the Variable
Account Value on the date of deduction. On the Contract Date and monthly
thereafter, we deduct the Asset-Based Charges proportionately from the Variable
Sub-Accounts in which you are invested. After the Income Date, however, these
charges are called Variable Sub-Account Charges and we deduct them daily from
the assets in each Variable Sub-Account supporting variable income payments. The
maximum charges are:

<TABLE>
<CAPTION>
Combined Asset-Based Charges
----------------------------
Annual Charge Monthly Charge Daily Charge
------------- -------------- ------------
<S> <C> <C> <C>
Contract Years 1-7 1.40% .116667% .0038626%
Contract Years 8+ 1.25% .104167% .0034462%
</TABLE>

We reserve the right to deduct Asset-Based Charges on the effective date of any
transfer from the Fixed Account, or allocation of purchase payment to the
Variable Account, based on the amount transferred or allocated and based on the
number of days remaining until the next date of deduction. These charges do not
apply to any Fixed Account Value.

PURCHASE PAYMENT TAX CHARGE

During the first seven Contract Years only, we will deduct any state
premium tax that we incur if you surrender your Contract or begin receiving
regular income payments. This tax charge currently ranges from 0% to 3.5%
depending upon the state. We currently do not intend to deduct this charge in or
after the eighth Contract Year.

<PAGE> 55

FUND EXPENSES

Because the Variable Account purchases shares of the various Funds you
choose, the net assets of the Variable Account will reflect the investment
management fees and other operating expenses incurred by those Funds. A table of
each Fund's management fees and other expenses can be found in the front of this
Prospectus in the Fee Table. For a description of each Fund's expenses,
management fees, and other expenses, see the Trusts' prospectuses.

ADDITIONAL INFORMATION

The Contracts are sold by broker-dealers through registered
representatives of such broker-dealers who are also appointed and licensed as
insurance agents of Sage Life. See "Distribution of the Contracts." These
broker-dealers receive commissions for selling Contracts calculated as a
percentage of purchase payments (up to a maximum of 6%). You do not pay these
commissions. We do. Broker-dealers who meet certain productivity and
profitability standards may be eligible for additional compensation.

6. HOW WILL MY CONTRACT BE TAXED?

THIS DISCUSSION IS NOT INTENDED AS TAX ADVICE. PLEASE CONSULT COUNSEL OR
OTHER COMPETENT TAX ADVISERS FOR MORE COMPLETE INFORMATION.

INTRODUCTION

The following summary provides a general description of the federal
income tax considerations associated with the Contract and does not purport to
be complete or to cover all tax situations. This discussion is based upon our
understanding of the present federal income tax laws as they are currently
interpreted by the Internal Revenue Service (the "IRS"). No representation is
made as to the likelihood of continuation of the present federal income tax laws
or of the current interpretations by the IRS.

The Contract may be purchased on a non-tax-qualified basis or purchased
on a tax-qualified basis. A Qualified Contract is designed for use by
individuals whose purchase payments are comprised solely of proceeds from and/or
contributions under retirement plans that are intended to qualify as plans
entitled to special income tax treatment under Sections 408 or 408A of the Code.
The ultimate effect of federal income taxes on the amounts held under a
Contract, or income payments, depends on the type of retirement plan, on the tax
and employment status of the individual concerned, and on our tax status. In
addition, certain requirements must be satisfied in purchasing a Qualified
Contract with proceeds from a tax-qualified plan and receiving distributions
from a Qualified Contract in order to continue receiving favorable tax
treatment. Some retirement plans are subject to distribution and other
requirements that are not incorporated into our Contract administration
procedures. Owners, participants, and Beneficiaries are responsible for
determining whether contributions, distributions, and other transactions with
respect to the Contract comply with applicable law.

<PAGE> 56

Therefore, purchasers of a Qualified Contract should seek competent legal and
tax advice regarding the suitability of a Contract for their situation. The
following discussion assumes that the Qualified Contract is purchased with
proceeds from and/or contributions under retirement plans that qualify for the
intended special federal income tax treatment.

TAX STATUS OF THE CONTRACT

DIVERSIFICATION REQUIREMENTS. The Code requires that the investments of
the Variable Account be "adequately diversified" in order for the Contract to be
treated as an annuity contract for federal income tax purposes. It is intended
that the Variable Account, through the Funds, will satisfy these diversification
requirements.

In certain circumstances, owners of variable annuity contracts have been
considered for federal income tax purposes to be the owners of the assets of the
variable account supporting their contracts due to their ability to exercise
investment control over those assets. When this is the case, the contract owners
have been currently taxed on income and gains attributable to the variable
account assets. There is little guidance in this area, and some features of the
Contract, such as the flexibility of an Owner to allocate purchase payments and
transfer Account Values, have not been explicitly addressed in published
rulings. While we believe that the Contract does not give an Owner investment
control over Variable Account assets, we reserve the right to modify the
Contract as necessary to prevent an Owner from being treated as the owner of the
Variable Account assets supporting the Contract.

REQUIRED DISTRIBUTIONS. To be treated as an annuity contract for federal
income tax purposes, the Code requires a Non-Qualified Contract to contain
certain provisions specifying how your interest in the Contract will be
distributed in the event of your death. The Non-Qualified Contracts contain
provisions that are intended to comply with these Code requirements, although no
regulations interpreting these requirements have yet been issued. We intend to
review such provisions and modify them if necessary to assure that they comply
with the applicable requirements when such requirements are clarified by
regulation or otherwise.

Other rules may apply to a Qualified Contract.

The following discussion assumes that the Contract will qualify as an
annuity contract for federal income tax purposes.

TAX TREATMENT OF ANNUITIES

IN GENERAL. We believe that if you are a natural person you will not be
taxed on increases in the value of a Contract until a distribution occurs or
until income payments begin. (An agreement to assign or pledge any portion of
the Account Value, and, in the case of a Qualified Contract, any portion of an
interest in the qualified plan, ordinarily will be treated as a distribution.)

<PAGE> 57

TAXATION OF A NON-QUALIFIED CONTRACT

NON-NATURAL PERSON. The Owner of any annuity contract who is not a
natural person ordinarily must include in income any increase in the excess of
the Account Value over the "investment in the contract" (ordinarily, the
purchase payments or other consideration paid for the contract) during the
taxable year. There are some exceptions to this rule and a prospective Owner
that is not a natural person may wish to discuss these with a tax adviser.

The following discussion generally applies to Contracts owned by natural
persons.

WITHDRAWALS. When a withdrawal (including Systematic Withdrawals) from a
Non-Qualified Contract occurs, the amount received will be treated as ordinary
income subject to tax up to an amount equal to the excess (if any) of the
Account Value immediately before the distribution over the Owner's investment in
the Contract at that time. It is possible that a positive Market Value
Adjustment at the time of a withdrawal may be treated as part of the Account
Value immediately before the distribution. You may want to consult a tax adviser
on the tax consequences of market value adjustments.

SURRENDERS. In the case of a surrender under a Non-Qualified Contract,
the amount received ordinarily will be taxable only to the extent it exceeds the
Owner's investment in the Contract.

PENALTY TAX ON SURRENDER AND CERTAIN WITHDRAWALS. In the case of a
distribution from a Non-Qualified Contract, a federal tax penalty equal to 10%
of the amount treated as income ordinarily will be imposed. In general, however,
there is no penalty on distributions:

- made on or after the taxpayer reaches age 59 1/2;

- made on or after the death of an Owner;

- attributable to the taxpayer's becoming disabled; or

- made as part of a series of substantially equal periodic
payments for the life (or life expectancy) of the
taxpayer.

Other exceptions may be applicable under certain circumstances and
special rules may be applicable in connection with the exceptions enumerated
above. A tax adviser should be consulted regarding exceptions from the penalty
tax.

INCOME PAYMENTS. Although tax consequences may vary depending on the
payment option elected under an annuity contract, a portion of each income
payment is ordinarily not taxed and the remainder is taxed as ordinary income.
The non-taxable portion of an income payment is ordinarily determined in a
manner that is designed to allow you to recover your investment in the Contract
ratably on a tax-free basis over the expected stream of income payments, as
determined when income payments start. Once your investment in the Contract has
been fully recovered, however, the full amount of each income payment is subject
to tax as

<PAGE> 58

ordinary income.

TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from a
Contract because of your death or the death of the Annuitant. Ordinarily, such
amounts are includible in the income of the recipient as follows: (i) if
distributed in a lump sum, they are taxed in the same manner as a surrender of
the Contract, or (ii) if distributed under an income payment option, they are
taxed in the same way as income payments.

TRANSFERS, ASSIGNMENTS OF A CONTRACT. A transfer or assignment of
ownership of a Contract, the designation of an Annuitant, the designation of a
payee other than yourself, the selection of certain Income Dates, or the
exchange of a Contract may result in certain tax consequences to you that are
not discussed herein. If you are considering any such transfer or assignment,
you should consult a tax adviser as to the tax consequences.

WITHHOLDING. Annuity distributions are ordinarily subject to withholding
for the recipient's federal income tax liability. Recipients can ordinarily
elect, however, not to have tax withheld from distributions.

MULTIPLE CONTRACTS. All annuity contracts that we or our affiliates
issue to the same Owner during any calendar year are treated as one annuity
contract for purposes of determining the amount includible in such Owner's
income when a taxable distribution occurs.

TAXATION OF A QUALIFIED CONTRACT

The Contract is designed for use with several types of qualified plans.
The tax rules applicable to participants in these qualified plans vary according
to the type of plan and the terms and conditions of the plan itself. Special
favorable tax treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; and in other specified circumstances. Therefore, no
attempt is made to provide more than general information about the use of the
Contract with the various types of qualified retirement plans. Owners,
Annuitants, and Beneficiaries are cautioned that the rights of any person to any
benefits under these qualified retirement plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Contract, but we shall not be bound by the terms and conditions of such
plans to the extent such terms contradict the Contract, unless we consent. For
IRAs under Section 408 of the Code (described below), distributions generally
must commence no later than April 1 of the calendar year following the calendar
year in which the Owner reaches age 70 1/2. Roth IRAs under Section 408A of the
Code do not require distributions at any time prior to the Owner's death.

WITHDRAWALS. When you take a withdrawal from a Qualified Contract, a
pro-rata portion

<PAGE> 59

of the amount you receive is taxable, ordinarily based on the ratio of your
investment in the contract (ordinarily, any non-deductible purchase payments or
other consideration paid for the Contract) to your total accrued benefit balance
under the retirement plan. For a Qualified Contract, the investment in the
contract can be zero. Special tax rules apply to withdrawals from Roth IRAs (see
below). Distributions from Qualified Contracts generally are subject to
withholding for the Owner's federal income tax liability. The withholding rate
varies according to the type of distribution and the Owner's tax status. We will
provide you the opportunity to elect not to have tax withheld from
distributions.

Brief descriptions follow of the various types of qualified retirement
plans in connection with a Contract. We will endorse the Contract as necessary
to conform it to the requirements of such plan.

INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits
eligible individuals to contribute to an individual retirement program known as
an "Individual Retirement Annuity" or "IRA." These IRAs are subject to limits on
the amount that may be contributed, the persons who may be eligible, and on the
time when distributions may commence. IRA contributions may be deductible in
whole or in part depending on the Owner's income and whether the Owner is a
participant in a qualified plan. Earnings in the IRA are not taxed until
distributed. Also, distributions from certain other types of qualified
retirement plans may be rolled over on a tax-deferred basis into an IRA.
Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject
to a 10% federal penalty tax. The form of the Contract and its IRA rider has
been approved by the IRS for use as an IRA. IRS approval does not relate to the
merits of the IRA as an investment.

SIMPLE IRAS. Certain small employers may establish SIMPLE plans as
provided by Section 408(p) of the Code, under which employees may elect to defer
to a SIMPLE IRA a percentage of compensation up to $6,000 (as increased for cost
of living adjustments). The sponsoring employer is required to make matching or
non-elective contributions on behalf of employees. Distributions from SIMPLE
IRAs are subject to the same restrictions that apply to IRA distributions and
are taxed as ordinary income. Subject to certain exceptions, premature
distributions prior to age 59 1/2 are subject to a 10% federal penalty tax,
which is increased to 25% if the distribution occurs within the first two years
after the commencement of the employee's participation in the plan. The form of
the Contract and its IRA rider has been approved by the IRS for use as an IRA.
IRS approval does not relate to the merits of the IRA as an investment.

ROTH IRAS. Section 408A of the Code permits certain eligible individuals
to contribute to a Roth IRA. Contributions to a Roth IRA, which are subject to
certain limitations, are not deductible and must be made in cash or as a
rollover or transfer from another Roth IRA or other IRA. A conversion of an IRA
to a Roth IRA may be subject to tax and other special rules may apply. You
should consult a tax adviser before combining any converted amounts with any
other Roth IRA contributions, including any other conversion amounts from other
tax years.

<PAGE> 60

Distributions from a Roth IRA ordinarily are not taxed, except that, once
aggregate distributions exceed contributions to the Roth IRA, income tax and a
10% federal penalty tax may apply to distributions made (1) before age 59 1/2
(subject to certain exceptions) or (2) during the five taxable years starting
with the year in which the first contribution is made to the Roth IRA. A 10%
federal penalty tax may apply to amounts attributable to a conversion from an
IRA if they are distributed during the five taxable years beginning with the
year in which the conversion was made.

OTHER TAX CONSEQUENCES

As noted above, the foregoing comments about the federal tax
consequences under the Contract are not exhaustive, and special rules are
provided with respect to other tax situations not discussed in this Prospectus.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of distributions under a Contract depend on
your individual circumstances or those of the recipient of the distribution. A
competent tax adviser should be consulted for further information.

Further, the federal income tax consequences discussed herein reflect
our understanding of current law, and the law may change. Although the
likelihood of legislative change is uncertain, there is always the possibility
that the tax treatment of the Contracts could change by legislation or other
means. It is also possible that any change could be retroactive, that is, made
effective prior to the date of the change. A tax adviser should be consulted
with respect to legislative developments and their effect on the Contract.

7. HOW DO I ACCESS MY MONEY?

You can partially withdraw from or surrender your Contract. When you
surrender your Contract, you can take the proceeds in a single sum, or you can
request that we pay the proceeds over a period of time under one of our income
plans. See "What are My Income Payment Options?" page __.

WITHDRAWALS

You may withdraw all or part of your Surrender Value at any time before
the Income Date. (If you have elected the "payments for a specified period
certain" income plan option, you may request a full withdrawal after the Income
Date; otherwise, no withdrawals are permitted after the Income Date). You may
make your withdrawal request in writing or by telephone. See "Requesting
Payments," page __. Any withdrawal must be at least $250. We will pay you the
withdrawal amount in one sum. Under certain circumstances, we may delay this
payment. See "Requesting Payments," page __ .

When you request a withdrawal, you can direct how we deduct the
withdrawal from your

<PAGE> 61

Account Value. If you provide no directions, we will deduct the withdrawal from
your Account Value in the Sub-Accounts on a pro-rata basis.

A PARTIAL WITHDRAWAL WILL REDUCE YOUR DEATH BENEFIT AND MAY BE SUBJECT
TO A SURRENDER CHARGE AND MARKET VALUE ADJUSTMENT. (SEE "WHAT ARE THE EXPENSES
UNDER A CONTRACT?" AND "DOES THE CONTRACT HAVE A DEATH BENEFIT?")

Please note that if your requested withdrawal would reduce your Account
Value below $2,000, we reserve the right to treat the request as a withdrawal of
only the excess over $2,000.

SYSTEMATIC PARTIAL WITHDRAWAL PROGRAM

The systematic partial withdrawal program provides automatic monthly,
quarterly, semi-annual, or annual payments to you from the amounts you have
accumulated in the Variable Sub-Accounts and/or the Fixed Sub-Accounts. You
select the day withdrawals will be taken, but this day can be no later than the
28th day of the month. If you do not select a day, we will use the day of each
month that corresponds to your Contract Date. If that date is not a Business
Day, we will use the next following Business Day. The minimum payment is $100.
You can elect to withdraw either earnings in a prior period (for example, prior
month for monthly withdrawals or prior quarter for quarterly withdrawals) or a
specified dollar amount.

