AMERITAS VARIABLE LIFE INSURANCE CO SEPARATE ACCOUNT V, 497, 1996-05-06

AMERITAS VARIABLE LIFE INSURANCE CO SEPARATE ACCOUNT V
497, 1996-05-06

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PROSPECTUS AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO

FLEXIBLE PREMIUM One Ameritas Way / 5900 "O" Street
VARIABLE UNIVERSAL LIFE POLICY P.O. Box 82550/ Lincoln, NE 68501
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Ameritas Variable Life Insurance Company ("AVLIC") is not offering the sale of
Flexible Premium Variable Universal Life Insurance (UniVar Life) policies (Form
#4002) pursuant to this prospectus. AVLIC stopped issuing UniVar policies as of
March 1, 1990. The purpose of the prospectus is to inform present policyowners
concerning their policy and further to inform them of AVLIC's offer to exchange
the UniVar Policy for AVLIC's Variable Universal Life Insurance Policy (Applause
Life) (Policy Form #4010). AVLIC proposes to exchange presently owned UniVar
policies for the new Applause Life policy as of the original UniVar issue date
without additional evidence of insurability on the same size policy. The UniVar
policyowner accepting the exchange offer will first be refunded all of the sales
and acquisition charges deducted from the premium payments, except premium
taxes, plus 12% interest thereon. After the amount is added to the policyowners
accumulation values the exchange will take place on a relative net asset basis
without deducting surrender charges on the surrendered policy or sales or
acquisition charges on the new policy. The policyowner would then enjoy the
benefits and be subject to the charges and contract provisions as described in
the Applause Life prospectus. (See Exchange Offer pages 8 and 12).

This Prospectus describes a flexible premium variable life insurance policy
("Policy") previously offered by AVLIC, a stock life insurance company . The
Policy is designed to provide lifetime insurance protection to age 95 and at the
same time provide flexibility to vary the frequency and amount of premium
payments and to increase or decrease the level of death benefits payable under
the Policy. This flexibility allows a policyowner to provide for changing
insurance needs under a single insurance policy.

The Policy guarantees a death benefit payable at the Insured's death for as long
as the Policy remains in force. The policyowner may choose either death benefit
Option A (generally, a level benefit that equals the Specified Amount of the
Policy) or Option B (a variable benefit that generally equals the Specified
Amount plus the Policy's cash value). The minimum Specified Amount for a Policy
is generally $50,000, and the Policy is available only to persons who have an
age nearest birthday of 80 or less at the time the Policy is purchased. The
Policy provides for a cash surrender value that can be obtained by partial
withdrawals, completely surrendering the Policy, or by policy loans. There is no
minimum guaranteed cash value.

The initial premium payment will be allocated to the money market subaccount of
the Variable Products Insurance Fund, as of the issue date, for 13 days. After
the expiration of the refund period (see page 20), the accumulation value will
be allocated to the subaccounts or the Fixed Account as selected by the
policyowner. The policyowner may allocate net premiums to one or more of the
Subaccounts of Ameritas Variable Life Insurance Company Separate Account V
("Account"), or to the Fixed Account. The amount of the Policy's cash value, the
duration of the death benefit and, if Option B is selected, the amount of the
death benefit above the Specified Amount, will vary with the investment
experience of the selected Subaccounts. In addition, the cash value will also be
adjusted for other factors, including the amount of charges imposed and the
premium payments made. The Policy will continue in force so long as the cash
surrender value is sufficient to pay certain monthly charges imposed in
connection with the Policy.

The assets of each Subaccount of the Separate Account are invested in shares of
a corresponding portfolio of the Variable Insurance Products Fund, (collectively
the Funds). The Variable Insurance Products Fund is a mutual fund with five
portfolios: the Money Market Portfolio, the High Income Portfolio, the
Equity-Income Portfolio, the Growth Portfolio and the Overseas Portfolio. The
accompanying prospectus for the various funds describes the investment
objectives and policies and the risk of each of the portfolios of the Funds.

You have the right to examine the Policy and return it for a refund for a
limited time.

Replacing existing insurance with a Policy or purchasing a Policy as a means to
obtain additional insurance protection if the purchaser already owns another
flexible premium variable life insurance policy may not be advantageous.

This Prospectus Must Be Accompanied or Preceded By Current Prospectuses for the
Variable Insurance Products Fund.

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

Please Read This Prospectus Carefully And Retain It For Future Reference.

The Date of This Prospectus is May 1, 1996.
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<TABLE>
<CAPTION>

TABLE OF CONTENTS
Page
<S> <C>
Definitions................................................................ 3
Summary.................................................................... 4
Ameritas Variable Life Insurance Company and the Account................... 9
Ameritas Variable Life Insurance Company................................... 9
Ameritas Variable Life Insurance Company Separate Account V................ 10
Variable Insurance Products Fund........................................... 10
Fixed Account.............................................................. 12
Addition, Deletion, or Substitution of Investments......................... 12
Exchange Offer ............................................................ 12
Policy Benefits............................................................ 14
Purposes of the Policy..................................................... 14
Death Benefit Proceeds..................................................... 14
Death Benefit Options...................................................... 14
Cash Value ................................................................ 17
Benefits at Maturity ...................................................... 18
Payment of Policy Benefits ................................................ 18
Policy Rights ............................................................. 18
Loan Benefits ............................................................. 18
Surrenders ................................................................ 19
Partial Withdrawals ....................................................... 19
Transfers ................................................................. 20
Refund Privilege........................................................... 20
Exchange Privilege......................................................... 20
Payment and Allocation of Premiums......................................... 21
Issuance of a Policy....................................................... 21
Premiums................................................................... 21
Allocation of Premiums and Cash Value...................................... 22
Policy Lapse and Reinstatement............................................. 22
Charges and Deductions .................................................... 23
Premium Charges ........................................................... 23
Charges from Cash Value ................................................... 23
Daily Charges Against the Account.......................................... 26
General Provisions ........................................................ 27
Distribution of the Policies .............................................. 29
Federal Tax Matters ....................................................... 29
Safekeeping of the Variable Account's Assets .............................. 31
Voting Rights ............................................................. 31
State Regulation of AVLIC.................................................. 32
Executive Officers and Directors of AVLIC.................................. 32
Legal Matters ............................................................ 34
Legal Proceedings ......................................................... 34
Experts ................................................................... 34
Additional Information .................................................... 34
Financial Statements ...................................................... 34
Ameritas Variable Life Insurance Company Separate Account V................ 35
Ameritas Variable Life Insurance Company .................................. 42
</TABLE>

Policy is not available in all States. The Overseas Portfolio and the Fixed
Account may not be available in all states.

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
<PAGE>
DEFINITIONS

ACCOUNT - Ameritas Variable Life Insurance Company Separate Account V, a
separate investment account established by Ameritas to receive and invest the
net premiums paid under the Policy and allocated by the policyowner to the
Account.

ACCRUED EXPENSE CHARGES -The sum of: in the first policy year, an amount equal
to the monthly first year acquisition charge times the number of months to the
first policy anniversary; during the twelve policy months following an increase
in Specified Amount, an amount equal to the monthly charges for the increase
(including acquisition and sales load charges) times the number of months to the
anniversary of the increased Specified Amount; and any monthly deductions that
are due and unpaid.

ATTAINED AGE - The Issue Age of the Insured plus the number of complete policy
years that the policy has been in force.

AMERITAS - Ameritas Variable Life Insurance Company, a Nebraska stock life
insurance company

BENEFICIARY - The beneficiary is designated by the policyowner in the
application. If changed, the beneficiary is as shown in the latest change filed
and recorded with Ameritas. If no beneficiary survives the Insured, the
policyowner or the policyowner's estate will be the beneficiary. The interest of
any beneficiary is subject to that of any assignee.

CASH VALUE - The total amount that a Policy provides for investment at any time.
It is equal to the total of the cash value held in the Account and the cash
value held in the general account which secures policy loans.

CASH SURRENDER VALUE - The policy cash value on the date of surrender, less any
outstanding policy debt, any cash surrender charge, and any accrued expense
charges.

DECLARED RATES - AVLIC guarantees that it will credit interest in the Fixed
Account at an effective annual rate of at least 4.5%. AVLIC may, at its
discretion, declare higher interest rates for amounts allocated or transferred
to the fixed account.

DUE PROOF OF DEATH - All of the following must be submitted: (1) A certified
copy of the death certificate; (2) A Claimant Statement (3) The Policy; and
(4) Any other information that Ameritas may reasonably require to establish the
validity of the contract.

DEATH BENEFIT - The amount of insurance coverage provided under the selected
death benefit option of the Policy.

DEATH BENEFIT PROCEEDS - The proceeds payable to the beneficiary upon receipt by
Ameritas of the proof of the death of the Insured while the Policy is in force
equal to: (l) the death benefit; plus (2) any additional life insurance proceeds
provided by any riders; minus (3) any outstanding policy debt; minus (4) any
monthly deduction that may apply to that period, including the deduction for the
month of death.

FIXED ACCOUNT -An account that is a part of AVLIC's general account to which all
or a portion of premium payments may be allocated for accumulation at fixed
rates of interest.

INSURED - The person upon whose life the Policy is issued.

ISSUE AGE - The age at the Insured's nearest birthday on the Policy Date.

ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.

MATURITY DATE - The policy anniversary nearest the Insured's 95th birthday, if
living.

MINIMUM FIRST YEAR PREMIUM - The premium that must be paid during the first
policy year. A pro rata portion of the minimum first year premium is required to
keep the Policy, including coverage under any riders, in force during the first
policy year.
<PAGE>
MINIMUM FIRST YEAR PREMIUM FOR THE POLICY - The premium that must be paid during
the first policy year to pay for insurance coverage under the selected death
benefit option. It does not include the required premium for coverage under any
riders.

MONTHLY ACTIVITY DATE - The same date in each succeeding month as the policy
date except that whenever the monthly activity date falls on a date other than a
valuation date, the monthly activity date will be deemed the next valuation
date.

NET PREMIUM - The premium less the premium charges consisting of the sales load
charge, premium taxes and the $2.00 per payment processing charge.

OUTSTANDING POLICY DEBT - The sum of all unpaid policy loans and accrued
interest on policy loans.

PLANNED PERIODIC PREMIUMS - A selected scheduled premium of a level amount at a
fixed interval. The policyowner is not required to follow this schedule and
following this schedule does not necessarily ensure that the Policy will remain
in force.

POLICY - The flexible premium variable life insurance Policy offered by Ameritas
and described in this Prospectus.

POLICYOWNER - The owner of the Policy, as designated in the application or as
subsequently changed. If a Policy has been absolutely assigned, the assignee is
the policyowner. A collateral assignee is not the policyowner.

POLICY DATE - The date set forth in the Policy that is the effective date of
coverage for all coverage provided in the original application and that is used
to determine policy anniversary dates, policy years and monthly activity dates.
Policy anniversaries are measured from the policy date.

POLICY YEAR - The period from one policy anniversary date until the next policy
anniversary date.

SPECIFIED AMOUNT - The minimum death benefit under the Policy so long as the
Policy remains in force.

SUBACCOUNT - A subdivision of the Account. Each Subaccount invests exclusively
in the shares of a specified portfolio of the Funds. Valuation Date - A
valuation date is each day on which the New York Stock Exchange is open for
trading.

VALUATION PERIOD - The period between two successive valuation dates, commencing
at the close of the New York Stock Exchange ("NYSE") on one valuation date and
ending at the close of the NYSE on the next succeeding valuation date.

SUMMARY

The following summary of Prospectus information should be read in conjunction
with the detailed information appearing elsewhere in this Prospectus. Unless
otherwise indicated, the description of the Policy contained in this Prospectus
assumes that the Policy is in effect and that there is no outstanding
indebtedness.

THE POLICY

This flexible premium variable life insurance policy ("Policy") allows the
policyowner, subject to certain limitations, to make premium payments in any
amount and at any frequency. So long as the Policy remains in force, it will
provide for: (1) life insurance coverage on the named Insured up to age 95; (2)
cash value; (3) surrender rights (including partial withdrawals and total
surrenders) and policy loan privileges; and (4) a variety of optional benefits
and riders that may be added to the Policy for an additional charge.

The Policy is a "flexible premium" policy because, unlike traditional insurance
policies, other than the minimum first year premium, there is no fixed schedule
for premium payments. The policyowner may establish a schedule of premium
payments ("planned periodic premiums"), however, failure to make the planned
periodic premiums will not necessarily cause the Policy to lapse nor will making
the planned periodic premiums guarantee that the Policy will remain in force
until maturity. The Policy will lapse when the cash surrender value is
insufficient to pay the monthly deduction for insurance and administrative
charges and a grace period expires without sufficient additional payment. In
addition, the Policy will lapse during the first policy year if the pro rata
portion of the minimum first year premium has not been paid. Thus, within
certain limits, a policyowner can skip premium payments or pay additional
premiums. (See Premiums, page 6.) This flexibility permits a policyowner to
provide for changing insurance needs within a single policy.

The Policy is a "variable" policy because, unlike the fixed benefits of a
conventional life insurance policy, the death benefit under the Policy may, and
the cash value will, if so invested, reflect the investment performance of the
selected Subaccounts of the separate account supporting the Policies, as well as
other factors. (See Death Benefit Proceeds, page 14 and Cash Value, page 17.)
Accordingly, the policyowner reaps the benefit of any appreciation
<PAGE>
in values, but bears the investment risk of any depreciation in value of the
underlying assets. The amount and/or duration of the life insurance coverage and
the cash values of this Policy is not guaranteed, except in the Fixed Account,
and may increase or decrease depending upon the investment experience of the
Subaccounts supporting the Policy.

Net premium payments are allocated by the policyowner to one or more of these
Subaccounts or to the Fixed Account. The assets of the Various Subaccounts are
invested in a corresponding portfolio of the Variable Products Funds.

THE VARIABLE INSURANCE PRODUCTS FUND is a mutual fund company with five separate
investment portfolios, each intended to pursue different investment objectives.
The objectives of these portfolios are described in more detail in the
accompanying prospectuses for the funds.

THE VARIABLE INSURANCE PRODUCTS FUND currently offers the following five
Portfolios:

THE MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The Money Market
Portfolio will invest only in high-quality money market instruments.

THE HIGH INCOME PORTFOLIO seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated debt securities (sometimes
called "junk bonds"). In choosing these securities, growth of capital will also
be considered.

THE EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities this Portfolio
will also consider the potential for capital appreciation. This Portfolio's goal
is to achieve a yield which exceeds the composite yield of the Standard & Poor's
500 Composite Stock Direct Index.

THE GROWTH PORTFOLIO seeks to achieve capital appreciation, normally through the
purchase of common stocks (although the Portfolio's investments are not
restricted to any one type of security). Capital appreciation may also be found
in other types of securities, including bonds and preferred stocks.

THE OVERSEAS PORTFOLIO seeks long term growth of capital primarily through
investments in foreign securities. The Overseas Portfolio provides a means for
investors to diversify their own Portfolios by participating in companies and
economies outside of the United States. May not be available in all states.

There is no assurance that these objectives will be met. The policyowner bears
the entire investment risk of amounts allocated to the Subaccounts of the
Account.

FIXED ACCOUNT. Policyholders may also allocate their premiums or transfer monies
to the Fixed Account where they will earn interest.(See Fixed Account, page 12.)

THE ISSUER

The Policy is issued by Ameritas Variable Life Insurance Company ("AVLIC"), a
Nebraska stock life insurance company. A separate account of AVLIC, Ameritas
Variable Life Insurance Company Separate Account V ("Account"), has been
established to hold the assets supporting the Policy. The Account has 5
Subaccounts which correspond to, and are invested in, the portfolios of the
Funds discussed just above. For more detailed information about AVLIC and the
Account, see Ameritas Variable Life Insurance Company and the Account, page 9.
The financial statements for AVLIC and the Account can be found beginning on
page 35.

POLICY BENEFITS

Death Benefit Proceeds and Death Benefit Options. So long as the Policy remains
in force, AVLIC will pay the proceeds under the Policy upon receipt of due proof
of death of the Insured. These proceeds will be the Policy's death benefit, plus
any life insurance proceeds provided by rider, but will be reduced by any
outstanding policy debt and any accrued expenses. The proceeds may be paid in a
lump sum or in accordance with an optional payment plan.

The Policy provides for two death benefit options. Under either option, so long
as the Policy remains in force, the death benefit will not be less than the
current Specified Amount of the Policy. The death benefit may, however, exceed
the Specified Amount, depending upon the investment experience of the Policy.
Death Benefit Option A provides for a level benefit equal to the current
Specified Amount of the Policy, unless the cash value of the Policy on the date
of the Insured's death multiplied by the applicable percentage set forth in the
Policy is greater, in which case the death benefit is equal to that larger
amount. Death Benefit Option B provides for a variable benefit equal to the
current Specified Amount of the Policy plus the Policy's cash value on the date
of the Insured's death, or if greater, the cash value of the Policy on the date
of the Insured's death multiplied by the applicable percentage set forth in the
Policy. (See Death Benefit Options, page 14.)

Optional insurance benefits offered under the Policy include: accidental death
benefit rider; term rider for covered Insured; disability benefit rider;
guaranteed insurability rider; payor disability rider; and children's protection
rider.
<PAGE>
See Additional Insurance Benefits, page 28.) The cost of these additional
insurance benefits will be deducted from the Policy's cash value as a part of
the monthly deduction.

BENEFITS AT MATURITY. On the maturity date of the Policy, if the Insured is
still living, the policyowner will be paid the cash value of the Policy less any
outstanding policy debt.

CASH VALUE BENEFITS. The Policy's cash value in the Account will reflect the
amount and frequency of premium payments, the investment experience of the
chosen Subaccounts, policy loans, any partial withdrawals, and any charges
imposed in connection with the Policy. The entire investment risk of the Account
is borne by the policyowner. AVLIC does not guarantee a minimum cash value in
the Account. (See Cash Value, page 17.)

The policyowner may at any time surrender the Policy and receive its cash
surrender value. Subject to certain limitations, the policyowner may also make a
partial withdrawal from the Policy and obtain a portion of the cash surrender
value at any time after the first policy year and prior to the maturity date.
Partial withdrawals will reduce both the cash value and the death benefit
payable under the Policy. (See Partial Withdrawals, page 19). A charge will be
deducted from the amount paid upon partial withdrawal. (See Partial Withdrawal
Charge, page 26.)

POLICY LOANS. After the first policy anniversary, the policyowner may exercise
certain loan privileges under a Policy. The maximum loan amount which is the
amount that may be borrowed is 75% of the cash value less any cash surrender
charges and accrued expenses. Texas policyholders may borrow 100% of the cash
value subject to certain deductions. The available loan amount at any time is
the maximum loan amount less any outstanding policy debt. Loans will accrue
interest on a daily basis at the rate of 8% per year. The amount of any loans
outstanding plus any accrued interest equals the outstanding policy debt.
Interest is due on each policy anniversary and if not paid when due, will be
added to the outstanding loan. When the loan is made or when interest is not
paid when due, an amount sufficient to secure the policy debt is transferred out
of the Account or the Fixed Account and into AVLIC's general account as security
for the loan and will earn interest at the annual rate of 4.5%, credited on the
policy anniversary. Upon partial or full loan repayment, the portion of the cash
value in the general account securing the repaid portion of the policy loan will
be transferred to the Account or the Fixed Account. Any loan transaction will
permanently affect the values of the Policy. If the outstanding policy debt
exceeds the Policy's cash value less any cash surrender charge and accrued
expenses, the excess must be repaid within the specified time period or the
Policy will terminate without value. Should the policy lapse while policy loans
are outstanding the portion of the loans attributable to earnings will become
taxable. (See Loan Benefits, page 18.)

FLEXIBILITY TO ADJUST DEATH BENEFITS

After the first policy anniversary, the policyowner has flexibility to adjust
the death benefit by changing the death benefit option. After the second policy
year the policyowner has flexibility to adjust the death benefit by increasing
or decreasing the Specified Amount of the Policy. A change in the Specified
Amount and a change in the death benefit option may only be made once per year,
and are subject to certain limitations. No change will be allowed if the
resulting Specified Amount is less than the minimum allowed. The minimum
Specified Amount during the first three policy years is $50,000; thereafter the
minimum is $35,000. Increases in the Specified Amount or a change in the death
benefit option from Option A to Option B will require satisfactory evidence of
insurability. Further, an increase in the Specified Amount may not be made if
the Insured's age nearest birthday is over 75, and the minimum amount of any
increase is the greater of 10% of the initial Specified Amount or $25,000. (See
Change in Death Benefit Option, page 16, and Change in Specified Amount, page
16.)

PREMIUMS

AMOUNTS. An initial premium of at least 1/12th of the minimum first year premium
for the Policy and any riders must be paid in order to put the Policy in force.
A pro rata portion of the minimum first year premium is required to have been
paid at all times during the first policy year in order to keep the Policy in
force. After the initial premium is paid, unscheduled premiums may be paid in
any amount and at any frequency, subject only to the maximum and minimum
limitations set by AVLIC and the maximum limitations set by federal income tax
law. A policyowner may also choose a planned periodic premium. The amounts and
frequency of the planned periodic premiums may be changed at any time. Any
premium received in an amount different from the planned periodic premiums will
be considered an unscheduled premium.

A Policy will lapse when the cash surrender value is insufficient to pay the
monthly deduction. Prior to the first policy anniversary, the Policy will lapse
regardless of the cash surrender value if a pro rata portion of the minimum
first year premium has not been paid on any monthly activity date. A period of
61 days from the date written notice of lapse is mailed will be allowed to make
sufficient payment to keep the Policy in force.

Therefore, this Policy differs in two important respects from a conventional
life insurance policy. First, the failure to pay a planned periodic premium will
not in itself cause the Policy to lapse. Second, a Policy can lapse even if
planned periodic premiums have been paid. (See Payment and Allocation of
Premiums, page 21.)

