FORTIS BENEFITS INSURANCE CO VARIABLE ACCOUNT C, 485BPOS, 1996-04-29

FORTIS BENEFITS INSURANCE CO VARIABLE ACCOUNT C
485BPOS, 1996-04-29

Previous: FORTIS BENEFITS INSURANCE CO VARIABLE ACCOUNT C, 485BPOS, 1996-04-29

Next: FORTIS BENEFITS INSURANCE CO VARIABLE ACCOUNT C, 485BPOS, 1996-04-29

<PAGE>

As filed with the Securities and Exchange Commission on April 29, 1996.
Registration No. 33-03919

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

POST-EFFECTIVE AMENDMENT NO. 18 to
FORM S-6
Registration Statement
Under
THE SECURITIES ACT OF 1933

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

VARIABLE ACCOUNT C
OF FORTIS BENEFITS INSURANCE COMPANY
(Exact name of trust)

FORTIS BENEFITS INSURANCE COMPANY
(Name of depositor)

500 Bielenberg Drive
Woodbury, Minnesota 55125
(Complete address of depositor's principal executive offices)

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

RHONDA J. SCHWARTZ, ESQ.
P. O. Box 64284
St. Paul, MN 55164
(Name and complete address of agent for service)

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

It is proposed that this filing will become effective (check appropriate line):

___ immediately upon filing pursuant to paragraph (b) of Rule 485.
_X_ on May 1, 1996 pursuant to paragraph (b) of Rule 485.
___ 60 days after filing pursuant to paragraph (a) of Rule 485.
___ on _____________ pursuant to paragraph (a) of Rule 485.

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

This filing is made pursuant to Rules 6c-3 and 6e-3(T)
under the Investment Company Act of 1940

<PAGE>

Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940 with respect to the Policies described in the
Prospectus.

Pursuant to Rule 24f-2, the registrant has registered an indefinite amount
of interests in Variable Account C pursuant to variable life insurance
policies, the securities being registered hereby. The registrant filed its
Rule 24f-2 notice for the year ended December 31, 1995 on February 23,
1996.

<PAGE>

PROSPECTUS SUPPLEMENT DATED MAY 1, 1996

This Supplement updates certain information contained in the following
prospectuses for products issued by Fortis Benefits Insurance Company:

* Harmony Investment Life dated May 1, 1995
* Fortis VUL 100 dated May 31, 1995

Please read this Supplement carefully. You should attach this Supplement to
the Prospectus and retain them for future reference.

ADDITIONAL INVESTMENT PORTFOLIOS OF THE FORTIS SERIES FUND, INC.

As of May 1, 1996, the Policy owner may elect to receive a rate of return
based on one or more of the following additional investment portfolios of
Fortis Series Fund, Inc.: Blue Chip Stock Series, S&P 500 Index Series, and
Value Series. The accompanying supplemental prospectus for Fortis Series[nb]
Fund describes the investment objectives, policies, and risks of each of
these additional portfolios.

Each of these Portfolios has a different investment objective and is managed
by Fortis Advisers, Inc. Each Series pays Advisers an advisory fee
calculated and paid monthly at a per annum rate equal to a percentage of such
Series' average daily net assets as follows: for Blue Chip Stock Series, .9%
of the first $100 million of average daily net assets and .85% thereafter;
for S&P 500 Index Series, .4% of average daily net assets; for Value Series,
.7% of the first $100 million of average daily net assets and .65% thereafter.

Two of these Series have retained a sub-adviser to provide investment
research, advice, and supervision subject to the general control of Fortis
Advisers, Inc. T. Rowe Price Associates, Inc. is the sub-adviser of the Blue
Chip Stock Series; The Dreyfus Corporation is the sub-adviser of the S&P 500
Index Series.

From its advisory fee, Fortis Advisers, Inc. pays the sub-advisers a fee
at an annual rate as follows: for Blue Chip Stock Series, .5% of the first
$100 million of average daily net assets and .45% thereafter; for S&P 500
Index Series, .17% of average daily net assets.

POLICY LOANS

After the later of 12 years or the insured's Age 70, the Policy owner may
borrow up to 100% of the difference between the Policy Value and the amount
of any Surrender Charge then in effect.

FINANCIAL STATEMENTS

The financial statements of Fortis Benefits included in this Supplement
should be considered only as bearing upon the ability of Fortis Benefits to
meet its obligations under the policies. They should not be considered as
bearing upon the investment experience of the Separate Accounts.

APPENDIX B -- Illustrations of Death Benefits, Policy Values, Surrender
Values, and Accumulated Premiums.

As a result of a slight increase in other portfolio operating expenses from
an annual rate of .07% to .08%, Policy Values, Death Benefits, and Surrender
Values would be slightly lower than those shown in Appendix B of the
Prospectus.

DRL\prossupp.96

1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Fortis Benefits Insurance Company

We have audited the accompanying balance sheets of Fortis Benefits Insurance
Company as of December 31, 1995 and 1994, and the related statements of income,
shareholder'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, the financial statements referred to above present fairly, in
all material respects, the financial position of Fortis Benefits Insurance
Company at 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 generally accepted accounting principles.

In 1993, as discussed in Note 2 to the financial statements, the Company changed
its method of accounting for income taxes, postretirement benefits other than
pensions and certain investments in debt and equity securities.

/s/ Ernst & Young LLP
Minneapolis, Minnesota
February 14, 1996

2
<PAGE>
BALANCE SHEETS
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Investments--Note 4
Fixed maturities, at fair value (amortized cost 1995--$1,951,204; 1994--$1,749,347)... $ 2,075,624 $ 1,674,782
Equity securities, at fair value (cost 1995--$60,935; 1994--$59,010).................. 78,852 64,552
Mortgage loans on real estate, less allowance for possible losses (1995--$8,353;
1994--$7,429)........................................................................ 562,697 452,547
Policy loans.......................................................................... 53,863 49,221
Short-term investments................................................................ 153,499 117,562
Real estate and other investments..................................................... 11,918 13,441
------------ ------------
2,936,453 2,372,105

Cash.................................................................................... 1 10,888

Receivables:
Uncollected premiums.................................................................. 55,992 40,667
Reinsurance recoverable on unpaid and paid losses..................................... 11,812 15,181
Due from affiliates................................................................... 388 2,220
Other................................................................................. 14,581 12,593
------------ ------------
82,773 70,661

Accrued investment income............................................................... 41,209 38,584
Deferred policy acquisition costs--Note 5............................................... 237,509 232,198
Property and equipment at cost, less accumulated depreciation--Note 6................... 60,031 56,939
Deferred federal income taxes--Note 8................................................... -- 48,509
Other assets............................................................................ 3,551 1,120
Assets held in separate accounts--Note 9................................................ 1,781,485 1,212,910
------------ ------------
TOTAL ASSETS............................................................................ $ 5,143,012 $ 4,043,914
------------ ------------
------------ ------------
</TABLE>

See notes to financial statements.

3
<PAGE>
BALANCE SHEETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
POLICY RESERVES, LIABILITIES, AND SHAREHOLDER'S EQUITY

POLICY RESERVES AND LIABILITIES
Future policy benefit reserves:
Traditional life insurance............................................................ $ 407,706 $ 375,257
Interest sensitive and investment products............................................ 1,101,931 912,653
Accident and health................................................................... 832,925 798,293
------------ ------------
2,342,562 2,086,203

Unearned premiums....................................................................... 13,044 16,145
Other policy claims and benefits payable................................................ 196,403 169,864
Policyholder dividends payable.......................................................... 7,930 6,793
------------ ------------
2,559,939 2,279,005
Accrued expenses........................................................................ 68,441 45,905
Current income taxes payable............................................................ 5,375 4,352
Deferred federal income taxes--Note 8................................................... 9,538 --
Other liabilities....................................................................... 31,145 32,416
Liabilities related to separate accounts................................................ 1,757,476 1,208,039
------------ ------------
TOTAL POLICY RESERVES AND LIABILITIES..................................................... 4,431,914 3,569,717

SHAREHOLDER'S EQUITY--Notes 1, 10 and 12
Common stock, $5 par value, 1,000,000 shares authorized, issued and outstanding......... 5,000 5,000
Additional paid-in capital.............................................................. 408,000 358,000
Retained earnings....................................................................... 207,421 153,551
Unrealized gains (losses) on investments, net--Note 4................................... 88,131 (42,908)
Unrealized gains on assets held in separate accounts net of deferred taxes of $1,371 in
1995
and $298 in 1994....................................................................... 2,546 554
------------ ------------
TOTAL SHAREHOLDER'S EQUITY................................................................ 711,098 474,197
------------ ------------
TOTAL RESERVES, LIABILITIES, AND SHAREHOLDER'S EQUITY..................................... $ 5,143,012 $ 4,043,914
------------ ------------
------------ ------------
</TABLE>

See notes to financial statements.