- If you elect earnings, we will deduct the withdrawals from the
Sub-Accounts in which you are invested on a pro-rata basis.

- If you elect a specified dollar amount, we will deduct the
withdrawals from the Sub-Accounts in which you are invested on a
pro-rata basis unless you tell us otherwise. Any amount in
excess of the Free Withdrawal Amount may be subject to a
surrender charge (see "Surrender Charge," page __). Also, any
amount in excess of interest earned on a Fixed Sub-Account in
the prior period ordinarily will be subject to a Market Value
Adjustment (see "Market Value Adjustment," page __).

You may participate in the systematic partial withdrawal program at any
time before the Income Date by providing Satisfactory Notice. Once we receive
your request, the program will begin and will remain in effect until your
Account Value drops to zero. You may cancel or make changes in the program at
any time by providing us with Satisfactory Notice. We do not deduct any other
charges for this program. We reserve the right to discontinue the systematic
partial withdrawal program at any time and for any reason. Systematic partial
withdrawals are not available while you are participating in the dollar-cost
averaging program.

<PAGE> 62
IRA PARTIAL WITHDRAWAL PROGRAM

If your Contract is an IRA Contract and you will attain age 70 1/2 in
the current calendar year, distributions may be made to satisfy requirements
imposed by federal tax law. An IRA partial withdrawal provides payout of amounts
required to be distributed by the IRS rules governing mandatory distributions
under qualified plans. We will send a notice before distributions must commence,
and you may elect this program at that time, or at a later date.

You may not elect the IRA Partial Withdrawal program while you are
participating in the systematic partial withdrawal program. You may take IRA
partial withdrawals on a monthly, quarterly, semi-annual, or annual basis. We
require a minimum withdrawal of $100. You select the day we make the
withdrawals, but this day can be no later than the 28th day of the month. If you
do not elect a day, we will use the day of each month that corresponds to your
Contract date.

REQUESTING PAYMENTS

You must provide us with Satisfactory Notice of your request for
payment. We will ordinarily pay any death benefit, withdrawal, or surrender
proceeds within seven days after receipt at our Customer Service Center of all
the requirements for payment. We will determine the amount as of the date our
Customer Service Center receives all requirements.

We may delay making a payment, applying Account Value to an income plan,
or processing a transfer request if:

- the disposal or valuation of the Variable Account's assets is
not reasonably practicable because the New York Stock Exchange
is closed for other than a regular holiday or weekend, trading
is restricted by the SEC, or the SEC declares that an emergency
exists; or

- the SEC, by order, permits postponement of payment to protect
our Owners.

We also may defer making payments attributable to a check that has not cleared
(which may take up to 15 days), and we may defer payment of proceeds from the
Fixed Account for a withdrawal, surrender, or transfer request for up to six
months from the date we receive the request.

If we defer payment 30 days or more, the amount deferred will earn
interest at a rate not less than the minimum required in the jurisdiction in
which the Contract is delivered.

8. HOW IS CONTRACT PERFORMANCE PRESENTED?

We may advertise or include in sales literature yields, effective
yields, and total returns for the Variable Sub-Accounts. Effective yields and
total returns for the Variable Sub-Accounts are based on the investment
performance of the corresponding Funds. WE BASE THESE FIGURES ON HISTORICAL
PERFORMANCE, AND THEY DO NOT INDICATE OR PROJECT FUTURE RESULTS. We may also

<PAGE> 63

advertise or include in sales literature a Variable Sub-Account's performance
compared to certain performance rankings and indexes compiled by independent
organizations, and we may present performance rankings and indexes without such
a comparison.

The yield of the Money Market Sub-Account refers to the annualized
income generated by an investment in the Sub-Account over a specified seven-day
period. We calculate the yield by assuming that the income generated for that
seven-day period is generated each seven-day period over a 52-week period. We
calculate the effective yield similarly but, when annualized, the income earned
by an investment in the Money Market Sub-Account is assumed to be reinvested.
The effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.

The yield of a Variable Sub-Account (except the Money Market
Sub-Account) refers to the annualized income generated by an investment in the
Variable Sub-Account over a specified 30-day or one-month period. We calculate
the yield by assuming that the income generated by the investment during that
30-day or one-month period is generated each period over a 12-month period.

The total return of a Variable Sub-Account refers to return quotations
assuming an investment under a Contract has been held in the Variable
Sub-Account for the stated times. Average annual total return of a Variable
Sub-Account tells you the return you would have experienced if you allocated a
$1,000 purchase payment to a Variable Sub-Account for the specified period.
Standardized average annual total return reflects all historical investment
results for the Variable Sub-Account, less all charges and deductions applied
against the Variable Sub-Account, including any surrender charge that would
apply if you surrendered your Contract at the end of each period indicated, but
excluding any deductions for purchase payment taxes. Standardized total return
may be quoted for various periods including 1 year, 5 years, and 10 years, or
from inception of the Variable Sub-Account if any of those periods are not
available. "Non-Standard" average annual total return information may be
presented, computed on the same basis as described above, except that deductions
will not include the Surrender Charge. In addition, we may from time to time
disclose average annual total return for non-standard periods and cumulative
total return for a Variable Sub-Account.

We may, from time to time, also disclose yield, standard total returns,
and non-standard total returns for the Funds. We may also disclose yield,
standard total returns, and non-standard total returns of funds or other
accounts managed by the Adviser or Subadviser with investment objectives similar
to those of the Funds, and Variable Sub-Account performance based on that
performance data. We will accompany non-standard performance by standard
performance.

In advertising and sales literature, we may compare the performance of
each Variable Sub-Account to the performance of other variable annuity issuers
in general or to the performance of particular types of variable annuities
investing in mutual funds, or investment

<PAGE> 64

series of mutual funds with investment objectives similar to each of the
Variable Sub-Accounts. Advertising and sales literature may also compare the
performance of a Variable Sub-Account to the S&P 500 Composite Stock Price
Index, a widely used measure of stock performance. This unmanaged index assumes
the reinvestment of dividends but does not reflect any deduction for the expense
of operating or managing an investment portfolio. Other independent ranking
services and indexes may also be used as a source of performance comparison. We
may also report other information, including the effect of tax-deferred
compounding on a Variable Sub-Account's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts.

9. DOES THE CONTRACT HAVE A DEATH BENEFIT?

Your Contract provides two different types of death benefits for your
Beneficiary. There is the basic death benefit and the accidental death benefit.

BASIC DEATH BENEFIT. If any Owner dies before the Income Date, we will
pay the Beneficiary the greatest of:

- the Account Value determined as of the Business Day we receive
proof of death (if proof of death is received on other than a
Business Day, we will deem the proof as received on the next
following Business Day);

- 100% of the sum of all purchase payments made under the
Contract, reduced by the amount of any prior withdrawal
(including any associated surrender charge and Market Value
Adjustment incurred); or

- the highest anniversary value (the "Highest Anniversary Value").

The Highest Anniversary Value is the greatest anniversary value attained
in the following manner. When we receive proof of death, we will calculate an
anniversary value for each Contract Anniversary prior to the date of the Owner's
death, but not beyond the Owner's attained age 80. An anniversary value for a
Contract Anniversary equals:

(1) the Account Value on that Contract Anniversary;

(2) increased by the dollar amount of any purchase payments made
since the Contract Anniversary; and

(3) reduced proportionately by any withdrawals (including any
associated surrender charge and Market Value Adjustment incurred)
taken since that Contract Anniversary. (By proportionately, we
take the percentage by which the

<PAGE> 65

withdrawal decreases the Account Value and we reduce the sum of
(1) and (2) by that percentage.)

If there are multiple Owners, we will use the age of the oldest Owner to
determine the applicable death benefit. If there is no Owner who is a natural
person (that is, an individual), we will treat the Annuitant as Owner for the
purpose of determining when the Owner dies and the Annuitant's age will
determine the death benefit payable to the Beneficiary.

OWNER'S DEATH BEFORE THE INCOME DATE. If an Owner dies before the Income
Date, the Beneficiary has up to five years from the Owner's date of death to
request that the death benefit be paid in one lump sum. If the Beneficiary
elects the lump sum and we pay it, the Contract will terminate, and we will have
no further obligations under the Contract. Alternatively, the Beneficiary may
provide us with Satisfactory Notice and request that the Contract continue, in
which case we will continue the Contract subject to the following conditions:

- If there are joint Owners, the surviving Owner becomes the new
Owner. Otherwise, the Beneficiary becomes the new Owner.

- Unless the new Owner otherwise tells us, we will allocate any
excess of the death benefit over the Account Value to and among
the Variable and Fixed Accounts in proportion to their values as
of the date on which we determine the death benefit. We will
establish a new Fixed Sub-Account for any allocation to the Fixed
Account based on the Guarantee Period the new Owner then elects.

- No additional purchase payments may be applied to the Contract.

However, certain distribution rules will apply to the continued
Contract. If the new Owner is not the deceased Owner's spouse, we must
distribute the entire interest in the Contract either: (i) over the life of the
new Owner, but not extending beyond the life expectancy of the new Owner, with
distributions beginning within one year of the prior Owner's death; or (ii)
within five years of the deceased Owner's death. These distributions, if from
the Fixed Account, are subject to our Market Value Adjustment rules.

Alternatively, if the new Owner is the deceased Owner's spouse, the
Contract will continue with the surviving spouse as the new Owner. The surviving
spouse may name a new Beneficiary. If no Beneficiary is named, the surviving
spouse's estate will be the Beneficiary. Upon the death of the surviving spouse,
the death benefit will equal the Account Value as of the Business Day we receive
proof of the spouse's death. We will distribute the entire interest in the
Contract to the new Beneficiary in accordance with the provisions that apply in
the case when the new Owner is not the surviving spouse.

<PAGE> 66

If there is more than one Beneficiary, the distribution provisions will
apply independently to each Beneficiary.

If no Owner of the Contract is an individual, we will treat the death of
any Annuitant under the Contract as the death of an Owner.

In all events, we will make death benefit distributions in accordance
with section 72(s) of the Code, or any applicable successor provision.

OWNER'S DEATH AFTER THE INCOME DATE. If any Owner dies on or after the
Income Date, but before the time we have distributed the entire interest in the
Contract, we will distribute the remaining portion at least as rapidly as under
the method of distribution being used as of the date of the Owner's death.

If income payments have been selected based on an income plan providing
for payments for a guaranteed period and the Annuitant dies on or after the
Income Date, we will make the remaining guaranteed payments to the Beneficiary.
We will make any remaining payments as rapidly as under the method of
distribution being used as of the date of the Annuitant's death. If no
Beneficiary is living, we will commute any unpaid guaranteed payments to a
single sum (on the basis of the interest rate used in determining the payments)
and pay that single sum to the estate of the last to die of the Annuitant or the
Beneficiary.

ACCIDENTAL DEATH BENEFIT. Under certain circumstances, if the Owner dies
before the Income Date, we will provide an additional death benefit called the
accidental death benefit. This additional benefit will equal the purchase
payments made minus any withdrawals (including any associated surrender charge
or Market Value Adjustment incurred), determined as of the date of the Owner's
death (or the next Business Day if the Owner dies on other than a Business Day),
up to a maximum of $250,000.

To qualify for this benefit, the Owner's death must: (i) occur before
the first Contract Anniversary after the Owner attains age 80; and (ii) be a
direct result of accidental bodily injury, independent of all other causes. If
there is no Owner who is a natural person (that is, an individual), we will
treat the Annuitant as Owner and use the Annuitant's age for purposes of
determining whether the accidental death benefit is payable.

Further, all the terms and conditions described in the Contract must be
satisfied, including the requirement that we receive satisfactory proof of
accidental death at our Customer Service Center within 30 days after an
accidental death or as soon thereafter as reasonably possible. We will pay the
accidental death benefit to the Beneficiary or the person entitled to receive
the death benefit under the Contract, after receipt of satisfactory proof of
accidental death.

<PAGE> 67

We terminate the accidental death benefit provision:

- when we pay the benefit;

- when you surrender the Contract or apply the entire
Account Value to an income plan;

- when we distribute the interest in the Contract due to
the death of an Owner; or

- when you request termination of the benefit.

PROOF OF DEATH. We must receive satisfactory proof of death at our
Customer Service Center before we will pay any death benefit. We will accept one
of the following items:

1. An original certified copy of an official death
certificate; or

2. An original certified copy of a decree of a court of
competent jurisdiction as to the finding of death; or

3. Any other proof satisfactory to us.

10. WHAT OTHER INFORMATION SHOULD I KNOW?

SEPARATE ACCOUNTS

THE SAGE VARIABLE ANNUITY ACCOUNT A. We established the Variable Account
as a separate investment account under Delaware law on December 3, 1997. The
Variable Account may invest in mutual funds, unit investment trusts, and other
investment portfolios. We own the assets in the Variable Account and are
obligated to pay all benefits under the Contracts. We use the Variable Account
to support the Contracts as well as for other purposes permitted by law. We
registered the Variable Account with the SEC as a unit investment trust under
the 1940 Act and it qualifies as a "separate account" within the meaning of the
federal securities laws. Such registration does not involve any supervision by
the SEC of the management of the Variable Account or Sage Life.

We divided the Variable Account into Variable Sub-Accounts, each of
which currently invests in shares of a specific Fund of AIM Variable Insurance
Funds, Inc., The Alger American Fund, Liberty Variable Investment Trust,
SteinRoe Variable Investment Trust, MFS(R) Variable Investment Trust (TM),
Morgan Stanley Dean Witter Universal Funds, Inc.(SM), Oppenheimer Variable
Account Funds, Sage Life Investment Trust, and T. Rowe Price Equity Series,
Inc. Variable Sub-Accounts buy and redeem Fund shares at net asset value
without any sales charge. We

<PAGE> 68

reinvest any dividends from net investment income and distributions from
realized gains from security transactions of a Fund at net asset value in shares
of the same Fund. Income, gains and losses, realized or unrealized, of the
Variable Account are credited to or charged against the Variable Account without
regard to any other income, gains or losses of Sage Life. Assets equal to the
reserves and other Contract liabilities with respect to the Variable Account are
not chargeable with liabilities arising out of any other business or account of
Sage Life. If the assets exceed the required reserves and other liabilities, we
may transfer the excess to our General Account.

THE SAGE FIXED INTEREST ACCOUNT A. The Fixed Account is a separate
investment account under state insurance law. We maintain it separate from our
General Account and separate from any other separate account that we may have.
We own the assets in the Fixed Account. Assets equal to the reserves and other
liabilities of the Fixed Account will not be charged with liabilities that arise
from any other business that we conduct. Thus, the Fixed Account represents
pools of assets that provide an additional measure of assurance that Owners will
receive full payment of benefits under the Contracts. We may transfer to our
General Account assets that exceed the reserves and other liabilities of the
Fixed Account. Notwithstanding the foregoing, our obligations under (and values
and benefits under) the Fixed Account do not vary as a function of the
investment performance of the Fixed Account. Owners and Beneficiaries with
rights under the Contracts do not participate in the investment gains or losses
of the assets of the Fixed Account. Those gains or losses accrue solely to us.
We retain the risk that the value of the assets in the Fixed Account may fall
below the reserves and other liabilities that we must maintain in connection
with our obligations under the Fixed Account. In such an event, we will transfer
assets from our General Account to the Fixed Account to make up the difference.
We are not required to register the Fixed Account as an investment company under
the 1940 Act.

VOTING OF FUND SHARES. We are the legal owner of shares held by the
Variable Sub-Accounts and as such, have the right to vote on all matters
submitted to shareholders of the Funds. However, as required by law, we will
vote shares held in the Variable Sub-Accounts at regular and special meetings of
shareholders of the Funds according to instructions received from Owners with
Account Value in the Variable Sub-Accounts. To obtain your voting instructions
before a Fund shareholder meeting, we will send you voting instruction
materials, a voting instruction form, and any other related material. We will
vote shares held by a Variable Sub-Account for which we received no timely
instructions in the same proportion as those shares for which we received voting
instructions. Should the applicable federal securities laws, regulations, or
interpretations thereof change so as to permit us to vote shares of the Funds in
our own right, we may elect to do so.