ALLOCATION OF NET PREMIUMS. Net premiums, which equal the premium paid less the
premium charges and the payment processing charge, are allocated to the Money
Market Subaccount of the Variable Products Fund as of the issue date for 13
days. After the expiration of the refund period, the accumulation value will be
allocated to the Subaccounts or the Fixed Account as selected by the
policyowner. Premium payments received by AVLIC prior
<PAGE>
to the issue date are held in the general account until the issue date. Amounts
held in the general account are credited with interest at a rate determined by
AVLIC for the period from the date good funds are received by AVLIC until the
amounts are transferred to the Subaccounts, but in no event will interest be
credited prior to the policy date. The policyowner may change the allocation
instructions for premiums and may also make a special designation for
unscheduled premiums. Subject to certain charges, a policyowner may transfer
amounts among the Subaccounts. (See Allocation of Premiums and Cash Value, page
22.)

CHARGES

PREMIUM CHARGES. Certain charges will be deducted from each premium before
placing any amount in a Subaccount.

Generally, a charge of 7.5% of each premium will be deducted to compensate AVLIC
for the expenses associated with distributing the Policy. During the first
policy year, a charge of 8.5% will be deducted from the minimum first year
premium for the Policy and 7.5% will be deducted from any premium payment in
excess of the minimum first year premium for the Policy. In addition, a charge
of 2.5% of each premium will be deducted to compensate AVLIC for taxes,
including premium taxes, paid to the various states. A $2.00 per payment
processing charge is also deducted from each premium payment. (See Premium
Charges, page 23.)

MONTHLY CHARGES AGAINST THE CASH VALUE. On each monthly activity date, the cash
value will be reduced by the monthly deduction. The monthly deduction is equal
to:

a) A maintenance charge of up to $5.00, plus
b) An acquisition charge during the first policy year only, plus
c) A charge for the cost of insurance for the current policy month,
including the cost for any riders, plus
d) Charges for any increase in the specified amount of insurance,
including a sales load charge and administrative charge. (See Charges
from Cash Value, page 23.)

Monthly charges will be deducted from the Subaccount(s) on a pro rata basis in
proportion to the assets held in each Subaccount. (See Monthly Deduction, page
23.)

The maintenance charge will compensate AVLIC for the ordinary ongoing
administrative costs of the Policy. This charge is a maximum of $5.00. The first
year acquisition charge compensates AVLIC for certain start-up processing and
insurance underwriting costs associated with determining the insurability and
risk classification of the Insured and other costs of issuing the Policy. The
cost of insurance charge compensates AVLIC for the insurance benefits provided
under the Policy and riders. The charge for any increase in the Specified Amount
compensates AVLIC for the cost of underwriting the increase, such as the cost of
medical examinations and review of applications, the cost of processing
applications and changing and establishing policy records, and for distribution
expenses incurred in connection with the Policy.

CASH SURRENDER CHARGE. If a Policy is surrendered prior to the 15th policy
anniversary, AVLIC will assess a cash surrender charge based upon certain
percentages of premiums actually paid in policy years 1 and 2.

If the policyowner surrenders during the first policy year, AVLIC will assess a
cash surrender charge equal to 21.5% of the amount actually paid in policy year
1, up to the amount of the minimum first year premium for the Policy. Any
premium paid in excess of the amount of the minimum first year premium will not
be subject to a charge. If the policyowner surrenders during policy year 2, the
amount of the cash surrender charge will equal 21.5% of the minimum first year
premium for the Policy, plus 2.5% of any premiums actually paid in the second
policy year up to an amount equal to the minimum first year premium for the
Policy, except that if the policyowner had not paid the entire minimum first
year premium for the Policy during the first policy year, any portion of the
premium paid in the second policy year attributable to the minimum first year
premium due for the Policy would not be subject to the 2.5% charge. The cash
surrender charge remains level in policy years three through eleven and will
equal the cash surrender charge at the end of year 2 and then grades to 0% in
year sixteen. There is no additional cash surrender charge attributable to any
increase in the Specified Amount of the Policy and no cash surrender charge
assessed upon decreases in the Specified Amount of the Policy or partial
withdrawals of cash value. Because the cash surrender charge may be significant
upon early surrender, prospective policyowners should purchase a Policy only if
they do not intend to surrender the Policy for a substantial period. (See Cash
Surrender Charge, page 26.)

TRANSFER CHARGE. The first 9 transfers per policy year will be permitted free of
charge. Thereafter a transfer charge of $10 will be assessed for each transfer
of cash value among Subaccounts and/or the Fixed Account to compensate AVLIC for
administrative costs in handling the transfer. The transfer charge will be
deducted from the amount transferred. (See Transfers and Transfer Charge, page
20 and 26.)

PARTIAL WITHDRAWAL CHARGE. A maximum charge, not to exceed the lesser of $50 or
2% of the amount withdrawn may be deducted for each partial withdrawal. The
charge will be deducted from the amount paid as a result of the
<PAGE>
withdrawal and will compensate AVLIC for the administrative costs of partial
withdrawals. (See Partial Withdrawal Charge, page 26.)

DAILY CHARGES AGAINST THE ACCOUNT. A daily charge will be imposed at an annual
rate of .70% of the average daily net assets of each Subaccount, but not the
Fixed Account, to compensate AVLIC for certain mortality and expense risks
incurred in connection with the Policy. (See Daily Charges Against the Account,
page 26.)

No charges are currently made against the Account for federal, state or local
taxes (which are charged in addition to state premium taxes). If there is a
material change from the expected treatment of AVLIC under federal, state or
local tax laws AVLIC may determine to make deductions from the Account to pay
those taxes. (See Taxes, page 27.)

In addition, because the Account purchases shares of the Fund, the value of the
units in each Subaccount will reflect the net asset value of shares of the
various Funds held therein, and therefore the investment advisory fee and other
expenses incurred by the Funds. (See The Funds, page 10.)

DISTRIBUTION OF THE POLICY

The Policy will be distributed by registered representatives of Ameritas
Investment Corp., which acts as the principal underwriter of the Policy.
Ameritas Investment Corp. is registered as a broker-dealer with the Securities
and Exchange Commission and is a member of the National Association of
Securities Dealers, Inc. The Policy will also be distributed through other
registered broker-dealers that have entered into written sales agreements with
the principal underwriter. (See Distribution of the Policies, page 29.)

TAX TREATMENT OF THE POLICY

The Internal Revenue Code (the Code) defines a modified endowment (MEC)
insurance contract as one where the cumulative amount paid under the contract at
any time during the first 7 contract years exceeds the sum of the net level
premiums which would have been paid on or before that time if the policy was
paid up after the payment of 7 level annual premiums. One may avoid a policy
becoming a MEC by, among other things, not making excessive payments or reducing
benefits. Should one deposit excessive premiums during a policy year, that
portion that is returned by the insurance company within 60 days after the
policy anniversary will reduce premiums paid during the policy year to avoid the
policy becoming a MEC. Should the policy become a "modified endowment contract"
partial or full surrenders, assignments, policy pledges, and loans (including
loans to pay loan interest) under the policy will be taxable to the extent of
any gain under the policy. A 10% penalty tax also applies to the taxable portion
of any distribution prior to the policyholder reaching age 59 1/2. The 10%
penalty tax does not apply if the policyholder is disabled as defined under the
Code or if the distribution is paid out in the form of a life annuity on the
life of the policyholder or the joint lives of the policyholder and beneficiary.

Like death benefits payable under conventional life insurance policies, life
insurance proceeds payable under a Policy should be completely excludable from
the gross income of the beneficiary. As a result, the beneficiary generally will
not be taxed on these proceeds. (See Federal Tax Matters, page 29.)

REFUND PRIVILEGE

The policyowner is granted a period of time (a "free look period") to examine a
Policy and return it for a refund. The policyowner may cancel the Policy within
45 days after Part I of the application is signed, within 10 days after the
policyowner receives the Policy, or 10 days after AVLIC delivers a cancellation
notice, whichever is later. The amount of the refund is the greater of the
premium paid or the premium paid adjusted by investment gains or losses.
(See Refund Privilege, page 20.)

EXCHANGE PRIVILEGE

During the first 24 months after the policy date of the Policy, subject to
certain restrictions, the policyowner may exchange the Policy for a flexible
premium adjustable life insurance policy issued by AVLIC or Ameritas Life. The
policy provisions and applicable charges for the new policy will be based on the
same policy date and issue age as under the Policy. (See Exchange Privilege,
page 20.)

EXCHANGE OFFER

AVLIC and the Account will exchange the flexible premium variable life insurance
policy offered by AVLIC and registered with the Securities and Exchange
Commission known as Applause Flexible Premium Variable Universal Life (Applause
Life) (Policy Form #4010) for previously issued UniVar Flexible Premium Variable
Universal Life Insurance Policies (Policy Form #4002). More detailed
information, including a description of policy charges and provisions is found
at page 13 herein and in the prospectus for the Applause policy. The exchange
offer provisions
<PAGE>
are designed to allow the old UniVar Life policyowner to acquire the new
Applause Life policy as if he had owned it from the date of the issue of the old
UniVar Life policy.

The exchange is offered under the following terms:

1. The Applause Life Insurance Policy will be issued as of the original date of
issue of the exchanged UniVar Life Policy.

2. The Applause Life Insurance Policy will be issued to UniVar policyowners
without additional evidence of insurability of the insured for the same face
amount of insurance.

3. The UniVar Life policyowner will be refunded all of the sales and
acquisition charges deducted from his/her premium payment, except premium
taxes, plus 12% interest thereon, which amount will be added to the UniVar
Policy accumulation value.

4. After the additions to the accumulation value, AVLIC will then exchange the
UniVar Life Policy for and issue the Applause Life Policy on a relative net
asset basis without deducting surrender charges on the UniVar Life Policy
surrender or sales or acquisition charges on this policy's acquisition.
AVLIC expects to recover certain of the refunded sales and acquisition
charges through surrender charges on the Applause Policy if surrendered
before the 15th policy year dating from the original UniVar issue date.

5. The new Applause Life policyholder will then enjoy the benefits and be
subject to the charges and contract provisions as set out in the Applause
Life Prospectus. (A comparison of the charges is set out at page 13.)

AMERITAS VARIABLE LIFE INSURANCE COMPANY AND THE ACCOUNT

AMERITAS VARIABLE LIFE INSURANCE COMPANY

Ameritas Variable Life Insurance Company ("AVLIC") is a stock life insurance
company organized in the State of Nebraska. AVLIC was incorporated on June 22,
1983 and commenced business December 29, 1983. AVLIC is currently licensed to
sell life insurance in 46 states, and the District of Columbia. AVLIC's
financial statements may be found at page 42.

AVLIC is a wholly-owned subsidiary of AMAL Corporation, a Nebraska stock
company. AMAL Corporation is a joint venture of Ameritas Life Insurance Corp.
(Ameritas Life), which owns a majority interest in AMAL Corporation; and
American Mutual Life Insurance Company ("American Mutual"), an Iowa mutual life
insurance company, which owns a minority interest in AMAL Corporation. The Home
Offices of both AVLIC and Ameritas Life are at One Ameritas Way, 5900 "O"
Street, P.O. Box 82550, Lincoln, Nebraska 68501.

On April 1, 1996 Ameritas Life consummated an agreement with American Mutual
whereby AVLIC became a wholly-owned subsidiary of a newly formed holding
company, AMAL Corporation. The agreement was announced March 11, 1996. The
holding company will contribute approximately $18 million of additional paid-in
capital to AVLIC. Under terms of the agreement the AMAL Corporation will
initially be 66% owned by Ameritas Life and 34% owned by American Mutual.
American Mutual has options to purchase an additional 15% interest over the next
five years if certain production requirements are met.

Ameritas Life and its subsidiaries had total assets at December 31, 1995 of over
$2.4 billion. American Mutual and its subsidiaries had total assets as of
December 31, 1995 of over $3.9 billion.

AVLIC has a rating of A (Excellent) from A.M. Best Company, a firm that analyzes
insurance carriers, and a rating of AA ("Excellent") from Standard & Poor's for
claims-paying ability. Ameritas Life enjoys a long standing A+ (Superior) rating
from A.M. Best.

Ameritas Life, American Mutual and AMAL Corporation guarantee the obligations of
AVLIC. This guarantee will continue until AVLIC is recognized by a National
Rating Agency as having a financial rating equal to or greater than Ameritas
Life, or until AVLIC is acquired by another insurance company who has a
financial rating by a National Rating Agency equal to or greater than Ameritas
Life and who agrees to assume the guarantee; provided that if AML sells its
interest in AMAL Corporation to another insurance company who has a financial
rating by a National Rating Agency equal to or greater than that of AML, and the
purchaser assumes the guarantee, AML will be relieved of its obligations under
the Guarantee.

Effective January 1, 1996, with the approval of the State of Nebraska Insurance
Department, AVLIC changed reserving methods used for most existing products
resulting in an increase in statutory surplus of approximately $23.4 million.

On February 28, 1996 the Board of Directors declared a return of paid-in capital
of $15 million paid by a note due on or before August 15, 1996. This action was
approved by the State of Nebraska Insurance Department (Insurance Department).
Any additional distributions of capital or surplus would require approval of the
Insurance Department.

Ameritas Investment Corp. is the principal underwriter for the Policies
described in this Prospectus.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V

AVLIC established the Ameritas Variable Life Insurance Company Separate Account
V (the "Account") on August 28, 1985, under Nebraska law as a separate
investment account. This Account holds assets that are segregated from all of
AVLIC's other assets and at present is used only to support flexible premium
variable life insurance policies. AVLIC is the legal holder of the assets in the
Account and will at all times maintain assets in the Account with a total market
value at least equal to the reserve and other contract liabilities for the
Account. The assets of the Account attributable to the Policies are not
chargeable with liabilities arising out of any other business which AVLIC may
conduct, and income and both realized and unrealized gains or losses from the
assets of the Account are credited to or charged against the Account without
regard to income, gains or losses arising out of any other business that AVLIC
may conduct. Nevertheless, these assets shall be available to cover the
liabilities of AVLIC's general account, but only to the extent that the
Account's assets exceed its liabilities arising under the Policies supported by
it. In addition to these assets, the Account assets may include accumulations of
the charges AVLIC makes against Policies participating in the Account. From time
to time, any such assets due AVLIC may be transferred in cash to AVLIC's general
account. The Account will at all times contain assets equal to or greater than
account values invested in the separate account. The Account's financial
statements may be found at page 35.

The Account is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 ("1940 Act") as a unit investment
trust, which is a type of investment company. This does not involve any SEC
supervision of the management or investment policies or practices of the
Account. For state law purposes, the Account is treated as a division of AVLIC.
There are currently five Subaccounts within the Account and each invests only in
corresponding portfolios of the Variable Insurance Products Fund, (collectively
the Variable Products Funds).

THE FUNDS

Each Subaccount of the Account will invest only in the shares of a corresponding
portfolio of the Variable Insurance Products Fund. Each fund is registered with
the SEC under the 1940 Act as an open-end diversified management investment
company. These registrations do not involve SEC supervision of the management or
investment practices or policies of the Funds.

The Account will purchase and redeem shares from the Funds at net asset value.
Shares will be redeemed to the extent necessary for AVLIC to collect charges
under the Policies, to pay the cash surrender value upon full surrenders of the
contracts, to fund partial withdrawals, to make policy loans, to provide
benefits under the Policies, or to transfer assets from one Subaccount to
another, or to the Fixed Account, as requested by policyowners. Any dividend or
capital gain distribution received from a portfolio of the Funds will be
reinvested immediately at net asset value in shares of that portfolio and
retained as assets of the corresponding Subaccount.

The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this Prospectus and which
should be read carefully together with the Prospectus and retained.

All underlying fund information, including the Fund prospectus, has been
provided to AVLIC by the underlying Fund. AVLIC has not independently verified
this information.

Each policyowner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Funds' various portfolios.

THE VARIABLE INSURANCE PRODUCTS FUND

The Variable Insurance Products Fund currently has a Money Market Portfolio, a
High Income Portfolio, an Equity- Income Portfolio, a Growth Portfolio and an
Overseas Portfolio. The assets of each portfolio of the Funds are held separate
from the assets of the other portfolios. Thus, each portfolio operates as a
separate investment portfolio, and the income or losses of one portfolio
generally have no effect on the investment performance of any other portfolio.

Since the Variable Insurance Products Fund is designed to provide investment
vehicles for variable annuity or variable life insurance contracts of various
insurance companies and will be sold to separate accounts of other insurance
companies as investment vehicles for various types of variable life insurance
policies or variable annuity contracts, there is a possibility that a material
conflict may arise between the interests of the Account and one or more of the
separate accounts of another participating insurance company. In the event of a
material conflict, the affected insurance companies agree to take any necessary
steps, including removing its separate accounts from the Funds, to resolve the
matter. The risks of such mixed and shared funding are described further in the
prospectuses of the Funds.
<PAGE>
THE VARIABLE INSURANCE PRODUCTS FUND currently offers the following five
Portfolios:

THE EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities this Portfolio
will also consider the potential for capital appreciation. This Portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's Daily Stock Price Index of 500 Common Stocks.

FUND MANAGEMENT AND FEES

Fidelity Management & Research Company (FMR) is the Manager for The Variable
Products Funds. It provides a number of mutual funds and other clients with
investment research and portfolio management services. It maintains a large
staff of experienced investment personnel and a full complement of related
support facilities. Each portfolio pays FMR a monthly fee for managing its
investment and business affairs. FMR has voluntarily agreed to temporarily limit
the total expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) of the Equity-Income, Growth and Overseas Portfolios to
an annual rate of 1.50%, and the High Income Portfolio to an annual rate of
1.00% of each Portfolio's average net assets. If a Portfolio's expenses exceed
that amount, FMR will waive all or a portion of its fees and reimburse the
Portfolio for its other expenses to the extent necessary to reduce expenses to
the applicable limit. As long as this expense limitation continues for a
Portfolio, if a reimbursement occurs, it has the effect of lowering the
portfolio's expense ratio and increasing its total return.

FUND MANAGEMENT FEES

Fee information relating to the underlying fund was provided to AVLIC by the
underlying fund. AVLIC has not independently verified the information received
from the underlying fund.

Fidelity Management & Research Company (FMR) is the Manager for the Fidelity
Funds. Each portfolio pays FMR a monthly fee for managing its investment and
business affairs.

EXPENSE SUMMARY

The amount of expenses borne by each portfolio for the fiscal year ended
December 31, 1995, was as follows:
<TABLE>
<CAPTION>

Investment Advisory
Portfolio and Management Other Expense Total
- ---------------- ---------------------- --------------- ---------
<S> <C> <C> <C>
Fidelity
- ----------------
Money Market .24% .09% .33%
High Income .60% .11% .71%(1)
Equity-Income .51% .10% .61%
Growth .61% .09% .70%
Overseas .76% .15% .91%

</TABLE>

(1) A portion of the brokerage commissions the fund paid was used to reduce
its expenses. Without this reduction total operating expenses would have
been, for High Income: 0.71% (please note there were brokerage commissions
paid, but it did not affect the ratio).
<PAGE>
The Account will purchase and redeem shares from the Funds at net asset value.
Shares will be redeemed to the extent necessary for AVLIC to collect charges
under the Policies, to pay the cash surrender value upon full surrenders of the
contracts, to fund partial withdrawals, to make policy loans, to provide
benefits under the Policies, or to transfer assets from one Subaccount to
another as requested by policyowners. Any dividend or capital gain distribution
received from a portfolio of the Funds will be reinvested immediately at net
asset value in shares of that portfolio and retained as assets of the
corresponding Subaccount.

FIXED ACCOUNT

Owners may elect to allocate all or a portion of their premium payments to the
Fixed Account and they may also transfer monies from the separate accounts to
the Fixed Account or from the Fixed Account to the Separate Account. (See
Transfers, page 20.)

Payments allocated to the Fixed Account and transferred from the Separate
Account to the Fixed Account are placed in the General Account of AVLIC, which
supports insurance and annuity obligations. The General Account includes all of
AVLIC's assets, except those assets segregated in the separate accounts. AVLIC
has the sole discretion to invest the assets of the General Account, subject to
applicable law. AVLIC bears an investment risk for all amounts allocated or
transferred to the Fixed Account and interest credited thereto, less any
deduction for charges and expenses, whereas the owner bears the investment risk
that the declared rate described below, will fall to a lower rate after the
expiration of a declared rate period. Because of exemptive and exclusionary
provisions, interests in the General Account have not been registered under the
Securities Act of 1933 (the "1933 Act") nor is the General Account registered as
an investment company under "the Investment Company Act of 1940". Accordingly,
neither the General Account nor any interest therein is generally subject to the
provisions of the 1933 or 1940 Act. We understand that the staff of the SEC has
not reviewed the disclosures in this Prospectus relating to the Fixed Account
portion of the Policy; however, disclosures regarding the Fixed Account portion
of the Policy may be subject to generally applicable provisions of the federal
securities laws regarding the accuracy and completeness of statements made in
prospectuses.

AVLIC guarantees that it will credit interest at an effective annual rate of at
least 4.5%. AVLIC may, at its discretion, declare higher interest rate(s) for
amounts allocated or transferred to the General Account ("Declared Rate(s)").
Each month AVLIC will establish the declared rate from the monies transferred or
allocated to the Fixed Account that month. The owner will earn interest on the
amount transferred or allocated at the rate declared for a 12-month period
effective the month of transfer or allocation. After the end of the 12-month
period, the monies will earn interest at the rate established by AVLIC for each
month.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS

AVLIC reserves the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares that are held in the Account or
that the Account may purchase. If the shares of a portfolio of the Fund are no
longer available for investment or if in AVLIC's judgment further investment in
any portfolio should become inappropriate in view of the purposes of the
Account, AVLIC may redeem the shares, if any, of that portfolio, and substitute
shares of another registered open-end management company. AVLIC will not
substitute any shares attributable to a policyowner's interest in a Subaccount
of the Account without notice and prior approval of the SEC and possibly state
insurance authorities, to the extent required by the 1940 Act or other
applicable law. The Account may, to the extent permitted by law, purchase other
securities for other contracts or permit a conversion between contracts upon
request by the policyowners.