4
<PAGE>
STATEMENTS OF INCOME
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES
Insurance operations
Traditional life insurance premiums......................................... $ 251,353 $ 207,824 $ 187,863
Interest sensitive and investment product policy charges.................... 46,076 37,823 28,778
Accident and health premiums................................................ 934,900 776,799 738,412
------------ ------------ ------------
1,232,329 1,022,446 955,053
Net investment income--Note 4................................................. 203,537 162,514 153,657
Realized gains (losses) on investments--Note 4................................ 55,080 (28,815) 73,623
Other income.................................................................. 33,085 35,958 27,100
------------ ------------ ------------
TOTAL REVENUES............................................................ 1,524,031 1,192,103 1,209,433
BENEFITS AND EXPENSES
Benefits to policyholders:
Traditional life insurance.................................................. 202,911 162,168 145,958
Interest sensitive and investment products.................................. 73,676 55,026 50,935
Accident and health......................................................... 769,588 620,367 598,146
------------ ------------ ------------
1,046,175 837,561 795,039
Policyholder dividends........................................................ 4,305 1,986 5,855
Amortization of deferred policy acquisition costs--Note 5..................... 41,291 34,566 36,503
Insurance commissions......................................................... 95,559 86,111 76,816
General and administrative expenses........................................... 254,940 197,427 185,986
------------ ------------ ------------
TOTAL BENEFITS AND EXPENSES............................................... 1,442,270 1,157,651 1,100,199
------------ ------------ ------------
Income before federal income taxes and cumulative effect of accounting
changes........................................................................ 81,761 34,452 109,234
Federal income taxes--Note 8.................................................... 27,891 11,595 31,090
------------ ------------ ------------
Income before cumulative effect of accounting changes........................... 53,870 22,857 78,144
Cumulative effect of change in accounting for income taxes--Note 2............ -- -- 4,814
Cumulative effect of change in accounting for postretirement benefits other
than pensions,
net of tax--Note 2........................................................... -- -- (1,251)
------------ ------------ ------------
NET INCOME................................................................ $ 53,870 $ 22,857 $ 81,707
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

See notes to financial statements.

5
<PAGE>
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
UNREALIZED GAINS ON
ADDITIONAL GAINS ASSETS HELD
COMMON PAID-IN RETAINED (LOSSES) ON IN SEPARATE
STOCK CAPITAL EARNINGS INVESTMENTS ACCOUNTS TOTAL
----------- ----------- ----------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1993......................... $ 5,000 $ 345,000 $ 52,634 $ 4,263 $ 657 $ 407,554
Net income...................................... -- -- 81,707 -- -- 81,707
Dividends to shareholder........................ -- -- (4,000) -- -- (4,000)
Other........................................... -- -- 353 -- -- 353
Change in unrealized gains on investments,
net............................................ -- -- -- 2,099 -- 2,099
Change in unrealized gains on investments, net,
resulting from initial adoption of FASB
115--Note 1.................................... -- -- -- 43,782 -- 43,782
Change in unrealized gain on assets held in
separate account, net of deferred tax expense
of $238........................................ -- -- -- -- 413 413
----- ----------- ----------- ----------- ----- ---------
Balance December 31, 1993....................... 5,000 345,000 130,694 50,144 1,070 531,908
Net income...................................... -- -- 22,857 -- -- 22,857
Additional paid-in capital...................... -- 13,000 -- -- -- 13,000
Change in unrealized losses on investments,
net............................................ -- -- -- (93,052) -- (93,052)
Change in unrealized gain on assets held in
separate account, net of deferred tax benefit
of $277........................................ -- -- -- -- (516) (516)
----- ----------- ----------- ----------- ----- ---------
Balance December 31, 1994....................... 5,000 358,000 153,551 (42,908) 554 474,197
Net income...................................... -- -- 53,870 -- -- 53,870
Additional paid-in capital...................... -- 50,000 -- -- -- 50,000
Change in unrealized gains on investments,
net............................................ -- -- -- 131,039 -- 131,039
Change in unrealized gain on assets held in
separate account, net of deferred tax expense
of $1,073...................................... -- -- -- -- 1,992 1,992
----- ----------- ----------- ----------- ----- ---------
Balance December 31, 1995....................... $ 5,000 $ 408,000 $ 207,421 $ 88,131 $ 2,546 $ 711,098
----- ----------- ----------- ----------- ----- ---------
----- ----------- ----------- ----------- ----- ---------
</TABLE>

6
<PAGE>
STATEMENT OF CASH FLOWS
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................................. $ 53,870 $ 22,857 $ 81,707
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of accounting changes................................... -- -- (3,563)
Increase in future policy benefit reserves for traditional, interest
sensitive and accident and health policies............................... 80,478 79,014 58,299
Increase (decrease) in other policy claims and benefits and policyholder
dividends payable........................................................ 27,676 10,075 (15,868)
Decrease in deferred federal income taxes................................. (13,584) (2,356) (9,776)
Increase (decrease) in income taxes payable............................... 1,023 3,283 (12,733)
Amortization of policy acquisition costs.................................. 41,291 34,566 36,503
Policy acquisition costs deferred......................................... (56,391) (54,349) (45,841)
Provision for mortgage loan losses........................................ 924 1,105 1,648
Provision for depreciation................................................ 15,654 12,267 9,399
Accrual of discount, net.................................................. (239) (914) 72
Change in receivables, accrued investment income, unearned premiums,
accrued expenses and other liabilities................................... 3,427 (36,650) 5,751
Net realized (gains) losses on investments................................ (55,080) 28,815 (73,623)
Other..................................................................... (2,431) (135) 164
------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES............................... 96,618 97,578 32,139
INVESTING ACTIVITIES
Purchase of fixed maturity investments...................................... (2,151,133) (1,943,697) (2,337,842)
Sales or maturities of fixed maturity investments........................... 2,000,068 1,798,184 2,358,288
(Increase) decrease in short-term investments............................... (35,908) (44,266) 28,756
Purchase of other investments............................................... (240,264) (211,836) (201,601)
Sales or maturities of other investments.................................... 112,598 104,399 75,539
Purchase of property and equipment.......................................... (19,975) (16,164) (13,155)
Purchase of group insurance business........................................ -- (6,644) (5,521)
Other....................................................................... 1,229 500 49
------------- ------------- -------------
NET CASH USED BY INVESTING ACTIVITIES................................... (333,385) (319,524) (95,487)
FINANCING ACTIVITIES
Activities related to investment products:
Considerations received................................................... 187,484 200,499 68,943
Surrenders and death benefits............................................. (60,522) (19,207) (37,262)
Interest credited to policyholders........................................ 48,918 31,867 30,024
Additional paid-in capital from shareholder................................. 50,000 13,000 --
Dividends paid to shareholder............................................... -- -- (4,000)
------------- ------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES............................... 225,880 226,159 57,705
------------- ------------- -------------
INCREASE (DECREASE) IN CASH............................................. (10,887) 4,213 (5,643)
Cash at beginning of year..................................................... 10,888 6,675 12,318
------------- ------------- -------------
CASH AT END OF YEAR..................................................... $ 1 $ 10,888 $ 6,675
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See notes to financial statements.

7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FORTIS BENEFITS INSURANCE COMPANY

DECEMBER 31, 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS: Fortis Benefits Insurance Company (the Company) is an
affiliate of the worldwide Fortis group of companies owned by Fortis AMEV of the
Netherlands and Fortis AG of Belgium. The Company is incorporated in Minnesota
and distributes its products in all states except New York. To date, the
majority of the Company's revenues have been derived from group employee
benefits products and the remainder from individual life and annuity products.

BASIS OF STATEMENT PRESENTATION: The financial statements are presented in
conformity with generally accepted accounting principles. Certain amounts
included in the 1993 and 1994 financial statements have been reclassified to
conform to the 1995 presentation.

RECOGNITION OF REVENUES, POLICY RESERVES AND LIABILITIES AND POLICY ACQUISITION
COSTS: The Company follows generally accepted accounting principles which differ
in certain respects from statutory accounting practices prescribed or permitted
by regulatory authorities. The more significant of these principles are:

Premiums for long-duration traditional life policies are recognized as
revenues when due over the premium-paying period. Liabilities for future
policy benefits and expenses are computed using the net level method and
include investment yield, mortality, withdrawal, and other assumptions based
on the Company's experience, modified as necessary to reflect anticipated
trends and to include provisions for possible unfavorable deviations.

Revenues for universal life and investment products consist of charges
assessed against policy account balances during the period for the cost of
insurance, policy administration, and surrender charges. Future policy
benefit reserves are computed under the retrospective deposit method and
consist of policy account balances before applicable surrender charges and
certain deferred policy initiation fees that are being recognized in income
over the term of the policies. Policy benefits charged to expense during the
period include amounts paid in excess of policy account balances and
interest credited to policy account balances. Interest credit rates for
universal life and investment products ranged from 4% to 7.80% in 1995 and
1994.

Premiums for long-term disability, short-term traditional life, and accident
and health are recognized as revenues ratably over the contract period in
proportion to the risk insured. Liabilities for future disability income
policy benefits are based on the 1964 Commissioners Disability Table at 6
percent interest. Calculated reserves are modified based on the Company's
actual experience. Claims and benefits payable for reported and incurred but
not reported losses and related loss adjustment expenses are determined
using case-basis estimates and past experience. The methods of making such
estimates and establishing the related liabilities are continually reviewed
and updated. Any adjustments resulting therefrom are reflected in earnings
currently.