MODIFICATION

When permitted by applicable law, we may modify the Contracts as
follows:

<PAGE> 69

- deregister the Variable Account under the 1940 Act;

- operate the Variable Account as a management company under the
1940 Act if it is operating as a unit investment trust;

- operate the Variable Account as a unit investment trust under
the 1940 Act if it is operating as a managed separate account;

- restrict or eliminate any voting rights of Owners, or other
persons who have voting rights as to the Variable Account;

- combine the Variable Account with other separate accounts; and

- combine a Variable Sub-Account with another Variable
Sub-Account.

We also reserve the right, subject to applicable law, to make additions to,
deletions from, or substitutions of shares of a Fund that are held by the
Variable Account or that the Variable Account may purchase; and to establish
additional Variable Sub-Accounts or eliminate Variable Sub-Accounts, if
marketing, tax, or investment conditions so warrant. Subject to any required
regulatory approvals, we reserve the right to transfer assets of a Variable
Sub-Account that we determine to be associated with the class of Contracts to
which the Contract belongs, to another separate account or to another separate
account sub-account.

If the actions we take result in a material change in the underlying
investments of a Variable Sub-Account in which you are invested, we will notify
you of the change. You may then make a new choice of Variable Sub-Accounts.

DISTRIBUTION OF THE CONTRACTS

Sage Distributors, Inc. ("Sage Distributors"), acts as the distributor
(principal underwriter) of the Contracts. Sage Distributors is a corporation
organized under Delaware law in 1997, is registered as a broker-dealer under the
Securities Exchange Act of 1934, and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). Sage Distributors is a wholly owned
subsidiary of Sage Insurance Group Inc. We compensate Sage Distributors for
acting as principal underwriter under a distribution agreement. We offer the
Contracts on a continuous basis, and do not anticipate discontinuing their sale.
The Contracts may not be available in all states.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our financial
statements for the years ended December 31, 1998 and 1997, as set forth in
their report, which is

<PAGE> 70

included in this Prospectus. We included our financial statements in this
Prospectus in reliance on their report, given on their authority as experts in
accounting and auditing.

LEGAL PROCEEDINGS

Sage Life and its subsidiaries, as of the date of this Prospectus, are
not involved in any lawsuits. However, Sage Life's direct and indirect parent
companies, like other companies, are involved in lawsuits. In some lawsuits
involving insurers, substantial damages have been sought and/or material
settlement payments have been made. Although the outcome of any litigation
cannot be predicted with certainty, Sage Life believes that at the present time
there are no pending or threatened lawsuits that are reasonably likely to have a
material adverse impact on the Variable Account, the Fixed Account, the General
Account, or Sage Life.

REPORTS TO CONTRACT OWNERS

We maintain records and accounts of all transactions involving the
Contracts, the Variable Account, and the Fixed Account at our Customer Service
Center. Each year, or more often if required by law, we will send you a report
showing information about your Contract for the period covered by the report. We
will also send you an annual and a semi-annual report for each Fund underlying a
Variable Sub-Account in which you are invested as required by the 1940 Act. In
addition, when you make purchase payments, or if you make transfers or
withdrawals, we will send you a confirmation of these transactions.

ASSIGNMENT

You may assign your Contract at any time before the Income Date. No
assignment will be binding on us unless we receive Satisfactory Notice. We will
not be liable for any payments made or actions we take before we accept the
assignment. An absolute assignment will revoke the interest of any revocable
Beneficiary. We are not responsible for the validity of any assignment. AN
ASSIGNMENT MAY BE A TAXABLE EVENT.

CHANGE OF OWNER, BENEFICIARY, OR ANNUITANT

During your lifetime and while your Contract is in force, you can
transfer ownership of your Contract, change the Beneficiary, or change the
Annuitant. However, you cannot change the Annuitant after the Income Date. To
make any of these changes, you must send us Satisfactory Notice. If accepted,
any change in Owner, Beneficiary, or Annuitant will take effect on the date you
signed the notice. Any of these changes will not affect any payment made or
action we took before our acceptance. A CHANGE IN OWNER MAY BE A TAXABLE EVENT
AND MAY ALSO EFFECT THE AMOUNT OF DEATH BENEFIT PAYABLE UNDER YOUR CONTRACT.

<PAGE> 71
MISSTATEMENT AND PROOF OF AGE, SEX, OR SURVIVAL

We may require proof of age, sex, or survival of any person upon whose
age, sex, or survival any payments depend. If the age or sex of the Annuitant
has been misstated, or if the age of the Owner has been misstated, the benefits
will be those that the Account Value applied would have provided for the correct
age and sex. If we have made incorrect income payments, we will pay the amount
of any underpayment. We will deduct the amount of any overpayment from future
income payments.

INCONTESTABILITY

Your Contract is incontestable from its Contract Date.

AUTHORITY TO MAKE AGREEMENTS

One of our officers must sign all agreements we make. No other person,
including an insurance agent or registered representative, can change the terms
of your Contract or make changes to it without our consent.

PREPARING FOR THE YEAR 2000

Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
year 2000. This potential problem has become known as the "Year 2000 issue." The
Year 2000 issue affects virtually all companies and organizations.

Computer applications that are affected by the Year 2000 issue could
impact our business functions in various ways, ranging from a complete inability
to perform critical business functions to a loss of productivity in varying
degrees. Likewise, the failure of some computer applications could have no
impact on critical business functions. We used these issues as critical
components in the evaluation and selection of in-house systems and of third
party administrators.

Since we outsource most of our operating functions, there are only be a
limited number of in-house systems utilized. At present, the only in-house
system we utilize is the accounting system. This system was certified as Year
2000 compliant before we selected and installed it for operation. We also intend
to purchase a reserve valuation system and a reinsurance system. Year 2000
compliance will be a critical component in the evaluation and selection process
for those two systems.

We have various third party administrators (including investment
advisors, brokers, transfer agents, and other financial services institutions)
for the processing of such tasks as contract administration, fund
administration, underwriting and investment administration. The

<PAGE> 72

quality of these third party administrators was of paramount importance in the
selection process.

Although we have received assurances from all of our third party
administrators, we are currently working with them to assess all Year 2000
issues associated with the processing of our applications. This assessment
involves the testing of the data being processed by third party administrators
and electronically interfaced into our accounting system. As to outside
organizations from which we will not be relying on electronic interface, we will
be relying on responses to questionnaires supplied to these service providers as
to their status on Year 2000 compliance. Based upon the responses received from
these third party administrators, we will develop a plan to assure Year 2000
compliance by all third party administrators. We anticipate completing all
testing well in advance of January 1, 2000. As this testing has and continues to
be done in the normal course of system development, we have not budgeted any
costs associated with the Year 2000 issue. In addition, Year 2000 costs have
been deemed immaterial.

If any of our third party administrators fail to achieve complete
compliance, it could have a material adverse effect on our ability to conduct
our business, including delays in calculating unit values, redeeming shares,
delivering account statements and providing other information, communication and
servicing to Owners. We believe that we have taken the necessary provisions,
both through selection and testing, to assure that we will not experience any
material adverse effects on our ability to conduct our business. We do, however,
realize the importance of this issue, and we are currently developing a detailed
contingency plan for operations in the unlikely event one or more of our third
party administrators is unable to fulfill its obligations.

FINANCIAL STATEMENTS

No financial statements are presented for the Variable Account because
it just began operations in February, 1999.

We included the audited financial statements for Sage Life for the years
ended December 31, 1997 and December 31, 1998 in this Prospectus. You should
consider these financial statements only as bearing on the ability of Sage Life
to meet its obligations under the Contracts. You should not consider them as
bearing on the investment performance of the assets held in the Variable
Account.

11. HOW CAN I MAKE INQUIRIES?

You may make inquiries about your Contract by writing to us at our
Customer Service Center, by calling us at 877-835-7243 (Toll Free), or by
contacting one of our authorized registered representatives.

<PAGE> 73
12. ADDITIONAL INFORMATION ABOUT SAGE LIFE ASSURANCE OF AMERICA, INC.

HISTORY AND BUSINESS

Ownership

Sage Life was incorporated under the laws of the state of Delaware in
1981. The Company is authorized to write general life insurance and fixed and
variable annuity contracts in all states except New York, and also is licensed
to conduct variable life insurance business in a majority of states.

Fidelity Mutual Life Insurance Company, a Pennsylvania insurer,
sponsored the Company's formation in 1981 under the name of Fidelity Standard
Life Insurance Company ("Fidelity Life"). Security First Life Insurance Company
("Security First") of Los Angeles, California acquired Fidelity Life in December
1984. In January 1997, Sage Insurance Group, Inc. ("Sage Insurance Group")
(formerly Finplan Investment Corp.), a Delaware corporation and a wholly owned
indirect subsidiary of Sage Group Limited ("Sage Group"), a South African
corporation and the Company's ultimate parent, acquired Fidelity Life. The
Company changed to its present name in September 1997. In December 1998, Sage
Insurance Group formed a new company, Sage Life Holdings of America, Inc.
("Sage Life Holdings"), to act as the new immediate parent of the Company. The
transaction is discussed more fully in the section below entitled "Holding
Company Structure and Background."

Prior Business Operations

As a Security First subsidiary, the Company specialized in the marketing
of annuities qualifying under Section 403(b) of the Code. Under an assumption
reinsurance agreement, Fidelity Life's annuity business was irrevocably
transferred to Security First in January 1997 except for a small number of
contracts. During 1998, Security First assumption reinsured all of the remaining
annuity business of Fidelity Life. Security First is now a subsidiary of The
Metropolitan Life Insurance Company.

Holding Company Structure and Background

We are an indirect, wholly owned subsidiary of Sage Insurance Group,
which is a holding company for us and affiliated entities conducting life and
annuity insurance business in the United States. We also are an indirect, wholly
owned subsidiary of Sage Group, a corporation quoted on the Johannesburg Stock
Exchange. Sage Group is a holding company with a thirty-year history of
extensive operating experience in mutual funds, life assurance and investment
management. Sage Group has directly and indirectly engaged in insurance
marketing activities in the United States since 1977 through its financial
interests in Independent Financial Marketing Group Inc., a financial planning
and bank insurance marketing company. Sage Group sold its interest in
Independent Financial Marketing Group in March 1996 to the Liberty Financial
Companies of Boston.

<PAGE> 74

Sage Group entered into an agreement with Swiss Re Life and Health
America, Inc. ("Swiss Re") on December 1, 1998, whereby Swiss Re will enter into
reinsurance arrangements with us. In addition, Swiss Re invested $12.5 million
in non-voting non-redeemable cumulative preferred stock in a newly formed
company, Sage Life Holdings, that became our immediate parent and a wholly-owned
subsidiary of Sage Insurance Group. Swiss Re's ultimate parent is Swiss
Reinsurance Company, Switzerland, one of the world's largest life and health
reinsurance groups. The arrangements contemplated by the agreement may be
subject to regulatory approval.

SELECTED FINANCIAL DATA

We cannot compare our historical financial results for the calendar year
1996 and all prior years, to the results for the years 1997 and 1998 due to the
substantial change in our business operations. We effectively disposed of all
in-force business existing as of December 31, 1996 and, therefore, on January 1,
1997, had no insurance liabilities under any of our policies other than the
small number of policies that were not 100% assumption reinsured to our former
parent company. We subsequently novated these insurance liabilities during
1998. Effectively, therefore, since January 1997, we became comparable to a new
company that had not yet begun its business activities.

We present the following selected financial data as of December 31, 1998
and 1997 and for the years then ended, taken from our audited financial
statements. Please read the information below along with the financial
statements, including related notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" we included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
Selected Financial Data
(in thousands)

Year ended Year ended
December 31, December 31,
1998 1997
------------ -------------
Income Statement Data:
Revenues:
<S> <C> <C>
Net investment income $ 1,244 $ 989

Expenses:
Amortization expense 549 325
General and administrative
expenses 1,264 1,016
------------ -------------
Total expenses 1,813 1,341
</TABLE>

<PAGE> 75

<TABLE>
<S> <C> <C>
Loss before taxes (569) (352)

Income tax expense - -

Net loss (569) $ (352)
======== ========

Balance Sheet Data:
Total Assets $ 36,542 $ 36,689

Stockholder's Equity $ 36,472 $ 33,202
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Introduction

The following discussion highlights the significant factors that
influence our operations. Please read this discussion along with our financial
statements and the related notes included in this Prospectus.

History and Business Overview

During February 1999, we began to market our new variable insurance
products. Sage Insurance Group acquired the Company on December 31, 1996, and
since that date, we have prepared for the recommencement of our insurance
underwriting and marketing activities. (Before the acquisition of the Company,
all new business production and marketing ended in October 1996.) We totally
reengineered our products, systems and administration since the change of
ownership. All of our current senior management are experienced in the insurance
industry (either in the United States or in South Africa). We recruited most of
them since January 1997. Our ongoing business strategy is to focus on the
development, underwriting, and marketing of variable insurance products. Our
obligations under these contracts are supported by (1) variable accounts --
determined by the value of investments held in separate accounts, and (2) fixed
accounts -- backed by investments held in separate accounts. We may not use the
assets of these separate accounts that equal the reserves and other liabilities
supporting the contracts to which they relate, to pay any of our other
obligations or creditors. Currently, we distribute the contracts through banks.
We anticipate that, over the long-term, our distribution channels will expand to
include wirehouses, regional broker-dealers, and financial planners.

Results of Operations

Net losses for the year ended December 31, 1998 were $568,974 and were
$351,786 for the year ended December 31, 1997. As the Company was not
underwriting or marketing

<PAGE> 76

insurance products, all revenue for 1998 and 1997 is derived from investing
activities. Effective investment yields for our General Account were 5.1% for
the year ended December 31, 1998, and 5.4% for the year ended December 31, 1997.
General expenses incurred in financing our daily activities more than offset
investment revenue. As we recommence business in 1999, we anticipate that our
revenues will increase primarily by charges and fees associated with products we
offer, while our expenses will increase by acquisition expenses, the cost of
administering this new business and the payment of benefits.

We have capitalized certain costs that have been incurred in the
development and registration of our insurance products and have been paid for by
Sage Insurance Group. We are amortizing these development costs on a straight
line basis over fifteen years. Accumulated amortization at December 31, 1998 and
December 31, 1997 was $405,287 and $93,637, respectively.

In April 1998, Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities" (SOP 98-5) was issued. SOP 98-5 requires entities to charge
to expense all start-up costs as incurred. SOP 98-5 is effective for years
beginning after December 15, 1998 (i.e., January 1, 1999). In addition, SOP 98-5
requires entities upon adoption to write-off as the cumulative effect of a
change in accounting principle any previously unamortized capitalized start-up
costs. Accordingly, we wrote-off any unamortized capitalized development costs
on January 1, 1999.

Liquidity and Capital Resources

Since the beginning of 1997, we have needed money primarily to develop
our insurance products and related infrastructure, and to fund our daily
operations. We have met our cash needs through interest income and capital
contributions from Sage Insurance Group.

During 1999, we expect our cash needs will continue to increase as our
underwriting and marketing activities begin. As discussed below, we intend to
enter into a reinsurance arrangement with Swiss Re that will provide an
additional source of cash. We still anticipate that we will be unable to meet
all of our liquidity requirements in 1999 without capital contributions from
Sage Insurance Group. However, as discussed above, Swiss Re has made an equity
investment in a newly formed holding company that will provide an additional
source of funds to us for new business expenses. In addition, although not
required to do so, we believe that Sage Insurance Group will continue to provide
capital to us for our non-recurring costs associated with new products and
business development during 1999. Our future marketing efforts could be hampered
in the unlikely event that Swiss Re, Sage Insurance Group and/or their
affiliates are unwilling to commit additional funding.

<PAGE> 77
Segment Information

We currently plan to conduct our business as a single segment, and
anticipate that this segment will eventually include all of the following
products:

- Combination fixed and variable deferred annuities.
- Combination fixed and variable immediate annuities.
- Combination fixed and variable life insurance products.