AVLIC also reserves the right to establish additional Subaccounts of the
Account, each of which would invest in shares corresponding to a new portfolio
of the Fund or in shares of another investment company having a specified
investment objective. AVLIC may, in its sole discretion, establish new
Subaccounts or eliminate one or more Subaccounts if marketing needs, tax
considerations or investment conditions warrant. Any new Subaccounts may be made
available to existing policyowners on a basis to be determined by AVLIC.

If any of these substitutions or changes are made, AVLIC may by appropriate
endorsement change the Policy to reflect the substitution or change. If AVLIC
deems it to be in the best interest of policyowners, and subject to any
approvals that may be required under applicable law, the Account may be operated
as a management company under the 1940 Act, it may be deregistered under that
Act if registration is no longer required, or it may be combined with other
AVLIC separate accounts. To the extent permitted by applicable law, AVLIC may
also transfer the assets of the Account associated with the Policies to another
separate account. In addition, AVLIC may, when permitted by law, restrict or
eliminate any voting rights of policyowners or other persons who have voting
rights as to the Account.

The policyowner will be notified of any material change in the investment policy
of any portfolio in which the owner has an interest.

EXCHANGE OFFER

On June 13, 1990, the Commission, after application by AVLIC and public notice
in the Federal Register, granted AVLIC's request that it be allowed to offer to
exchange previously issued UniVar Life Insurance policies for the Applause Life
Insurance Policy.
<PAGE>
The exchange offer provisions are designed to allow the old UniVar Life
policyowner to acquire the new Applause Life Insurance Policy as if he had owned
it from the date of issue of the old UniVar Life Insurance Policy.

The exchange is offered under the following terms:

1. The Applause Life Insurance Policy will be issued as of the original date
of issue of the exchanged UniVar Life Insurance Policy.

2. The Applause Life Insurance Policy will be issued to UniVar policyowners
without additional evidence of insurability of the insured for the same
amount of insurance.

4. After the additions to the accumulation value, AVLIC will then exchange
the UniVar Life Insurance Policy for and issue the Applause Life Insurance
Policy on a relative net asset basis without deducting surrender charges
on the UniVar Life Insurance Policy surrender or sales acquisition charges
on the Applause Life Insurance Policy acquisition. AVLIC expects to
recover certain of the refunded sales and acquisition charges through
surrender charges on the Applause Life Insurance Policy if surrendered
before the 15th policy year dating from the original UniVar issue date.
AVLIC does not expect to recover the remainder of the refunded charges.

5. The new Applause Life Insurance policyholder will then enjoy the benefits
and be subject to the charges and contract provisions as set out in the
Applause Life Prospectus. A table summarizing the charges under the
respective policies are set out as follows:

Old Policy New Policy
---------------------- -----------------------------------
PREMIUM TAX 2.5% 2.5% (not charged on accumulation
values transferred from the old
policy

SALES CHARGES 7.5% of all premiums 5% (not charged on accumulation
(8.5% of minimum first values transferred from the old
year premiums) (refunded policy)
plus 12% interest in the
exchanges).

ADMINISTRA- Charges deducted from No deductions are made from
TIVE CHARGES first year premiums based premiums for the Administrative
FOR ISSUE upon table at page 25. costs of issue. A Deferred Admini-
strative costs charge will be
assessed if surrendered before
policy year 15.

MORTALITY Daily deductions at an Daily deductions currently charged
AND EXPENSE annual rate of .70% at an annual rate of .90% for the
CHARGES first 20 policy years and .65%
thereafter. (guaranteed .90%)

SURRENDER A contingent deferred A contingent deferred sales load of
CHARGES sales load based upon 25% of premiums actually paid in
amounts paid in the first the first two years up to the
two policy years (up to Guaranteed Death Benefit premiums,
21.5% of the minimum and 5% of the premiums in excess of
amounts paid during the to a limit of $12 per $1000 of
first two years, up to a insurance. And a contingent defer-
second minimum first year red administrative charges based
premium) is deducted upon upon an amount per $1000 of face
surrenders prior to the amount of insurance. This amount
sixteenth policy anniver- varies by age at date of issue as
sary. 100% of the charge described in the Applause!
is deducted in policy Prospectus. 100% of the surrander
years 1 through 11 and charges are deducted in policy
then grades to 0 in the years 1 through 5 and then grades
16th policy year. to 0 in the 15th policy year.

<PAGE>
POLICY BENEFITS

PURPOSES OF THE POLICY

The Policy is designed to provide the policyowner with both lifetime insurance
protection to the policy anniversary nearest the Insured's 95th birthday and
flexibility in connection with the amount and frequency of premium payments and
the level of life insurance proceeds payable under the Policy. Unlike
traditional life insurance, other than the minimum first year premium, the
policyowner is not required to pay scheduled premiums to keep a Policy in force,
but may, subject to certain limitations, vary the frequency and amount of
premium payments. Moreover, the Policy allows a policyowner to adjust the level
of death benefits payable under the Policy without having to purchase a new
policy by increasing or decreasing the Specified Amount. Thus, as insurance
needs or financial conditions change, the policyowner has the flexibility to
adjust life insurance benefits and vary premium payments.

The Policy varies from conventional fixed benefit life insurance in a number of
additional respects. Because the death benefit may, and the cash value will,
vary with the investment experience of the chosen Subaccounts of the Account,
the policyowner reaps the benefit of any appreciation in value of the underlying
assets, but bears the investment risk of any depreciation in value. As a result,
whether or not a Policy continues in force may depend in part upon the
investment experience of the chosen Subaccounts. The failure to pay a planned
periodic premium will not necessarily cause the Policy to lapse, but the Policy
could lapse even if planned periodic premiums have been paid, depending upon the
investment experience of the Account.

DEATH BENEFIT PROCEEDS

As long as the Policy remains in force, AVLIC will, upon due proof of the
Insured's death, pay the death benefit proceeds of a Policy in accordance with
the death benefit option in effect at the time of the Insured's death. The
amount of the death benefits payable will be determined at the end of the
valuation period during which the Insured's death occurred. The death benefit
proceeds may be paid in a lump sum or under one or more of the payment options
set forth in the Policy. (See Payment Options, page 18.)

Death benefit proceeds will be paid to the surviving beneficiary or
beneficiaries specified in the application or as subsequently changed.

DEATH BENEFIT OPTIONS

The Policy provides two death benefit options and the policyowner selects one of
the options in the application. The death benefit under either option will never
be less than the current Specified Amount of the Policy as long as the Policy
remains in force (See Policy Lapse and Reinstatement, page 22). The minimum
Specified Amount currently is $50,000.

OPTION A. Under Option A, the death benefit is the current Specified Amount of
the Policy or, if greater, the applicable percentage of cash value on the date
of death. The applicable percentage is 250% for Insureds with an attained age 40
or younger on the policy anniversary prior to the date of death. For Insureds
with an attained age over 40 on that policy anniversary, the percentage declines
as shown in the Applicable Percentage Table on page 15. Accordingly, under
Option A the death benefit will remain level at the Specified Amount unless the
applicable percentage of cash value exceeds the current Specified Amount, in
which case the amount of the death benefit will vary as the cash value varies.
Policyowners who prefer to have favorable investment performance reflected in
higher cash value, rather than increased insurance coverage, generally should
select Option A.

OPTION A EXAMPLE. For purposes of this example, assume that the Insured's
attained age is between 0 and 40 and that there is no outstanding policy debt.
Under Option A, a Policy with a $50,000 Specified Amount will generally pay
$50,000 in death benefits. However, because the death benefit must be equal to
or greater than 250% of cash value, any time the cash value of the Policy
exceeds $20,000, the death benefit will exceed the $50,000 Specified Amount.
Each additional dollar added to cash value above $20,000 will increase the death
benefit by $2.50. Thus, if the cash value exceeds $20,000 and increases by $100
because of investment performance or premium payments, the death benefit will
increase by $250. A Policy with a cash value of $30,000 will provide a death
benefit of $75,000 ($30,000 x 250%); a cash value of $40,000 will provide a
death benefit of $100,000 ($40,000 x 250%); a cash value of $50,000 will provide
a death benefit of $125,000 ($50,000 x 250%).

Similarly, so long as cash value exceeds $20,000 each dollar taken out of cash
value will reduce the death benefit by $2.50. If, for example, the cash value is
reduced from $25,000 to $20,000 because of partial withdrawals, charges or
negative investment performance, the death benefit will be reduced from $62,500
to $50,000. If at any time, however, the cash value multiplied by the applicable
percentage is less than the Specified Amount, the death benefit will equal the
current Specified Amount of the Policy.
<PAGE>
The applicable percentage becomes lower as the Insured's attained age increases.
If the attained age of the Insured at the beginning of the policy year in the
example above were, for example, 50 (rather than between 0 and 40), the
applicable percentage would be 185%. The death benefit would not exceed the
$50,000 Specified Amount unless the cash value exceeded approximately $27,028
(rather than $20,000), and each $1 then added to or taken from the cash value
would change the death benefit by $1.85 (rather than $2.50).
<TABLE>
<CAPTION>

Applicable Percentage Table

Attained Age Applicable Attained Age Applicable Attained Age Applicable
Percentage Percentage Percentage
-------------- ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
40 or younger 250% 54 157% 68 117%
41 243% 55 150% 69 116%
42 236% 56 146% 70 115%
43 229% 57 142% 71 113%
44 222% 58 138% 72 111%
45 215% 59 134% 73 109%
46 209% 60 130% 74 107%
47 203% 61 128% 75 to 90 105%
48 197% 62 126% 91 104%
49 191% 63 124% 92 103%
50 185% 64 122% 93 102%
51 178% 65 120% 94 101%
52 171% 66 119% 95 100%
53 164% 67 188%
</TABLE>

OPTION B. Under Option B, the death benefit is equal to the current Specified
Amount plus the cash value of the Policy or, if greater, the applicable
percentage of the cash value on the date of death. The applicable percentage is
the same as under Option A: 250% for Insureds with an attained age 40 or younger
on the Policy anniversary prior to the date of death, and for Insureds with an
attained age over 40 on that Policy anniversary the percentage declines as shown
in the Applicable Percentage Table. Accordingly, under Option B the amount of
the death benefit will always vary as the cash value varies (but will never be
less than the Specified Amount). Policyowners who prefer to have favorable
investment performance reflected in increased insurance coverage, rather than
higher cash values, generally should select Option B.

OPTION B EXAMPLE. For purposes of this example, assume that the Insured is age
40 or younger and that there is no outstanding policy debt. Under Option B, a
Policy with a Specified Amount of $50,000 will generally provide a death benefit
of $50,000 plus cash value. Thus, for example, a Policy with a cash value of
$5,000 will have a death benefit of $55,000 ($50,000 + $5,000); a cash value of
$10,000 will provide a death benefit of $60,000 ($50,000 + $10,000). The death
benefit, however, must be at least 250% of cash value. As a result, if the cash
value of the Policy exceeds $33,334, the death benefit will be greater than the
Specified Amount plus cash value. Each additional dollar of cash value above
$33,334 will increase the death benefit by $2.50. Thus, if the cash value
exceeds $33,334 and increases by $100 because of investment performance or
premium payments, the death benefit will increase by $250. A Policy with a cash
value of $20,000 will provide a death benefit of $70,000; a cash value of
$30,000 will provide a death benefit of $80,000; a cash value of $50,000 will
provide a death benefit of $125,000 ($50,000 x 250%).

Similarly, any time cash value exceeds $33,334, each dollar taken out of cash
value will reduce the death benefit by $2.50. If, for example, the cash value is
reduced from $40,000 to $35,000 because of partial withdrawals, charges, or
negative investment performance, the death benefit will be reduced from $100,000
to $87,500. If at any time, however, cash value multiplied by the applicable
percentage is less than the Specified Amount plus the cash value, then the death
benefit will be the current Specified Amount plus cash value of the Policy.

The applicable percentage becomes lower as the Insured's attained age increases.
If the attained age of the Insured in the example above were, for example, 50
(rather than 40 or younger), the applicable percentage would be 185%. Assuming a
Specified Amount of $50,000 the amount of the death benefit would be the sum of
the cash value plus
<PAGE>
$50,000 unless the cash value exceeded $58,824 (rather than $33,334), and each
$1 then added to or taken from the cash value would change the death benefit by
$1.85 (rather than $2.50).

CHANGE IN DEATH BENEFIT OPTION. Generally, the death benefit option in effect
may be changed once per year any time after the first policy year by sending
AVLIC a written request for change. AVLIC will require evidence of insurability
before making a change in the Death Benefit from Option A to Option B. The
effective date of such a change will be the monthly activity date on or
following the date the change is approved by AVLIC. A change may have Federal
Tax consequences.

If the death benefit option is changed from Option A to Option B, the death
benefit after the change will equal the Specified Amount before the change plus
the cash value on the effective date of the change. If the death benefit option
is changed from Option B to Option A, the death benefit after the change will
equal the death benefit before the change minus the cash value on the effective
date of change.

No charges will be imposed upon a change in death benefit option, nor will such
a change in and of itself result in an immediate change in the amount of a
Policy's cash value. However, a change in the death benefit option may affect
the monthly cost of insurance charge since this charge varies with the net
amount at risk, which is the amount by which the death benefit that would be
payable on a monthly activity date exceeds the cash value on that date. Changing
from Option B to Option A will generally decrease the net amount at risk, and
therefore cost of insurance charges. Changing from Option A to Option B will
generally result in a net amount at risk that remains level. Such a change,
however, will result in an increase in the cost of insurance charges over time,
since the cost of insurance rates increase with the Insured's age. If, however,
the change was from Option A to Option B, the cost of insurance rate may be
different for the increased death benefit. (See Charges and Deductions - Cost of
Insurance, page 25 and Federal Tax Matters, page 29.)

CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the second
policy year a policyowner may increase or decrease the Specified Amount of a
Policy. A change in Specified Amount may affect the cost of insurance rate and
the net amount at risk, both of which may affect a policyowner's cost of
insurance charge and have Federal Tax consequences. (See Charges and Deductions
- - Cost of Insurance, page 25 and Federal Tax Matters, page 29.)

Any increase or decrease in the Specified Amount will become effective on the
monthly activity date on or following the date a written request is approved by
AVLIC. The Specified Amount of a Policy may be changed only once per year and
AVLIC may limit the size of a change in a policy year.

The Specified Amount remaining in force after any requested decrease may not be
less than $50,000 during the first 3 policy years and $35,000 thereafter. A
decrease may also not be made during the first policy year following the
effective date of any increase. In addition, if following the decrease in
Specified Amount, the Policy would not comply with the maximum premium
limitations required by federal tax law (See Premiums, page 21), the decrease
may be limited or cash value may be returned to the policyowner at the
policyowner's election, to the extent necessary to meet these requirements. For
purposes of determining the cost of insurance rate, a decrease in the Specified
Amount will reduce the Specified Amount in the following order:

(a) The Specified Amount provided by the most recent increase;
(b) The next most recent increases successively; and
(c) The initial Specified Amount.

For an increase in the Specified Amount, a written supplemental application must
be submitted. AVLIC may also require additional evidence of insurability.
Although an increase need not necessarily be accompanied by an additional
premium, in certain cases an additional premium will be required to effect the
requested increase. (See Premiums upon Increases in Specified Amount, page 22).
The minimum amount of any increase is 10 percent of the initial Specified Amount
or $25,000, whichever is greater, and an increase cannot be made if the
Insured's attained age is over 75. An increase in the Specified Amount will
result in certain additional charges, which will be deducted from the cash value
of the Policy on each monthly activity date during the year following the
increase. (See Charges and Deductions, page 23.)

METHODS OF AFFECTING INSURANCE PROTECTION. A policyowner may increase or
decrease the pure insurance protection provided by a Policy - the difference
between the death benefit and the cash value - in several ways as insurance
needs change. These ways include increasing or decreasing the Specified Amount
of insurance, changing the level of premium payments, and, to a lesser extent,
making a partial withdrawal of the Policy's cash value. Certain of these changes
may have Federal Tax consequences. Although the consequences of each of these
methods will depend upon the individual circumstances, they may be generally
summarized as follows:

(a) A decrease in the Specified Amount will, subject to the applicable
percentage limitations (See Death Benefit Options, page 14), decrease the
insurance protection and the cost of insurance charges under the Policy
without reducing the cash value.

(b) An increase in the Specified Amount may increase the amount of pure
insurance protection, depending on the amount of cash value and the
resultant applicable percentage limitation. If the insurance protection is
increased, the Policy charges generally will increase as well.
<PAGE>
(c) An increased level of premium payments will reduce the pure insurance
protection, until the applicable percentage of cash value exceeds the
Specified Amount if Option A is in effect. Increased premiums should also
increase the amount of funds available to keep the Policy in force.

(d) A reduced level of premium payments generally will increase the amount of
pure insurance protection, depending on the applicable percentage
limitations. It also will result in a reduced amount of cash value and will
increase the possibility that the Policy will lapse.

(e) A partial withdrawal will reduce the death benefit. (See Policy Rights -
Surrenders, page 19.) However, it only affects the amount of pure insurance
protection and charges under the Policy if the percentage from the
Percentage Table is applicable in determining the death benefit. Otherwise,
the decrease in the death benefit is offset by the amount of cash value
withdrawn. The primary use of a partial withdrawal is to withdraw cash
value.

(f) A change in the Death Benefit Option may result in an increase or decrease
in the net amount at risk, depending on the circumstances of the Policy.
(See Change in Death Benefit Option, page 16.)

DURATION OF THE POLICY. The duration of the Policy generally depends upon the
cash value. The Policy will remain in force so long as the cash surrender value
is sufficient to pay the monthly deduction. (See Charges from Cash Value, page
23.) Where, however, the cash surrender value is insufficient to pay the monthly
deduction and the grace period expires without an adequate payment by the
policyowner, the Policy will lapse and terminate without value. (See Policy
Lapse and Reinstatement, page 22.) During the first policy year, the Policy will
lapse regardless of the cash surrender value if a pro rata portion of the
minimum first year premium has not been paid and a grace period expires without
sufficient payment.

CASH VALUE

The Policy's cash value in the Account will reflect the investment performance
of the chosen Subaccounts of the Account or the Fixed Account, the net premiums
paid, any partial withdrawals, and the charges assessed in connection with the
Policy. A policyowner may at any time surrender the Policy and receive the
Policy's cash surrender value. (See Surrenders, page 19.) There is no guaranteed
minimum cash value.

DETERMINATION OF CASH VALUE. Cash value is determined on each valuation date. On
the policy issue date, the cash value in a Subaccount will equal the portion of
any net premium allocated to the Subaccount, reduced by the portion of the first
monthly deduction allocated to that Subaccount. (See Allocation of Premiums and
Cash Value, page 22.) Thereafter, on each valuation date, the cash value of a
Policy will equal:

(1) The aggregate of the values attributable to the Policy in each of the
Subaccounts on the valuation date, determined for each Subaccount by
multiplying the Subaccount's unit value by the number of Subaccount units
allocated to the Policy; plus

(2) The Value of The Fixed Account;

(3) Any cash value impaired by policy debt held in the general account; plus

(4) Any net premiums received on that valuation date; less

(5) Any partial withdrawal, and its charge, made on that valuation date; less

(6) Any monthly deduction to be made on that valuation date; less

(7) Any federal or state income taxes charged against the cash value.

In computing the Policy's cash value, the number of Subaccount units allocated
to the Policy is determined after any transfers among Subaccounts, or the Fixed
Account, (and deduction of transfer charges) but before any other Policy
transactions, such as receipt of net premiums and partial withdrawals, on the
valuation date. Because the cash value is dependent upon a number of variables,
including the investment performance of the chosen Subaccounts, the frequency
and amount of premium payments, transfers, partial withdrawals, loans, and
charges assessed in connection with the Policy, a Policy's cash value cannot be
predetermined.

THE UNIT VALUE. The unit value of each Subaccount reflects the investment
performance of that Subaccount. The unit value of each Subaccount shall be
calculated by (i) multiplying the per share net asset value of the corresponding
Fund portfolio on the valuation date times the number of shares held by the
Subaccount, before the purchase or redemption of any shares on that date; minus
(ii) a charge not exceeding an annual rate of .70% for mortality and expense
risk; and (iii) dividing the result by the total number of units held in the
Subaccount on the valuation date, before the purchase or redemption of any units
on that date. (See Daily Charges Against the Account, page 26.)
<PAGE>
VALUATION DATE AND VALUATION PERIOD. A valuation date is each day on which the
New York Stock Exchange ("NYSE") is open for trading. A valuation period is the
period between two successive valuation dates, commencing at the close of the
NYSE on each valuation date and ending at the close of the NYSE on the next
succeeding valuation date.

BENEFITS AT MATURITY

If the Insured is living, AVLIC will pay the cash value of the Policy, less
outstanding policy debt, on the maturity date. The Policy will mature on the
policy anniversary nearest the Insured's 95th birthday, if living.

PAYMENT OF POLICY BENEFITS

Death benefit proceeds under the Policy will usually be paid within seven days
after AVLIC receives due proof of death. Cash value benefits will ordinarily be
paid within seven days of receipt of a written request. Payments may be
postponed in certain circumstances. (See Postponement of Payments, page 28.) The
policyowner may decide the form in which the benefits will be paid. During the
Insured's lifetime, the policyowner may arrange for the death benefit proceeds
to be paid in a lump sum or under one or more of the optional methods of payment
described below. These choices are also available if the Policy is surrendered
or matures. If no election is made, AVLIC will pay the benefits in a lump sum.