For interest sensitive and investment products, deferred policy acquisition
costs are amortized in relation to profits. For group life, accident and
health, disability, and dental insurance business acquired on October 1,
1991 (see Note 3), the Company recorded the present value of future profits
as deferred policy acquisition costs. These costs are amortized in
proportion to premium revenue over the estimated premium paying period of
the related policies and, if required, are expensed when such costs are
deemed not to be recoverable from future policy revenues, including the
related investment income.

For insurance products issued subsequent to December 31, 1984, the costs of
acquiring new business, which vary with and are directly related to the
production of new business, are deferred, to the extent recoverable from
future profits, and amortized against income. The period of amortization
varies depending upon the product. For traditional life products, the policy
acquisition costs are deferred and amortized over the premium paying period
of the contracts. For interest sensitive and investment products, the policy
acquisition costs are deferred and amortized in relation to the present
value of estimated future gross profits.

INVESTMENTS: The Company's investment strategy is developed based on many
factors including insurance liability matching, rate of return, maturity, credit
risk, tax considerations and regulatory requirements.

Prior to December 31, 1993, the Company classified fixed maturity investments as
available-for-sale recorded at the lower of amortized cost or market, computed
on a portfolio basis. Equity securities were carried at fair value. At December
31, 1993, all fixed maturity securities were classified as available-for-sale
and carried at fair value. The effect of adopting Statement 115 at December 31,
1993 was to increase the carrying amount of fixed maturities by $76,309,000,
policyholder dividends payable by $2,684,000, deferred income taxes by
$23,575,000 and shareholder's equity by $43,782,000 and to reduce the carrying
amount of deferred policy acquisition costs by $6,268,000. Beginning in 1994,
the classification of fixed maturity investments between available-for-sale or
held to maturity is made at the time of each purchase and, prospectively, that
classification is reevaluated as of each balance sheet date.

Changes in market values of available-for-sale securities, after deferred income
taxes and after adjustment for the amortization of deferred policy acquisition
costs, and participating policyholders' share of earnings are reported as
unrealized gains (losses) on investments directly in shareholder's equity and,
accordingly, have no effect on net income. The offsets to the unrealized
appreciation or depreciation represent valuation adjustments relating to amounts
of additional deferred policy acquisition costs or amortization of deferred
policy acquisition costs and the additional liabilities established for future
policyholder benefits and participating policyholders' share of the Company's
earnings that would have been required as a charge or credit to operations had
such unrealized amounts been realized.

Mortgage loans constitute first liens on commercial real estate and other income
producing properties. The insurance statutes in Minnesota generally require that
the initial principal loaned not exceed 80% of the appraised value of the
property securing the loan. The Company's policy fully complies with this
statute. Mortgage loans on real estate are reported at unpaid balances, adjusted
for amortization of premium or discount, less allowance for possible losses. The
change in the allowance for possible losses is recorded with realized gains and
losses on investments. Policy loans are reported at unpaid balance.

8
<PAGE>

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Realized gains and losses on sales of investments, and declines in value judged
to be other-than-temporary, are recognized on the specific identification basis.
Investment income is recorded as earned.

PROPERTY AND EQUIPMENT: Property and equipment are recorded at cost less
accumulated depreciation. The Company provides for depreciation principally on
the straight line method over the estimated useful lives of the related
property.

INCOME TAXES: Income taxes have been provided using the liability method in
accordance with Financial Accounting Standards Board ("FASB") Statement 109,
ACCOUNTING FOR INCOME TAXES. Deferred tax assets and liabilities are determined
based on the differences between the financial reporting and the tax bases and
are measured using the enacted tax rates.

SEPARATE ACCOUNTS: Assets and liabilities associated with separate accounts
relate to premium and annuity considerations for variable life and annuity
products for which the contract holder, rather than the Company, bears the
investment risk. Separate account assets are reported at fair value.

GUARANTY FUND ASSESSMENTS: The economy and other factors have caused an increase
in the number of insurance companies that are under regulatory supervision. This
circumstance may result in an increase in assessments by state guaranty funds,
or voluntary payments by solvent insurance companies, to cover losses to
policyholders of insolvent or rehabilitated companies. Mandatory assessments can
be partially recovered through a reduction in future premium taxes in some
states. The Company is not able to reasonably estimate the impact of future
assessments on its financial position but does not believe that the impact will
be material.

USE OF ESTIMATES: The preparation of financial statements in conformity of
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

2. CHANGES IN ACCOUNTING PRINCIPLES

EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: Effective
January 1, 1993, the Company adopted FASB Statement 106, EMPLOYERS' ACCOUNTING
FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. The Company elected to
immediately recognize the cumulative effect of this change in accounting for
postretirement benefits of $1,895,000 ($1,251,000 net of deferred income tax
benefit), which represents the accumulated postretirement benefit obligation
existing at January 1, 1993. The impact of Statement 106 on operating results
for 1993 was not material.

ACCOUNTING FOR INCOME TAXES: Effective January 1, 1993, the Company adopted FASB
Statement 109, ACCOUNTING FOR INCOME TAXES. Statement 109 provides for a balance
sheet approach in determining deferred income tax assets and liabilities. The
cumulative effect of adopting Statement 109 increased the Company's deferred tax
asset and net income by approximately $4,814,000 in 1993.

ACCOUNTING AND REPORTING FOR REINSURANCE OF SHORT-DURATION AND LONG-DURATION
CONTRACTS: In 1993, the Company adopted FASB Statement 113, ACCOUNTING AND
REPORTING FOR REINSURANCE OF SHORT-DURATION AND LONG-DURATION CONTRACTS. Under
Statement 113, amounts paid or deemed to have been paid for reinsurance
contracts are recorded as reinsurance recoverables.

ACCOUNTING FOR CERTAIN DEBT AND EQUITY SECURITIES: The Company adopted FASB
Statement 115, ACCOUNTING FOR CERTAIN DEBT AND EQUITY SECURITIES, as of December
31, 1993. Under Statement 115, all fixed maturities are classified as
available-for-sale and carried at fair value, while equity securities continue
to be carried at fair value. Adoption of Statement 115 had no effect on net
income in 1993.

3. ACQUIRED BUSINESS
In October, 1991, the Company purchased certain assets and assumed certain
liabilities from The Mutual Benefit Life Insurance Company in Rehabilitation
(MBL). The seller transferred to the Company, the assets and liabilities
relating to the group life, accident and health, disability and dental insurance
business of MBL. The acquisition was accounted for as a purchase. The Company
purchased this business for $318,000,000. Per contractual agreement, additional
payments were paid to MBL based upon the persistency of the long term disability
portion of the business. Under terms of this agreement, the Company paid
$6,644,000, $5,521,000 and $8,685,000 in 1994, 1993, and 1992, respectively.
This additional purchase price was accounted for as deferred policy acquisition
costs. No additional payments will be made.

9
<PAGE>
4. INVESTMENTS
AVAILABLE FOR SALE SECURITIES: The following is a summary of the available for
sale securities (in thousands):

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAIN LOSS FAIR VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
December 31, 1995:
Fixed Income Securities:
Governments.................................... $ 453,406 $ 36,938 $ 142 $ 490,202
Public utilities............................... 55,793 4,617 -- 60,410
Industrial & miscellaneous..................... 1,420,374 82,705 1,282 1,501,797
Other.......................................... 21,631 1,586 2 23,215
------------ ------------ ------ ------------
Total........................................ 1,951,204 125,846 1,426 2,075,624
Equity Securities................................ 60,935 20,321 2,404 78,852
------------ ------------ ------ ------------
Total........................................ $ 2,012,139 $ 146,167 $ 3,830 $ 2,154,476
------------ ------------ ------ ------------
------------ ------------ ------ ------------
December 31, 1994:
Fixed Income Securities:
Governments.................................... $ 829,607 $ 1,129 $ 40,642 $ 790,094
Public utilities............................... 60,885 1,132 1,389 60,628
Industrial & miscellaneous..................... 847,018 3,184 38,505 811,697
Other.......................................... 11,837 764 238 12,363
------------ ------------ ------ ------------
Total........................................ 1,749,347 6,209 80,774 1,674,782
Equity Securities................................ 59,010 9,896 4,354 64,552
------------ ------------ ------ ------------
Total........................................ $ 1,808,357 $ 16,105 $ 85,128 $ 1,739,334
------------ ------------ ------ ------------
------------ ------------ ------ ------------
</TABLE>

The amortized cost and fair value of available-for-sale investments in fixed
maturities at December 31, 1995, by contractual maturity, are shown below (in
thousands). Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.

<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
------------ ------------
<S> <C> <C>
Due in one year or less.................................................. $ 80,474 $ 80,960
Due after one year through five years.................................... 472,741 487,764
Due after five years through ten years................................... 687,374 727,723
Due after ten years...................................................... 710,615 779,177
------------ ------------
Total................................................................ $ 1,951,204 $ 2,075,624
------------ ------------
------------ ------------
</TABLE>

MORTGAGE LOANS: The Company has issued commercial mortgage loans on properties
located throughout the country. Approximately 35% of outstanding principal is
concentrated in the states of California, Florida and New York at December 31,
1995 as compared to concentrated interests in California, Florida, and Texas of
34% at December 31, 1994. Loan commitments outstanding totaled $10,030,000 at
December 31, 1995.