Reinsurance

We intend to enter into a coinsurance reinsurance arrangement with Swiss
Re, pursuant to which Swiss Re will reinsure a significant portion of our
liabilities under our variable insurance contracts. This arrangement will
provide additional capacity for growth of our variable insurance business.

In addition, we intend to reinsure certain mortality risks associated
with the guaranteed minimum death benefit and accidental death benefit features
of the Contracts. We intend to use only highly rated reinsurance companies to
reinsure these risks.

Reinsurance does not relieve us from our obligations to Owners. We
remain primarily liable to our Owners to the extent that any reinsurer does not
meet its obligations under the reinsurance agreements.

<PAGE> 78

Reserves

The insurance laws and regulations under which we operate obligate us to
carry on our books, as liabilities, actuarially determined reserves to meet our
obligations on outstanding Contracts. We base our reserves involving life
contingencies on mortality tables in general use in the United States. Where
applicable, we compute our reserves to equal amounts which, together with
interest on such reserves computed annually at certain assumed rates, will be
sufficient to meet our Contract obligations at their maturities or in the event
of the Owner's death. In the financial statements included in this Prospectus,
all reserves have been determined in accordance with generally accepted
accounting principles. As previously noted, all of Fidelity Life's existing
annuity business has been irrevocably transferred to Security First, resulting
in no remaining contract obligations at December 31, 1998.

Investments

We invested our General Account cash and invested assets of $25.5
million and $25.3 million at December 31, 1998 and December 31, 1997,
respectively, entirely in investment grade securities and money market funds. It
is our stated policy to refrain from investing in securities having speculative
characteristics. Our entire portfolio is classified as available-for-sale, and
is reported at fair value, with resulting unrealized gains or losses included as
a separate component of stockholder's equity.

Dividend Restrictions

We are subject to state regulatory restrictions that limit the maximum
amount of dividends payable. Subject to certain net income carryforward
provisions described below, we must obtain approval of the Insurance
Commissioner of the State of Delaware to pay, in any 12- month period,
"extraordinary" dividends which are defined as those in excess of the greater of
10% of surplus as regard to shareholders as of the prior year-end and statutory
net income less realized capital gains for such prior year. We may pay dividends
only out of unassigned surplus. In addition, we must provide notice to the
Insurance Commissioner of the State of Delaware of all dividends and other
distributions to shareholders within five business days after declaration and at
least ten days prior to payment. At December 31, 1998 the maximum amount of
dividends we could have paid out to our parent without prior approval from state
regulatory authorities was $2,310,910.

New Accounting Standards

As of January 1, 1998, we adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130), which
establishes new rules for the reporting and display of comprehensive income and
its components, consisting of net income and other comprehensive income. SFAS
130 requires us to report separately in stockholder's equity the

<PAGE> 79

accumulated balance of other comprehensive income. Our only component of other
comprehensive income is net unrealized gains or losses on available-for-sale
securities, which we report separately in stockholder's equity. The adoption of
SFAS 130 had no impact on our net income or stockholder's equity.

COMPETITION

We are engaged in a business that is highly competitive due to the large
number of stock and mutual life insurance companies as well as other entities
marketing insurance products comparable to our products. There are approximately
1,600 stock, mutual, and other types of insurers in the life insurance business
in the United States, a substantial number of which are significantly larger
than we are. We are unique in that we are one of the few life insurers confining
its activities to the marketing of separate account variable insurance products.

TRANSACTIONS WITH SAGE INSURANCE GROUP

In 1997, we entered into a Cost Sharing Agreement with Sage Insurance
Group to share personnel costs, office rent, and equipment costs. These costs
are allocated between the companies based upon the estimated time worked, square
footage of space utilized and upon monitored usage of the equipment,
respectively. Under this agreement, we have received $151,348 from Sage
Insurance Group for the year ended December 31, 1998, and we have paid expenses
of $76,048 for the year ended December 31, 1997. In addition, Sage Insurance
Group provides funds to us to meet various operating expenses. We pay these
amounts back to Sage Insurance Group at the end of each quarter.

Sage Insurance Group has also incurred expenditures in connection with
the costs of establishing new systems, new products, and premises for us. The
amount of these developmental costs paid for by companies affiliated with Sage
Life on December 31, 1998 and December 31, 1997 were $3,270,219 and $1,504,558,
respectively. Sage Insurance Group regards these expenditures as being of a
developmental nature and does not intend to recover these expenditures from us.
Accordingly, these expenditures have been capitalized as development costs and
reflected as contributed capital in our financial statements.

<PAGE> 80

EMPLOYEES

Due to our business strategy of outsourcing our primary administrative
and investment functions to organizations that specialize in these areas, the
number of full time personnel we employ is limited. As of December 31, 1998, we
had 14 employees. As of December 31, 1997, we had 8 employees.

PROPERTIES

Our executive office is located at 300 Atlantic Street, in Stamford,
Connecticut, where we maintain our primary corporate records. We maintain
customer records at our Customer Service Center.

Sage Insurance Group leases our office space. We reimburse Sage
Insurance Group for the office space under the Cost Sharing Agreement described
above.

STATE REGULATION

We are subject to the laws of the State of Delaware governing insurance
companies and to the regulations of the Delaware Department of Insurance (the
"Insurance Department"). We file a detailed financial statement in the
prescribed form (the "Statement") with the Insurance Department each year
covering our operations for the preceding year and our financial condition as of
the end of that year. Regulation by the Insurance Department means that the
Insurance Department may examine us and our books and records to determine,
among other things, whether contract liabilities and reserves as we state them
are correct. The Insurance Department, under the auspices of the National
Association of Insurance Commissioners ("NAIC"), will periodically conduct a
full examination of our operations.

In addition, we are subject to regulation under the insurance laws of
all jurisdictions in which we operate. The laws of the various jurisdictions
establish supervisory agencies with broad administrative powers with respect to
various matters, including licensing to transact business, overseeing trade
practices, licensing agents, approving contract forms, establishing reserve
requirements, fixing maximum interest rates on life insurance contract loans and
minimum rates for accumulation of surrender values, prescribing the form and
content of required financial statements and regulating the type and amounts of
investments permitted. We must file the Statement with supervisory agencies in
each of the jurisdictions in which we do business, and our operations and
accounts are subject to examination by these agencies at regular intervals.

The NAIC has adopted several regulatory initiatives designed to improve
the surveillance and financial analysis regarding the solvency of insurance
companies in general. These initiatives include the development and
implementation of a risk-based capital formula for

<PAGE> 81

determining adequate levels of capital and surplus. Insurance companies are
required to calculate their risk-based capital in accordance with this formula
and to include the results in their Statements. We anticipate that these
standards will have no significant effect upon us.

Further, many states regulate affiliated groups of insurers like us and
our affiliates, under insurance holding company legislation. Under such laws,
inter-company transfers of assets and dividend payments from insurance
subsidiaries may be subject to prior notice or approval, depending on the size
of the transfers and payments in relation to the financial positions of the
companies involved.

Under insurance guaranty fund laws in most states, insurers doing
business therein can be assessed (up to prescribed limits) for contract owner
losses incurred when other insurance companies have become insolvent. Most of
these laws provide that an assessment may be excused or deferred if it would
threaten an insurer's own financial strength.

Although the federal government ordinarily does not directly regulate
the business of insurance, federal initiatives often have an impact on the
business in a variety of ways. Our insurance products are subject to various
federal securities laws and regulations. In addition, current and proposed
federal measures that may significantly affect the insurance business include:

- regulation of insurance company solvency,

- employee benefit regulation,

- removal of barriers preventing banks from engaging in the
insurance business,

- tax law changes affecting the taxation of insurance companies,
and

- tax treatment of insurance products and its impact on the
relative desirability of various personal investment vehicles.

<PAGE> 82

DIRECTORS AND EXECUTIVE OFFICERS

Position held with the Other Principal Positions
Name (Age) Company/Year Commenced During Past Five Years
<S> <C> <C>
Ronald S. Scowby 1/ Director, 1/97 to Chairman and Trustee,
Age 60 present, Chairman, 2/98 Sage Life Investment
to present Trust, 7/98 to present;
Director, Sage Life
Assurance Company of New
York, 5/98 to present;
Deputy Chairman 2/98 to
present, President, 1/97
to 2/98, Director, 1/97
to present, Sage
Insurance Group Inc.;
Director, Sage Advisors,
Inc., 1/98 to present;
President, Chief
Executive Officer, Sage
Life Assurance of
America Inc., 1/97-2/98;
Director, Sage
Distributors, Inc., 1/98
to present; Director,
President, Chief
Executive Officer, Sage
Management Services
(USA), Inc., 6/96 to
present; Owner, Sheldon
Scowby Resources
7/95-6/96; Executive
Vice President, Mutual
of America Life
Insurance Group,
6/91-7/95; President,
Mutual of America
Financial Services,
6/91-7/95

Robin I. Marsden 1/ Director, 1/97 to President and Trustee,
Age 33 present, President and Sage Life Investment
Chief Executive Trust, 7/98 to present;
Officer, 2/98 to present Director, Sage Life
Assurance Company of New
York, 5/98 to present;
Director, President,
Sage Advisors, Inc.,
1/98 to present;
Director, Sage
Distributors, Inc., 1/98
to present; Director,
1/97 to present,
President and Chief
</TABLE>

60
<PAGE> 83

<TABLE>
<S> <C> <C>
Executive Officer, 2/98
to present, Sage
Insurance Group, Inc.;
Chief Investment
Officer, Sage Life
Holdings, Ltd., 11/94 to
1/98;
Executive-Strategic
Developments, Sage Group
Ltd., 11/94 to 1/98;
Partner and Management
Consultant Deloitte &
Touche 1/89-10/94

H. Louis Shill 2/ Director, Director, Sage Life
Age 68 1/97 to present Assurance Company of New
York, 5/98 to present;
Chairman, Sage Life
Assurance of America,
Inc. 1/97 to 2/98;
Chairman, Sage Insurance
Group, Inc., 1/97 to
present; Founder,
Chairman, Sage Group
Limited, 1965 to present

Paul C. Meyer 3/ Director, Director, Sage Life
Age 45 1/97 to present Assurance Company of New
York 5/98 to present;
Partner, Rogers & Wells,
1986 to present

Richard D. Starr 4/ Director, Director, Sage Life
Age 54 1/97 to present Assurance Company of New
York, 5/98 to present;
President, First
Interstate Securities,
1/95-12/95; Chairman &
Chief Executive Officer,
Financial Institutions
Group, Inc., 10/78 to
present

Mitchell R. Katcher 1/ Director, 12/97 to Vice President, Sage
Age 45 present, Senior Life Investment Trust,
Executive Vice 7/98 to present;
President, Chief Director, Sage Life
Financial Officer, Assurance Company of New
Chief Actuary York, 5/98 to present;
5/97 to present Director, Treasurer,
Sage Advisors, Inc.,
1/98 to present;
Director, Sage
Distributors, Inc., 1/98
to present; Treasurer,
7/97 to present, Senior
Executive Vice
</TABLE>

61
<PAGE> 84

<TABLE>
<S> <C> <C>
President, 12/97 to
present, Sage Insurance
Group, Inc.; Executive
Vice President,
Golden American Life
Insurance Company,
7/93-2/97.
</TABLE>

1/ The principal business address of these persons is 300 Atlantic Street,
Stamford, CT 06901.

2/ Mr. Shill's principal business address is Sage Centre, 10 Fraser Street,
Johannesburg, South Africa 2000.

3/ Mr. Meyer's principal business address is 200 Park Avenue, New York,
N.Y. 10166.

4/ Mr. Starr's principal business address is 22507 SE 47th Place, Issaquah,
WA 98029.

COMPENSATION

Our executive officers also serve as officers of our parent and of
certain affiliated companies. Cost allocations have been made to us as to the
time these individuals devoted to their duties with us. No allocation was made
during 1997 nor was any made for 1998 for the services of Mr. Shill. No
allocation was made during 1997 for the services of Mr. Marsden.

The following table includes compensation paid by us for services
rendered in all capacities for the years indicated for the Chief Executive
Officer and the other Executive Officers compensated more than $100,000 for the
year ended December 31, 1998.

<PAGE> 85

<TABLE>
<CAPTION>
Annual Compensation
All Other
Name and Principal Position Year Salary Bonus Compensation
--------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Ronald S. Scowby, 1997 $337,500 $100,000
Chairman(1) 1998 $350,000 $100,000 $22,097

Robin I. Marsden, 1998 $275,000 $0 $20,956
President and Chief
Executive Officer(1)

Mitchell R. Katcher, 1997 $114,583 $265,000
Senior Executive 1998 $250,000 $0 $19,037
Vice President, Chief
Financial Officer and Chief
Actuary(1)
</TABLE>

(1) All salaries and bonuses are paid by Sage Insurance Group.

We pay outside directors $12,000 and $2,000 per meeting attended. For
the year ended December 31, 1997, we paid each outside director $20,000. We do
not compensate directors who are officers or employees of ours or our affiliates
for serving on the Board. Directors do not receive retirement benefits.

<PAGE> 86
Report of Independent Auditors

Board of Directors
Sage Life Assurance of America, Inc.

We have audited the accompanying balance sheets of Sage Life Assurance of
America, Inc. (formerly Fidelity Standard Life Insurance Company) as of December
31, 1998 and 1997, and the related statements of operations, stockholder's
equity and cash flows for the years 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 Sage Life Assurance of America,
Inc. as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/ Ernst & Young LLP

Stamford, Connecticut
February 15, 1999

<PAGE> 87

Sage Life Assurance of America, Inc.

Balance Sheets

<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
-------------------- ---------------------

<S> <C> <C>
ASSETS

Investments:
Fixed maturities available for sale, at fair value
(amortized cost: 1998-$12,967,022 and
1997-$3,520,393) $12,992,917 $ 3,595,326
Short-term investments 10,975,402 21,530,888
-------------------- ---------------------
Total investments 23,968,319 25,126,214

Cash and cash equivalents 1,531,165 228,605
Accrued investment income 203,425 58,039
Receivable from affiliates - 25,941
Reinsurance recoverable - 2,728,284
Goodwill 6,565,134 6,802,300
Development costs 4,269,488 1,310,921
Other assets 5,000 11,443
Separate account assets - 396,992
-------------------- ---------------------

Total assets $36,542,531 $36,688,739
==================== =====================

LIABILITIES AND STOCKHOLDER'S EQUITY

Liabilities:
Accrued expenses $ 61,670 $ 180,442
Policy liabilities - 2,728,284
Deferred income taxes 8,804 26,227
Amounts payable to affiliates - 154,366
Separate account liabilities - 396,992
-------------------- ---------------------
Total liabilities 70,474 3,486,311

Stockholder's equity:
Common stock, $2,500 par value, 1,000 shares
authorized, issued and outstanding 2,500,000 2,500,000
Additional paid-in capital 34,875,727 31,005,508
Retained deficit (920,760) (351,786)
Accumulated other comprehensive income 17,090 48,706
-------------------- --------------------
Total stockholder's equity 36,472,057 33,202,428
-------------------- ---------------------

Total liabilities and stockholder's equity $36,542,531 $36,688,739
==================== =====================
</TABLE>

See accompanying notes to financial statements.

<PAGE> 88

Sage Life Assurance of America, Inc.

Statements of Operations

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997
-------------------- --------------------

<S> <C> <C>
REVENUES

Investment income $1,243,522 $ 989,494

EXPENSES

Amortization expense 548,818 325,406
General and administrative expenses 1,263,678 1,015,874
-------------------- --------------------
Total expenses 1,812,496 1,341,280
-------------------- --------------------

Loss before taxes (568,974) (351,786)

Income tax expense - -
-------------------- --------------------

Net loss $ (568,974) $ (351,786)
==================== ====================
</TABLE>

See accompanying notes to financial statements.

<PAGE> 89

Sage Life Assurance of America, Inc.