When death benefits are payable in a lump sum and no election for an optional
method of payment is in force at the death of the Insured, the beneficiary may
select one or more of the optional methods of payment.

An election or change of method of payment must be in writing. A change in
beneficiary revokes any previous settlement election. Further, if the Policy is
assigned, any amounts due to the assignee will first be paid in one sum. The
balance, if any, may be applied under any payment option. Once payments have
begun, the payment option may not be changed.

PAYMENT OPTIONS. The minimum amount of each payment is $25. If a payment would
be less than $25, AVLIC has the right to make payments less often so that the
amount of each payment is at least $25. Once a payment option is in effect, the
proceeds will be transferred to AVLIC's general account. AVLIC may make other
payment options available in the future. For additional information concerning
these options, see the Policy itself. The following payment options are
currently available:

Option ai-INTEREST PAYMENT OPTION. AVLIC will hold any amount applied under this
option. Interest on the unpaid balance will be paid or credited each month at a
rate determined by AVLIC.

Option aii-FIXED AMOUNT PAYABLE OPTION. Each payment will be for an agreed fixed
amount. Payments continue until the amount AVLIC holds runs out.

Option b-FIXED PERIOD PAYMENT OPTION. Equal payments will be made for any period
selected up to 20 years.

Option c-LIFETIME PAYMENT OPTION. Equal monthly payments are based on the life
of a named person. Payments will continue for the lifetime of that person.
Variations provide for the lifetime of that person. Variations provide for
guaranteed payments for a period of time.

Option d-JOINT LIFETIME PAYMENT OPTION. Equal monthly payments are based on the
lives of two named persons. While both are living, one payment will be made each
month. When one dies, the same payment will continue for the lifetime of the
other.

As an alternative to the above payment options, the proceeds may be paid in any
other manner approved by AVLIC. Further, one of AVLIC's affiliates may make
payments under the above payment options. If an affiliate makes the payment, it
will do so according to the rules set out above.

POLICY RIGHTS

LOAN BENEFITS

LOAN PRIVILEGES. After the first policy anniversary, AVLIC will permit the
policyowner to borrow money from it using the Policy as the only security for
the loan. The maximum amount that may be borrowed is 75% of the cash value less
the cash surrender charge and any accrued expenses as of the date of the policy
loan. The available loan amount at any time is the maximum loan amount less any
outstanding policy debt. The loan may be completely or partially repaid at any
time while the Insured is living, prior to the maturity date. Loans usually are
paid within 7 days after receipt of a written request. Texas and Virginia
policyholders may borrow 100% of the surrender value after deducting interest
and policy charges for the remainder of the policy year. Loans may have a tax
consequence. (See Federal Tax Matters, page 29.)
<PAGE>
INTEREST. The interest rate charged on policy loans is 8% per year. Interest
accrues daily and is due on each policy anniversary date. If unpaid when due,
interest will be added to the amount of the loan and bear interest at the same
rate.

AFFECT OF POLICY LOANS. When a loan is made cash value equal to the amount of
the loan will be transferred from the cash value in the Account or the Fixed
Account to the general account of AVLIC as security for the indebtedness. The
cash value transferred out of the Account will be allocated among the
Subaccounts or the Fixed Account in accordance with the instructions given when
the loan is requested. The minimum amount which can remain in a Subaccount or
the Fixed Account as a result of a loan is $100. In the event no allocation
instructions are provided or the allocation instructions conflict with this
minimum, the loan will be allocated among the Subaccounts or the Fixed Account,
in the same proportion as the cash value in each Subaccount or the Fixed Account
prior to the loan bears to the cash value in all Accounts. This will reduce the
cash value in those Subaccounts and the Fixed Account. AVLIC will transfer cash
value from the Subaccounts and the Fixed Account to secure indebtedness on the
date of the policy loan and, if loan interest is not paid when due in any policy
year, on the policy anniversary thereafter. AVLIC will allocate the amount
transferred to secure the excess indebtedness among the Subaccounts and the
Fixed Account in the same proportion as the cash value in each Subaccount or the
Fixed Account bears to the total cash value in all Subaccounts and the Fixed
Account. No charge will be imposed for these transfers.

A policy loan will permanently affect the cash value of a Policy, and may
permanently affect the amount of the Death Benefits, even if the loan is repaid.
The effect could be favorable or unfavorable depending on whether the investment
performance of the Subaccount(s) selected by the policyowner is less than or
greater than the interest rate credited to the cash value held in the general
account to secure the loan. In comparison to a policy under which no loan was
made, Policy values will be lower if the general account interest rate is less
than the investment performance of the Subaccount(s), and greater if the general
account interest rate is higher than the investment performance of the
Subaccount(s).

Cash value in the general account held to secure indebtedness will be credited
with interest at a rate of 4.5% per year. Interest earned on amounts held in the
general account will be allocated to the Subaccounts and the Fixed Account on
each policy anniversary in the same proportion that net premiums are being
allocated to those Subaccounts and the Fixed Account at the time. Upon repayment
of indebtedness, the portion of the repayment allocated in accordance with the
repayment of indebtedness provision (see below) will be transferred to increase
the cash value in that Subaccount or the Fixed Account.

Outstanding Policy Debt. The outstanding policy debt equals the total of all
policy loans and accrued interest on policy loans. If the policy debt exceeds
the cash value less any cash surrender charge and any accrued expenses, the
policyowner must pay the excess. AVLIC will send a notice of the amount which
must be paid. If the policyowner does not make the required payment within the
61 days after AVLIC sends the notice, the Policy will terminate without value.
Should the policy lapse while policy loans are outstanding the portion of the
loans attributable to earnings will become taxable. A lapsed Policy may later be
reinstated. (See Policy Lapse and Reinstatement, page 22.)

Repayment of Indebtedness. Unscheduled premiums paid while a policy loan is
outstanding are treated as repayment of indebtedness only if the policyowner so
requests. As indebtedness is repaid, the cash value in the general account
securing the indebtedness repaid will be allocated among the Subaccounts and the
Fixed Account in the same proportion that net premiums are being allocated at
the time of repayment. The repayment of indebtedness will be allocated at the
end of the valuation period during which the repayment is received. If not
repaid, AVLIC will deduct indebtedness from any amount payable under the Policy.

SURRENDERS

At any time during the lifetime of the Insured and prior to the maturity date,
the policyowner may partially withdraw or totally surrender the Policy by
sending a written request to AVLIC. The amount available for surrender is the
cash surrender value at the end of the valuation period during which the
surrender request is received at AVLIC's Home Office. Surrenders from the
Account will generally be paid within seven days of receipt of the written
request. (See Postponement of Payments, page 28.) Surrenders may have tax
consequences. (See Tax Treatment of Policy Proceeds, page 30.)

TOTAL SURRENDERS. If the Policy is being totally surrendered, the Policy itself
must be returned to AVLIC along with the request. AVLIC will pay the cash
surrender value. Coverage under the Policy will terminate as of the date of a
total surrender. A policyowner may elect to have the amount paid in a lump sum
or under a payment option. (See Payment Options, page 18.)

PARTIAL WITHDRAWALS. Partial withdrawals are irrevocable. The amount of a
partial withdrawal may not exceed the cash surrender value on the date the
request is received and may not be less than $500. The cash surrender value
after a partial withdrawal must be at least $1,000. The amount paid will be
deducted from the Policy's cash value at the end of the valuation period during
which the request is received. The amount will be deducted from the Subaccounts
or the Fixed Account according to the instructions of the policyowner when the
withdrawal is requested, provided that the minimum amount remaining in a
Subaccount as a result of the allocation is $100. If no instructions are given,
or if there is not sufficient value in any Subaccount or the Fixed Account, the
amount will be allocated in the same proportion that the cash value in each
bears to the total cash value in all Subaccounts and the Fixed Account, on the
date the request for the partial withdrawal is received by AVLIC.
<PAGE>
The Death Benefit will be reduced by the amount of any partial withdrawal. If
Option A is in effect, the Specified Amount will be reduced. Where increases in
the Specified Amount occurred previously, a partial withdrawal will reduce the
last increase first, and then each other increase, in order of the more recent
increase first, and finally the initial Specified Amount. Thus, partial
withdrawals may affect the way in which the cost of insurance charge is
calculated and the amount of pure insurance protection under the Policy. (See
Monthly Deduction - Cost of Insurance, page 25; Death Benefits - Methods of
Affecting Insurance Protection, page 16.) If Option B is in effect, the
Specified Amount will not change, but the cash value will be reduced.

The Specified Amount remaining in force after a partial withdrawal may not be
less than $50,000 during the first three policy years and $35,000 thereafter.
Any request for a partial withdrawal that would reduce the Specified Amount
below this amount will not be implemented. A fee not to exceed $50.00 or 2% of
the amount withdrawn is deducted from each partial withdrawal amount paid. (See
Partial Withdrawal Charge, page 26.)

TRANSFERS

Cash value may be transferred among the Subaccounts of the Account as often as
desired. The total amount transferred each time must be at least $250, or the
balance of the Subaccount, if less. The minimum amount that may remain in a
Subaccount after a transfer is $100. AVLIC will effectuate transfers and
determine all values in connection with transfers on the later of the date
designated in the request or at the end of the valuation period during which the
transfer request is received. Cash value on the date of a transfer will not be
affected except to the extent of the transfer charge. Transfers may also be made
from the subaccounts to the Fixed Account. One Hundred percent of the amount
deposited plus interest thereon may be transferred out of the Fixed Account
during the 30-day period following the yearly anniversary date of the policy.

The first nine transfers per policy year will be permitted free of charge. A
transfer charge will be imposed each additional time amounts are transferred and
will be deducted from the amount transferred. The charge is $10 per transfer.
(See Transfer Charge, page 26.) Transfers resulting from policy loans or
exercise of the exchange privilege will not be subject to a transfer charge. In
addition, such transfers will not be counted for purposes of the limitation on
the number of transfers allowed in each year. AVLIC may at any time revoke or
modify the transfer privilege, including the minimum amount transferable.

Transferring cash value from two or more Subaccounts or the Fixed Account into a
third Subaccount counts as one transfer. Similarly, transferring cash value from
one Subaccount into two or more Subaccounts or the Fixed Account counts as one
transfer.

The privilege to initiate transactions by telephone will be made available to
Policyowners automatically. AVLIC will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine, and if it does not,
AVLIC may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures AVLIC follows for transactions initiated by
telephone include, but are not limited to, requiring the Policyowner to provide
the policy number at the time of giving transfer instructions; AVLIC's tape
recording of all telephone transfer instructions; and the provision, by AVLIC,
of written confirmation of telephone transactions.

REFUND PRIVILEGE

The policyowner may cancel the Policy within the later of 10 days after the
policyowner receives it, within 10 days after AVLIC delivers a cancellation
notice, or within 45 days of completing Part I of the application. If a policy
is cancelled within this time period a refund will be paid. The refund is equal
to the greater of the premium paid or the premium paid adjusted by investment
gains or losses.

To cancel the Policy, the policyowner should mail or deliver it to AVLIC at the
Home Office. A refund of premiums paid by check may be delayed until the check
has cleared the policyowner's bank. (See Postponement of Payments, page 28.)

EXCHANGE PRIVILEGE

During the first 24 policy months after the policy date of the Policy, the
policyowner may exchange the Policy for a flexible premium adjustable life
insurance policy issued by AVLIC or Ameritas Financial Services. No new evidence
of insurability will be required.

The policy date, issue age and risk classification for the Insured will be the
same under the new policy as under the old. In addition, the policy provisions
and applicable charges for the new policy and its riders will be based on the
same policy date and issue age as under the Policy. Cash values for the exchange
and payments will be established after making adjustments for investment gains
or losses and after recognizing variance, if any, between payment or charges,
dividends or cash values under the flexible contract and under the new policy.
The policyowner may elect either the same Specified Amount or the same net
amount at risk for the new policy as under the old.

To make the change, the Policy, a completed application for exchange and any
required payment must be received by AVLIC. The exchange will be effective on
the valuation date when all financial and contractual arrangements for the new
policy have been completed.
<PAGE>
PAYMENT AND ALLOCATION OF PREMIUMS

ISSUANCE OF A POLICY

Individuals wishing to purchase a Policy must complete an application and submit
it to AVLIC's Home Office (One Ameritas Way, 5900 O Street, P.O. Box 82550 ,
Lincoln, Nebraska 68501). A Policy will generally be issued only to individuals
80 years of age on their nearest birthday or less who supply satisfactory
evidence of insurability to AVLIC. AVLIC may, at its sole discretion, issue a
Policy to an individual above the age of 80. Acceptance is subject to AVLIC's
underwriting rules, and AVLIC reserves the right to reject an application for
any reason.

The policy date is the effective date of coverage for all coverage applied for
in the original application. The policy date is used to determine policy
anniversary dates, policy years and policy months.

The issue date is the date that all financial, contractual and administrative
requirements have been met and processed for the Policy. The initial premium
payment will be allocated to the Money Market Subaccount of the Variable
Products Insurance Fund, as of the issue date, for 13 days. After the expiration
of the refund period, the accumulation value will be allocated to the
Subaccounts or the Fixed Account as selected by the policyowner.

Interim conditional insurance coverage may be issued prior to the policy date,
provided that certain conditions are met, upon the completion of an application
and the payment of a specified amount at the time of the application. The amount
of the interim coverage is limited to the smaller of the amount of insurance
applied for, $100,000, or $25,000 if the proposed Insured is under age 10 or
over age 60 at his nearest birthday.

PREMIUMS

The initial premium is due no later than the issue date. No insurance will take
effect before the initial premium is paid. The initial premium must be at least
1/12th of the minimum first year premium for the Policy, including any riders.
The initial premium and all other premiums are payable at AVLIC's Home Office.
The amounts and frequency of the planned periodic premiums are shown in the
Schedule of Premiums in the Policy. However, subject to certain limitations, a
policyowner has flexibility in determining the frequency and amount of premiums
since the planned periodic premium schedule is not binding on the policyowner.

MINIMUM FIRST YEAR PREMIUM. During the first policy year, a pro rata portion of
the minimum first year premium is required to have been paid on the monthly
activity date at all times in order to keep the Policy in force. The minimum
first year premium is equal to the amount designated in the Policy, which is
based on the annual level premium that would be required to provide the future
benefits under the contract, computed using certain assumptions, including an
assumed interest rate of 5% and standard guaranteed cost of insurance rates.
There is no representation that the Policy will not lapse even if annual
premiums equal to the minimum first year premium are paid, since the minimum
first year premium is computed using certain assumptions that may not be
applicable to a particular Policy. Moreover, since this premium is determined
using an annual mode and standard underwriting class, the premium may not be
sufficient to cover the first year administrative charge, premium transaction
fees and cost of insurance charges if the mode of premium payment is other than
annual or if the Insured is not in a standard underwriting class. AVLIC may
require that a premium sufficient to cover these charges be paid at issue to
place the Policy in force.

PREMIUM FLEXIBILITY. A policyowner may make unscheduled premium payments at any
time in any amount, or skip premium payments, subject to the minimum first year
premium requirements and subject to the premium limitations described below.
Therefore, unlike conventional insurance policies, this Policy does not obligate
the policyowner to pay premiums in accordance with a rigid and inflexible
premium schedule. AVLIC does reserve the right to limit the number and amount of
additional or unscheduled premium payments.

PLANNED PERIODIC PREMIUMS. At the time the Policy is issued each policyowner
will determine a planned periodic premium schedule that provides for the payment
of level premiums at selected intervals. The policyowner is not required to pay
premiums in accordance with this schedule. The policyowner has considerable
flexibility to alter the amount and frequency of premiums paid.

Policyowners can also change the frequency and amount of planned periodic
premiums by sending a written request to the Home Office, although AVLIC
reserves the right to limit any increase. Premium payment notices will be sent
annually, semi-annually or quarterly, depending upon the frequency of the
planned periodic premiums. Payment of the planned periodic premiums does not
guarantee that the Policy remains in force. Instead, the duration of the Policy
depends upon the Policy's cash surrender value. (See Duration of the Policy,
page 17.) Thus, even if planned periodic premiums are paid by the policyowner,
the Policy will nonetheless lapse any time cash surrender value is insufficient
to pay certain monthly charges, and a grace period expires without a sufficient
payment. (See Policy Lapse and Reinstatement, page 22.)

Any premium received in an amount different from the planned periodic premium
will be considered an unscheduled premium.

PREMIUM LIMITATIONS. In no event may the total of all premiums paid, both
planned and unscheduled, exceed the current maximum premium limitations
established by federal tax laws. If at any time a premium is paid which would
result in total premiums exceeding the current maximum premium limitation, AVLIC
will only accept that portion
<PAGE>
of the premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned or applied as otherwise agreed
and no further premiums will be accepted until allowed by the current maximum
premium limitations prescribed by law. AVLIC may require additional evidence of
insurability if any premium payment would result in an increase in the Policy's
net amount at risk on the date the premium is received. AVLIC may also establish
a minimum acceptable premium amount.

PREMIUMS UPON INCREASES IN SPECIFIED AMOUNT. Depending upon the cash value of
the Policy at the time of an increase in the Specified Amount of the Policy and
the amount of the increase requested by the policyowner, an additional premium
payment may be required. AVLIC will notify the policyowner of any premium
required to fund the increase, which premium must be made as a single payment.
The cash value of the Policy will be immediately increased by the amount of the
payment, less the applicable sales load charge. (See Charge for an Increase in
the Specified Amount of Insurance, page 25 for a description of the charges
deducted from premiums required upon an increase.)

ALLOCATION OF PREMIUMS AND CASH VALUE

Allocation of Net Premiums. In the application for a Policy, the policyowner
allocates net premiums to one or more Subaccounts of the Account or to the Fixed
Account. The minimum percentage that may be allocated to any one Subaccount or
to the Fixed Account is 10% of the net premium, and fractional percentages may
not be used. The allocations must total 100%. The allocation for future net
premiums may be changed without charge by providing proper notification to the
Home Office. The notice must include the policy number to which the instructions
apply. The reallocation will apply to future premiums received by AVLIC on or
after the date the change is received.

The initial premium payment will be allocated to the Money Market Subaccount of
the Variable Products Insurance Fund, as of the issue date, for 13 days. After
the expiration of the refund period, the accumulation value will be allocated to
the subaccounts or the Fixed Account as selected by the policyowner. Premium
payments received by AVLIC prior to the issue date are held in the general
account until the issue date. Amounts held in the general account are credited
with interest at a rate determined by AVLIC for the period from the date the
payment has been converted into Federal Funds (monies of member banks within the
Federal Reserve System which are held on deposit at a Federal Reserve Bank) that
are available to AVLIC until the date the amounts are transferred to the Money
Market Account, but in no event will interest be credited prior to the policy
date. Net premiums received by AVLIC subsequent to the issue date are allocated
to the selected Subaccounts or the Fixed Account. If there is any outstanding
policy debt at the time of payment, AVLIC will treat it as a premium payment
unless otherwise instructed in proper written notice.

CASH VALUE. The value of amounts allocated to Subaccounts of the Separate
Account will vary with the investment performance of these Subaccounts and the
policyowner bears the entire investment risk. This will affect the Policy's cash
value, and may affect the death benefit as well. Policyowners should
periodically review their allocations of premiums and values in light of market
conditions and overall financial planning requirements.

POLICY LAPSE AND REINSTATEMENT

LAPSE. Unlike conventional life insurance policies, the failure to make a
planned periodic premium payment will not itself cause the Policy to lapse.
Lapse will occur when the cash surrender value is insufficient to cover the
monthly deduction, and a grace period expires without a sufficient payment. The
grace period is 61 days from the date AVLIC mails a notice that the grace period
has begun. AVLIC will notify the policyowner at the beginning of the grace
period by mail addressed to the last known address on file with AVLIC. The
notice will specify the premium required to keep the Policy in force. Failure to
pay the required amount within the grace period will result in lapse of the
Policy. If the Insured dies during the grace period, any overdue monthly
deductions and outstanding policy debt will be deducted from the proceeds.

If cash surrender value is insufficient to cover the monthly deduction, the
policyowner must pay a premium during the grace period sufficient to cover the
monthly deductions and premium charges for the three policy months after
commencement of the grace period to avoid lapse. (See Charges and Deductions,
page 23.)

Prior to the first policy anniversary, the Policy will also lapse regardless of
the cash surrender value if a pro rata portion of the minimum first year premium
has not been paid and a grace period expires without sufficient payment.
Any cash surrender value will be paid to the policyowner.

REINSTATEMENT. A lapsed Policy may be reinstated any time within 2 years after
the end of the grace period (or if required by state law, within 3 years), but
before the maturity date. Reinstatement will be effected based on the Insured's
underwriting classification at the time of the reinstatement. Reinstatement is
subject to the following:

1. Evidence of insurability of the Insured satisfactory to AVLIC (including
evidence of insurability of any person covered by a rider to reinstate the
rider);

2. Payment of a premium that, after the deduction of premium charges, is large
enough to cover: (a) the monthly deductions for at least the three policy
months commencing with the effective date of reinstatement; (b) any due
and unpaid charges associated with increases; (c) any due and unpaid
acquisition charges; and (d)any minimum first year premium that would have
been due.
<PAGE>
3. Any policy debt will be reinstated with interest due and accrued.

4. The Policy cannot be reinstated if it has been surrendered for its full
cash surrender value.

The amount of cash value on the date of reinstatement will be equal to the
amount of the cash value on the date of lapse, increased by the premium paid at
reinstatement, less the premium charges and the amounts stated in (b) and (c)
above, plus that part of the deferred sales load (i.e., cash surrender charge)
which would apply if the Policy were surrendered on the date of reinstatement.
The last addition to the cash value is designed to avoid duplicate cash
surrender charges. The original policy date will be used for purposes of
calculating the cash surrender charge. If any policy debt was reinstated, that
debt will be held in AVLIC's general account. Cash value calculations will then
proceed as described under "Cash Value" on page 17.