In May 1993, FASB issued Statement 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT
OF A LOAN, which becomes effective for fiscal years beginning after December 15,
1994, and which the Company adopted in 1995. Statement 114 requires that
impaired loans are to be valued at the present value of expected future cash
flows discounted at the loan's effective interest rate, or, as a practical
expedient, at the loan's observable market price, or the fair market value of
the collateral if the loan is collateral dependent. The impact of adoption was
not material to the Company's financial position or operating results.

INVESTMENTS ON DEPOSIT: The Company had fixed maturities and mortgage loans on
real estate carried at $2,385,000 and $8,132,000, respectively, at December 31,
1995, and $2,635,000 and $8,132,000 respectively, at December 31, 1994 on
deposit with various governmental authorities as required by law.

NET UNREALIZED GAINS (LOSSES): The adjusted net unrealized gains (losses)
recorded in shareholder's equity were as follows (in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Change in unrealized gains (losses) before adjustment for the following
items:.................................................................... $ 214,452 $ (155,923) $ 80,288
Capitalization (amortization) of deferred policy acquisition costs....... (9,789) 9,288 (6,268)
Participating policyholders' share of earnings........................... -- 2,684 (2,684)
Deferred income taxes.................................................... (71,632) 50,383 (25,042)
------------ ------------ ------------
Change in net unrealized gains (losses).................................... 133,031 (93,568) 46,294
Net unrealized gains, beginning of the year................................ (42,354) 51,214 4,920
------------ ------------ ------------
Net unrealized gains (losses), end of year................................. $ 90,677 $ (42,354) $ 51,214
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

10
<PAGE>

4. INVESTMENTS (CONTINUED)

NET INVESTMENT INCOME AND REALIZED GAINS (LOSSES) ON INVESTMENTS: Major
categories of net investment income and realized gains (losses) on investments
for each year were as follows (in thousands):

<TABLE>
<CAPTION>
REALIZED GAINS (LOSSES)
NET INVESTMENT INCOME ON INVESTMENTS
------------------------------- -------------------------------
1995 1994 1993 1995 1994 1993
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fixed maturities........................................... $ 139,062 $ 119,668 $ 120,844 $ 50,393 $ (27,854) $ 70,626
Equity securities.......................................... 2,026 1,937 1,490 2,830 1,352 3,955
Mortgage loans on real estate.............................. 49,227 36,816 28,370 (242) (2,992) (1,805)
Policy loans............................................... 2,797 2,731 3,004 -- -- --
Short-term investments..................................... 11,863 4,671 4,282 (3) (60) 1
Real estate & other investments............................ 4,750 2,138 1,171 2,102 739 846
--------- --------- --------- --------- --------- ---------
Tota1.................................................. 209,725 167,961 159,161 $ 55,080 $ (28,815) $ 73,623
--------- --------- ---------
--------- --------- ---------
Expenses................................................... (6,188) (5,447) (5,504)
--------- --------- ---------
$ 203,537 $ 162,514 $ 153,657
--------- --------- ---------
--------- --------- ---------
</TABLE>

Proceeds from sales of investments in fixed maturities were $2,000,068,000,
$1,798,185,000, and $2,335,230,000 in 1995, 1994 and 1993, respectively. Gross
gains of $61,070,000, $16,618,000, and $75,133,000 and gross losses of
$10,677,000, $44,472,000, and $4,507,000 were realized on the sales in 1995,
1994, and 1993, respectively.

5. DEFERRED POLICY ACQUISITION COSTS
The changes in deferred policy acquisition costs by product were as follows
(in thousands):

<TABLE>
<CAPTION>
INTEREST
SENSITIVE AND
TRADITIONAL INVESTMENT ACCIDENT AND
LIFE PRODUCTS HEALTH TOTAL
----------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Balance January 1, 1994................................ $ 61,474 $ 87,946 $ 47,063 $ 196,483
Acquisition costs deferred:
Acquired business.................................... -- -- 6,644 6,644
Other business....................................... -- 54,349 -- 54,349
Acquisition costs amortized............................ (11,564) (10,274) (12,728) (34,566)
Allowance for additional amortization from unrealized
gains on available-for-sale securities................ -- 9,288 -- 9,288
----------- ------------- ------------- ---------
Balance December 31, 1994.............................. $ 49,910 $ 141,309 $ 40,979 $ 232,198
Acquisition costs deferred:
Other business....................................... -- 56,391 -- 56,391
Acquisition costs amortized............................ (11,378) (17,071) (12,842) (41,291)
Additional amortization of deferred acquisition costs
from unrealized losses on available-for-sale
securities............................................ -- (9,789) -- (9,789)
----------- ------------- ------------- ---------
Balance December 31, 1995.............................. $ 38,532 $ 170,840 $ 28,137 $ 237,509
----------- ------------- ------------- ---------
----------- ------------- ------------- ---------
</TABLE>

Included within total deferred policy acquisition costs at December 31, 1995 is
$46,750,000 of present value of future profits (PVP) resulting from acquisitions
accounted for as a purchase. The estimated amount of PVP to be amortized during
each of the next three years is as follows: 1996-- $19,210,000;
1997--$17,262,000; 1998--$10,278,000.

During 1995, 1994, and 1993, the Company sold portions of its investment
portfolio and in accordance with FASB Statement 97, the recognition of the
realized capital (losses) gains resulted in (reduced) additional amortization of
acquisition costs deferred of $4,825,000, $(935,000), and $5,400,000,
respectively. In addition, the Company (reduced) recorded policyholder dividends
payable of $1,095,000 in 1995, $(761,000) in 1994 and $2,800,000 in 1993.

11
<PAGE>
6. PROPERTY AND EQUIPMENT
A summary of property and equipment for each year follows (in thousands):

<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Land................................................................................. $ 1,900 $ 1,900
Building and improvements............................................................ 23,319 23,084
Furniture and equipment.............................................................. 85,592 68,017
--------- ---------
110,811 93,001
Less accumulated depreciation........................................................ (50,780) (36,062)
--------- ---------
Net property and equipment........................................................... $ 60,031 $ 56,939
--------- ---------
--------- ---------
</TABLE>

7. UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES
Activity for the liability for unpaid accident and health claims and claims
adjustment expense is summarized as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Balance as of January 1, net of reinsurance recoverables.................... $ 838,810 $ 806,538 $ 776,194
Add: Incurred losses related to:
Current year.............................................................. 827,261 656,052 612,621
Prior years............................................................... (28,520) (58,218) (41,619)
--------- --------- ---------
Total incurred losses................................................... 798,741 597,834 571,002
Deduct: Paid losses related to:
Current year.............................................................. 492,460 377,595 353,124
Prior years............................................................... 216,259 187,967 187,534
--------- --------- ---------
Total paid losses....................................................... 708,719 565,562 540,658
--------- --------- ---------
Balance as of December 31, net of reinsurance recoverables.................. $ 928,832 $ 838,810 $ 806,538
--------- --------- ---------
--------- --------- ---------
</TABLE>

In 1995, the accident/health business experienced overall unfavorable claims
experience. The unfavorable experience was the result of medical cost trends and
the negative impact of medical premium rate restrictions in certain states. In
1994 and 1993, the accident/health business experienced overall favorable
development on claims reserves established as of the previous year end. The
favorable development was a result of lower medical costs due to less
uncertainty in the health business, a reduction of loss reserves which
considered historically high inflation in medical costs and, in 1994, a
refinement in the claims reserve estimates.

8. FEDERAL INCOME TAXES
The Company reports its taxable income in a consolidated federal income tax
return along with other affiliated subsidiaries of Fortis, Inc. Income tax
expense or credits are allocated among the affiliated subsidiaries by applying
corporate income tax rates to taxable income or loss determined on a separate
return basis according to a Tax Allocation Agreement.

The cumulative effect of adopting Statement 109 as of January 1, 1993 was to
increase net income for 1993 by $4,814,000. An increase in the tax rate from 34%
to 35% was effective in the third quarter of 1993 and resulted in a $305,000
increase in net income from the recalculation of the deferred liability account.

Deferred income taxes reflect the net tax effects of temporary differences
between the basis of assets and liabilities for financial statement purposes and
for income tax purposes.

12
<PAGE>

8. FEDERAL INCOME TAXES (CONTINUED)

The significant components of the Company's deferred tax liabilities and assets
as of December 31, 1995 and 1994 are as follows (in thousands):

<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Deferred tax assets:
Reserves........................................................... $ 54,346 $ 42,715
Separate account assets/liabilities................................ 34,386 27,663
Unrealized losses.................................................. -- 22,806
Accrued liabilities................................................ 13,781 14,565
Claims and benefits payable........................................ 2,626 1,976
Other.............................................................. 123 1,393
--------- ---------
Total deferred tax assets........................................ 105,262 111,118
Deferred tax liabilities:
Unrealized gains................................................... 48,826 --
Deferred policy acquisition costs.................................. 60,930 55,329
Investments........................................................ -- 1,194
Fixed assets....................................................... 5,044 6,086
--------- ---------
Total deferred tax liabilities................................... 114,800 62,609
--------- ---------
Net deferred tax asset (liability)............................... $ (9,538) $ 48,509
--------- ---------
--------- ---------
</TABLE>

The Company is required to establish a valuation allowance for any portion of
the deferred tax asset that management believes will not be realized. In the
opinion of management, it is more likely than not that the Company will realize
the benefit of the deferred tax assets, and, therefore, no such valuation
allowance has been established.