Statements of Stockholder's Equity

<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN RETAINED COMPREHENSIVE
STOCK CAPITAL DEFICIT INCOME TOTAL
-------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 $2,500,000 $15,505,508 $18,005,508

Net loss $ (351,786) (351,786)

Change in unrealized gain on
investments $ 48,706 48,706
-----------------

Comprehensive income (303,080)

Additional capital contributions 15,500,000 15,500,000
-------------------------------------------------------------------------------------------

Balance at December 31, 1997 2,500,000 31,005,508 (351,786) 48,706 33,202,428

Net loss (568,974) (568,974)

Change in unrealized gain on
investments (31,616) (31,616)
-----------------

Comprehensive income (600,590)

Additional capital contributions 3,870,219 3,870,219
-------------------------------------------------------------------------------------------

Balance at December 31, 1998 $2,500,000 $34,875,727 $ (920,760) $ 17,090 $36,472,057
===========================================================================================
</TABLE>

See accompanying notes to financial statements.

<PAGE> 90

Sage Life Assurance of America, Inc.

Statements of Cash Flows

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31

1998 1997
------------------- --- -------------------

<S> <C> <C>
OPERATING ACTIVITIES

Net loss $ (568,974) $ (351,786)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Amortization expense 548,818 325,406
Changes in:
Accrued investment income (145,386) (29,638)
Receivable from affiliates 25,941 (25,941)
Other assets 6,443 (11,443)
Accrued expenses (118,772) 116,216
Amounts payable to affiliates (154,366) 154,366
------------------- -------------------
Net cash (used in) provided by operating activities (406,296) 177,180

INVESTING ACTIVITIES

Purchase of fixed maturity securities (10,295,783) -
Proceeds from sales, maturities and repayments of fixed
maturity securities 849,153 42,941
Net (purchases) sales of short-term investments 10,555,486 (15,507,987)
------------------- -------------------
Net cash provided by (used in) investing activities 1,108,856 (15,465,046)

FINANCING ACTIVITIES

Capital contribution from the parent 600,000 15,500,000
------------------- -------------------
Net cash provided by financing activities 600,000 15,500,000
------------------- -------------------

Increase in cash and cash equivalents 1,302,560 212,134

Cash and cash equivalents at beginning of year 228,605 16,471
------------------- -------------------

Cash and cash equivalents at end of year $ 1,531,165 $ 228,605
=================== ===================
</TABLE>

See accompanying notes to financial statements.

5
<PAGE> 91

Sage Life Assurance of America, Inc.

Notes to Financial Statements

December 31, 1998

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND OPERATION

Sage Life Assurance of America, Inc. (the "Company") is a wholly-owned
subsidiary of Sage Life Holdings of America, Inc., ("SLHA") which is a
wholly-owned indirect subsidiary of Sage Group Limited, a South African company.

DESCRIPTION OF BUSINESS

Effective December 31, 1996, Sage Insurance Group Inc. ("SIGI") purchased from
Security First Life Insurance Company ("SFLIC") all of the outstanding stock of
Fidelity Standard Life Insurance Company ("Fidelity Standard"), a Delaware
domiciled life insurance company licensed to sell fixed and variable annuity
contracts. As a result of the purchase, Fidelity Standard was renamed Sage Life
Assurance of America, Inc. Effective October 31, 1996, all new business
production and marketing was ceased and Fidelity Standard entered into a
modified coinsurance arrangement to cede all of its separate account
liabilities to its then parent, SFLIC. Assets equal to the total reserves and
related liabilities were transferred to SFLIC. The remaining general account
liabilities were ceded under a 100% coinsurance arrangement with SFLIC. In
connection with the purchase of Fidelity Standard, the Company entered into a
service agreement with SFLIC to provide all necessary administrative services
for all ceded business. Effective September 1, 1998, all of the in-force
business of the Company was novated to SFLIC. There was no gain or loss in
connection with the novation. Accordingly, no insurance liabilities exist at
December 31, 1998.

The Company is in the process of developing and preparing to market variable
annuity and variable life insurance products. The marketing of these products is
expected to begin in the second quarter 1999.

The Company also intends to enter into a coinsurance reinsurance arrangement
with Swiss Re Life and Health America, Inc. ("Swiss Re"), pursuant to which
Swiss Re will reinsure a significant portion of the liabilities under the
variable insurance contracts.

BASIS OF PRESENTATION

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles.

NEW ACCOUNTING PRONOUNCEMENT

As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standard No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
establishes standards for the reporting and display of comprehensive income and
its components; however, adoption of this Statement had no impact on the
Company's net income or stockholder's equity. Comprehensive income is defined as
the change in equity during the financial reporting period of a business
enterprise resulting from non-owner sources. The primary element of
comprehensive income is the unrealized gains and losses on investments. Prior
year financial statements have been reclassified to conform to the requirements
of SFAS 130.

<PAGE> 92

Sage Life Assurance of America, Inc.

Notes to Financial Statements (continued)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTMENTS

The Company has classified all of its fixed maturity investments as
available-for-sale. Those investments are carried at fair value and changes in
unrealized gains and losses are reported as a component of stockholder's equity,
net of applicable deferred income taxes. Fair values are determined by quoted
market prices.

Short-term investments are carried at cost, which approximates fair value.

Realized gains and losses on disposal of investments are determined by the
specific identification method and are included in revenues.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with a maturity of
three months or less from the date of purchase to be cash equivalents. Cash and
cash equivalents are carried at cost, which approximates fair value.

SEPARATE ACCOUNTS

The separate account assets and liabilities reported in the accompanying balance
sheet represent funds that are separately administered, principally for the
benefit of certain policyholders who bear the investment risk. The separate
account assets and liabilities, as reported as of December 31, 1997, are carried
at fair value. Revenues and expenses related to the separate account assets and
liabilities, to the extent of benefits paid or provided to the separate account
policyholders, are excluded from the amounts reported in the accompanying
statement of operations. The separate account balances were novated to SFLIC
effective September 1, 1998. As a result, no separate account assets or
liabilities are reported at December 31, 1998.

POLICY LIABILITIES

Policy liabilities at December 31, 1997 consisted of deposits received plus
credited interest, less accumulated policyholder charges, assessments, and
withdrawals related to annuities of a nonguaranteed return nature. Interest
crediting rates ranged from 5.5 % to 7.0%. There were no policy liabilities at
December 31, 1998 as all in-force business was novated to SFLIC, effective
September 1, 1998.

GOODWILL

Goodwill represents the excess of the fair value of assets exchanged over the
net assets acquired. Goodwill is being amortized on a straight-line basis over
thirty years. The carrying value of goodwill is regularly reviewed for
indications of impairment in value, which, in the view of management, is other
than temporary. Accumulated amortization at December 31, 1998 and December 31,
1997 was $468,935 and $231,769, respectively.

<PAGE> 93

Sage Life Assurance of America, Inc.

Notes to Financial Statements (continued)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEVELOPMENT COSTS

The Company has capitalized certain costs that have been incurred in the
development and registration of the Company's insurance products. These
development costs are being amortized on a straight line basis over fifteen
years. Accumulated amortization at December 31, 1998 and December 31, 1997 was
$405,287 and $93,637, respectively.

In April 1998, Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities", (SOP 98-5) was issued. SOP 98-5 requires entities to charge to
expense all start-up costs as incurred. SOP 98-5 is effective for years
beginning after December 15, 1998 (i.e., January 1, 1999). In addition, SOP 98-5
requires entities upon adoption to write-off as the cumulative effect of a
change in accounting principle any previously unamortized capitalized start-up
costs. Accordingly, the Company will be required to write-off any unamortized
capitalized development costs on January 1, 1999.

ESTIMATES

The preparation of financial statements in accordance with generally accepted
accounting principles requires that management makes estimates and assumptions
that affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

INCOME TAXES

Income taxes are accounted for using the liability method. Using this method,
deferred tax assets and liabilities are determined based on differences between
the financial reporting and tax basis of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.

2. INVESTMENTS

Investments in fixed maturity securities as of December 31, 1998 consist of the
following:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Obligations $ 9,356,479 $ 89,549 $ 54,974 $ 9,391,054
Corporate Obligations 3,610,543 4,282 12,962 3,601,863
-------------------------------------------------------------------
$12,967,022 $ 93,831 $ 67,936 $12,992,917
===================================================================
</TABLE>

Investments in fixed maturity securities as of December 31, 1997 consisted of
the following:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Obligations $3,520,393 $ 79,120 $4,187 $3,595,326
===================================================================
</TABLE>

<PAGE> 94

Sage Life Assurance of America, Inc.

Notes to Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturity securities by contractual
maturity at December 31, 1998 are summarized below. Actual maturities will
differ from contractual maturities because certain borrowers have the right to
call or prepay obligations.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
------------------------------

<S> <C> <C>
Due after one year through five years $ 4,750,473 $ 4,811,245
Due after five years through ten years 8,216,549 8,181,672
------------------------------
Total $12,967,022 $12,992,917
==============================
</TABLE>

Investment income by major category of investment for the year ended December
31, 1998 and 1997 is summarized as follows:

<TABLE>
<CAPTION>
1998 1997
------------------------------------
<S> <C> <C>
Bonds $261,781 $255,778
Short-term investments 787,873 720,556
Cash and cash equivalents 239,700 49,035
------------------------------------
Total investment income 1,289,354 1,025,369
Investment expenses 45,832 35,875
------------------------------------
Net investment income $1,243,522 $989,494
====================================
</TABLE>

At December 31, 1998 and 1997, investment securities with an amortized cost of
$6,678,745 and $6,128,048, respectively, and a fair value of $6,623,770 and
$6,202,980, respectively, are held by trustees in various amounts in accordance
with the statutory requirements of certain states in which the Company is
licensed to conduct business.

3. INCOME TAXES

The Company has filed a separate life insurance company Federal income tax
return for the period January 1, 1997 through December 31, 1997. The Company
will continue to file a separate life insurance company Federal income tax
return through the year 2001. Beginning in the year 2002, the Company will be
included in the consolidated Federal income tax return of Sage Holdings (USA),
Inc. and its subsidiaries.

The provision for income taxes varies from the amount which would be computed
using the federal statutory income tax rate as follows:

<TABLE>
<CAPTION>
1998 1997
------------------- -------------------
<S> <C> <C>
Pre-tax loss $ (568,974) $ (351,786)
Application of the federal statutory tax rate - 34% (193,451) (119,607)
Tax effect of:
State income taxes - (75)
Change in valuation allowance 193,451 119,532
------------------- -------------------
Total income tax provision $ - $ -
=================== ===================
</TABLE>

<PAGE> 95

Sage Life Assurance of America, Inc.

Notes to Financial Statements (continued)

3. INCOME TAXES (CONTINUED)

Significant components of the Company's deferred tax assets and liabilities as
of December 31, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
1998 1997
---------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 1,967,528 $ 756,521
Total deferred tax assets 1,967,528 756,521
---------------------------------------
Deferred tax liabilities:
Unrealized gain on appreciation of investments (8,804) (26,227)
Amortization of goodwill and development costs (1,654,545) (636,989)
---------------------------------------
Total deferred tax liabilities (1,663,349) (663,216)
Valuation allowance for deferred tax assets (312,983) (119,532)
---------------------------------------
Net deferred tax liability $ (8,804) $ (26,227)
=======================================
</TABLE>

Based upon the lack of historical operating results and the uncertainty of
operating earnings in the future, management has determined that it is not more
likely than not that the deferred tax assets will be fully recognized.
Accordingly, a valuation allowance has been recorded.

At December 31, 1998, the Company has net operating loss carryforwards of $3.8
million for federal income tax purposes which expire in 2018 and $2.0 million
that expire in the year 2012.

4. RETAINED EARNINGS AND DIVIDEND RESTRICTIONS

Statutory-basis net income and surplus of the Company are as follows:

<TABLE>
<CAPTION>
1998 1997
---------------------------------------

<S> <C> <C>
Net income $ 27,002 $ 51,133
Surplus 25,609,097 25,017,752
</TABLE>

The required statutory capital and surplus at December 31, 1998 $17,857,518.

The Company is subject to state regulatory restrictions that limit the maximum
amount of dividends payable. Subject to certain net income carryforward
provisions as described below, the Company must obtain approval of the Insurance
Commissioner of the State of Delaware in order to pay, in any 12-month period,
"extraordinary" dividends which are defined as those in excess of the greater of
10% of surplus as regards policyholders as of the prior year-end and statutory
net income less realized capital gains for such prior year. Dividends may be
paid by the Company only out of earned surplus. In addition, the Company must
provide notice to the Insurance Commissioner of the State of Delaware of all
dividends and other distributions to shareholders within five business days
after declaration and at least ten days prior to payment. At December 31, 1998,
the maximum amount of dividends the Company could pay SLHA without prior
approval from state regulatory authorities is $2,310,910.

10
<PAGE> 96

Sage Life Assurance of America, Inc.

Notes to Financial Statements (continued)

5. RELATED PARTY TRANSACTIONS

In 1997, the Company entered into a Cost Sharing Agreement with SIGI, the
parent of SLHA, to share the personnel costs, office rent and equipment costs.
These costs are allocated between the companies based upon the estimated time
worked, square footage of space utilized and upon monitored usage of the
equipment, respectively. Pursuant to this agreement, the Company has received
$151,348 from SIGI for the year ended December 31, 1998 and paid expenses of
$76,048 for the year ended December 31, 1997. In addition, SIGI provides funds
to the Company to meet various operating expenses. These amounts are paid back
to SIGI at the end of each quarter. At December 31, 1997, $100,000 of the
amounts transferred to the Company remained payable to SIGI. No amounts were
remained payable at December 31, 1998.

All non-recurring development costs of the Company are paid by SIGI or its
parent, Sage Group Limited, and treated as capital contributions. The amount of
development costs paid for by affiliated companies at December 31, 1998 and
December 31, 1997 were $3,270,219 and $1,504,558, respectively.

<PAGE> 97

Table of Contents of the
Statement of Additional Information

Additional information about the Contracts and The Sage Variable Annuity
Account A is contained in the Statement of Additional Information. You can
obtain a free copy of the Statement of Additional Information by writing to us
at the address shown on the front cover or by calling (877) 835-7243 (Toll
Free). The following is the Table of Contents for the Statement of Additional
Information.

<TABLE>
<CAPTION>
Statement of Additional Information
Table of Contents

<S> <C>
Page

Participation........................................................................................
Beneficiary Designation..............................................................................
Calculation of Historical Performance Data
Money Market Sub-Account Yields.................................................................
Other Variable Sub-Account Yields...............................................................
Average Annual Total Returns....................................................................
Other Total Returns.............................................................................
Effect of the Annual Administration Charge on Performance Data..................................
Use of Indexes..................................................................................
Other Information...............................................................................
Income Payment Provisions............................................................................
Amount of Fixed Income Payments.................................................................
Amount of Variable Income Payments..............................................................
Income Units....................................................................................
Income Unit Value...............................................................................
Exchange of Income Units........................................................................
Safekeeping of Account Assets........................................................................
Legal Matters........................................................................................
Other Information....................................................................................
Financial Statements.................................................................................

</TABLE>

<PAGE> 98

APPENDIX A

Market Value Adjustment

We will apply a Market Value Adjustment to amounts surrendered, withdrawn,
transferred or applied to an income plan when taken from a Fixed Sub-Account
more than 30 days before its Expiration Date. We apply a Market Value Adjustment
separately to each Fixed Sub-Account. Surrender charges also may apply.

For a surrender, withdrawal, transfer or amount applied to an income plan,
we will calculate the Market Value Adjustment by applying the factor below to
the total amount (including any applicable surrender charge) that must be
surrendered, withdrawn, transferred or applied to an income plan in order to
provide the amount requested.

(N/365)
[(1+I)/(1+J+.0025)] - 1

Where

- I is the Index Rate for a maturity equal to the Fixed
Sub-Account's Guarantee Period, at the time that we established
the Sub-Account;

- J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Fixed Sub-Account's
Guarantee Period, at the time of surrender, withdrawal,
transfer, or application to an income plan; and

- N is the remaining number of days in the Guarantee Period at the
time of calculation.

We will apply Market Value Adjustments as follows:

If the Market Value Adjustment is negative, we first deduct it from any
remaining value in the Fixed Sub-Account. We then deduct any remaining
negative Market Value Adjustment from the amount you surrender, withdraw,
transfer, or apply to an income plan.