The effective date of reinstatement will be the first monthly activity date on
or next following the date of approval by AVLIC of the application for
reinstatement.

CHARGES AND DEDUCTIONS

Charges will be deducted in connection with the Policy to compensate AVLIC for:
(1) providing the insurance benefits set forth in the Policy and any optional
insurance benefits added by rider; (2) administering the Policy; (3) assuming
certain risks in connection with the Policy; and (4) incurring expenses in
distributing the Policy. The nature and amount of these charges are described
more fully below.

PREMIUM CHARGES

Prior to allocation of premium payments among the Subaccounts or the Fixed
Account, premiums paid will be reduced by a percent of premium charge and a per
payment processing charge of $2.00. The per payment processing charge is
designed to reimburse AVLIC for expenses; the amount of the charge is guaranteed
not to increase and AVLIC does not expect to make a gain from it. During the
first policy year a percent of premium charge equal to 11% of the minimum first
year premium for the Policy and no greater than 10% of any premium paid in
excess of the minimum first year premium for the Policy will be deducted.
Thereafter, there will be a charge of no greater than 10.0% of all premiums
paid. The percent of premium charge consists of the "sales loads," which
compensates AVLIC for distribution expenses, and a 2.5% charge to reimburse
AVLIC for premium taxes.

SALES CHARGE. Sales charges, generally called the "sales load," will be deducted
to compensate AVLIC for the cost of selling the Policy. This cost includes
agents' commissions, the printing of Prospectuses and sales literature, and
advertising.

There are two types of sales loads under the Policy. The first, a front-end
sales load, will be deducted from each premium payment upon receipt prior to
allocation of net premiums to the Account or the Fixed Account. The front-end
sales load is no greater than 7.5% of the premium paid, except during the first
policy year in which case a charge of 8.5% is deducted from any premium paid up
to the minimum first year premium for the Policy. The second, a contingent
deferred sales load ("Cash Surrender Charge"), will reduce the assets in the
Account attributable to the Policy in the event of surrender.

The sales charges in any Policy year are not necessarily related to actual
distribution expenses incurred in that year. Instead, AVLIC expects to incur the
majority of distribution expenses in the early Policy years and to recover
amounts to pay such expenses over the life of the Policy. To the extent that
sales and distribution expenses exceed sales loads (both front-end and deferred)
in any year, AVLIC will pay them from its other assets or surplus in its general
account, which include amounts derived from mortality and expense risk charges
and other charges made under the Policy. AVLIC believes that this distribution
financing arrangement will benefit the Account and the policyowners.

PREMIUM TAXES. Various states and their subdivisions impose a tax on premiums
received by insurance companies. Premium taxes vary from state to state. A
deduction of 2.5 percent of the premium will be made from each premium payment.
The deduction represents an amount AVLIC considers necessary to pay all premium
taxes imposed by the states and their subdivisions.

CHARGES FROM CASH VALUE

MONTHLY DEDUCTION. Charges will be deducted on each monthly activity date from
the cash value of the Policy to compensate AVLIC for administrative expenses and
insurance provided. AVLIC has primary responsibility for the administration of
the Policy and the Account. AVLIC administers the Policy through an arrangement
whereby AVLIC purchases all administrative services from Ameritas Life Insurance
Corp. As compensation for the expenses of providing such services, the Policies
include a monthly deduction. The monthly deduction includes: (a) a maintenance
charge of $5.00 per Policy, plus (b) an acquisition charge during the first
policy year only, plus (c) the cost of insurance for the current policy month,
including the cost for any riders, plus (d) any charge for an
<PAGE>
increase in the Specified Amount of the Policy. The monthly deduction will be
deducted as of the policy date and on each monthly activity date thereafter. It
will be allocated among the Subaccounts in the same proportion as the cash value
in each Subaccount bears to the total cash value in the Account on that date.
Each of these charges is described in more detail below. Because portions of the
monthly deduction, such as the cost of insurance, can vary from month to month,
the monthly deduction itself will vary in amount from month to month.

MAINTENANCE CHARGE. To compensate AVLIC for the ordinary administrative expenses
expected to be incurred in connection with a Policy, the monthly deduction
includes a $5.00 per Policy maintenance charge. These ordinary administrative
expenses include premium billing; recordkeeping; processing death benefit
claims, cash surrenders, and policy changes; preparing and mailing reports, and
overhead costs. This maintenance charge is levied throughout the life of the
Policy and is guaranteed not to increase above $5.00. AVLIC does not expect to
make any profit from the monthly maintenance charge.

ACQUISITION CHARGE. In addition to ordinary administrative expenses, AVLIC
expects to incur certain additional ad ministrative expenses in connection with
the issuance of the Policy, including medical exams, review of applications for
insurance underwriting decisions, and processing of the applications and
establishing policy records. Similar expenses are expected in connection with
future changes in the Policy initiated by the policyowner which involve
insurability decisions such as certain changes in the death benefit option. To
compensate AVLIC for these expenses during the first policy year only, a monthly
acquisition charge will be deducted from the cash value as part of the monthly
deduction on the first twelve monthly activity dates. This monthly amount will
be specified in the Policy and will be based on the Insured's age nearest
birthday at policy issuance and the initial Specified Amount of the Policy.
AVLIC does not expect to make a profit from the acquisition charge. The amount
of the acquisition charge will be shown in the schedule pages of the Policy and
is guaranteed not to be increased. It is based on the following table which
shows the annual charges per $1000 of initial Specified Amount by issue age:
<TABLE>
<CAPTION>

CHARGE PER $1000 CHARGE PER $1000
ISSUE INITIAL ISSUE INITIAL
AGE SPECIFIED AMOUNT AGE SPECIFIED AMOUNT
--------- -------------------- --------- ------------------
<S> <C> <C> <C>
0 0.64 41 3.26
1 0.66 42 3.33
2 0.68 43 3.40
3 0.73 44 3.49
4 0.77 45 3.57
5 0.81 46 3.64
6 0.86 47 3.70
7 0.90 48 3.77
8 0.94 49 3.83
9 1.00 50 3.88
10 1.04 51 3.96
11 1.10 52 4.02
12 1.16 53 4.08
13 1.23 54 4.15
14 1.29 55 4.22
15 1.35 56 4.29
16 1.40 57 4.37
17 1.47 58 4.45
18 1.56 59 4.64
19 1.64 60 4.73
20 1.73 61 4.83
21 1.82 62 4.94
22 1.90 63 5.05
23 1.98 64 5.16
24 2.07 65 5.28
25 2.15 66 5.40
26 2.23 67 5.53
27 2.30 68 5.65
28 2.37 69 5.79
29 2.44 70 5.93
30 2.50 71 6.08
31 2.57 72 6.22
32 2.64 73 6.36
33 2.70 74 6.51
34 2.76 75 6.67
35 2.82 76 6.83
36 2.88 77 7.01
37 2.94 78 7.20
38 3.01 79 7.39
39 3.08 80 7.48
40 3.17
</TABLE>

The monthly charge will be 1/12th of the annual charge.
<PAGE>
COST OF INSURANCE. Because the cost of insurance depends upon several variables,
the cost for each policy month can vary from month to month. AVLIC will
determine the monthly cost of insurance charges by multiplying the applicable
cost of insurance rate by the net amount at risk for each policy month. The net
amount at risk on any monthly activity date is the amount by which the death
benefit which would have been payable on that monthly activity date exceeds the
cash value on that date.

COST OF INSURANCE RATE. The annual cost of insurance rate is based on the
Insured's sex, attained age, policy duration and risk class. The rate will vary
if the Insured is a smoker or non-smoker or is considered a substandard risk
classification and rated with a tabular extra rating. For the initial Specified
Amount, the cost of insurance rate will not exceed those shown in the Schedule
of Guaranteed Annual Cost of Insurance Rates shown in the schedule pages of the
Policy. These guaranteed rates are based on the Insured's age nearest birthday
and the 1980 Commissioners Standard Ordinary Smoker and Non-Smoker, Male and
Female Mortality Tables. Any change in the cost of insurance rates will apply to
all persons of the same age, sex and risk class and whose policies have been in
effect for the same length of time.

If the underwriting class for any increase in the Specified Amount or for any
increase in death benefit resulting from a change in death benefit option from A
to B is not the same as the underwriting class at issue, the cost of insurance
rate used after such increase will be a composite rate based upon a weighted
average of the rates of the different underwriting classes. Decreases will also
be reflected in the cost of insurance rate as discussed earlier.

The actual charges made during the Policy year will be shown in the annual
report delivered to policyowners.

RATE CLASS. The rate class of an Insured may affect the cost of insurance rate.
AVLIC currently places Insureds into both standard rate classes and substandard
classes that involve a higher mortality risk. In an otherwise identical policy,
an Insured in the standard rate class will have a lower cost of insurance than
an Insured in a rate class with higher mortality risks. If a Policy is rated at
issue with a tabular extra rating, the guaranteed rate is a multiple of the
guaranteed rate for a standard issue. This multiple factor is shown in the
Schedule of Benefits in the Policy.

Insureds may also be assigned a flat extra rating to reflect certain additional
risks. The flat extra rating will not impact the cost of insurance rate but 1/12
of any flat extra cost will be deducted as part of the monthly deduction on each
monthly activity date.

CHARGE FOR AN INCREASE IN THE SPECIFIED AMOUNT OF INSURANCE. The policyowner has
the option of changing the Specified Amount of the Policy. If the policyowner
elects to increase the Specified Amount, charges for each increase will be
deducted from the cash value on each monthly activity date during the twelve
months following the increase. This is in addition to any increase in the cost
of insurance charge caused by the increase. The charges are based on the age
nearest birthday of the Insured at the time of the increase and the amount of
the increase. The charges are guaranteed not to be increased above those set
forth in the Policy. The monthly administrative charge for each increase will
equal 1/12 of the per $1,000 charge multiplied by the number of thousands in the
increase. A schedule of the administrative charge for increases follows:
<TABLE>
<CAPTION>

CHARGE PER $1000 OF CHARGE PER $1000 OF
AGE AMOUNT OF INCREASE AGE AMOUNT OF INCREASE
------- --------------------- ----- ----------------------
<S> <C> <C> <C>
1 0.38 39 2.80
2 0.40 40 2.89
3 0.45 41 2.98
4 0.49 42 3.05
5 0.53 43 3.12
6 0.58 44 3.21
7 0.62 45 3.29
8 0.66 46 3.36
9 0.72 47 3.42
10 0.76 48 3.49
11 0.82 49 3.55
12 0.88 50 3.60
13 0.95 51 3.68
14 1.01 52 3.74
15 1.07 53 3.80
16 1.12 54 3.87
17 1.19 55 3.94
18 1.28 56 4.01
19 1.36 57 4.09
20 1.45 58 4.17
21 1.54 59 4.36
22 1.62 60 4.45
23 1.70 61 4.55
24 1.79 62 4.66
25 1.87 63 4.77
26 1.95 64 4.88
27 2.01 65 5.00
28 2.09 66 5.12
29 2.16 67 5.25
30 2.22 68 5.37
31 2.28 69 5.51
32 2.36 70 5.65
33 2.42 71 5.80
34 2.47 72 5.94
35 2.53 73 6.08
36 2.60 74 6.23
37 2.66 75 6.39
38 2.73
</TABLE>
<PAGE>

The administrative charge for increases covers the cost of underwriting the
increase, such as the cost of medical examinations and review of applications,
the cost of processing applications and changing and establishing policy
records. AVLIC does not expect to make a profit on this portion of the charge.

There will also be a sales load charge for increases to cover their distribution
costs. This charge will equal 7.5% of an amount equal to two payments, each
payment being the minimum first year premium that would be required for a Policy
with a Specified Amount equal to the amount of the increase at the age nearest
birthday of the Insured at the time of the increase. One-twelfth of this sales
load charge will be deducted along with the administrative charge on each of the
12 months following the increase.

If there is insufficient cash value in the Policy to bear the sales load charge,
the policyowner will be required to make a premium payment. In determining
whether there is sufficient cash value, the SEC has prescribed a method by which
the cash value must be apportioned between the Specified Amount of the original
contract (original Specified Amount) and the amount of the increase in the
Specified Amount (increased Specified Amount). The portion attributable to the
increase Specified Amount will depend upon the ration between the minimum first
year premium that would be required for the original Specified Amount and two
times the minimum first year premium that would be required for the increased
Specified Amount. The portion of the cash value attributable to the increased
Specified Amount must be large enough such that if it were paid as a premium, it
would support the sales load charge. If the policyowner is required to make a
premium payment, the portion of the premium attributable to the original
Specified Amount (using the SEC required apportionment) will be subject to a
font-end sales load charge of no greater than 7.5%. The 7.5% sales load charge
on the portion of the payment attributable to the increased Specified Amount
will be deducted from cash value as described above, on each of the 12 months
following the increase.

CASH SURRENDER CHARGE. If a Policy is surrendered prior to the 15th policy
anniversary, AVLIC will assess a cash surrender charge based upon percentages of
the premiums actually paid up to a cap of the minimum first year premium for the
Policy.

The cash surrender charge will be based upon percentages of the premiums paid in
policy years 1 and 2. During the first two policy years, the amount of the cash
surrender charge will equal 21.5% of the premiums paid, up to the amount of the
minimum first year premium, and 2.5% of any premiums paid in excess of the
minimum first year premium, up to the amount of a second, minimum first year
premium. The cash surrender charge remains level in policy years three through
eleven and will equal the cash surrender charge at the end of year 2 and then
grades to 0% in year sixteen. There is no additional cash surrender charge
attributable to any increase in the Specified Amount of the Policy and no cash
surrender charge assessed upon decreases in the Specified Amount of the Policy
or partial withdrawals of cash value. Because the cash surrender charge may be
significant upon early surrender, prospective policyowners should purchase a
Policy only if they do not intend to surrender the Policy for a substantial
period.

TRANSFER CHARGE. A transfer charge of $10.00 will be imposed for each additional
transfer among the Subaccounts after nine per policy year to compensate AVLIC
for the costs of effecting the transfer. Since the charge reimburses AVLIC for
the cost of effecting the transfer only, it does not expect to make any profit
from the transfer charge. This charge will be deducted from the amount
transferred. The transfer charge will not be imposed on transfers that occur as
a result of policy loans or the exercise of exchange rights. The amount of the
transfer charge is guaranteed not to be increased.

PARTIAL WITHDRAWAL CHARGE. A charge will be imposed for each partial withdrawal
to compensate AVLIC for the administrative costs in effecting the requested
payment and in making necessary calculations for any reductions in Specified
Amount which may be required by reason of the partial withdrawal. This charge is
guaranteed not to be greater than $50 or 2% of the amount withdrawn. AVLIC does
not expect to make any profit from the partial withdrawal charge. The charge
will be deducted from the amount of the withdrawal.

DAILY CHARGES AGAINST THE ACCOUNT

A daily charge will be deducted from the value of the net assets of the Account
to compensate AVLIC for mortality and expense risks assumed in connection with
the Policy. This daily charge from the Account will be at the rate of 0.001918
percent (equivalent to an annual rate of 0.70 percent) of the average daily net
assets of the Account. The daily charge will be deducted from the net asset
value of the Account, and therefore the Subaccounts, on each valuation date.
Where the previous day or days was not a valuation date, the deduction on the
valuation date will be 0.001918 percent multiplied by the number of days since
the last valuation date. No mortality and expense charges will be deducted from
the amounts in the Fixed Account.

AVLIC believes that this level of charge is within the range of industry
practice for comparable flexible premium variable life policies.

The mortality risk assumed by AVLIC is that Insureds may live for a shorter time
than assumed, and that an aggregate amount of death benefits greater than that
assumed accordingly will be paid. The expense risk assumed is that expenses
incurred in issuing and administering the policies will exceed the
administrative charges provided in the policies.
<PAGE>
TAXES. Currently, no charge will be made against the Account for federal, state
or local income taxes. AVLIC may, however, make such a charge in the future if
income or gains within the Account will incur any federal, or any significant
state or local income tax liability, or if the federal, state or local tax
treatment of AVLIC changes. Charges for such taxes, if any, would be deducted
from the Account. (See Federal Tax Matters, page 29.)

FUND INVESTMENT ADVISORY FEE AND EXPENSES. Because the Account purchases shares
of the Fund, the net assets of the Account will reflect the investment advisory
fee and other expenses incurred by the Fund. The investment adviser will receive
compensation with respect to the Fund's portfolios that it advises at a rate
which varies by portfolio and the size of that portfolio (See Funds, page 10).

GENERAL PROVISIONS

THE CONTRACT

The Policy, the application, any supplemental applications, and any riders,
amendments or endorsements make up the entire contract. All statements made by
the Insured in the application, in the absence of fraud, are considered
representations and not warranties. Only statements in the application that is
attached to the Policy and any supplemental applications made a part of the
Policy when a change in coverage went into effect can be used to contest a claim
or the validity of the policy. Only the President, Vice President, Secretary or
Assistant Secretary can modify the Policy. Any changes must be made in writing,
and approved by AVLIC. No agent has the authority to alter or modify any of the
terms, conditions or agreements of the Policy or to waive any of its provisions.

CONTROL OF POLICY

The policyowner is as shown in the application or subsequent written
endorsement. Subject to the rights of any irrevocable beneficiary and any
assignee of record, all rights, options, and privileges belong to the
policyowner, if living; otherwise to any successor-owner or owners, if living;
otherwise to the estate of the last owner to die.

BENEFICIARY

The policyowner may name both primary and contingent beneficiaries. The
beneficiary(ies) and their designated class are specified in the application.
Payments will be shared equally among beneficiaries of the same class unless
otherwise stated. If a beneficiary dies before the Insured, payments will be
made to any surviving beneficiaries of the same class; otherwise to any
beneficiary(ies) of the next class; otherwise to the owner; otherwise to the
estate of the owner.

CHANGE OF BENEFICIARY

The policyowner may change the beneficiary by written request on a Change of
Beneficiary form at any time during the Insured's lifetime unless otherwise
provided in the previous designation of beneficiary. AVLIC, at its option, may
require that the Policy be returned to the Home Office for endorsement of any
change, or that other forms be completed. The change will take effect as of the
date the change is recorded at the Home Office. AVLIC will not be liable for any
payment made or action taken before the change is recorded. No limit is placed
on the number of changes that may be made.

CHANGE IN OWNER OR ASSIGNMENT

In order to change the Owner of the Policy or assign Policy rights, an
assignment of the Policy must be made in writing and filed with AVLIC at its
Home Office. The change will take effect as of the date the change is recorded
at the Home Office, and AVLIC will not be liable for any payment made or action
taken before the change is recorded. Payment of proceeds is subject to the
rights of any assignee of record. A change in the Owner will be valid only upon
absolute and complete assignment of the Policy. A collateral assignment is not a
change of ownership.

PAYMENT OF PROCEEDS

The proceeds are subject first to any indebtedness to AVLIC and then to the
interest of any assignee of record. Payments to satisfy any such indebtedness
and to any assignee shall each be paid in one sum. The balance of any death
benefit proceeds shall be paid in one sum to the designated beneficiary unless
an Optional Method of Payment is selected. If no beneficiary survives the
Insured, the proceeds shall be paid in one sum to the policyowner, if living;
otherwise to any successor-owner, if living; otherwise to the owner's estate.
Any proceeds payable on the Maturity Date or upon full surrender shall be paid
in one sum unless an Optional Method of Payment is elected.

INCONTESTABILITY

The Policy is incontestable after it has been in force for two years from the
policy date during the lifetime of the Insured. An increase in Specified Amount
or addition of a rider after the policy date shall be incontestable after such
<PAGE>
increase or addition has been in force for two years from its effective date
during the lifetime of the Insured. However, this two year provision shall not
apply to riders that provide disability or accidental death benefits. Any
reinstatement of a Policy shall be incontestable only after having been in force
during the lifetime of the Insured for two years after the effective date of the
reinstatement.

MISSTATEMENT OF AGE, SEX, OR SMOKING

If the age, sex, or smoking habits of the Insured or any person insured by rider
has been misstated, the amount of the death benefit and cash values under the
Policy will be adjusted. The death benefit will be adjusted in proportion to the
correct and incorrect cost of insurance rates. The adjustment in the cash value
will be the difference between the cost of insurance deductions that were made
and those that should have been made, accumulated at 4.5% annually.

SUICIDE

Suicide within two years of the policy date is not covered by the Policy. If the
Insured, while sane or insane, commits suicide within two years after the policy
date, AVLIC will pay only the premiums received, less any partial withdrawals,
the cost for riders and any outstanding policy debt. If the Insured, while sane
or insane, commits suicide within two years after the effective date of any
increase in the Specified Amount, AVLIC's liability with respect to such
increase will only be its total cost of insurance applied to the increase. The
laws of Missouri provide that death by suicide at any time is covered by the
Policy and further that suicide by an insane person is not a defense to payment
of accidental death benefits unless the insane intended suicide when the Insured
applied for the Policy.

POSTPONEMENT OF PAYMENTS

Payment of any amount upon complete surrender, partial withdrawal, policy loans,
benefits payable at death or maturity, and transfers may be postponed whenever:
(i) the New York Stock Exchange is closed other than customary week-end and
holiday closings, or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission; (ii) the Commission by
order permits postponement for the protection of policyowners; (iii) an
emergency exists, as determined by the Commission, as a result of which disposal
of securities is not reasonably practicable or it is not reasonably practicable
to determine the value of the Account's net assets; or (iv) surrenders or
partial withdrawals from the Fixed Account may be deferred for up to 6 months
from the date of written request.

Payments under the Policy of any amounts derived from premiums paid by check may
be delayed until such time as the check has cleared the policyowner's bank.

ADDITIONAL INSURANCE BENEFITS

Subject to certain requirements, one or more of the following additional
insurance benefits may be added to a Policy by rider. The cost of any additional
insurance benefits will be deducted as part of the monthly deduction. (See
Charges - Monthly Deduction, page 23.)