The Company's tax expense before cumulative effect of accounting changes is
shown as follows (in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Current....................................................... $ 39,660 $ 15,046 $ 35,747
Deferred...................................................... (11,769) (3,451) (4,657)
--------- --------- ---------
$ 27,891 $ 11,595 $ 31,090
--------- --------- ---------
--------- --------- ---------
</TABLE>

Tax payments were made of $47,711,000, $18,080,000 and $53,600,000 in 1995,
1994, and 1993, respectively. Tax refunds were received of $7,258,000 and
$7,729,000 in 1995 and 1994, respectively.

The Company's effective income tax rate varied from the statutory federal income
tax rate as follows:

<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Statutory income tax rate.......................................... 35.0% 35.0% 35.0%
Tax audit provision................................................ 0.0% 0.8% (4.6)%
Other, net......................................................... (0.9)% (2.1)% (1.9)%
--- --- ---
34.1% 33.7% 28.5%
--- --- ---
--- --- ---
</TABLE>

9. ASSETS HELD IN SEPARATE ACCOUNTS
Separate account assets were as follows (in thousands):

<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Premium and annuity considerations for the variable annuity
products and variable universal life product for which the
contract holder, rather than the Company, bears the investment
risk............................................................. $ 1,757,476 $ 1,208,038
Assets of the separate accounts owned by the Company, at fair
value............................................................ 24,009 4,872
------------ ------------
$ 1,781,485 $ 1,212,910
------------ ------------
------------ ------------
</TABLE>

13
<PAGE>
10. STATUTORY ACCOUNTING PRACTICES
Reconciliations of net income and shareholder's equity on the basis of
statutory accounting to the related amounts presented in the accompanying
statements were as follows (in thousands):

<TABLE>
<CAPTION>
SHAREHOLDER'S EQUITY
NET INCOME
------------------------------- --------------------
1995 1994 1993 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Based on statutory accounting practices.......................... $ 30,576 $ 49,759 $ 46,605 $ 377,040 $ 304,231
Deferred policy acquisition costs................................ 15,100 19,783 9,338 237,509 232,198
Investment valuation differences................................. 330 370 520 114,413 (85,944)
Deferred and uncollected premiums................................ 303 (14) 1,655 (7,372) (8,393)
Unearned premiums................................................ 1,829 1,126 7,035 (11,179) (13,008)
Loading and equity in unearned premiums.......................... (56) 316 (179) 94 85
Property and equipment........................................... (178) (204) (63) 27,172 22,027
Policy reserves.................................................. (31,011) (26,655) (38,558) (103,174) (72,192)
Current income taxes payable..................................... (1,294) -- 4,656 (7,895) (4,786)
Deferred income taxes............................................ 11,769 2,356 9,776 (9,538) 48,509
Realized gains (losses) on investments........................... 1,938 (1,052) 3,651 -- --
Realized gains (losses) transferred to the Interest Maintenance
Reserve (IMR), net of tax....................................... 31,711 (18,456) 40,459 -- --
Amortization of IMR, net of tax.................................. (5,261) (5,479) (3,777) -- --
Interest maintenance reserve..................................... -- -- -- 53,814 27,364
Asset valuation reserve.......................................... -- -- -- 48,507 32,011
Cumulative effect of accounting changes.......................... -- -- 3,563 -- --
Other, net....................................................... (1,886) 1,007 (2,974) (8,293) (7,905)
--------- --------- --------- --------- ---------
$ 53,870 $ 22,857 $ 81,707 $ 711,098 $ 474,197
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

11. REINSURANCE
The maximum amount that the Company retains on any one life is $750,000 of
life insurance including accidental death. Amounts in excess of $750,000 are
reinsured with other life insurance companies on a yearly renewable term basis.

Ceded reinsurance premiums were as follows (in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Life Insurance................................................ $ 4,661 $ 5,571 $ 4,366
Accident & Health Insurance................................... 3,410 36,782 37,088
--------- --------- ---------
$ 8,071 $ 42,353 $ 41,454
--------- --------- ---------
--------- --------- ---------
</TABLE>

Recoveries under reinsurance contracts were as follows (in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Life Insurance................................................ $ 2,489 $ 1,650 $ 6,963
Accident & Health Insurance................................... 8,807 19,913 15,448
--------- --------- ---------
$ 11,296 $ 21,563 $ 22,411
--------- --------- ---------
--------- --------- ---------
</TABLE>

Reinsurance ceded would become a liability of the Company in the event the
reinsurers are unable to meet the obligations assumed under the reinsurance
agreements. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentrations of credit risk arising from similar geographic
regions, activities or economic characteristics of the reinsurers.

12. STATUTORY INFORMATION
Dividend distributions to parent are restricted as to amount by state
regulatory requirements. The Company had $37,204,000 free from such restrictions
at December 31, 1995. Distributions in excess of this amount would require
regulatory approval.

Statutory-basis financial statements are prepared in accordance with accounting
practices prescribed or permitted by Minnesota Insurance regulatory authorities.
Prescribed statutory accounting practices include a variety of publications of
the National Association of Insurance Commissioners ("NAIC"), as well as state
laws, regulations and general administrative rules. Permitted statutory
accounting practices encompass all accounting practices not so prescribed; such
practices may differ from state to state, may differ from company to company
within a state, and may change in the future. The NAIC is currently in the
process of codifying statutory accounting practices. This project, which is
expected to be completed in 1996, may result in changes to the accounting
practices that insurance enterprises use to prepare their statutory-basis
financial statements.

Insurance enterprises are required by State Insurance Departments to adhere to
minimum risk-based capital ("RBC") requirements developed by the NAIC. All of
the Company's insurance subsidiaries exceed minimum RBC requirements.

14
<PAGE>
13. TRANSACTIONS WITH AFFILIATED COMPANIES
The Company receives various services from Fortis, Inc. These services
include assistance in benefit plan administration, corporate insurance,
accounting, tax, auditing, investment and other administrative functions. The
fees paid to Fortis, Inc. for these services for the years ended December 31,
1995, 1994, and 1993, were $10,074,000 , $8,944,000, and $8,595,000
respectively.

In conjunction with the marketing of its variable annuity products, the Company
paid $59,308,000, $57,307,000, and $27,931,000, in commissions to its affiliate,
Fortis Investors, Inc. for the years ended December 31, 1995, 1994, and 1993,
respectively.

14. FAIR VALUE DISCLOSURES
VALUATION METHODS AND ASSUMPTIONS: Investments are reported in the accompanying
balance sheets on the following basis:

The fair values for fixed maturity securities and equity securities are
based on quoted market prices, where available. For fixed maturity securities
not actively traded, fair values are estimated using values obtained from
independent pricing services or, in the case of private placements, are
estimated by discounting expected future cash flows using a current market rate
applicable to the yield, credit quality, and maturity of the investments.

Mortgage loans are reported at unpaid principal balance less allowances for
possible losses. The fair values of mortgage loans are estimated using
discounted cash flow analyses, using interest rates currently being offered for
similar loans to borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations. The fair values
for the Company's policy reserves under investment products are determined using
cash surrender value.

The fair values under all insurance contracts are taken into consideration
in the Company's overall management of interest rate risk, such that the
Company's exposure to changing interest rates is minimized through the matching
of investment maturities with amounts due under insurance contracts.

<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------------------------------
1995 1994
--------------------------- ---------------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturities............................... $ 2,075,624 $ 2,075,624 $ 1,674,782 $ 1,674,782
Equity securities.............................. 78,852 78,852 64,552 64,552
Mortgage loans on real estate.................... 562,697 605,501 452,547 434,503
Policy loans..................................... 53,863 53,863 49,221 49,221
Short-term investments........................... 153,499 153,499 117,562 117,562
Cash............................................. 1 1 10,888 10,888
Assets held in separate accounts................. 1,781,485 1,781,485 1,212,910 1,212,910
Liabilities:
Individual and group annuities (subject to
discretionary withdrawal)......................... 865,623 834,621 692,196 657,454
</TABLE>

15. COMMITMENTS AND CONTINGENCIES
The Company is named as a defendant in a number of legal actions arising
primarily from claims made under insurance policies. These actions have been
considered in establishing policy benefit and loss reserves. Management and its
legal counsel are of the opinion that the settlement of these actions will not
have a material adverse effect on the Company's financial position or results of
operations.

16. RETIREMENT AND OTHER EMPLOYEE BENEFITS
The Company participates in the Fortis, Inc. noncontributory defined benefit
pension plan covering substantially all of its employees. Benefits are based on
years of service and the employee's compensation during such years of service.
Fortis, Inc. is not able to segregate Company specific benefit obligations or
plan assets. On an aggregate basis, the fair value of plan assets exceeded the
accumulated benefit obligations as of December 31, 1995.