If the Market Value Adjustment is positive, we add it to any remaining value
in the Fixed Sub-Account or the amount you surrender. If you withdraw,
transfer or apply to an income plan the full amount of the Fixed
Sub-Account, we add the Market Value Adjustment to the amount you withdraw,
transfer, or apply to an income plan.

MVA EXAMPLES

Example #1: Surrender -- Example of a Negative Market Value Adjustment

Assume you invest $100,000 in a Fixed Sub-Account with a Guarantee Period of ten
years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of 7.0%
based on the U.S. Treasury Constant Maturity Series at the time we established
the Sub-Account. You request a surrender three years into the Guarantee Period,
the Index Rate based on the U.S. Treasury Constant Maturity Series for a
seven-year Guarantee Period ("J") is 8.0% at the time of the surrender, no prior
transfers or withdrawals affecting this Fixed Sub-Account have been made, and no
surrender charge is applicable.

A-1

<PAGE> 99

CALCULATE THE MARKET VALUE ADJUSTMENT

<TABLE>
<S> <C>
3
1. The Account Value of the Fixed Sub-Account on the date of surrender is $124,230 ($100,000 x 1.075 )

2. N = 2,555 (365 x 7)

2555/365
3. Market Value Adjustment = $124,230 x {[(1.07)/(1.0825)] -1} = - $9,700
</TABLE>

Therefore, the amount paid on full surrender is $114,530 ($124,230 - $9,700).

Example #2: Surrender -- Example of a Positive Market Value Adjustment

Assume you invest $100,000 in a Fixed Sub-Account with a Guarantee Period of ten
years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of 7.0%
based on the U.S. Treasury Constant Maturity Series at the time we established
the Sub-Account. You request a surrender three years into the Guarantee Period,
the Index Rate based on the U.S. Treasury Constant Maturity Series for a
seven-year Guarantee Period ("J") is 6.0% at the time of the surrender, no prior
transfers or withdrawals affecting this Fixed Sub-Account have been made, and no
surrender charge is applicable.

CALCULATE THE MARKET VALUE ADJUSTMENT

<TABLE>
<S> <C>
1. The Account Value of the Fixed Sub-Account on the date of surrender is $124,230 ($100,000
3
x 1.075 )

2. N = 2,555 (365 x 7)

2555/365
3. Market Value Adjustment = $124,230 x {[(1.07)/(1.0625)] -1} = + $6,270
</TABLE>

Therefore, the amount paid on full surrender is $130,500 ($124,230 + $6,270).

Example #3: Withdrawal -- Example of a Negative Market Value Adjustment

Assume you invest $200,000 in a Fixed Sub-Account with a Guarantee Period of ten
years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of 7.0%
based on the U.S. Treasury Constant Maturity Series at the time we established
the Sub-Account. You request a withdrawal of $100,000 three years into the
Guarantee Period, the Index Rate based on the U.S. Treasury Constant Maturity
Series for a seven-year Guarantee Period ("J") is 8.0% at the time of
withdrawal, no prior transfers or withdrawals affecting this Fixed Sub-Account
have been made, and no surrender charge is applicable.

A-2

<PAGE> 100

<TABLE>
<S> <C>
1. The Account Value of the Fixed Sub-Account on the date of withdrawal is $248,459
3
($200,000 x 1.075 ).

2. N = 2,555 (365 x 7)

2555/365
3. Market Value Adjustment = $100,000 x {[(1.07)/(1.0825)] -1} = - $7,808
</TABLE>

Therefore, the amount of the withdrawal paid is $100,000, as requested. The
Fixed Sub-Account will be reduced by the amount of the withdrawal paid,
($100,000) and by the Market Value Adjustment ($7,808), for a total reduction in
the Fixed Sub-Account of $107,808.

Example #4: Withdrawal -- Example of a Positive Market Value Adjustment

Assume you invest $200,000 in a Fixed Sub-Account with a Guarantee Period of ten
years, with a Guaranteed Interest Rate of 7.5% and an initial Index Rate ("I")
of 7.0% based on the U.S. Treasury Constant Maturity Series at the time we
established the Sub-Account. You request a withdrawal of $100,000 three years
into the Guarantee Period, the Index Rate based on the U.S. Treasury Constant
Maturity Series for a seven-year Guarantee Period ("J") is 6.0% at the time of
the withdrawal, no prior transfers or withdrawals affecting this Fixed
Sub-Account have been made, and no surrender charge is applicable.

<TABLE>
<S> <C>
1. The Account Value of the Fixed Sub-Account on the date of withdrawal is $248,459
3
($200,000 x 1.075 )

2. N = 2,555 (365 x 7)

(2555/365)
3. Market Value Adjustment = $100,000 x {[(1.07)/(1.0625)] - 1} = + $5,047
</TABLE>

Therefore, the amount of the withdrawal paid is $100,000, as requested. The
Fixed Sub-Account will be reduced by the amount of the withdrawal paid
($100,000) and increased by the amount of the Market Value Adjustment
($5,047), for a total reduction of $94,953.

A-3

<PAGE> 101

APPENDIX B

Dollar Cost Averaging Program

Below is an example of how the Dollar Cost Averaging Program works.

Assume that the Dollar Cost Averaging Program has been elected and that
$24,000 is invested in a DCA Fixed Sub-Account with a Guarantee Period of two
years and an annual Guaranteed Interest Rate of 6.0%.

(1) (2) (4)
Beginning Beginning of Dollar Cost (3) Interest (5)
of Month Month Averaging Amount Dollar Credited End of Month
-------- Account Value Monthly Factor Cost Averaged For Month Account Value
------------- -------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C>
1 24,000 - - 117 24,117
2 24,117 1 / 24 1,005 112 23,224
3 23,224 1 / 23 1,010 108 22,323
4 22,323 1 / 22 1,015 104 21,412
5 21,412 1 / 21 1,020 99 20,492
6 20,492 1 / 20 1,025 95 19,562
7 19,562 1 / 19 1,030 90 18,622
8 18,622 1 / 18 1,035 86 17,673
9 17,673 1 / 17 1,040 81 16,715
10 16,715 1 / 16 1,045 76 15,746
11 15,746 1 / 15 1,050 72 14,768
12 14,768 1 / 14 1,055 67 13,780
13 13,780 1 / 13 1,060 62 12,782
14 12,782 1 / 12 1,065 57 11,774
15 11,774 1 / 11 1,070 52 10,756
16 10,756 1 / 10 1,076 47 9,727
17 9,727 1 / 9 1,081 42 8,688
18 8,688 1 / 8 1,086 37 7,639
19 7,639 1 / 7 1,091 32 6,580
20 6,580 1 / 6 1,097 27 5,510
21 5,510 1 / 5 1,102 21 4,429
22 4,429 1 / 4 1,107 16 3,338
23 3,338 1 / 3 1,113 11 2,236
24 2,236 1 / 2 1,118 5 1,124
25 1,124 1 / 1 1,124 - -
</TABLE>

Note:

Column (3) = Column (1) x Column (2)

Column (5) = Column (1) - Column (3) + Column(4)

B-1

<PAGE> 102

To obtain a Statement of Additional Information for this Prospectus, please
complete the form below and mail to:

Sage Life Assurance of America, Inc.
Customer Service Center
1290 Silas Deane Highway
Wethersfield, CT 06109

Please send a Statement of Additional Information to me at the following
address:

- -------------------------------------
Name

- -------------------------------------
Address

- -------------------------------------
City/State Zip Code

<PAGE> 103

STATEMENT OF ADDITIONAL INFORMATION
DATED _____________ ____, 1999

FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY
CONTRACTS

issued by

THE SAGE VARIABLE ANNUITY ACCOUNT A AND SAGE LIFE ASSURANCE OF
AMERICA, INC.

Customer Service Center:
1290 Silas Deane Highway
Wethersfield, CT 06109
Telephone: (877) 835-7243
(Toll Free)

This Statement of Additional Information expands upon subjects we discussed in
the current Prospectus for the Flexible Payment Deferred Combination Fixed and
Variable Annuity Contracts (the "Contracts") offered by Sage Life Assurance of
America, Inc. ("we," "us," "our," "Sage Life," or the "Company"). You may obtain
a copy of the Prospectus dated ___________, by calling 1-877-835-7243 (Toll
Free) or by writing to our Customer Service Center at the above address. You may
also obtain a copy of the Prospectus by accessing the Securities and Exchange
Commission's website at http://www.sec.gov. The terms we used in the current
Prospectus for the Contracts are incorporated into and made a part of this
Statement of Additional Information.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
SHOULD BE READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR
THE CONTRACTS AND THE PROSPECTUSES FOR THE TRUSTS.

<PAGE> 104

Statement of Additional Information
Table of Contents

<TABLE>
<CAPTION>
Page
----
<S> <C>
Participation.....................................................................................

Beneficiary Designation...........................................................................

Calculation of Historical Performance Data........................................................
Money Market Sub-Account Yields................................................................
Other Variable Sub-Account Yields..............................................................
Average Annual Total Returns...................................................................
Other Total Returns............................................................................
Effect of the Annual Administration Charge on Performance Data.................................
Use of Indexes.................................................................................
Other Information..............................................................................

Income Payment Provisions.........................................................................
Amount of Fixed Income Payments................................................................
Amount of Variable Income Payments.............................................................
Income Units...................................................................................
Income Unit Value..............................................................................
Exchange of Income Units.......................................................................

Safekeeping of Account Assets.....................................................................

Legal Matters.....................................................................................

Other Information.................................................................................

Financial Statements..............................................................................
</TABLE>

<PAGE> 105

PARTICIPATION

The Contracts do not participate in our surplus or profits, and we do not
pay dividends on the Contracts.

BENEFICIARY DESIGNATION

This is as shown in the application. It includes the name of the Beneficiary
and the order and method of payment. If you name "estate" as a Beneficiary, it
means the executors or administrators of your estate. If you name "children" of
a person as a Beneficiary, only children born to or legally adopted by that
person as of an Owner's date of death will be included.

We may rely on an affidavit as to the ages, names, and other facts about all
Beneficiaries. We will incur no liability if we act on such affidavit.

CALCULATION OF HISTORICAL PERFORMANCE DATA

From time to time, we may disclose yields, total returns, and other
performance data of the Variable Sub-Accounts and the Funds. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the SEC.

MONEY MARKET SUB-ACCOUNT YIELDS

From time to time, advertisements and sales literature may quote the current
annualized yield of the Variable Sub-Account investing in the Money Market Fund
(the "Money Market Sub-Account") of the Sage Life Investment Trust for a
seven-day period in a manner that does not take into consideration any realized
or unrealized gains or losses on shares of the Money Market Fund.

We compute the current annualized yield by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the seven-day period in the value
of a hypothetical account under a Contract having a balance of one Accumulation
Unit of the Money Market Sub-Account at the beginning of the period, dividing
such net change in Account Value by the value of the hypothetical account at the
beginning of the period to determine the base period return, and annualizing
this quotient on a 365-day basis. The net change in Account Value reflects (i)
net income from the Money Market Fund attributable to the hypothetical account;
and (ii) charges and deductions imposed under a Contract which are attributable
to the hypothetical account. The charges and deductions include the per unit
charges for the hypothetical account for the annual administration charge and
the Asset-Based Charges. For purposes of calculating current yields for a
Contract, an average per unit annual administration charge is used based on the
$40 Annual Administration Charge. We calculate current yield according to the
following formula:

<PAGE> 106

<TABLE>
<S> <C>
Current Yield = ((NCS - ES)/UV) (365/7)

Where:

NCS = the net change in the value of the Money
Market Fund (exclusive of realized gains or
losses on the sale of securities, unrealized
appreciation and depreciation, and income other
than investment income) for the seven-day
period attributable to a hypothetical account
having a balance of one Accumulation Unit.

ES = per unit expenses attributable to the
hypothetical account for the seven-day period.

UV = the unit value for the first day of the
seven-day period.

(365/7)
Effective Yield = (1+((NCS - ES)/UV)) -1

Where:

NCS = the net change in the value of the Money
Market Fund (exclusive of realized gains or
losses on the sale of securities, unrealized
appreciation and depreciation and income other
than investment income) for the seven-day
period attributable to a hypothetical account
having a balance of one Accumulation Unit.

ES = per unit expenses attributable to the
hypothetical account for the seven-day period.

UV = the unit value for the first day of the
seven-day period.
</TABLE>

Because of the charges and deductions imposed under the Contracts, the yield
for the Money Market Sub-Account is lower than the yield for the Money Market
Fund. Yield calculations do not take into account the surrender charge that we
assess on certain withdrawals and surrender of Account Value.

The current and effective yields on amounts held in the Money Market
Sub-Account normally fluctuate on a daily basis. THEREFORE, THE DISCLOSED YIELD
FOR ANY GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION OF FUTURE
YIELDS OR RATES OF RETURN. The Money Market Sub-Account's actual yield is
affected by changes in interest rates on money market securities, average
portfolio maturity of the Money Market Fund, the types and quality of portfolio
securities held by the Money Market Fund and the Money Market Fund's operating
expenses. Yields on amounts held in the Money Market Sub-Account may also be
presented for periods other than a seven-day period.

OTHER VARIABLE SUB-ACCOUNT YIELDS

We compute the yield by: 1) dividing the net investment income of the Fund
attributable to the Variable Sub-Account units less expenses allocated to a
Variable Sub-Account for the period; by 2) the maximum offering price per unit
on the last day of the period times the daily average number of Accumulation
Units outstanding for the period; and then 3) compounding that yield for a
six-month period; and then 4) multiplying that result by two (2). Expenses
allocated to a Variable Sub-Account include the Annual Administration Charge and
the Asset-Based Charges. The yield calculation assumes an annual administration
charge of $40 per Contract deducted at the end of each Contract Year on the
Contract Anniversary. For purposes of calculating the 30-day or one-month yield,
we use an average administration cost charge based on the average Account Value
in the Variable

<PAGE> 107

Sub-Account to determine the amount of the charge attributable to the Variable
Sub-Account for the 30-day or one-month period. We calculate the 30-day or
one-month yield according to the following formula:

<TABLE>
<S> <C>
6
Yield = 2 x ((((NI - ES)/(U x UV)) + 1) -1)

Where:
NI = net income of the portfolio for the 30-day or
one-month period attributable to the Variable
Sub-Account's units.

ES = expenses of the Variable Sub-Account for the
30-day or one-month period.

U = the average number of units outstanding.

UV = the unit value at the close (highest) of the last day in the 30-day or
one-month period.
</TABLE>

Because of the charges and deductions imposed under the Contracts, the yield
for the Variable Sub-Account is lower than the yield for the corresponding Fund.

The yield on amounts invested in the Variable Sub-Accounts normally
fluctuates over time. THEREFORE, THE DISCLOSED YIELD FOR ANY GIVEN PAST PERIOD
IS NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS OR RATES OF RETURN. A
Variable Sub-Account's actual yield is affected by the types and quality of
securities held by the corresponding Fund and that Fund's operating expenses.

Yield calculations do not take into account the surrender charge that is
assessed on certain withdrawals and surrenders of Account Value.

AVERAGE ANNUAL TOTAL RETURNS

From time to time, sales literature or advertisements may also quote average
annual total returns for one or more of the Variable Sub-Accounts for various
periods of time.

When a Variable Sub-Account or Fund has been in operation for 1, 5, and 10
years, respectively, the average annual total return for these periods will be
provided. Otherwise, average annual total return will be shown from inception of
the Variable Sub-Account. Average annual total returns for other periods of time
may, from time to time, also be disclosed.

Standard average annual total returns represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Contract to the Surrender Value of that investment as of the last day of
each of the periods. The ending date for each period for which total return
quotations are provided will be for the most recent calendar quarter-end
practicable, considering the type of the communication and the media through
which it is communicated.