ACCIDENTAL DEATH BENEFIT RIDER

Provides additional insurance if the Insured's death results from accidental
death, as defined in the rider. Under the terms of the rider, the additional
benefits provided in the Policy will be paid upon receipt of proof by AVLIC that
death resulted directly and independently of all other causes from accidental
bodily injuries incurred before the rider terminates and within 91 days after
such injuries were incurred.

TERM RIDER FOR COVERED INSURED

Provides the Specified Amount of insurance to the beneficiary upon receipt of
due proof of death of any Covered Insured, as defined in the rider.

CHILDRENS' PROTECTION RIDER

Provides for term insurance on the Insured's children, as defined in the rider.
Under the terms of the rider, the death benefit will be payable to the named
beneficiary upon the death of any insured child. Upon receipt of proof of the
Insured's death before the rider terminates, the rider will be considered paid
up for the term of the rider.

GUARANTEED INSURABILITY RIDER

Provides that the policyowner can purchase additional insurance for the Insured
by increasing the Specified Amount of the Policy at certain future dates without
evidence of insurability.

DISABILITY BENEFIT PAYMENT RIDER

Provides for the payment of the disability benefit in the form of premiums by
AVLIC while the Insured is disabled. In addition, while the Insured is totally
disabled, the cost of insurance for the rider will not be deducted from the
Policy's cash value.
<PAGE>
PAYOR DISABILITY RIDER

Provides for the payment of the disability benefit in the form of premiums by
AVLIC while the Covered Person specified in the rider is totally disabled, as
defined in the rider. In addition, while the Covered Person is totally disabled,
the cost of insurance for the rider will not be deducted from the Policy's cash
value.

REPORTS AND RECORDS

AVLIC will maintain all records relating to the Account and will mail to the
policyowner, at the last known address of record, within 30 days after each
policy anniversary, an annual report which shows the current cash value, cash
surrender value, death benefit, premiums paid, outstanding policy debt and other
information. The policyowner will also be sent a periodic report for the Fund
and a list of the portfolio securities held in each portfolio of the Fund.

DISTRIBUTION OF THE POLICIES

Ameritas Investment Corp. ("Investment Corp."), a wholly-owned subsidiary of
AMAL Corporation and an affiliated company of AVLIC, will act as the principal
underwriter of the Policies, pursuant to an Underwriting Agreement between
itself and AVLIC. Investment Corp. was organized under the laws of the State of
Nebraska on December 29, 1983, and is a registered broker/dealer pursuant to the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers. Investment Corp. offers its clients a wide variety of
financial products and services and has the ability to execute stock and bond
transactions on a number of national exchanges. It also has executed selling
agreements with a variety of mutual funds, unit investment trusts and direct
participation programs. The Policies are sold by individuals who are Registered
Representatives of Investment Corp. and who are licensed as life insurance
agents for AVLIC.

Registered Representatives of Investment Corp. who sell the Policy will receive
commissions based upon a commission schedule. After issuance of the Policy,
commissions to the Registered Representatives will equal, at most, 40% of the
first year premium paid less the first year acquisition charge plus the first
year cost of any riders. In years two through seven of the Policy, Registered
Representatives will receive a maximum commission of 5% per policy year on any
premiums paid, and thereafter, 2% or less. Upon any subsequent increase in
Specified Amount or any subsequent increase in riders, commissions will also be
paid based on the amount of the increase in Specified Amount or increase in
rider. Further, Registered Representatives who meet certain production standards
may receive additional compensation, and managers receive override commissions
with respect to the policies. Investment Corp. and AVLIC may authorize other
registered broker/dealers and its Registered Representatives to sell the
Policies subject to applicable law.

FEDERAL TAX MATTERS

The following discussion provides a general description of the federal income
tax considerations associated with the Policy.

This discussion is not intended as tax advice. Any person concerned about these
tax implications should consult a competent tax advisor. This discussion is
based upon AVLIC's understanding of the present federal income tax laws as they
are currently interpreted by the Internal Revenue Service (the "Service"). No
representation is made as to the likelihood of continuation of the present
federal income tax laws or of the current interpretations by the Service. The
following summary does not purport to be complete or to cover all situations.
Special rules not described in this Prospectus may be applicable in certain
situations. Moreover, no attempt has been made to consider in detail any
applicable state or other tax (except premium taxes, see discussion "Premium
Taxes," page 23) laws. Counsel and other competent advisors should be consulted
for more complete information before a Policy is purchased.

(a) Taxation of AVLIC. AVLIC is taxed as a life insurance company under Part I
of Subchapter L of the Internal Revenue Code of 1986, (the "Code"). At this
time, since the Account is not an entity separate from AVLIC, and its
operations form a part of AVLIC, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code. Net
investment income and realized net capital gains on the assets of the
Account are reinvested and are taken into account in determining the death
benefit and cash value of the Policy. As a result, such net investment
income and realized net capital gains are automatically retained as part of
the reserves under the Policy. AVLIC believes that Account net investment
income and realized net capital gains will not be taxable to the extent that
such income and gains are retained as reserves under the Policy.

AVLIC does not currently expect to incur any federal income tax liability
attributable to the Account with respect to the sale of the Policies.
Accordingly, no charge is being made currently to the Account for federal
income taxes. If, however, AVLIC determines that it may incur such taxes
attributable to the Account, it may assess a charge for such taxes against
the Account.

AVLIC may also incur state and local taxes (in addition to premium taxes for
which a deduction from premiums is currently made) in various states. At
present, these taxes are not significant. If there is a material change in
state or local tax laws, charges for such taxes attributable to the Account,
if any, may be assessed against the Account.
<PAGE>
(b) Tax Status of the Policy. The Code (section 7702) includes a definition of a
life insurance contract for federal tax purposes, which places limitations
on the amount of premiums that may be paid for the Policy and the
relationship of the cash value to the death benefit. AVLIC believes that the
Policy meets the statutory definition of a life insurance contract. If the
death benefit of a Policy is changed , the applicable definitional
limitations may change. In the case of a decrease in the death benefit, a
partial surrender, a change from Option B to Option A, or any other such
change that reduces future benefits under the Policy during the first 15
years after a Policy is issued and that results in a cash distribution to
the policyowners in order for the Policy to continue complying with the
section 7702 definitional limitations on premiums and cash values, the
policyowner must include in ordinary income (to the extent of any gain in
the Policy) certain amounts prescribed in section 7702 which are so
distributed.

The Code (section 7702A) also defines a "modified endowment contract" for
federal tax purposes which causes distributions to be taxed as ordinary
income to the extent of any gain. This policy will become a "modified
endowment contract" if the premiums paid into the policy fail to meet a
7-pay premium test as outlined in Section 7702A of the Code.

Certain benefits the policyholder may elect under this policy may be
material changes affecting the 7-pay premium test. These include changes in
death benefits and changes in the policy amount. Should the policy become a
"modified endowment contract" partial or full surrenders, assignments,
policy pledges, and loans (including loans to pay loan interest) under the
policy will be taxable to the extent of any gain under the policy. A 10%
penalty tax also applies to the taxable portion of any distribution prior to
the policyholder's age 59 1/2. The 10% penalty tax does not apply if the
policyholder is disabled as defined under the Code or if the distribution is
paid out in the form of a life annuity on the life of the policyholder or
the joint lives of the policyholder and beneficiary. One may avoid a policy
becoming a modified endowment contract by, among other things, not making
excessive payments or reducing benefits. Should one deposit excessive
premiums during a policy year, that portion that is returned by the
insurance company within 60 days after the policy anniversary will
reduce the premiums paid to avoid the policy become a modified endowment
contract.

The Code (section 817(h)) also authorizes the Secretary of the Treasury (the
"Treasury") to set standards by regulation or otherwise for the investments
of the Account to be "adequately diversified" in order for the Policy to be
treated as a life insurance contract for federal tax purposes. The Account,
through the Fund, intends to comply with the diversification requirements
prescribed by the Treasury in regulations published in the Federal Register
on March 2, 1989, which affect how the Fund's assets may be invested.
Although the Fund's investment adviser is an affiliate of AVLIC, AVLIC does
not have complete control over the Fund or its investments.

However, AVLIC believes that the Fund will meet the diversification
requirements and AVLIC will monitor compliance with this requirement. Thus,
AVLIC believes that the Policy will be treated as a life insurance contract
for federal tax purposes.

In connection with the issuance of regulations relating to the
diversification requirements, the Treasury announced that such regulations
do not provide guidance concerning the extent to which owners may direct
their investments to particular divisions of a separate account. Regulations
in this regard may be issued in the future. It is not clear what these
regulations will provide nor whether they will be prospective only. It is
possible that when regulations are issued, the Policy may need to be
modified to comply with such regulations. For these reasons, the Company
reserves the right to modify the Policy as necessary to prevent the Owner
from being considered the Owner of the assets of the Separate Account.

The following discussion assumes that the Policy will qualify as a life
insurance contract for federal tax purposes.

(c) Tax Treatment of Policy Proceeds. AVLIC believes that the Policy will be
treated in a manner consistent with a fixed benefit life insurance policy
for federal income tax purposes. Thus, AVLIC believes that the death benefit
payable under either death benefit option under the Policy will be
excludable from the gross income of the beneficiary under section 101(a)(1)
of the Code and the policyowner will not be deemed to be in constructive
receipt of the cash value under the Policy until its actual surrender.
However, in the event of certain cash distributions under the Policy
resulting from any change which reduce future benefits under the Policy, the
distribution will be taxed in whole or in part as ordinary income (to the
extent of gain in the Policy). See discussion above, "Tax Status of the
Policy."

AVLIC also believes that loans received under a Policy will be treated as
indebtedness of the policyowner and that no part of any loan under a Policy
will constitute income to the policyowner so long as the Policy remains in
force. Generally, interest paid on any loan under a Policy owned by an
individual will not be tax-deductible.

In addition, interest on any loan under a Policy owned by a taxpayer and
covering the life of any individual who is an officer or is financially
interested in the business carried on by that taxpayer will not be tax
deductible to the extent the aggregate amount of such loans with respect to
Polices covering such individual exceeds $50,000. Further, even as to
interest on loans up to $50,000 per such individual, such interest would not
be deductible if the Policy were deemed for federal tax purposes to be a
single premium life insurance contract. Policyowners should consult a
competent tax advisor as to whether the Policy would be so deemed.
<PAGE>
The right to exchange the Policy for a flexible premium adjustable life
insurance policy (See Exchange Privilege, page 20), the right to change
owners (See General Provisions, page 27), and the provision for partial
withdrawals (See Surrenders, page 19) may have tax consequences depending on
the circumstances of such exchange, change, or withdrawal. Upon complete
surrender or when maturity benefits are paid, if the amount received plus
any outstanding policy debt exceeds the total premiums paid that are not
treated as previously withdrawn by the policyowner, the excess generally
will be taxed as ordinary income.

Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on applicable
law and the circumstances of each policyowner or beneficiary. In addition,
if the Policy is used in connection with tax-qualified retirement plans,
certain limitations prescribed by the Service on, and rules with respect to
the taxation of, life insurance protection provided through such plans may
apply.

SAFEKEEPING OF THE ACCOUNT'S ASSETS

AVLIC holds the assets of the Account. The assets are kept physically segregated
and held separate and apart from the general account assets, except for its
Fixed Account. AVLIC maintains records of all purchases and redemptions of Fund
shares by each of the Subaccounts.

VOTING RIGHTS

All of the assets held in the Subaccounts of the Account will be invested in
shares of the corresponding portfolios of the Funds. AVLIC is the legal holder
of those shares and as such has the right to vote to elect the Board of
Directors of the Various Funds, to vote upon certain matters that are required
by the 1940 Act to be approved or ratified by the shareholders of a mutual fund,
and to vote upon any other matter that may be voted upon at a shareholders'
meeting. To the extent required by law, AVLIC will vote all shares of the Funds
held in the Account at regular and special shareholder meetings of the Funds in
accordance with instructions received from policyowners. The number of votes for
which each policyowner has the right to provide instructions will be determined
as of the record date selected by the Board of Directors of the various Funds.
AVLIC will furnish policyowners with the proper forms, materials and reports to
enable them to give it these instructions.

The number of Fund shares in a Subaccount for which instructions may be given by
a policyowner is determined by dividing the Policy's cash value held in that
Subaccount by the net asset value of one share in the corresponding portfolio of
the Fund. Fractional shares will be counted. Fund shares held in each Subaccount
for which no timely instructions from policyowners are received and Fund shares
held in each Subaccount which do not support policyowner interests will be voted
by AVLIC in the same proportion as those shares in that Subaccount for which
timely instructions are received. Voting instructions to abstain on any item to
be voted will be applied on a pro rata basis to reduce the votes eligible to be
cast. Should applicable federal securities laws or regulations permit, AVLIC may
elect to vote shares of the Fund in its own right.

Matters on which policyowners may give voting instructions include the
following: (1) election of the Board of Directors of the Fund; (2) ratification
of the independent accountant of the Fund; (3) approval of the Investment
Advisory Agreement for the Portfolio(s) of the Fund corresponding to the
policyowner's selected Subaccount; (4) any change in the fundamental investment
policies of the Portfolio(s) corresponding to the policyowner's selected
Subaccount(s); and (5) any other matter requiring a vote of the shareholders of
the Fund under the 1940 Act.

DISREGARD OF VOTING INSTRUCTION. AVLIC may, if required by state insurance
officials, disregard voting instructions if those instructions would require
shares to be voted to cause a change in the subclassification or investment
objectives or policies of one or more of the Fund's Portfolios, or to approve or
disapprove an investment adviser or principal underwriter for the Fund. In
addition, AVLIC itself may disregard voting instructions that would require
changes in the investment objectives or policies of any portfolio or in an
investment adviser or principal underwriter for the Fund, if AVLIC reasonably
disapproves those changes in accordance with applicable federal regulations. If
AVLIC does disregard voting instructions, it will advise policyowners of that
action and its reasons for the action in the next annual report or proxy
statement to policyowners.
<PAGE>
STATE REGULATION OF AVLIC

AVLIC, a stock life insurance company organized under the laws of Nebraska, is
subject to regulation by the Nebraska Department of Insurance. On or before
March 1 of each year an NAIC convention blank covering the operations and
reporting on the financial condition of AVLIC and the Account as of December 31
of the preceding year must be filed with the Nebraska Department of Insurance.
Periodically, the Nebraska Department of Insurance examines the liabilities and
reserves of AVLIC and the Account and certifies their adequacy.

In addition, AVLIC is subject to the insurance laws and regulations of other
states within which it is licensed or may become licensed to operate. The
policies offered by the prospectus are available in the various states as
approved. Generally, the Insurance Department of any other state applies the
laws of the state of domicile in determining permissible investments.

EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC

Shows name and position(s) with AVLIC* followed by the principal occupations for
the last five years.***

LAWRENCE J. ARTH, DIRECTOR, CHAIRMAN OF THE BOARD, PRESIDENT, AND CHIEF
EXECUTIVE OFFICER*
Director, Chairman of the Board, and Chief Executive Officer: ALIC**, First
Ameritas Life Insurance Corp. of New York.; Director, Chairman of the Board,
President, and Chief Executive Officer: AMAL Corporation; Pathmark Assurance
Company, Bankers Life Nebraska Company, BLN Financial Services, Inc.; Director
and Chairman of the Board: Veritas Corp., Ameritas Investment Corp., Ameritas
Investment Advisors, Inc., FMA Realty Inc.; Director, Chairman, President, Chief
Executive Officer: Lincoln Gateway Shopping Center, Inc.; Director: Ameritas
Bankers Assurance Company, Ameritas Managed Dental Plan, Inc.

KENNETH C. LOUIS, DIRECTOR, EXECUTIVE VICE PRESIDENT*
President and Chief Operating Officer: ALIC; Director, Executive Vice President:
AMAL Corporation; Director and Senior Vice President: Ameritas Investment Corp.;
Director: First Ameritas Life Insurance Corp. of New York, Ameritas Investment
Advisors, Inc., Ameritas Investment Corp., Veritas Corp., Ameritas Bankers
Assurance Company, Bankers Life Nebraska Company, BLN Financial Services, Inc.,
FMA Realty, Inc., Lincoln Gateway Shopping Center, Inc., Pathmark Assurance
Company, Ameritas Managed Dental Plan, Inc.

D T DOAN, DIRECTOR AND EXECUTIVE VICE PRESIDENT****
Director and Executive Vice President: AMAL Corporation; Director and Senior
Vice President: Ameritas Investment Corp.; Vice Chairman and President-Insurance
Operations, American Mutual Life Insurance Company (formerly known as ("f.k.a.")
Central Life Assurance Company *****).

ROBERT B. BUSH, DIRECTOR, SENIOR VICE PRESIDENT VARIABLE OPERATIONS AND
ADMINISTRATION*
Executive Vice President-Individual Insurance, ALIC; Chairman, President, CEO:
CUNA Mutual Financial Services Corporation; CUNA Brokerage Services, Inc.;
Century Financial Services Corp.; CUNA Mutual General Agency of Texas, Inc.; CM
Field Services, Inc.; Plan America Program, Inc.; Director: CU Financial and
Insurance Services, Inc.; CUNA Mutual Insurance Agency of Alabama, Inc.; CUNA
Mutual Insurance Agency of Massachusetts, Inc.; CUNA Mutual Life Insurance
Agency of Mississippi, Ltd.; CUNA Mutual Casualty Insurance Agency of
Mississippi, Inc.; CUNA Mutual Insurance Agency of New Mexico, Inc; CUNA Mutual
Insurance Agency of Ohio, Inc.; Vice President: CUNA Mutual Funds Management
Company, L.L.C.; Senior Vice President: CUNA Mutual Insurance Society; CUNA
Mutual Investment Corporation; CUMIS Insurance Society, Inc.; League General
Insurance Company; Members Life Insurance Company; CUNA Mutual Insurance Agency,
Inc.; Century Life of America; Century Life Insurance Co.

WAYNE E. BREWSTER, SENIOR VICE PRESIDENT-VARIABLE SALES*
Vice President-Variable Sales: ALIC.

ASHOK CHAWLA, VICE PRESIDENT-FIXED ANNUITY INVESTMENTS****
Senior Vice President - Fixed Income Group: American Mutual Life Insurance
Company; Director-Risk Management: Providian Corp.; Assistant Vice President:
Lincoln National Corp.

THOMAS C. GODLASKY, DIRECTOR****
Director, AIC; Executive Vice President and Chief Investment Officer, American
Mutual Life Insurance Company; Manager-Fixed Income and Derivatives Department,
Providian Corporation

JOSEPH K. HAGGERTY, ASSISTANT GENERAL COUNSEL****
Assistant Secretary and Assistant General Counsel, AMAL Corporation; Senior Vice
President and General Counsel: American Mutual Life Insurance Company (f.k.a.
Central Life Assurance Company*****); Senior Vice President, Assistant
Secretary, Deputy General Counsel: I.C.H. Corporation; Assistant Secretary:
Integrity National Life Insurance Company; Senior Vice President: Facilities
Management Installation, Inc.; Vice President: Constitution Life Insurance
Company; Bankers Life and Casualty Company; Bankers Multiple Line Insurance
Company; Certified Life Insurance Company; Lifetime Security Life Insurance
Company; Philadelphia American Life Insurance Company; Southeast Title and
Insurance Company; Southwestern Life Insurance Company; Union Bankers Insurance
Company; Western Pioneer Life Insurance Company; Director: Bankers Life and
Casualty Company of New York; Vice President and Director: Modern American Life
Insurance Company
<PAGE>
JAMES R. HAIRE, VICE PRESIDENT AND ACTUARY*
Senior Vice President-Corporate Actuary and Strategic Development: ALIC;
Director: Pathmark Assurance Co.; Director and Vice President: First Ameritas
Life Insurance Corp. of New York

JON C. HEADRICK, TREASURER*
Executive Vice President-Investments and Treasurer: ALIC; Treasurer to: Ameritas
Investment Corp., AMAL Corporation, Veritas Corp., Ameritas Bankers Assurance
Company, Bankers Life Nebraska Company, Pathmark Assurance Company, First
Ameritas Life Insurance Corp. of New York, Ameritas Managed Dental Plan, Inc.;
Director, Vice President and Treasurer to: BLN Financial Services Inc.;
Director, President and Treasurer: FMA Realty Inc., Armenta Corp.; Director and
Treasurer: Ameritas Investment Corp.; Director, President and Chief Executive
Officer: Ameritas Investment Advisors Inc.

SANDRA K. HOLMES, VICE PRESIDENT-FIXED ANNUITY CUSTOMER SERVICE****
Vice President: American Mutual Life Insurance Company (f.k.a. Central Life
Assurance Company*****)

KENNETH R. JONES, VICE PRESIDENT-CORPORATE COMPLIANCE AND ASSISTANT SECRETARY*
Vice President, Corporate Compliance & Assistant Secretary: ALIC; Ameritas
Investment Advisors, Inc., Ameritas Investment Corp., First Ameritas Life
Insurance Corp. of New York; Assistant Vice President & Assistant Secretary:
Bankers Life Nebraska Company, Pathmark Assurance Company.

NORMAN M. KRIVOSHA, SECRETARY AND GENERAL COUNSEL*
Executive Vice President, Secretary & Corporate General Counsel: ALIC; Secretary
and General Counsel: AMAL Corporation, Ameritas Investment Corp.; Director,
Secretary: Ameritas Investment Advisors Inc., Ameritas Investment Corp., BLN
Financial Services, Inc., Ameritas Bankers Assurance Company, Veritas Corp.,
Pathmark Assurance Company, Bankers Life Nebraska Company; Armenta Corp., FMA
Realty, Inc.; Ameritas Managed Dental Plan, Inc.; Vice President, Secretary &
General Counsel: First Ameritas Life Insurance Corp. of New York; Secretary:
Lincoln Gateway Shopping Center, Inc.