The Company has a profit sharing plan covering substantially all employees which
provides benefits payable to participants on retirement or disability and to
beneficiaries of participants in event of the participant's death. Amounts
contributed to the plan and expensed by the Company were $3,765,000, $3,536,000
and $3,399,000 in 1995, 1994, and 1993, respectively.

15
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors
Fortis Benefits Insurance Company

We have audited the accompanying statement of net assets of Fortis Benefits
Insurance Company Variable Account C (comprising, respectively, the Fortis
Series Fund, Inc.'s Growth Stock, U.S. Government Securities, Money Market,
Asset Allocation, Diversified Income, Global Growth, Aggressive Growth, Growth &
Income, High Yield, Global Asset Allocation, Global Bond, and International
Stock Subaccounts and the Norwest Select Fund's Small Company Stock Subaccount)
as of December 31, 1995, and the related statements of changes in net assets for
each of the three years then ended, except for the Fortis Series Fund, Inc.'s
Aggressive Growth, Growth & Income, and High Yield Subaccounts which are for the
years ended December 31, 1995 and 1994, and the Fortis Series Fund, Inc.'s
Global Asset Allocation, Global Bond, and International Stock Subaccounts and
the Norwest Select Fund's Small Company Stock Subaccount which are for the year
ended December 31, 1995. These financial statements are the responsibility of
the management of Fortis Benefits Insurance Company. 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 as of December 31, 1995 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fortis Benefits Insurance
Company Variable Account C at December 31, 1995, and the changes in the net
assets for the periods described in the first paragraph, in conformity with
generally accepted accounting principles.

[LOGO]
March 22, 1996

16
<PAGE>
STATEMENT OF NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
DECEMBER 31, 1995

<TABLE>
<CAPTION>
ATTRIBUTABLE ATTRIBUTABLE NET ASSET VALUE
TO FORTIS TO VARIABLE FOR VARIABLE LIFE
BENEFITS LIFE ACCUMULATION INSURANCE
INSURANCE INSURANCE UNITS POLICIES PER
NET ASSETS COMPANY POLICIES OUTSTANDING ACCUMULATION UNIT
---------- ------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Investments in Fortis Series
Fund, Inc., at market value
(Note 2):
Growth Stock Series (4,069,900
shares; cost--$85,836,221)... $114,336,114 $1,626,134 $112,709,980 5,597,835 $20.13
U.S. Government Securities
Series (773,801 shares;
cost-- $8,216,067)........... 8,637,241 -- 8,637,241 563,792 15.32
Money Market Series (448,336
shares; cost--$4,872,591).... 4,853,912 -- 4,853,912 380,101 12.77
Asset Allocation Series
(1,517,676 shares;
cost--$20,665,868)........... 24,130,134 783,299 23,346,835 1,319,746 17.69
Diversified Income Series
(408,851 shares;
cost--$4,732,097)............ 4,986,624 -- 4,986,624 317,914 15.69
Global Growth Series
(2,326,115 shares;
cost--$29,749,600)........... 37,150,378 650,869 36,499,509 2,298,743 15.88
Aggressive Growth Series
(724,997 shares;
cost--$7,999,913)............ 9,189,333 760,602 8,428,731 672,460 12.53
Growth & Income Series
(387,727 shares;
cost--$4,356,563)............ 4,975,884 770,231 4,205,653 322,904 13.02
High Yield Series (285,845
shares; cost--$2,860,695).... 2,783,523 1,266,202 1,517,321 137,850 11.01
Global Asset Allocation Series
(627,400 shares;
cost--$6,424,554)............ 7,167,294 5,712,197 1,455,097 125,237 11.62
Global Bond Series (576,688
shares; cost--$5,900,696).... 6,508,904 5,643,468 865,436 73,311 11.81
International Stock Series
(737,128 shares;
cost--$7,533,474)............ 8,308,832 5,636,625 2,672,207 236,244 11.31
Investment in Norwest Select
Fund, at market value (Note 2):
Small Company Stock Fund
(103,433 shares;
cost--$1,038,350)............ 1,159,487 1,159,487 -- -- --
</TABLE>

See notes to financial statements.

17
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
GROWTH STOCK SUBACCOUNT
Investment income:
Dividend income............................................................... $ 510,059 $ 524,850 $ 186,295
Mortality and expense and policy advance charges (Note 3)..................... (1,093,454) (630,146) (406,385)
------------ ----------- -----------
NET INVESTMENT LOSS......................................................... (583,395) (105,296) (220,090)
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 542,606 193,238 315,227
Net change in unrealized appreciation (depreciation) on investments........... 20,881,118 (1,837,695) 3,121,509
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... 20,840,329 (1,749,753) 3,216,646
Capital transactions:
Purchase of Variable Account C units.......................................... 23,231,047 24,347,849 18,848,153
Redemption of Variable Account C units........................................ (2,402,006) (1,554,311) (1,856,898)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 1,093,454 630,146 --
Mortality and expense charge due from Fortis Series Fund, Inc................. -- -- 406,385
Dividend income distribution to Fortis Benefits Insurance Company............. (7,237) (9,364) --
------------ ----------- -----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................ 21,915,258 23,414,320 17,397,640
------------ ----------- -----------
TOTAL INCREASE IN NET ASSETS................................................ 42,755,587 21,664,567 20,614,286
Net assets, beginning of year................................................... 71,580,527 49,915,960 29,301,674
------------ ----------- -----------
NET ASSETS, END OF YEAR..................................................... $114,336,114 $71,580,527 $49,915,960
------------ ----------- -----------
------------ ----------- -----------

YEAR ENDED DECEMBER 31
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES SUBACCOUNT
Investment income:
Dividend income............................................................... $ 379 $ 607,364 $ 523,262
Mortality and expense and policy advance charges (Note 3)..................... (95,405) (79,454) (51,142)
------------ ----------- -----------
Net investment (loss) income.................................................. (95,026) 527,910 472,120
Net realized (loss) gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... (54,024) (126,731) 56,486
Net change in unrealized appreciation (depreciation) on investments........... 1,463,356 (967,547) (133,072)
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... 1,314,306 (566,368) 395,534
Capital transactions:
Purchase of Variable Account C units.......................................... 2,331,839 1,951,506 4,101,566
Redemption of Variable Account C units........................................ (2,234,298) (1,984,288) (971,887)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 95,405 79,454 --
Mortality and expense charge due from Fortis Series Fund, Inc................. -- -- 51,142
------------ ----------- -----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................ 192,946 46,672 3,180,821
------------ ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................................... 1,507,252 (519,696) 3,576,355
Net assets, beginning of year................................................... 7,129,989 7,649,685 4,073,330
------------ ----------- -----------
NET ASSETS, END OF YEAR..................................................... $ 8,637,241 $ 7,129,989 $ 7,649,685
------------ ----------- -----------
------------ ----------- -----------
</TABLE>

See notes to financial statements.

18
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
MONEY MARKET SUBACCOUNT
Investment income:
Dividend income............................................................... $ 180,105 $ -- $ 35,403
Mortality and expense and policy advance charges (Note 3)..................... (52,173) (21,446) (14,578)
----------- ----------- -----------
NET INVESTMENT INCOME (LOSS)................................................ 127,932 (21,446) 20,825
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 176,710 13,988 4,990
Net change in unrealized (depreciation) appreciation on investments........... (98,436) 100,566 (3,006)
----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................. 206,206 93,108 22,809
Capital transactions:
Purchase of Variable Account C units.......................................... 5,764,979 4,963,584 3,163,424
Redemption of Variable Account C units........................................ (5,395,064) (2,269,774) (3,233,030)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 52,173 21,446 --
Mortality and expense charge due from Fortis Series Fund, Inc................. -- -- 14,578
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS............. 422,088 2,715,256 (55,028)
----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................................... 628,294 2,808,364 (32,219)
Net assets, beginning of year................................................... 4,225,618 1,417,254 1,449,473
----------- ----------- -----------
NET ASSETS, END OF YEAR..................................................... $ 4,853,912 $ 4,225,618 $ 1,417,254
----------- ----------- -----------
----------- ----------- -----------

YEAR ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
ASSET ALLOCATION SUBACCOUNT
Investment income:
Dividend income............................................................... $ 924,340 $ 626,408 $ 363,460
Mortality and expense and policy advance charges (Note 3)..................... (231,545) (146,296) (91,158)
----------- ----------- -----------
NET INVESTMENT INCOME....................................................... 692,795 480,112 272,302
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 184,857 42,277 67,563
Net change in unrealized appreciation (depreciation) on investments........... 2,815,928 (678,881) 432,499
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... 3,693,580 (156,492) 772,364
Capital transactions:
Purchase of Variable Account C units.......................................... 5,135,857 5,042,184 5,311,744
Redemption of Variable Account C units........................................ (1,383,622) (488,270) (572,086)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 231,545 146,296 --
Mortality and expense charge due from Fortis Series Fund, Inc................. -- -- 91,158
Dividend income distribution to Fortis Benefits Insurance Company............. (31,040) (26,122) --
----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................ 3,952,740 4,674,088 4,830,816
----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS................................................ 7,646,320 4,517,596 5,603,180
Net assets, beginning of year................................................... 16,483,814 11,966,218 6,363,038
----------- ----------- -----------
NET ASSETS, END OF YEAR..................................................... $24,130,134 $16,483,814 $11,966,218
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

See notes to financial statements.