We calculate standard average annual total returns using Variable
Sub-Account unit values which we calculate on each Business Day based on the
performance of the Variable Sub-Account's underlying Fund. The calculation
assumes that annual Asset-Based Charges of 1.40% during the first seven Contract
Years (decreasing to 1.25% during Contract Years 8 and later) are deducted
monthly beginning on the Contract Date. The calculation also assumes that the
Annual Administration Charge is $40 per year per Contract deducted at the end of
each Contract Year during the first seven Contract Years. For purposes of
calculating average annual total return, we use an average per-dollar per-day
annual administration charge attributable to the hypothetical account for the
period. The calculation also assumes surrender of Account Value at the end of
the period for the return quotation taking into account any applicable Free
Withdrawal Amount. We calculate the total return according to the following
formula:

<PAGE> 108

<TABLE>
<S> <C>
1/N
TR = (ESV/P) -1

Where:

TR = the average annual total return for the period.

ESV = the Surrender Value of the hypothetical account at the end of the period.

P = a hypothetical initial payment of $1,000.

N = the number of years in the period.
</TABLE>

OTHER TOTAL RETURNS

From time to time, sales literature or advertisements may also quote average
annual total returns that do not reflect deduction of the Surrender Charge. We
calculate other total returns the same way as average annual total returns
described above, except that the ending Surrender Value of the hypothetical
account for the period is replaced with an ending value for the period that does
not take into account any charges on amounts surrendered or withdrawn.

We may disclose cumulative total returns in conjunction with the standard
formats described above. We will calculate the cumulative total returns using
the following formula:

<TABLE>
<S> <C>
CTR = (ESV/P) - 1

Where:

CTR = The cumulative total return for the period.

ESV = The ending Surrender Value of the hypothetical
investment at the end of the period net of recurring
charges.

P = A hypothetical single payment of $1,000.
</TABLE>

EFFECT OF THE ANNUAL ADMINISTRATION CHARGE ON PERFORMANCE DATA

The Contracts provide for a $40 Annual Administration Charge (waived for
Contracts with Account Value of at least $50,000, or beginning on and after the
eighth Contract Year) that is deducted from the Sub-Accounts proportionately.
For purposes of reflecting the Annual Administration Charge in yield and total
return quotations, the average Account Value is assumed to be $30,000, so that
the annual administration charge is .1333%.

USE OF INDEXES

From time to time, we may present the performance of certain historical
indexes in advertisements or sales literature. We may compare the performance of
these indexes to the performance of certain Variable Sub-Accounts or Funds, or
we may present without such a comparison.

OTHER INFORMATION

The following is a partial list of those publications which we may note in the
Funds' sales literature and/or shareholder materials which contain articles
describing investment results or other data relative to one or more of the
Variable Sub-Accounts. We also may cite other publications.

<PAGE> 109

<TABLE>
<S> <C>
Broker World Financial World
Across the Board Advertising Age
American Banker Barron's
Best's Review Business Insurance
Business Month Business Week
Changing Times Consumer Reports
The Economist Financial Planning
Forbes Fortune
Inc. Institutional Investor
Insurance Forum Insurance Sales
Insurance Week Journal of Accountancy
Journal of Financial Service Professionals Journal of Commerce
Life Insurance Selling Life Association News
MarketFacts Manager's Magazine
National Underwriter Money
Morningstar, Inc. Nation's Business
New Choices (formerly 50 Plus) The New York Times
Pension World Pensions & Investments
Rough Notes Round the Table
U.S. Banker VARDs
The Wall Street Journal Working Woman
</TABLE>

INCOME PAYMENT PROVISIONS

AMOUNT OF FIXED INCOME PAYMENTS. On the Income Date, the amount you have
chosen to apply to provide fixed income payments will be applied under the
income plan you have chosen. The monthly income payment factor in effect on the
Income Date times that amount and then divided by $1,000 will be the dollar
amount of each monthly payment. Each of these payments are guaranteed and remain
level throughout the period you selected.

The monthly income payment factor used to determine the amount of the fixed
income payments will not be less than the guaranteed minimum monthly income
payment factor shown in your Contract.

AMOUNT OF VARIABLE INCOME PAYMENTS. These payments will vary in amount. The
dollar amount of each payment attributable to each Variable Sub-Account is the
number of Income Units for each Variable Sub-Account times the Income Unit value
of that Sub-Account. The sum of the dollar amounts for each Variable Sub-Account
is the amount of the total variable income payment. We will determine the Income
Unit values for each payment no earlier than five Business Days preceding the
due date of the variable income payment. We guarantee the payment will not vary
due to changes in mortality or expenses.

INCOME UNITS. On the Income Date, the number of Income Units for an
applicable Variable Sub-Account is determined by multiplying (1) by (2),
dividing the result by (3), and then dividing that result by (4) where:

(1) is the amount you have chosen to allocate to that Variable Sub-Account;
(2) is the monthly income payment factor for the income plan chosen;
(3) is $1,000; and
(4) is the Income Unit value for the Variable Sub-Account for the Valuation
Period ending on that date.

INCOME UNIT VALUE. The value of an Income Unit is calculated at the same
time that the value of an Accumulation Unit is calculated and is based on the
same values for Fund shares and other assets

<PAGE> 110

and liabilities. The Income Unit value for a Variable Sub-Account's first
Business Day was set at $10. After that, we determine the Income Unit value for
every Business Day by multiplying (a) by (b), and then dividing by (c) where:

(a) is the Income Unit value for the immediately preceding Valuation Period;

(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined; and

(c) is the daily equivalent of the assumed investment rate that you have
selected and that is shown in your Contract for the number of days in
the Valuation Period.

After the Income Date, we calculate the net investment factor slightly
differently than before the Income Date. Before the Income Date, we calculate
Asset-Based Charges as a percentage of the Variable Account Value on the date of
deduction. These charges are equal on an annual basis to 1.40%, decreasing to
1.25% after the seventh Contract Year. However, on and after the Income Date, we
call these charges Variable Sub-Account Charges and deduct them from the assets
in each Variable Sub-Account on a daily basis. Therefore, the "net investment
factor" in (b), above, is determined by dividing (i) by (ii), and then
subtracting (iii) where:

(i) is the Accumulation Unit value for the current Valuation Period;

(ii) is the Accumulation Unit value for the immediately preceding Valuation
Period; and

(iii) is the daily Variable Sub-Account Charges (adjusted for the number of
days in the Valuation Period).

<TABLE>
<CAPTION>
ILLUSTRATION OF CALCULATION OF INCOME UNIT VALUE
<S> <C>
1. Accumulation Unit value for current Valuation Period................................10.0026116

2. Accumulation Unit value for immediately preceding Valuation
Period..............................................................................10.0000000

3. Net Investment Factor prior to the Income date (1)/(2)..............................1.00026116

4. Adjustment for Variable Sub-Account Charges........................................0.000038626

5. Net Investment Factor on and after the Income Date (3)-(4)..........................1.00022253

6. Income Unit value for the immediately preceding Valuation
Period.............................................................................10.00000000

7. Daily equivalent of the assumed investment rate for the number of days in the
1/365
Valuation Period (assuming you select 3%)=(1.03 )...............................1.00008099

8. Income Unit value for current Valuation Period
[(5) x (6)]/(7)....................................................................10.00141533
</TABLE>

<PAGE> 111

<TABLE>
<CAPTION>
ILLUSTRATION OF VARIABLE INCOME PAYMENTS
<S> <C>
1. Number of Accumulation Units.............................................................1,000

2. Accumulation Unit value.............................................................10.0026116

3. Account Value (1) x (2)..............................................................10,002.61

4. Minimum monthly income payment factor per $1,000 applied.................................10.50

5. First monthly variable income payment [(3) x (4)]/$1,000................................105.03

6. Income Unit value..................................................................10.00141533

7. Number of Income Units (5)/(6)........................................................10.50151

8. Assume Income Unit value at the end of the second month is...............................10.05

9. Second monthly variable income payment (7) x (8)........................................105.54

10. Assume Income Unit value at the end of the third month is................................10.10

11. Third monthly variable income payment (7) x (10)........................................106.07
</TABLE>

EXCHANGE OF INCOME UNITS. After the Income Date, if there is an exchange of
value of a designated number of Income Units of particular Variable Sub-Accounts
into other Income Units, the value will be such that the dollar amount of the
income payment made on the date of exchange will be unaffected by the exchange.

SAFEKEEPING OF ACCOUNT ASSETS

We hold the title to the assets of the Variable Account. The assets are kept
physically segregated and held separate and apart from our General Account
assets and from the assets in any other separate account.

We maintain records of all purchases and redemptions of Fund shares held by
each of the Variable Sub-Accounts.

A fidelity bond in the amount of approximately $10 million per occurrence
covering the Company's directors, officers, and employees has been issued by
Lloyd's of London.

LEGAL MATTERS

All matters relating to Delaware law pertaining to the Contracts, including
the validity of the Contracts and the Company's authority to issue the
Contracts, have been passed upon by James F. Bronsdon, the Company's Vice
President, Legal and Compliance. Sutherland Asbill & Brennan LLP has provided
advice on certain matters relating to the federal securities laws.

OTHER INFORMATION

A registration statement has been filed with the SEC under the Securities
Act of 1933, as amended, with respect to the Contracts discussed in this
Statement of Additional Information. Not all

<PAGE> 112

the information set forth in the registration statement, amendments and exhibits
thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are intended to be
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the SEC.

FINANCIAL STATEMENTS

The Statement of Additional Information contains no financial statements for
the Variable Account because the Variable Account had just begun operations in
February, 1999. Financial statements of the Company are presented in the
Prospectus.

<PAGE> 113

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

All required financial statements are included in Part A. Financial
statements for The Sage Variable Annuity Account A (the "Variable Account") are
not included in Part B because the Variable Account had just begun operations in
February, 1999.

(b) Exhibits

(1)(a) Resolutions of the Board of Directors of Sage Life
Assurance of America, Inc. establishing The Sage
Variable Annuity Account A.1/

(2) Not Applicable.

(3) Form of Distribution Agreement with Sage
Distributors, Inc. and Form of Selling Agreement.2/

(4)(a)(i)(B) Amended Form of Individual Contract.3/

(ii)(B) Amended Form of Individual Contract with Interest
Account.4/

(iii)(B) Amended Form of Group Contract.3/

(iv)(B) Amended Form of Group Certificate.3/

(b)(i)(B) Amended Form of Individual IRA Rider.3/

(ii)(B) Amended Form of Group IRA Rider.3/

(iii)(B) Amended Form of Individual SIMPLE IRA Rider.3/

(iv)(B) Amended Form of Group SIMPLE IRA Rider.3/

(v)(A) Form of Individual Roth IRA Rider.5/

(vi)(A) Form of Group Roth IRA Rider.5/

(vii) Form of Individual Waiver of Surrender Charge Rider.5/

(viii) Form of Group Waiver of Surrender Charge Rider.5/

<PAGE> 114
(ix) Form of Individual Accidental Death Benefit Rider.5/

(x) Form of Group Accidental Death Benefit Rider.5/

(5) (i) Form of Individual Contract Application.6/

(ii) Form of Group Certificate Application.7/

(6)(a) Articles of Incorporation of the Company.8/

(b) By-Laws of the Company.8/

(7) Not Applicable.

(8)(a)(i) Form of Participation Agreement with AIM Variable
Insurance Funds, Inc.9/

(ii) Form of Participation Agreement with The Alger
American Fund.9/

(iii) Form of Participation Agreement with Liberty Variable
Investment Trust.10/

(iv) Form of Participation Agreement with MFS(R) Variable
Insurance Trust.(TM)9/

(v) Form of Participation Agreement with Morgan Stanley
Universal Funds, Inc.10/

(vi) Form of Participation Agreement with Oppenheimer
Variable Account Funds.10/

(vii) Form of Participation Agreement with Sage Life
Investment Trust.9/

(viii) Form of Participation Agreement with SteinRoe Variable
Investment Trust.10/

(ix) Form of Participation Agreement with T. Rowe Price
Equity Series, Inc.10/

(b) Form of Services Agreement with Financial
Administration Services, Inc.10/

(9) (i) Opinion and Consent of James F. Bronsdon.11/

(ii) Consent of Sutherland Asbill & Brennan LLP.

(10) Consent of Ernst & Young, LLP.*

(11) Not Applicable.

(12) Not Applicable.

(13) Not Applicable.

(14)(a) Power of Attorney for Paul C. Meyer.12/

(14)(b) Power of Attorney for Ronald S. Scowby.13/

(14)(c) Power of Attorney for Richard D. Starr.13/

(14)(d) Power of Attorney for H. Louis Shill 14/

(14)(e) Power of Attorney for Mitchell R. Katcher 14/

(14)(f) Power of Attorney for Robin I. Marsden*
- ------------------------------
* Filed herewith.

1/ This exhibit was previously filed in Exhibit 1 to the Registration Statement
on From N-4 dated December 24, 1997 (File No. 333-43329), and is incorporated
herein by reference.

<PAGE> 115

2/ This exhibit was previously filed in Exhibit No. 3 to Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-4 (File No. 333-43329) dated
December 31, 1998, and is incorporated herein by reference.

3/ This exhibit was previously filed in Exhibit No. 4 to Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-4 (File No. 333-43329) dated
December 31, 1998, and is incorporated herein by reference.

4/ This exhibit was previously filed in Exhibit No. 4 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-43329)
dated January 28, 1998, and is incorporated herein by reference.

5/ This exhibit was previously filed in Exhibit No. 4 to the Registration
Statement on Form N-4 (File No. 333-43329) dated December 24, 1997, and is
incorporated herein by reference.

6/ This exhibit was previously filed in Exhibit No. 5 to Pre-Effective Amendment
No. 1 to the Registration Statement filed on Form N-4 (File No. 333-43329) dated
December 31, 1998, and is incorporated herein by reference.

7/ This exhibit was previously filed in Exhibit No. 5 to the Registration
Statement filed on Form N-4 (File No. 33-43329) dated December 24, 1997, and is
incorporated herein by reference.

8/ This exhibit was previously filed in Exhibit No. 6 to the Registration
Statement filed on Form N-4 (File No. 33-43329) dated December 24, 1997, and is
incorporated herein by reference.

9/ This exhibit was previously filed in Exhibit No. 8 to Pre-Effective Amendment
No. 1 to the Registration Statement filed on Form N-4 (File No. 333-43329) dated
December 31, 1998, and is incorporated herein by reference.

10/ This exhibit was previously filed in Exhibit No. 8 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-43329)
dated January 28, 1999, and is incorporated herein by reference.

11/ This exhibit was previously filed in Exhibit No. 9 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-43329)
dated January 28, 1999, and is incorporated herein by reference.

12/ This exhibit was previously filed in Exhibit No. 14(a) to Pre-Effective
Amendment No. 1 to the Registration Statement filed on Form N-4 (File No.
333-44751) dated January 12, 1999, and is incorporated herein by reference.

13/ This exhibit was previously filed in Exhibit No. 14 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-43329)
dated January 28, 1999, and is incorporated herein by reference.

14/ This exhibit was previously filed in Exhibit No. 14 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-44751)
dated February 10, 1999, and is incorporated herein by reference.

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

Incorporated herein by reference to the section titled "Directors and
Executive Officers" of the Prospectus filed as Part A of this Registration
Statement.

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT

The registrant is a segregated asset account of the Company and therefore
is owned and controlled by the Company. The Company is a stock life insurance
company of which all the voting securities are owned by Sage Life Holdings of
America, Inc., a Delaware corporation, ("Sage Life Holdings"), all of the voting
securities of which are owned by Sage Insurance Group Inc., a Delaware
corporation. (The Company in turn owns all of the voting securities of Sage Life
Assurance Company of New York, a New York domiciled company which is pursuing a
license to

<PAGE> 116

conduct insurance business in that state.) In addition to Sage Life Holdings,
Sage Insurance Group also owns all of the voting securities of Sage
Distributors, Inc. (a broker-dealer), Sage Advisors, Inc. (a registered
investment adviser), and Finplan Holdings, Inc. (a financing company), all of
which are Delaware corporations. All the voting securities of Sage Insurance
Group Inc. are owned by Sage Insurance Holdings, Inc, a Delaware corporation.
Sage Insurance Holdings, Inc. is a wholly owned subsidiary of Sage Holdings
(USA), Inc., a Delaware corporation. (Sage Holdings (USA), Inc. also owns all of
the voting securities of Sage Properties (USA), Inc., a Virginia corporation
whose principal assets are real estate.) Sage Holdings (USA), Inc. is a wholly
owned subsidiary of Sage Life Holdings Limited, a South African corporation. The
nature of the business of the companies listed above is insurance and financial
services. Sage Life Holdings is 100% owned by Sage Group Limited, a South
African corporation that is the ultimate holding company. Sage Group Limited is
a controlling company operating in life insurance, mutual funds and investment
management. Various companies and other entities controlled by Sage Group
Limited may be considered to be under common control with the registrant or the
Company. Such other companies and entities and the nature of their businesses
are set forth below. These companies are incorporated in South Africa and are
wholly owned subsidiaries unless otherwise noted.