JOANN M. MARTIN, CONTROLLER*
Senior Vice President-Controller and Chief Financial Officer: ALIC; Director and
Chief Financial Officer: Ameritas Managed Dental Plan, Inc.; Director: Ameritas
Investment Advisors, Inc., Ameritas Investment Corp., BLN Financial Services,
Inc., FMA Realty, Inc.; Controller to: Veritas Corp., Bankers Life Nebraska
Company, Pathmark Assurance Company; Director, Controller: Lincoln Gateway
Shopping Center Inc.; Director, Comptroller, Assistant Secretary: Ameritas
Bankers Assurance Company; Vice President, Comptroller: First Ameritas Life
Insurance Corp. of New York.

SHEILA SANDY, ASSISTANT SECRETARY****
Annuity Manager: American Mutual Life Insurance Company

MICHAEL E. SPROULE, DIRECTOR****
Director, Ameritas Investment Corp.; Executive Vice President and Chief
Financial Officer: American Mutual Life Insurance Company (f.k.a. Central Life
Assurance Company*****); I.C.H. Corporation

LINDA S. STRECK, VICE PRESIDENT-FIXED ANNUITY PRODUCT DEVELOPMENT****
Actuarial Vice President - Product Development and Management: American Mutual
Life Insurance Company (f.k.a. Central Life Assurance Company*****).

KEVIN WAGONER, ASSISTANT TREASURER****
Director Investment Accounting: American Mutual Life Insurance Company (f.k.a.
Central Life Assurance Company*****); Senior Financial Analyst: Target Stores

* The Principal business address: of each person listed is Ameritas
Variable Life Insurance Company, One Ameritas Way, 5900 "O" Street,
P.O. Box 82550, Lincoln, Nebraska 68501.
** Ameritas Life Insurance Corp.
*** Where an individual has held more than one position with an
organization during the last 5-year period, the last position held has
been given.
**** Principal business address for D T Doan, Joseph Haggerty, Sandra K.
Holmes, Michael E. Sproule, Ashok K. Chawla, Thomas C. Godlasky,
Sheila E. Sandy, Linda S. Streck, and Kevin Wagoner is: American Mutual
Life Insurance Company, 611 Fifth Avenue, Des Moines, Iowa 50309.
***** Central Life Assurance Company merged with American Mutual Life
Insurance Company on December 31, 1994. Central Life Assurance Company
was the survivor of the merger. Contemporaneous with the merger,
Central Life Assurance Company changed its name to American Mutual Life
Insurance Company.
<PAGE>
LEGAL MATTERS

All matters of Nebraska law pertaining to the Policy, including the validity of
the Policy and AVLIC's right to issue the Policy under Nebraska Insurance Law,
have been passed upon by Norman M. Krivosha, Secretary and General Counsel of
AVLIC.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Account is a party or to which the
assets of the Account are subject. AVLIC is not involved in any litigation that
is of material importance in relation to its total assets or that relates to the
Account.

EXPERTS

The financial statements of AVLIC as of December 31, 1995 and 1994, and for each
of the three years in the period ended December 31, 1995 and the financial
statements of the Account as of December 31, 1995 and for each of the three
years in the period then ended, included in this Prospectus, have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.

Actuarial matters included in this Prospectus have been examined by Thomas P.
McArdle, Assistant Vice President and Associate Actuary of Ameritas Life
Insurance Corp. as stated in the opinion filed as an exhibit to the registration
statement.

ADDITIONAL INFORMATION

A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning the Account, AVLIC and the Policy offered hereby.
Statements contained in this Prospectus as to the contents of the Policy and
other legal instruments are summaries. For a complete statement of the terms
thereof reference is made to such instruments as filed.

FINANCIAL STATEMENTS

The financial statements of AVLIC which are included in this Prospectus should
be considered only as bearing on the ability of AVLIC to meet its obligations
under the Policies. They should not be considered as bearing on the investment
performance of the assets held in the Account.
<PAGE>
Independent Auditors' Report

Board of Directors
Ameritas Variable Life
Insurance Company
Lincoln, Nebraska

We have audited the accompanying statement of net assets of Ameritas Variable
Life Insurance Company Separate Account V as of December 31, 1995, and the
related statements of operations and changes in net assets for each of the three
years in the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1995. 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, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company
Separate Account V as of December 31, 1995, and the results of its operations
and changes in its net assets for each of the three years in the period then
ended, in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Lincoln, Nebraska
February 1, 1996
<PAGE>
<TABLE>
<CAPTION>

AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
DECEMBER 31, 1995

ASSETS

INVESTMENTS AT NET ASSET VALUE:
<S> <C>
Variable Insurance Products Fund:
Money Market Portfolio - 5,613,527.070 shares at
$1.00 per share (cost $5,613,527) $ 5,613,527
Equity-Income Portfolio - 652,438.732 shares at
$19.27 per share (cost $9,667,592) 12,572,494
Growth Portfolio - 702,196.341 shares at
$29.20 per share (cost $14,143,041) 20,504,133
High Income Portfolio - 358,988.159 shares at
$12.05 per share (cost $3,703,023) 4,325,807
Overseas Portfolio - 438,914.420 shares at
$17.05 per share (cost $6,616,181) 7,483,491
Variable Insurance Products Fund II:
Asset Manager Portfolio - 1,221,448.421 shares at
$15.79 per share (cost $16,521,707) 19,286,671
Investment Grade Bond Portfolio - 171,189.054 shares at
$12.48 per share (cost $2,013,214) 2,136,439
Contrafund Portfolio - 9,382.665 shares at
$13.78 per share (cost $129,565) 129,293
Index 500 Portfolio - 61.274 shares at
$75.71 per share (cost $4,403) 4,639
Asset Manager: Growth Portfolio - 1,153.239 shares at
$11.78 per share (cost $14,071) 13,585
Alger American Fund:
Small Capitalization Portfolio - 263,321.551 shares at
$39.41 per share (cost $8,012,444) 10,377,502
Growth Portfolio - 150,146.226 shares at
$31.16 per share (cost $3,672,555) 4,678,557
Income and Growth Portfolio - 51,644.863 shares at
$17.79 per share (cost $790,984) 918,762
Midcap Growth Portfolio - 138,005.038 shares at
$19.44 per share (cost $2,229,077) 2,682,818
Balanced Portfolio - 32,000.820 shares at
$13.64 per share (cost $391,329) 436,491
Leveraged Allcap Portfolio - 5,780.602 shares at
$17.43 per share (cost $99,893) 100,756
Dreyfus Stock Index Fund:
Stock Index Fund Portfolio - 127,452.178 shares at
$17.20 per share (cost $1,880,387) 2,192,178
MFS Variable Insurance Trust:
Emerging Growth Series Portfolio -10,355.688 shares at
$11.41 per share (cost $119,796) 118,158
World Governments Series Portfolio - 1,555.043 shares at
$10.17 per share (cost $16,700) 15,815
Utilities Series Portfolio - 1,475.513 shares at
$12.57 per share (cost $19,793) 18,547
---------------

NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS $ 93,609,663
===============

The accompanying notes are an integral part of these financial statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSET
FOR THE YEARS ENDED DECEMBER 31,

1995 1994 1993
------------ ------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ 1,293,935 $ 799,210 $ 499,740
EXPENSE
Charges to policyowners for assuming
mortality and expense risk (Note B) 723,000 465,706 260,944
----------- ----------- -----------
INVESTMENT INCOME - NET 570,935 333,504 238,796
----------- ----------- -----------

REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS - NET
Capital gain distributions received 403,845 1,403,280 292,625
Unrealized increase/(decrease) 14,755,373 (2,469,056) 3,683,814
----------- ------------ ----------
NET GAIN/(LOSS) ON INVESTMENTS 15,159,218 (1,065,776) 3,976,439
----------- ------------ ----------

NET (DECREASE)/INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS 15,730,153 (732,272) 4,215,235

NET INCREASE IN NET ASSETS RESULTING
FROM PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS (Note B) 19,763,147 21,904,104 14,840,992
----------- ----------- -----------

TOTAL INCREASE IN NET ASSETS 35,493,300 21,171,832 19,056,227

NET ASSETS
Beginning of period 58,116,363 36,944,531 17,888,304
----------- ----------- -----------
End of period $ 93,609,663 $ 58,116,363 $ 36,944,531
=========== =========== ===========

The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

A. ORGANIZATION AND ACCOUNTING POLICIES:
-------------------------------------

Ameritas Variable Life Insurance Company Separate Account V (the Account)
was established on August 28, 1985, under Nebraska law by Ameritas Variable
Life Insurance Company (AVLIC), a wholly-owned subsidiary of Ameritas Life
Insurance Corp. (ALIC). The assets of the Account are segregated from
AVLIC's other assets and are used only to support variable life products
issued by AVLIC.

The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. At December 31, 1995, there are twenty
subaccounts within the Account. Five of the subaccounts invest only in a
corresponding Portfolio of Variable Insurance Products Fund and five invest
only in a corresponding Portfolio of Variable Insurance Products Fund II.
Both funds are diversified open-end management investment companies and are
managed by Fidelity Management and Research Company. Six of the subaccounts
invest only in a corresponding Portfolio of Alger American Fund which is a
diversified open-end management investment company managed by Fred Alger
Management, Inc. One subaccount invests only in a corresponding Portfolio
of Dreyfus Stock Index Fund which is a non-diversified open-end management
investment company managed by Dreyfus Service Corporation. Three of the
subaccounts invest only in a corresponding Portfolio of MFS Variable
Insurance Trust which is a diversified open-end management investment
company managed by Massachusetts Financial Services Company. All five funds
are registered under the Investment Company Act of 1940, as amended. Each
Portfolio pays the manager a monthly fee for managing its investments and
business affairs. The assets of the Account are carried at the net asset
value of the underlying Portfolios of the Funds. The value of the
policyowners' units corresponds to the Account's investment in the
underlying subaccounts. The availability of investment portfolio and
subaccount options may vary between products.

AVLIC currently does not expect to incur any federal income tax liability
attributable to the Account with respect to the sale of the variable life
insurance policies. If, however, AVLIC determines that it may incur such
taxes attributable to the Account, it may assess a charge for such taxes
against the Account.

B. POLICYHOLDER CHARGES:
---------------------

AVLIC charges the Account for mortality and expense risks assumed. A daily
charge is made on the average daily value of the net assets representing
equity of policyowners held in each subaccount per each product's current
policy provisions. Additional charges are made at intervals and in amounts
per each product's current policy provisions. These charges are prorated
against the balance in each investment option of the policyholder,
including the Fixed Account option which is not reflected in this separate
account. The withdrawal of these charges are included as other operating
transfers.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

C. INFORMATION BY FUND:
<TABLE>
<CAPTION>

Variable Insurance Products Fund
-------------------------------------------------------------------------------
Money Equity- High
Market Income Growth Income Overseas
-------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>

Balance 12-31-94 $ 6,247,662 $ 6,295,945 $ 12,362,890 $ 2,970,211 $ 4,954,650
Distributed earnings 330,031 558,647 71,777 214,996 39,788
Mortality risk charge (57,621) (89,161) (160,505) (40,007) (60,098)
Unrealized increase/(decrease) --- 2,148,654 4,664,368 542,261 616,308
Net premium transferred (906,545) 3,658,409 3,565,603 638,346 1,932,843
------------- ------------ ------------- ------------- ------------
Balance 12-31-95 $ 5,613,527 $ 12,572,494 $ 20,504,133 $ 4,325,807 $ 7,483,491
============= ============ ============= ============= ============

Variable Insurance Products Fund II
------------------------------------------------------------------------------
Asset Investment Contrafund Asset Mgr.: Index 500
Manager Grade Bond (1) Growth (2) (3)
------------- ------------- ------------ -------------- -------------
Balance 12-31-94 $ 16,158,059 $ 907,159 $ --- $ --- $ ---
Distributed earnings 346,679 34,269 1,284 564 ---
Mortality risk charge (164,848) (13,893) (119) (25) (7)
Unrealized increase/(decrease) 2,471,611 183,723 (273) (486) 236
Net premium transferred 475,170 1,025,181 128,401 13,532 4,410
------------- ----------- ------------ -------------- ------------
Balance 12-31-95 $ 19,286,671 $ 2,136,439 $ 129,293 $ 13,585 $ 4,639
============= =========== ============ ============== ============

Alger American Fund
------------------------------------------------------------------------------------
Small Income and Midcap Leveraged
Capitalization Growth Growth Growth Balanced Allcap(4)
--------------- ------------ ----------- ----------- ----------- -----------
Balance 12-31-94 $ 4,264,367 $ 2,012,571 $ 307,350 $ 545,887 $ 126,178 $ ---
Distributed earnings --- 34,885 5,186 142 3,039 ---
Mortality risk charge (67,150) (32,981) (5,765) (14,362) (2,251) (57)
Unrealized increase/(decrease) 2,184,006 924,176 146,805 430,138 45,544 863
Net premium transferred 3,996,279 1,739,906 465,186 1,721,013 263,981 99,950
------------- ------------ ----------- ----------- ----------- -----------
Balance 12-31-95 $ 10,377,502 $ 4,678,557 $ 918,762 $ 2,682,818 $ 436,491 $ 100,756
============= ============ =========== =========== =========== ===========

MFS Variable Insurance Trust Dreyfus
---------------------------------------------- -------------
Emerging World (6) Utilities Stock
Growth(5) Governments (7) Index Fund TOTAL
------------- --------------- ------------- ------------- ---------------
Balance 12-31-94 $ --- $ --- $ --- $ 963,434 $ 58,116,363
Distributed earnings 2,634 1,440 1,745 50,674 1,697,780
Mortality risk charge (118) (37) (10) (13,985) (723,000)
Unrealized increase/(decrease) (1,638) (885) (1,246) 401,208 14,755,373
Net premium transferred 117,280 15,297 18,058 790,847 19,763,147
------------- -------------- ------------ ----------- ---------------
Balance 12-31-95 $ 118,158 $ 15,815 $ 18,547 $ 2,192,178 $ 93,609,663
============= ============== ============ =========== ===============

(1) Commenced business 09/05/95. (5) Commenced business 09/12/95.
(2) Commenced business 09/13/95. (6) Commenced business 09/13/95.
(3) Commenced business 10/17/95. (7) Commenced business 10/18/95.
(4) Commenced business 09/13/95.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

C. INFORMATION BY FUND:

Alger American Fund
--------------------------------------------------------------------------------
Small Income Midcap
Capitalization Growth and Growth Growth Balanced
--------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance 12-31-93 $ 2,431,108 $ 513,578 $ 155,544 $ 91,469 $ 12,416
Distributed earnings 197,447 56,309 12,250 805 1,173
Mortality risk charge (28,810) (10,955) (2,338) (2,777) (667)
Unrealized increase/(decrease) (212,648) 11,388 (27,043) 15,802 (793)
Net premium transferred 1,877,270 1,442,251 168,937 440,588 114,049
--------------- ------------- -------------- ------------- -------------
Balance 12-31-94 $ 4,264,367 $ 2,012,571 $ 307,350 $ 545,887 $ 126,178
=============== ============= ============== ============= =============

Variable Insurance Products Fund
--------------------------------------------------------------------------------
Money Equity- High
Market Income Growth Income Overseas
--------------- ------------- ------------- ------------- -------------
Balance 12-31-93 $ 3,302,391 $ 4,081,214 $ 8,666,232 $ 2,112,409 $ 2,627,460
Distributed earnings 227,947 343,291 540,322 192,676 16,253
Mortality risk charge (53,086) (50,692) (97,597) (24,422) (41,486)
Unrealized increase/(decrease) --- (10,817) (430,322) (216,500) (57,561)
Net premium transferred 2,770,410 1,932,949 3,684,255 906,048 2,409,984
------------- ------------ ------------ ------------ ------------
Balance 12-31-94 $ 6,247,662 $ 6,295,945 $ 12,362,890 $ 2,970,211 $ 4,954,650
============= ============ =========== ============ ============

Variable Insurance
Products Fund II Dreyfus
----------------------------- -------------
Asset Investment Stock
Manager Grade Bond Index Fund TOTAL
-------------- ------------ ------------- -------------
Balance 12-31-93 $ 11,412,386 $ 1,069,216 $ 469,108 $ 36,944,531
Distributed earnings 589,342 2,944 21,731 2,202,490
Mortality risk charge (133,984) (12,468) (6,424) (465,706)
Unrealized increase/(decrease) (1,465,271) (53,875) (21,416) (2,469,056)
Net premium transferred 5,755,586 (98,658) 500,435 21,904,104
------------- ------------- ------------ -------------
Balance 12-31-94 $ 16,158,059 $ 907,159 $ 963,434 $ 58,116,363
============= ============= ============ =============

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

C. INFORMATION BY FUND:
Alger American Fund
--------------------------------------------------------------------------------
Small Income Midcap
Capitalization Growth and Growth Growth (1) Balanced (2)
--------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance 12-31-92 $ 596,677 $ 56,046 $ 37,708 $ --- $ ---
Distributed earnings --- 189 218 922 ---
Mortality risk charge (12,717) (2,485) (775) (191) (42)
Unrealized increase/(decrease) 298,611 64,901 6,462 7,801 411
Net premium transferred 1,548,537 394,927 111,931 82,937 12,047
--------------- ------------- ------------- -------------- ------------
Balance 12-31-93 $ 2,431,108 $ 513,578 $ 155,544 $ 91,469 $ 12,416
=============== ============= ============= ============== ============

Variable Insurance Products Fund
--------------------------------------------------------------------------------
Money Equity- High
Market Income Growth Income Overseas
--------------- ------------- ------------- ------------- -------------
Balance 12-31-92 $ 2,600,260 $ 2,476,762 $ 5,152,469 $ 857,133 $ 586,673
Distributed earnings 84,138 89,586 125,620 82,061 15,219
Mortality risk charge (26,767) (33,306) (67,253) (17,034) (13,317)
Unrealized increase/(decrease) --- 430,027 1,063,056 215,584 333,367
Net premium transferred 644,760 1,118,145 2,392,340 974,665 1,705,518
-------------- -------------- ------------ ----------- -----------
Balance 12-31-93 $ 3,302,391 $ 4,081,214 $ 8,666,232 $ 2,112,409 $ 2,627,460
============== ============== ============ =========== ===========

Variable Insurance
Products Fund II Dreyfus
----------------------------- -------------
Asset Investment Stock
Manager Grade Bond Index Fund TOTAL
-------------- ------------ ------------- -------------
Balance 12-31-92 $ 4,852,263 $ 510,803 $ 161,510 $ 17,888,304
Distributed earnings 237,544 60,677 96,191 792,365
Mortality risk charge (74,672) (9,236) (3,149) (260,944)
Unrealized increase/(decrease) 1,317,267 15,527 (69,200) 3,683,814
Net premium transferred 5,079,984 491,445 283,756 14,840,992
------------- ------------ ------------ -------------
Balance 12-31-93 $ 11,412,386 $ 1,069,216 $ 469,108 $ 36,944,531
============= ============ ============ =============

(1) Commenced business 06/17/93.
(2) Commenced business 06/28/93.

</TABLE>
<PAGE>
Independent Auditors' Report

Board of Directors
Ameritas Variable Life
Insurance Company
Lincoln, Nebraska

We have audited the accompanying balance sheets of Ameritas Variable Life
Insurance Company as of December 31, 1995 and 1994, and the related statements
of operations, changes in stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1995. 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, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with statutory accounting principles which are considered generally
accepted accounting principles for mutual life insurance companies and their
insurance subsidiaries.

As discussed in Note A to the financial statements, effective December 31, 1995,
the Company changed a reserving practice.