19
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
DIVERSIFIED INCOME SUBACCOUNT
Investment income:
Dividend income............................................................... $ 155 $ 257,570 $ 120,019
Mortality and expense and policy advance charges (Note 3)..................... (49,814) (29,757) (11,358)
----------- ----------- -----------
NET INVESTMENT (LOSS) INCOME................................................ (49,659) 227,813 108,661
Net realized gain (loss) on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 10,234 (32,443) 16,707
Net change in unrealized appreciation (depreciation) on investments........... 639,984 (335,368) (49,202)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... 600,559 (139,998) 76,166
Capital transactions:
Purchase of Variable Account C units.......................................... 2,234,605 2,099,560 1,934,554
Redemption of Variable Account C units........................................ (1,087,689) (601,619) (509,368)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 49,814 29,757 --
Mortality and expense charge due from Fortis Series Fund, Inc................. -- -- 11,358
----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................ 1,196,730 1,527,698 1,436,544
----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS................................................ 1,797,289 1,387,700 1,512,710
Net assets, beginning of year................................................... 3,189,335 1,801,635 288,925
----------- ----------- -----------
NET ASSETS, END OF YEAR..................................................... $ 4,986,624 $ 3,189,335 $ 1,801,635
----------- ----------- -----------
----------- ----------- -----------

YEAR ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
GLOBAL GROWTH SUBACCOUNT
Investment income:
Dividend income............................................................... $ 194,924 $ 144,687 $ 25,615
Mortality and expense and policy advance charges (Note 3)..................... (352,145) (157,000) (35,224)
----------- ----------- -----------
NET INVESTMENT LOSS......................................................... (157,221) (12,313) (9,609)
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 155,887 490,813 33,810
Net change in unrealized appreciation (depreciation) on investments........... 7,220,951 (1,089,277) 930,476
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... 7,219,617 (610,777) 954,677
Capital transactions:
Purchase of Variable Account C units.......................................... 9,569,763 14,421,587 6,887,276
Redemption of Variable Account C units........................................ (1,321,205) (698,757) (722,115)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 352,145 157,000 --
Mortality and expense charge due from Fortis Series Fund, Inc................. -- -- 35,224
Redemption of Fortis Benefits Insurance Company investment in subaccount...... -- (2,500,000) --
Dividend income distributed to Fortis Benefits Insurance Company.............. (3,423) (3,407) --
----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................ 8,597,280 11,376,423 6,200,385
----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS................................................ 15,816,897 10,765,646 7,155,062
Net assets, beginning of year................................................... 21,333,481 10,567,835 3,412,773
----------- ----------- -----------
NET ASSETS, END OF YEAR..................................................... $37,150,378 $21,333,481 $10,567,835
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

See notes to financial statements.

20
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1995 1994
---------- ----------
<S> <C> <C>
AGGRESSIVE GROWTH SUBACCOUNT
Investment income:
Dividend income............................................................... $ 32,999 $ 8,878
Mortality and expense and policy advance charges (Note 3)..................... (55,105) (4,484)
---------- ----------
NET INVESTMENT (LOSS) INCOME................................................ (22,106) 4,394
Net realized gain (loss) on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 87,207 (2,388)
Net change in unrealized appreciation on investments.......................... 1,158,725 30,648
---------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................. 1,223,826 32,654
Capital transactions:
Purchase of Variable Account C units.......................................... 6,246,152 1,858,035
Redemption of Variable Account C units........................................ (621,660) (204,115)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 55,105 4,484
Funding of subaccount by Fortis Benefits Insurance Company.................... -- 600,000
Dividend income distributed to Fortis Benefits Insurance Company.............. (2,760) (2,388)
---------- ----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................ 5,676,837 2,256,016
---------- ----------
TOTAL INCREASE IN NET ASSETS................................................ 6,900,663 2,288,670
Net assets, beginning of year................................................... 2,288,670 --
---------- ----------
NET ASSETS, END OF YEAR..................................................... $9,189,333 $2,288,670
---------- ----------
---------- ----------

YEAR ENDED DECEMBER 31
----------------------
1995 1994
---------- ----------
<S> <C> <C>
GROWTH & INCOME SUBACCOUNT
Investment income:
Dividend income............................................................... $ 83,612 $ 12,968
Mortality and expense and policy advance charges (Note 3)..................... (24,640) (1,404)
---------- ----------
NET INVESTMENT INCOME....................................................... 58,972 11,564
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 40,572 124
Net change in unrealized appreciation (depreciation) on investments........... 619,472 (222)
---------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................. 719,016 11,466
Capital transactions:
Purchase of Variable Account C units.......................................... 3,356,014 656,805
Redemption of Variable Account C units........................................ (366,822) (6,999)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 24,640 1,404
Funding of subaccount by Fortis Benefits Insurance Company.................... -- 600,000
Dividend income distributed to Fortis Benefits Insurance Company.............. (13,202) (6,438)
---------- ----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................ 3,000,630 1,244,772
---------- ----------
TOTAL INCREASE IN NET ASSETS................................................ 3,719,646 1,256,238
Net assets, beginning of year................................................... 1,256,238 --
---------- ----------
NET ASSETS, END OF YEAR..................................................... $4,975,884 $1,256,238
---------- ----------
---------- ----------
</TABLE>

See notes to financial statements.

21
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1995 1994
---------- ----------
<S> <C> <C>
HIGH YIELD SUBACCOUNT
Investment income:
Dividend income............................................................... $ 252,046 $ 81,918
Mortality and expense and policy advance charges (Note 3)..................... (11,638) (1,463)
---------- ----------
NET INVESTMENT INCOME....................................................... 240,408 80,455
Net realized gain (loss) on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 7,233 (3,503)
Net change in unrealized appreciation (depreciation) on investments........... 11,854 (88,789)
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... 259,495 (11,837)
Capital transactions:
Purchase of Variable Account C units.......................................... 1,244,092 733,981
edemption of Variable Account C units......................................... (346,228) (229,014)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............ 11,638 1,463
Funding of subaccount by Fortis Benefits Insurance Company.................... -- 1,300,000
Dividend income distributed to Fortis Benefits Insurance Company.............. (120,917) (59,150)
---------- ----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................ 788,585 1,747,280
---------- ----------
TOTAL INCREASE IN NET ASSETS................................................ 1,048,080 1,735,443
Net assets, beginning of year................................................... 1,735,443 --
----------
NET ASSETS, END OF YEAR..................................................... $2,783,523 $1,735,443
---------- ----------
---------- ----------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-----------
1995
-----------
<S> <C> <C>
GLOBAL ASSET ALLOCATION SUBACCOUNT
Investment income:
Dividend income........................................................ $ 199,139
Mortality and expense and policy advance charges (Note 3).............. (7,642)
-----------
NET INVESTMENT INCOME................................................ 191,497
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares................................................................ 21,531
Net change in unrealized appreciation on investments................... 742,740
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS........................... 955,768
Capital transactions:
Purchase of Variable Account C units................................... 1,423,812
Redemption of Variable Account C units................................. (59,928)
Mortality and expense charge redeemed from Fortis Series Fund, Inc..... 7,642
Funding of subaccount by Fortis Benefits Insurance Company............. 5,000,000
Dividend income distributed to Fortis Benefits Insurance Company....... (160,000)
-----------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS................. 6,211,526
-----------
TOTAL INCREASE IN NET ASSETS......................................... 7,167,294
Net assets, beginning of year............................................ --
-----------
NET ASSETS, END OF YEAR.............................................. $7,167,294
-----------
-----------
</TABLE>

See notes to financial statements.

22
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
GLOBAL BOND SUBACCOUNT
Investment income:
Dividend income.................................................................. $ 349,572
Mortality and expense and policy advance charges (Note 3)........................ (5,019)
------------
NET INVESTMENT INCOME.......................................................... 344,553
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio shares..... 37,910
Net change in unrealized appreciation on investments............................. 608,208
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................................... 990,671
Capital transactions:
Purchase of Variable Account C units............................................. 1,061,190
Redemption of Variable Account C units........................................... (242,976)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............... 5,019
Funding of subaccount by Fortis Benefits Insurance Company....................... 5,000,000
Dividend income distributed to Fortis Benefits Insurance Company................. (305,000)
------------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................... 5,518,233
------------
TOTAL INCREASE IN NET ASSETS................................................... 6,508,904
Net assets, beginning of year...................................................... --
------------
NET ASSETS, END OF YEAR........................................................ $6,508,904
------------
------------

YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
INTERNATIONAL STOCK SUBACCOUNT
Investment income:
Dividend income.................................................................. $ 117,200
Mortality and expense and policy advance charges (Note 3)........................ (13,805)
------------
NET INVESTMENT INCOME.......................................................... 103,395
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio shares..... 13,134
Net change in unrealized appreciation on investments............................. 775,358
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................................... 891,887
Capital transactions:
Purchase of Variable Account C units............................................. 2,584,243
Redemption of Variable Account C units........................................... (101,103)
Mortality and expense charge redeemed from Fortis Series Fund, Inc............... 13,805
Funding of subaccount by Fortis Benefits Insurance Company....................... 5,000,000
Dividend income distributed to Fortis Benefits Insurance Company................. (80,000)
------------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................... 7,416,945
------------
TOTAL INCREASE IN NET ASSETS................................................... 8,308,832
Net assets, beginning of year...................................................... --
------------
NET ASSETS, END OF YEAR........................................................ $8,308,832
------------
------------
</TABLE>

See notes to financial statements.