Sage Life Holdings was formed pursuant to a letter of intent between Sage
Group Limited and Swiss Re Life and Health America, Inc. ("Swiss Re"). Swiss
Re's ultimate parent company is Swiss Reinsurance Company, Switzerland, one of
the world's largest life and health reinsurance groups. Under the letter of
intent, Swiss Re made an equity investment into Sage Life Holdings. The
arrangements contemplated by the letter of intent may be subject to regulatory
approval.

<PAGE> 117

<TABLE>
<CAPTION>
DIRECT AND INDIRECT SUBSIDIARIES OF SAGE GROUP LIMITED

COMPANY NAME PRINCIPAL BUSINESS
<S> <C>
Alexotel (Pty) Ltd Property holding
Allied Financial Planning Services (Pty) Ltd Investment consultants
Bentley Office Park (Pty) Ltd Property development & investment
Blackreef Properties (Pty) Ltd Property holding
Consumer Classics (Pty) Ltd Manufacturing & distribution
Corporate Marketing Services (Pty) Ltd Investment marketing
Dinwiddie Township (Pty) Ltd Property holding
Edenston Properties (Pty) Ltd Property development
Educational Information Services (Pty) Ltd Publishing
Ensiklopedie Afrikana (Edms) Beperk Publishing
Estromin Properties & Investments (Pty) Ltd Property investment
Everest Construction (Pty) Ltd Construction
FPS (South Vaal) Investments (Pty) Ltd Property investment
FPS (Vaal) Investments (Pty) Ltd Investment holding
FPS Consultants Ltd Investment consultants
FPS Corporate Services (Pty) Ltd Pension advisors
FPS Investment Holdings Ltd Investment holding
FPS Investments (Pty) Ltd Investment holding
FPS Ltd Investment consultants
FPS Marketing & Management Systems (Pty) Ltd Training
Fraser Street Registrars (Pty) Ltd Transfer secretaries
Hatfield Properties (Block A) (Pty) Ltd Property investment
Hatfield Properties (Block B) (Pty) Ltd Property investment
Hatfield Properties (Block C) (Pty) Ltd Property investment
Hatfield Properties (Block D) (Pty) Ltd Property investment
Highrise Home Investments (Pty) Ltd Property investment
Home Mortgage Investments (Pty) Ltd (50% owner) Financing
J van Streepen (Kempton Park) (Pty) Ltd (51% owner) Property development
Kemparkto (Pty) Ltd Property investment & development
Lakeview Management Properties (Pty) Ltd (75% owner) Property management
Lanrov Investments (Pty) Ltd Investment holding
Lot 26 of Portion 8 Parktown (Pty) Ltd Property development
Lot 26 of Portion 9 Parktown (Pty) Ltd Property investment
Mardin Agency (Pty) Ltd Real estate agents
Marlands Flats (Pty) Ltd Property holding
Meumann & Heyneke (Pty) Ltd Retail merchants
Nedrep Investments Ltd Investment holding
Netherlands Properties (Pty) Ltd Property investment
New Smal Construction Co. (Pty) Ltd Construction
Noordwyk Developments (Pty) Ltd Property development
Palmiet Townships (Pty) Ltd Property development
PJP Properties (Pty) Ltd Investment
R/E 105 Rosebank (Pty) Ltd Investment holding
Residential Mortgage Investments (Pty) Ltd (50% owner) Financing
S A Cultural Holdings (Pty) Ltd Investment
S A Kultuur Beleggings (Edms) Beperk Investment
</TABLE>

<PAGE> 118

<TABLE>
<S> <C>
COMPANY NAME PRINCIPAL BUSINESS
S.B. Plant Hire (Pty) Ltd Plant hire
SACI Finance (Pty) Ltd Finance company
Sage Business Park (Eight) (Pty) Ltd Property investment
Sage Business Park (Five) (Pty) Ltd Property investment
Sage Business Park (Four) (Pty) Ltd Property investment
Sage Business Park (Nine) (Pty) Ltd Property investment
Sage Business Park (One) (Pty) Ltd Property investment
Sage Business Park (Seven) (Pty) Ltd Property investment
Sage Business Park (Six) (Pty) Ltd Property investment
Sage Business Park (Three) (Pty) Ltd Property investment
Sage Business Park (Two) (Pty) Ltd Property investment
Sage Centre (Pty) Ltd Property investment
Sage Corporate Services (Pty) Ltd Investment holding
Sage Family Benefits (Pty) Ltd Insurance consultants
Sage Holdings Ltd Financial, investment & management
Sage Investment Trust Ltd Insurance & investment
Sage Land Finance (Pty) Ltd Financiers
Sage Land Holdings (Pty) Ltd Investment holding
Sage Library Gardens Ltd Investment holding
Sage Life Holdings Ltd Investment holding
Sage Life Ltd Life insurance
Sage Management Services (Pty) Ltd Management
Sage Parking (Pty) Ltd Own & operate parking garages
Sage Personal Investment Marketing (Pty) Ltd Investment consultants
Sage Properties (549 Sandown) (Pty) Ltd Property holding
Sage Properties (Menlyn) (Pty) Ltd Property investment
Sage Properties (Rivonia Four) (Pty) Ltd Property holding
Sage Properties (Sunnyside) (Pty) Ltd Property holding
Sage Properties Ltd Investment holding
Sage Property Holdings Ltd Property holding
Sage Property Management Services (Pty) Ltd Property management
Sage Property Portfolio Managers (Pty) Ltd Property investment & management
Sage Property Trust Managers, Ltd. (77.2% owner) Management of unit trusts
Sage Schachat Developments (Pty) Ltd Builders
Sage Schachat Ltd Investment holding
Sage Secretarial Services (Pty) Ltd Management & secretarial
Sage Selections (Pty) Ltd Investment
Sage Specialized Insurances Ltd Short term insurance
</TABLE>

<PAGE> 119

<TABLE>
<CAPTION>
COMPANY NAME PRINCIPAL BUSINESS
<S> <C>
Sage Strategic Investments (Pty) Ltd Investment holding
Sage Trustees (Pty) Ltd Trustees
Sage Unit Trusts Ltd Management of unit trusts
Sagemed (Pty) Ltd Health & medical insurance
SAK Executive Investments (Pty) Ltd Investment holding
SAK Holdings (Pty) Ltd Investment holding
Sandhurst Properties (Block A) (Pty) Ltd Property investment & management
Sandhurst Properties (Block B) (Pty) Ltd Property investment & management
Sandhurst Properties (Block C) (Pty) Ltd Property investment & management
Sandhurst Properties (Block D) (Pty) Ltd Property investment & management
Sandhurst Properties (Block E) (Pty) Ltd Property investment & management
Sandhurst Properties (Block F) (Pty) Ltd Property investment & management
Sandhurst Properties (Block G) (Pty) Ltd Property investment & management
Sandown Development Holdings (Pty) Ltd Property holding
Sandown Developments (Pty) Ltd Property development
Schachat Ciskei (Pty) Ltd Property development
Schachat Construction (Pty) Ltd Construction
Schachat Cullum (Pty) Ltd Property development & management
Schachat Finance Company (Pty) Ltd Financiers
Schachat Land Resources (Pty) Ltd Investment holding
Schachat Natal (Pty) Ltd Farming & other
Schalab Townships (Pty) Ltd (51% owner) Property development
Sectional Title (Pty) Ltd Property development
SLR Land Development (Pty) Ltd Building contractors
SMH Land Development (Pty) Ltd Property investment
SPTM Holdings (Pty) Ltd Investment holding
SSI Securities (Pty) Ltd Financiers
Stonehouse Investments (Pty) Ltd Property investment
Strandbou (Pty) Ltd Property investment
Sunnyside Erf 26 (Block B) (Pty) Ltd Property investment & management
Sunnyside Erf 26 (Block C) (Pty) Ltd Property investment & management
Sunnyside Erf 26 (Block D) (Pty) Ltd Property investment & management
Table Classics (Pty) Ltd Deal in tableware products
The Gold Jewelry Corporation (Pty) Ltd Manufacture & sale of coins & jewelry
Townhomes (Pty) Ltd Building contractors
Von Brandis Square Development Co. (Pty) Ltd Property development
Wereldspekium (Edms) Beperk Distributors & publishers of books
Witch Construction Company (Pty) Ltd Property investment & development
Witch Construction Company (Transvaal) (Pty) Ltd Property investment & development
Witch Management (Pty) Ltd
Sage International B.V. (Netherlands corporation) Management services
Sage International Assets Ltd (BVI corporation) Holding
Sage Management Services (USA), Inc. Holding
(New York corporation) Management services
</TABLE>

<PAGE> 120

ITEM 27. NUMBER OF CONTRACT OWNERS

Not applicable.

ITEM 28. INDEMNIFICATION

Sage Life's Articles of Incorporation provide that a director of the Company
shall not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except that (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which would involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived any personal benefit. Notwithstanding the foregoing, the
Articles provide that if the Delaware General Corporation Law is amended to
authorize further limitations of the liability of a director or a corporation,
then a director of the Company, in addition to circumstances in which a director
is not personally liable as set forth in the preceding sentence, shall be held
free from liability to the fullest extent permitted by the Delaware General
Corporation Law as amended.

Sage Life's Bylaws provide that the Company shall indemnify its officers,
directors, employees and agents to the extent permitted by the General
Corporation Law of Delaware.

Further, Section 145 of Delaware General Corporation Law provides that a
corporation shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit, or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had a reasonable cause to believe that his conduct was not unlawful.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

<PAGE> 121
ITEM 29. PRINCIPAL UNDERWRITER

(a)Sage Distributors, Inc. ("Sage Distributors") is the registrant's
principal underwriter.

(b)Officers and Directors of Sage Distributors

<TABLE>
<S> <C>
Name and Principal Business Address* Positions and Offices With Sage Distributors
- ------------------------------------ --------------------------------------------

Robin I. Marsden Director

Mitchell R. Katcher Director

Ronald S. Scowby Director

James F. Bronsdon President, Chief Executive Officer, Chief Legal Officer

James F. Renz Chief Financial Officer, Treasurer, Assistant Secretary

Robert J. Kiggins Secretary
</TABLE>

* The principal business address of all of the persons listed above is 300
Atlantic Street, Stamford, CT 06901, except for Mr. Kiggins whose
principal business address is 11 Martine Avenue, 12th Floor, White
Plains, New York 10606.

ITEM 30. LOCATION OF BOOKS AND RECORDS

All of the accounts, books, records or other documents required to be kept
by Section 31(a) of the Investment Company Act of 1940 and rules thereunder, are
maintained at our Customer Service Center.

ITEM 31. MANAGEMENT SERVICES

All management contracts are discussed in Part A or Part B of this
registration statement.

ITEM 32. UNDERTAKINGS AND REPRESENTATIONS

(a) The registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in the
statement are never more than 16 months old for as long as
purchase payments under the Contracts offered herein are being
accepted.

(b) The registrant undertakes that it will include either (1) as part of
any application to purchase a Contract offered by the prospectus,
a space that an applicant can check to request a Statement of
Additional Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that the
applicant can remove and send to the Company for a Statement of
Additional Information.

Additional Information.

(c) The registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this Form N-4 promptly upon written or oral
request to the Company at the address or phone number listed in
the prospectus.

<PAGE> 122

(d) The Company represents that the fees and charges under the Contracts,
in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks
assumed by the Company.

<PAGE> 123

SIGNATURES

As required by the Securities Act of 1933, and the Investment Company
Act of 1940, the registrant has caused this Post-Effective Amendment No. 1 to be
signed on its behalf, in the City of Washington, and the District of Columbia on
this 26 day of February, 1999.

<TABLE>
<S> <C>
The Sage Variable Annuity Account A
(Registrant)
By: Sage Life Assurance of America, Inc.

Attest:

/s/ Pamela K. Ellis By: /s/ Robin I. Marsden*
- ------------------------------- -------------------------------------
Pamela K. Ellis Robin I. Marsden
Director, President, Chief Executive
Officer

By: Sage Life Assurance of America, Inc.
(Depositor)

Attest:

/s/ Pamela K. Ellis By: /s/ Robin I. Marsden*
- ------------------------------- -------------------------------------
Pamela K. Ellis Robin I. Marsden
Director, President, Chief Executive
Officer
</TABLE>

<PAGE> 124

As required by the Securities Act of 1933, this Post-Effective Amendment No.
1 has been signed by the following persons in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
Signature Title Date
------------- --------------------------------
<S> <C>
/s/ Ronald S. Scowby* Chairman February 26, 1999
- ------------------------------
Ronald S. Scowby

/s/ H. Louis Shill* Director February 26, 1999
- -------------------------------
H. Louis Shill

/s/ Paul C. Meyer* Director February 26, 1999
- -------------------------------
Paul C. Meyer

/s/ Richard D. Starr * Director February 26, 1999
- -------------------------------
Richard D. Starr

/s/ Mitchell R. Katcher* Director, February 26, 1999
- --------------------------------- Senior Executive Vice
Mitchell R. Katcher President, Chief Financial
Officer, Chief Actuary
</TABLE>

*By: /s/ James F. Bronsdon
----------------------
James F. Bronsdon

As Attorney-In-Fact pursuant to a
Power of Attorney as dated below.

Director Date
-------- ----
Robin I. Marsden January 26, 1999
Ronald S. Scowby January 26, 1999
H. Louis Shill February 8, 1999
Paul C. Meyer December 23, 1998
Richard D. Starr January 7, 1999
Mitchell R. Katcher January 26, 1999

<PAGE> 125

EXHIBIT INDEX

Exhibit (10) Consent of Independent Auditors

Exhibit (14)(f) Power of Attorney

<PAGE> 1

EXHIBIT (10)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Prospectus and to the use of our report dated February 15, 1999, with respect to
the financial statements of Sage Life Assurance of America, Inc. included in the
Post-Effective Amendment No. 1 to the Registration Statement (Form N-4, Nos.
333-43329 and 811-08581) and related Prospectus for the registration of its
variable annuity contracts.

/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP

Stamford, Connecticut
February 25, 1999

<PAGE> 1
EXHIBIT (14)(f)

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that ROBIN I. MARSDEN, whose signature appears
below, hereby constitutes and appoints MITCHELL R. KATCHER and JAMES F.
BRONSDON, and each of them, as his attorney-in-fact, with full power of
substitution and resubstitution, for him and in his name, place, and stead, in
any and all capacities, to sign any registration statement and amendments
thereto, under the Securities Act of 1933 and the Investment Company Act of
1940, where applicable, executed on behalf of Sage Life Assurance of America,
Inc. (the "Company") in connection with (a) variable annuity contracts issued
by the Company through The Sage Variable Annuity Account A, and (b) and
variable life insurance contracts issued by the Company through The Sage
Variable Life Account A, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission.
ROBIN I. MARSDEN hereby ratifies and confirms all that said attorney-in-fact,
or his substitute, may do or cause to be done by virtue thereof.

/s/ ROBIN I. MARSDEN
--------------------------
Robin I. Marsden
Director
Sage Life Assurance Company
of America, Inc.

January 26th, 1999

State of Connecticut
County of Fairfield

On this 26th day of January, 1999, before me came ROBIN I. MARSDEN,
Director of Sage Life Assurance of America, Inc., to me known, and signed the
above Power of Attorney on behalf of Sage Life Assurance of America, Inc.

/s/ CYNTHIA WENDT [SEAL]
-------------------------
Notary Public

My Comm. Exp. 4/30/99