DELOITTE & TOUCHE LLP

Lincoln, Nebraska
February 1, 1996
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

BALANCE SHEETS
(in thousands, except shares)

December 31,
---------------------------
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
Investments:
Bonds, at amortized cost ( fair value of $40,344
and $34,021) (Note C) $ 38,753 $ 34,607
Short-term investments 4,289 7,714
Loans on life insurance policies 2,639 1,597
------------- -------------

Total investments 45,681 43,918

Cash 1,371 431
Accrued investment income 790 774
Reinsurance recoverable - affiliates (Note E) 57 467
Other assets 76 129
Separate Accounts (Note F) 682,482 462,886
------------- ------------

$ 730,457 $ 508,605
============= ============

LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:

Life and annuity reserves $ 28,740 $ 30,578
Funds left on deposit with the company 87 142
Interest maintenance reserve 41 36
Accounts payables - affiliates (Note E) 1,926 884
Income tax payable-affiliates 1,221 36
Accrued professional fees 20 11
Sundry current liabilities -
Cash with applications 1,305 562
Other 662 692
Valuation reserve 193 163
Separate Accounts (Note F) 682,482 462,886
------------- -----------
716,677 495,990
------------- -----------

STOCKHOLDER'S EQUITY:

Common stock, par value $100 per share; 4,000 4,000
authorized 50,000 shares, issued and
outstanding 40,000 shares
Additional paid-in capital 29,700 29,700
Deficit (19,920) (21,085)
------------- -----------

13,780 12,615
------------- -----------

$ 730,457 $ 508,605
============ ===========

The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

STATEMENTS OF OPERATIONS
(in thousands)

Year Ended December 31,
--------------------------------------------------------
1995 1994 1993

-------------- --------------- ---------------
<S> <C> <C> <C>
INCOME:
Premium income $ 158,436 $ 174,085 $ 155,166
Less reinsurance: (Note E)
Yearly renewable term (5,110) (1,333) (843)
-------------- --------------- ---------------
Net premium income 153,326 172,752 154,323
Miscellaneous insurance income 4,482 1,398 459
Net investment income (Note D) 3,507 3,050 2,897
-------------- --------------- ---------------

161,315 177,200 157,679
-------------- --------------- ---------------

EXPENSES:

Increase (decrease) in reserves (296) (637) 1,717
Benefits to policyowners 31,094 19,012 8,128
Commissions 14,813 15,799 13,080
General insurance expenses (Note E) 6,641 6,403 4,216
Taxes, licenses and fees 1,275 1,183 829
Net premium transferred to
Separate Accounts (Note F) 106,053 139,974 136,451
------------- --------------- ---------------

159,580 181,734 164,421
------------- --------------- ---------------
Income(loss) before income taxes
and realized capital gains 1,735 (4,534) (6,742)

Income taxes (benefit)-current 1,752 (611) (1,501)
-------------- --------------- ---------------

(Loss) before realized capital gains (17) (3,923) (5,241)

Realized capital gains(losses) (net of tax
of $12, $11 and $19 and $18, $12 and
$32 transfers to interest maintenance
reserve for 1995, 1994 and 1993,
respectively) (2) (2) 1
-------------- --------------- ---------------

Net (loss) $ (19) $ (3,925) $ (5,240)
============== =============== ===============

The accompanying notes are an integral part of these financial statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

AMERITAS VARIABLE LIFE INSURANCE COMPANY

STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands, except shares)

Additional
Common Stock Paid in
Shares Amount Capital Deficit Total
------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>

BALANCE, January 1, 1993 40,000 $ 4,000 $ 18,200 $ (11,793) $ 10,407

Transfer to valuation reserve - - - (62) (62)

Capital contribution from
Ameritas Life Insurance Corp. - - 5,500 - 5,500

Net (loss) - - - (5,240) (5,240)
------------ ----------- ------------- ------------ ------------

BALANCE, December 31, 1993 40,000 4,000 23,700 (17,095) 10,605

Increase in non-admitted assets (2) (2)

Transfer to valuation reserve - - - (63) (63)

Capital contribution from
Ameritas Life Insurance Corp. - - 6,000 - 6,000

Net (loss) - - - (3,925) (3,925)
------------ ------------ ------------- ------------ ------------

BALANCE, December 31, 1994 40,000 4,000 29,700 (21,085) 12,615

Decrease in non-admitted assets - - - 5 5

Transfer to valuation reserve - - - (30) (30)

Release of reserves (Note A) - - - 1,618 1,618

Settlement/intercompany taxes - - - (409) (409)

Net (loss) - - - (19) (19)
----------- ----------- ------------- ------------ ------------
BALANCE, December 31, 1995 40,000 $ 4,000 $ 29,700 $ (19,920) $ 13,780
=========== =========== ============= ============ ============

The accompanying notes are an integral part of these financial statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

STATEMENTS OF CASH FLOWS
(in thousands)

Year Ended December 31,
---------------------------------------------------------
1995 1994 1993
-------------- --------------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net premium income received $ 153,867 $ 172,701 $ 154,408
Miscellaneous insurance income 4,201 1,398 459
Net investment income received 3,405 2,899 2,848
Net premium transferred to Separate Accounts (105,654) (140,161) (136,451)
Benefits paid to policyowners (31,200) (18,944) (8,207)
Commissions (12,343) (15,799) (13,080)
Expenses and taxes (10,664) (7,547) (4,939)
Net increase in policy loans (1,041) (576) (592)
Income taxes (987) 527 1,630
Other operating income and disbursements 1,978 (2,222) 270
-------------- --------------- -----------------

Net cash provided by (used in) operating activities 1,562 (7,724) (3,654)
-------------- --------------- -----------------

INVESTING ACTIVITIES:
Maturity of bonds 3,713 5,108 8,266
Purchase of investments (7,760) (15,673) (1,460)
-------------- --------------- -----------------

Net cash (used in) provided by investing activities (4,047) (10,565) 6,806
-------------- --------------- -----------------

FINANCING ACTIVITIES:
Capital contribution - 6,000 5,500
-------------- --------------- -----------------

NET (DECREASE) INCREASE IN CASH AND
SHORT TERM INVESTMENTS (2,485) (12,289) 8,652

CASH AND SHORT TERM INVESTMENTS -
BEGINNING OF PERIOD 8,145 20,434 11,782
-------------- --------------- -----------------

CASH AND SHORT TERM INVESTMENTS -
END OF PERIOD $ 5,660 $ 8,145 $ 20,434
============== =============== =================

The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)

A. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
---------------------------------------------------------------------

Ameritas Variable Life Insurance Company (the Company), a stock life
insurance company domiciled in the State of Nebraska, is a wholly-owned
subsidiary of Ameritas Life Insurance Corp.(ALIC), a mutual life insurance
company. The Company began issuing variable life insurance and variable
annuity policies in 1987. The variable life and variable annuity policies
are not participating with respect to dividends.

The accompanying financial statements have been prepared in accordance with
life insurance accounting practices prescribed by the Insurance Department
of the State of Nebraska. While appropriate for mutual life insurance
companies, such accounting practices differ in certain respects from
generally accepted accounting principles followed by other business
enterprises. The Financial Accounting Standards Board (FASB) has undertaken
consideration of changing those methods constituting generally accepted
accounting principles applicable to mutual life insurance companies. In
accordance with pronouncements issued by the FASB in 1993 and 1994,
financial statements prepared on the basis of statutory accounting practices
will no longer be described as prepared in conformity with generally
accepted accounting principles for fiscal years beginning after December 15,
1995.

USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent 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.

The principal accounting and reporting practices followed are:

INVESTMENTS - Bonds and short-term investments earning interest are carried
at amortized cost which, for short-term investments, approximates market.
Separate account assets are carried at market. Realized gains and losses are
determined on the basis of specific identification.

ACQUISITION COSTS - Commissions, reinsurance ceded allowances, underwriting
and other costs of issuing new policies as well as maintenance and
settlement costs are reported as costs of insurance operations in the period
incurred.

PREMIUMS - Premiums are reported as income when collected over the premium
paying periods of the policies. Premium income consists of:
<TABLE>
<CAPTION>

Year Ended December 31,
--------------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C>
Life $ 32,020 $ 31,980 $ 20,591
Annuity 126,416 142,105 134,575
-------------- -------------- --------------
$ 158,436 $ 174,085 $ 155,166
============== ============== ==============

</TABLE>

POLICY RESERVES - Generally, reserves for variable life and annuity policies
are established and maintained on the basis of each policyholder's interest
in the account values of Separate Accounts V and VA-2. However, reserves
established for certain annuity products are determined on the basis of the
Commissioner's Annuity Reserve Valuation Method (CARVM) reserving method
which approximates surrender values. The account values are net of
applicable cost of insurance and other expense charges. The cost of
insurance has been developed by actuarial methods. The Company uses the
mortality rates from the Commissioners 1980 Standard Ordinary Smoker and
Non- Smoker, Male and Female Mortality Tables in computing minimum values
and reserves. Policy reserves are also provided for amounts held in the
general accounts consistent with requirements of the Nebraska Department of
Insurance.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)

A. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
---------------------------------------------------------------------
(Continued)
-----------

INTEREST MAINTENANCE RESERVE - The interest maintenance reserve is
calculated based on the prescribed methods developed by the NAIC. This
reserve is used to accumulate realized gains and losses resulting from
interest rate changes on fixed income investments. These gains and losses
are then amortized into investment income over what would have been the
remaining years to maturity of the underlying investment.

VALUATION RESERVE - Valuation reserves are a required appropriation of
Stockholder's Equity to provide for possible losses that may occur on
certain investments held by the Company. The appropriation (Asset Valuation
Reserve) is based on the holdings of bonds, stocks, mortgages, real estate
and short-term investments. Realized and unrealized gains and losses, other
than those resulting from interest rate changes, are added or charged to the
reserve (subject to certain maximums).

INCOME TAXES - The Company files a consolidated life/non-life tax return
with Ameritas Life Insurance Corp. and its subsidiaries. An agreement among
the members of the consolidated group provides for distribution of
consolidated tax results as if filed on a separate return basis. The current
income tax expense or benefit (including effects of capital gains and losses
and net operating losses) is apportioned generally on a sub-group
(life/non-life) basis. As a result of differences in accounting between book
and tax purposes for certain items, primarily deferred acquisition costs and
certain reserve calculations, taxes are provided in excess of the 35%
statutory corporate rate.

CHANGE IN ACCOUNTING - Effective December 31, 1995 the Company released the
voluntary mortality fluctuation reserve through a credit to stockholder's
equity. The increase in reserve included in the statements of operations for
the years ended 1995, 1994 and 1993 were $659, $421 and $135, respectively.

B. FINANCIAL INSTRUMENTS:
----------------------

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument for which it is practicable to
estimate a value:

Bonds
For publicly traded securities, fair value is determined using an
independent pricing source. For securities without a readily ascertainable
fair value, fair value has been determined using an interest rate spread
matrix based upon quality, weighted average maturity, and Treasury yields.

Short-term Investments
The carrying amount approximates fair value because of the short maturity of
these instruments.

Loans on Life Insurance Policies
Fair values for policy loans are estimated using discounted cash flow
analyses at interest rates currently offered for similar loans. Policy loans
with similar characteristics are aggregated for purposes of the
calculations.

Cash
The carrying amounts reported in the balance sheet equals fair value.

Accrued Investment Income
Fair value on accrued investment income equals book value.

Funds left on Deposit
Funds on deposit which do not have fixed maturities are carried at the
amount payable on demand at the reporting date.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)

B. FINANCIAL INSTRUMENTS: (Continued)
----------------------------------

The estimated fair values, as of December 31, 1995 and 1994, of the
Company's financial instruments are as follows:
<TABLE>
<CAPTION>

1995 1994
--------------------------------- --------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Financial Assets:
Bonds $ 38,753 $ 40,344 $ 34,607 $ 34,021
Short-term investments 4,289 4,289 7,714 7,714
Loans on life insurance policies 2,639 2,346 1,597 1,190
Cash 1,371 1,371 431 431
Accrued investment income 790 790 774 774

Financial Liabilities:
Funds left on deposit 87 87 142 142

These fair values do not necessarily represent the value for which the financial instrument could be sold.
</TABLE>

C. BONDS:
------
The table below provides additional information relating to bonds held by
the Company as of December 31, 1995:
<TABLE>
<CAPTION>

Gross Gross
Amortized Fair Unrealized Unrealized Carrying
Cost Value Gains Losses Value
-------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
LONG TERM BONDS:
Corporate-U.S. $ 20,667 $ 21,597 $ 930 $ - $ 20,667
Mortgage-Backed 3,628 3,742 114 - 3,628
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies 14,458 15,005 551 4 14,458
-------------- ------------- ------------ ------------- ------------
$ 38,753 $ 40,344 $ 1,595 4 $ 38,753
============== ============= ============ ============= ============

</TABLE>

The comparative data as of December 31, 1994 is summarized as follows:

<TABLE>
<CAPTION>
Gross Gross
Amortized Fair Unrealized Unrealized Carrying
Cost Value Gains Losses Value
-------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>

LONG TERM BONDS:
Corporate-U.S. $ 19,634 $ 19,396 $ 160 $ 398 $ 19,634
Corporate-Foreign 1,000 1,008 8 - 1,000
Mortgage-Backed 1,149 1,184 35 - 1,149
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies 12,824 12,433 47 438 12,824
-------------- ------------- ------------ ------------- -------------
$ 34,607 $ 34,021 $ 250 $ 836 $ 34,607
============== ============= ============ ============= =============

</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)

C. BONDS: (Continued)
------------------

The carrying value and fair value of bonds at December 31, 1995 by
contractual maturity are shown below:
<TABLE>
<CAPTION>
Fair Carrying
Value Value
--------------- ----------------
<S> <C> <C>
Due in one year or less $ 10,731 $ 10,429
Due after one year through five years 25,368 24,200
Due after five years through ten years 503 496
Due after ten years - -
Mortgage-Backed Securities 3,742 3,628
--------------- ----------------
$ 40,344 $ 38,753
=============== ================

Investments in securities of one issuer other than United States Government
and United States Government Agencies which exceed 10% of total
stockholder's equity as of December 31, 1995 are as follows:
</TABLE>

Included in Bonds: Carrying
ISSUER Value
------ --------------
<S> <C>

Leggett & Platt Inc Medium Term Notes $ 1,500
Sears, Roebuck & Co 1,499

Included in Short-Term Investments:
ISSUER
------
GTE Northwest Inc Discount Note $ 1,500
Goldman Sachs Money Market Treasury Obligations 1,539

Included in Bonds: Carrying
ISSUER Value
------ -------------
Leggett & Platt Inc Medium Term Notes $ 1,500
Sears, Roebuck & Co 1,499

Included in Short-Term Investments:
ISSUER
------
GTE Northwest Inc Discount Note $ 1,397
Potomac Electric Power Co Disc Note 1,499
AT&T Corp Disc Note 1,299
Cargill Inc Disc Note 1,496

At December 31, 1995, the Company had securities with a market value of $3,356
on deposit with various State Insurance Departments.

</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)

D. INVESTMENT INCOME:
------------------

Net investment income for the years ended December 31, 1995, 1994 and 1993
is comprised as follows:
<TABLE>
<CAPTION>

Year Ended December 31,
--------------------------------------------------
1995 1994 1993
--------------- --------------- ----------------
<S> <C> <C> <C>
Bonds $ 2,819 $ 2,410 $ 2,384
Short-term investments 597 609 529
IMR amortization 15 5 1
Loans on life insurance policies 128 82 39
--------------- ---------------- ---------------
Gross investment income 3,559 3,106 2,953
Less investment expenses 52 56 56
--------------- ---------------- ---------------

Net investment income $ 3,507 $ 3,050 $ 2,897
=============== ================ ===============

</TABLE>

E. RELATED PARTY TRANSACTIONS:
---------------------------

Ameritas Life Insurance Corp. provides technical, financial and legal
support to the Company under an administrative service agreement. The cost
of these services to the Company for years ended December 31, 1995, 1994 and
1993 was $4,858, $4,029 and $1,915, respectively. The Company also leases
office space and furniture and equipment from Ameritas Life Insurance Corp.
The cost of these leases to the Company for the years ended December 31,
1995, 1994 and 1993 was $37, $40 and $54, respectively.

Under the terms of an investment advisory agreement, the Company paid $44,
$43 and $44 for the years ended December 31, 1995, 1994 and 1993 to Ameritas
Investment Advisors Inc., an indirect wholly-owned subsidiary of Ameritas
Life Insurance Corp.

The Company entered into a reinsurance agreement (yearly renewable term)
with Ameritas Life Insurance Corp. Under this agreement, Ameritas Life
Insurance Corp. assumes life insurance risk in excess of the Company's $50
retention limit. The Company recorded $5,085 of gross reinsurance premiums
for the year ended December 31, 1995 which includes reinsurance ceded
commission allowances of $2,805 resulting in net reinsurance ceded premiums
of $2,280. In 1994 and 1993 the Company reported reinsurance ceded premiums
net of reinsurance ceded commission allowances. The Company paid $1,333 and
$843 of net reinsurance premiums for the years ended December 31, 1994 and
1993, respectively.

The Company has entered into a guarantee agreement with Ameritas Life
Insurance Corp., whereby, Ameritas Life Insurance Corp. guarantees the full,
complete and absolute performance of all duties and obligations of the
Company.

The Company's products are distributed through Ameritas Investment Corp., an
indirect wholly-owned subsidiary of Ameritas Life Insurance Corp. The
Company received $192, $272 and $23 for the years ended December 31, 1995,
1994 and 1993, respectively, from this affiliate to partially defray the
costs of materials and prospectuses. Policies placed by this affiliate
generated commission expense of $14,028, $15,223 and $12,621 for the years
ended December 31, 1995, 1994 and 1993, respectively.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)

F. SEPARATE ACCOUNTS:
------------------

The Company is currently marketing variable life and variable annuity
products which have separate accounts as an investment option. Separate
Account V (Account V) was formed to receive and invest premium receipts from
variable life insurance policies issued by the Company. Separate Account
VA-2 (Account VA-2) was formed to receive and invest premium receipts from
variable annuity policies issued by the Company. Both Separate Accounts are
registered under the Investment Company Act of 1940, as amended, as unit
investment trusts. Account V and VA-2's assets and liabilities are
segregated from the other assets and liabilities of the Company.

Amounts in the Separate Accounts are:

December 31,
---------------------------
1995 1994
------------ ------------
Separate Account V $ 93,610 $ 58,117
Separate Account VA-2 588,872 404,769
------------ ------------
$ 682,482 $ 462,886
============ ============

The assets of Account V are invested in shares of the Variable Insurance
Products Fund, the Variable Insurance Products Fund II, Alger American Fund,
Dreyfus Stock Index Fund and MFS Variable Insurance Trust. Each fund is
registered with the SEC under the Investment Company Act of 1940, as
amended, as an open-end diversified management investment company.

The Variable Insurance Products Fund and the Variable Insurance Products
Fund II are managed by Fidelity Management and Research Company. Variable
Insurance Products Fund has five portfolios: the Money Market Portfolio, the
High Income Portfolio, the Equity Income Portfolio, the Growth Portfolio and
the Overseas Portfolio. The Variable Insurance Fund II has five portfolios:
the Investment Grade Bond Portfolio, Asset Manager Portfolio, Contrafund
Portfolio (effective August 25, 1995), Asset Manager Growth Portfolio(
effective September 15, 1995) and the Index 500 Portfolio (September 21,
1995). The Alger American Fund is managed by Fred Alger Management, Inc. and
has six portfolios: Income and Growth Portfolio, Small Capitalization
Portfolio, Growth Portfolio, MidCap Growth Portfolio (effective June 17,
1993), Balanced Portfolio (effective June 28, 1993) and the Leveraged Allcap
Portfolio (effective August 30, 1995). The Dreyfus Stock Index Fund is
managed by Wells Fargo Nikko Investment Advisors and has the Stock Index
Fund Portfolio. The MFS Variable Insurance Trust is managed by Massachusetts
Financial Services Company. The MFS Variable Insurance Trust has three
portfolios: the Emerging Growth Portfolio (effective August 25, 1995), World
Governments Portfolio (effective August 24, 1995) and the Utilities
Portfolio (effective September 18, 1995)

Separate Account VA-2 allows investment in the Variable Insurance Products
Fund, Variable Insurance Products Fund II, Alger American Fund, Dreyfus
Stock Index Fund and the MFS Variable Insurance Trust with the same
portfolios as described above.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(in thousands)

G. BENEFIT PLANS:
--------------

The Company is included in the noncontributory defined-benefit pension plan
that covers substantially all full-time employees of Ameritas Life Insurance
Corp. and its subsidiaries. Pension costs include current service costs,
which are accrued and funded on a current basis, and past service costs,
which are amortized over the average remaining service life of all employees
on the adoption date. The assets and liabilities of this plan are not
segregated. The Company had no full time employees during 1995. Total
Company contributions for the years ended December 31, 1994 and 1993 were
$47 and $51, respectively.

The Company's employees also participate in a defined contribution thrift
plan that covers substantially all full-time employees of Ameritas Life
Insurance Corp. and its subsidiaries. Company matching contributions under
the plan range from 1% to 3% of the participant's compensation. The Company
had no full time employees during 1995. Total Company contributions for the
years ended December 31, 1994 and 1993 were $20 and $22, respectively.

The Company is also included in the postretirement benefit plan providing
group medical coverage to retired employees of Ameritas Life Insurance Corp.
and its subsidiaries. These benefits are a specified percentage of premium
until age 65 and a flat dollar amount thereafter. Employees become eligible
for these benefits upon the attainment of age 55, 15 years of service and
participation in the plan for the immediately preceding 5 years. Benefit
costs include the expected cost of postretirement benefits for newly
eligible employees, interest cost, and gains and losses arising from
differences between actuarial assumptions and actual experience. The assets
and liabilities of this plan are not segregated. The Company had no full
time employees during 1995. Total Company contributions for the years ended
December 31, 1994 and 1993 were $7 and $2, respectively.

Expenses for the defined benefit pension plan and postretirement group
medical plan are allocated to the Company based on a percentage of payroll.

H. REGULATORY MATTERS:
-------------------

Under statutes of the Insurance Department of the State of Nebraska, the
Company is limited in the amount of dividends it can pay to its stockholder.
No dividends are to be paid in 1996 without approval of the Insurance
Department.

I. SUBSEQUENT EVENTS - UNAUDITED:
------------------------------

On April 1, 1996 Ameritas Life consummated an agreement with American Mutual
Life Insurance Company whereby AVLIC became a wholly-owned subsidiary of a
newly formed holding company, AMAL Corporation. The agreement was announced
March 11, 1996. The holding company will contribute approximately $18
million of additional paid-in capital to AVLIC. Under terms of the
agreement the AMAL Corporation will initially be 66% owned by Ameritas Life
and 34% owned by American Mutual. American Mutual has options to purchase
an additional 15% interest over the next five years if certain production
requirements are met. Ameritas Life, American Mutual and AMAL Corporation
guarantee the obligations of AVLIC. This guarantee will continue until
AVLIC is recognized by a National Rating Agency as having a financial
rating equal to or greater than Ameritas Life, or until AVLIC is acquired
by another insurance company who has a financial rating by a National
Rating Agency equal to or greater than Ameritas Life and who agrees to
assume the guarantee; provided that if AML sells its interest in AMAL
Corporation to another insurance company who has a financial rating by a
National Rating Agency equal to or greater than that of AML, and the
purchaser assumes the guarantee, AML will be relieved of its obligations
under the Guarantee.

Effective January 1, 1996, with the approval of the State of Nebraska
Insurance Department, AVLIC changed reserving methods used for most existing
products resulting in an increase in statutory surplus of approximately $23.4
million.

On February 28, 1996 the Board of Directors declared a return of paid-in
capital of $15 million paid by a note due on or before August 15, 1996. This
action was approved by the State of Nebraska Insurance Department (Insurance
Department). Any additional distributions of capital or surplus would require
approval of the Insurance Department.