23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
SMALL COMPANY STOCK SUBACCOUNT
Investment income:
Dividend income.................................................................. $ 38,350
Mortality and expense and policy advance charges (Note 3)........................ --
------------
NET INVESTMENT INCOME.......................................................... 38,350
Net realized gain (loss) on redemption of Norwest Select Fund portfolio shares... --
Net change in unrealized appreciation on investments............................. 121,137
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................................... 159,487
Capital transactions:
Purchase of Variable Account C units............................................. --
Redemption of Variable Account C units........................................... --
Mortality and expense charge redeemed from Norwest Select Fund................... --
Funding of subaccount by Fortis Benefits Insurance Company....................... 1,000,000
------------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS........................... 1,000,000
------------
TOTAL INCREASE IN NET ASSETS................................................... 1,159,487
Net assets, beginning of year...................................................... --
------------
NET ASSETS, END OF YEAR........................................................ $1,159,487
------------
------------
</TABLE>

See notes to financial statements.

24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
DECEMBER 31, 1995

1. GENERAL
Fortis Benefits Insurance Company Variable Account C (the Account) was
established as a segregated asset account of Fortis Benefits Insurance Company
(Fortis Benefits) on March 13, 1986 under Minnesota law. The Account is
registered under the Investment Company Act of 1940 as a unit investment trust.

Fortis Benefits was founded in 1910. At the end of 1995, Fortis Benefits had
approximately $86 billion of total life insurance in force. Fortis Benefits is a
Minnesota corporation and is qualified to sell life insurance and annuity
contracts in the District of Columbia and in all states except New York. Fortis
Benefits is an indirectly wholly-owned subsidiary of Fortis, Inc., which is
itself indirectly owned 50% by N.V. AMEV and 50% by Compagnie Financiere et de
Reassurance du Group AG ("Group AG"). Fortis, Inc. manages the United States
operations for these two companies.

N.V. AMEV is a diversified financial services company headquartered in Utrecht,
The Netherlands, where its insurance operations began in 1847. Group AG is a
diversified financial services company headquartered in Brussels, Belgium, where
its insurance operations began in 1824. N.V. AMEV and Group AG have merged their
operating companies under the trade name of Fortis. The Fortis group of
companies is active in insurance, banking and financial services, and real
estate development in The Netherlands, Belgium, the United States, Western
Europe, and the Pacific Rim. The Fortis group of companies had over $155 billion
in assets at the end of 1995.

Fortis Advisers, Inc. (a wholly-owned subsidiary of Fortis, Inc.) provides
investment management services to the portfolios in exchange for investment
advisory and management fees. Investment advisory and management fees are based
on each portfolio's daily net assets and decrease in reduced percentages as
average daily net assets increase. The fees represent an investment expense to
Fortis Series Fund, Inc. which reduces the portfolios' net assets. These fees
charged by Fortis Advisers, Inc. are not available on an individual variable
account basis. Fees for all variable accounts to which Fortis Advisers, Inc.
provided investment management services amounted to $7,819,224, $5,839,044 and
$3,748,274 in 1995, 1994 and 1993, respectively.

There are thirteen subaccounts within the Account. The investment objectives and
policies of each of the Account's subaccounts are as follows:

- GROWTH STOCK SUBACCOUNT--seeks growth of capital through short-term and
long-term appreciation.

- U.S. GOVERNMENT SECURITIES SUBACCOUNT--seeks to earn a high level of
current income consistent with prudent investment risk.

- MONEY MARKET SUBACCOUNT--seeks high levels of capital stability and
liquidity and, to the extent consistent with these objectives, a high
level of current income.

- ASSET ALLOCATION SUBACCOUNT--seeks favorable overall rates of return on
capital primarily through increased ownership of equity securities during
periods when stock market conditions appear favorable and short-term and
long-term debt instruments during periods when stock market conditions
are less favorable.

- DIVERSIFIED INCOME SUBACCOUNT--seeks high level of current income by
investing primarily in a diversified portfolio of government securities
and investment-grade corporate bonds.

- GLOBAL GROWTH SUBACCOUNT--seeks long-term capital appreciation in equity
securities that are allocated among diverse international markets.

- AGGRESSIVE GROWTH SUBACCOUNT--seeks long-term capital appreciation in
equity securities.

- GROWTH & INCOME SUBACCOUNT--seeks growth of capital and current income
through ownership of equity securities that provide an income component
and the potential for growth.

25
<PAGE>
1. GENERAL (CONTINUED)
- HIGH YIELD SUBACCOUNT--seeks maximum total return through current income
from, and capital appreciation of, a diversified portfolio of
high-yielding fixed-income securities.

- GLOBAL ASSET ALLOCATION SUBACCOUNT--seeks favorable overall rates of
return through ownership of foreign and domestic equity securities when
stock market conditions appear favorable and short-term and long-term
foreign and domestic debt instruments when stock market conditions are
less favorable.

- GLOBAL BOND SUBACCOUNT--seeks total return from current income and
capital appreciation by investing in a global portfolio of high-quality
fixed-income securities.

- INTERNATIONAL STOCK SUBACCOUNT--seeks capital appreciation by investing
primarily in equity securities of non-United States companies.

- SMALL COMPANY STOCK SUBACCOUNT--seeks growth of capital by investing
primarily in the common stock of small and medium-size domestic companies
that are either in the early stages of development or that produce goods
and services having a favorable prospect for growth.

Certain 1994 amounts have been reclassified to conform to the 1995 presentation.

2. INVESTMENTS
Investments in shares of Fortis Series Fund, Inc. and the Norwest Select Fund
(the Funds) are stated at market value, which is based on the percentage owned
by the Account of the net asset value of the respective portfolios of the Funds.
The Funds' net asset value is based on market quotations of the securities held
in the portfolios. The cost of investments sold and redeemed is determined using
the average cost method. Unrealized appreciation or depreciation of investments
represents the Account's share of the mutual fund's undistributed net investment
income, undistributed realized gains and losses and unrealized appreciation or
depreciation in the Funds' investments.

26
<PAGE>
2. INVESTMENTS (CONTINUED)
Purchases and sales of shares of the Funds are recorded on the trade date. The
number of shares and aggregate cost of purchases and proceeds from sales of
shares were as follows:

<TABLE>
<CAPTION>
SHARES
------------------ COST OF PROCEEDS
PURCHASED SOLD PURCHASES FROM SALES
--------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
Fortis Series Fund, Inc.:
Growth Stock Series....................................... 903,891 90,700 $23,231,047 $2,409,243
U.S. Government Securities Series......................... 228,211 213,159 2,331,839 2,234,298
Money Market Series....................................... 540,043 506,551 5,764,979 5,395,064
Asset Allocation Series................................... 333,531 90,515 5,135,857 1,414,662
Diversified Income Series................................. 197,390 95,167 2,234,605 1,087,689
Global Growth Series...................................... 673,847 93,947 9,569,763 1,324,628
Aggressive Growth Series.................................. 537,853 49,233 6,246,152 624,420
Growth & Income Series.................................... 287,048 30,747 3,356,014 380,024
High Yield Series......................................... 122,624 46,105 1,244,092 467,145
Global Asset Allocation Series............................ 629,303 19,414 6,423,812 219,928
Global Bond Series........................................ 593,769 48,334 6,061,190 547,976
International Stock Series................................ 742,827 16,307 7,584,243 181,103
Norwest Select Fund:
Small Company Stock Fund.................................. 100,000 -- 1,000,000 --
</TABLE>

<TABLE>
<CAPTION>
SHARES
------------------- COST OF PROCEEDS
PURCHASED SOLD PURCHASES FROM SALES
---------- ------- ----------- ----------

<S> <C> <C> <C> <C>
Year ended December 31, 1994:
Fortis Series Fund, Inc.:
Growth Stock Series....................................... 1,106,287 70,314 $24,347,849 $1,563,675
U.S. Government Securities Series......................... 188,049 192,822 1,951,506 1,984,288
Money Market Series....................................... 476,828 217,878 4,963,584 2,269,774
Asset Allocation Series................................... 361,546 37,257 5,042,184 514,392
Diversified Income Series................................. 183,908 53,081 2,099,560 601,619
Global Growth Series...................................... 1,156,826 261,960 14,421,587 3,202,164
Aggressive Growth Series.................................. 254,672 21,957 2,458,035 206,503
Growth & Income Series.................................... 124,784 1,316 1,256,805 13,437
High Yield Series......................................... 203,595 28,990 2,033,981 288,164
</TABLE>

<TABLE>
<CAPTION>
SHARES
------------------- COST OF PROCEEDS
PURCHASED SOLD PURCHASES FROM SALES
---------- ------- ----------- ----------

<S> <C> <C> <C> <C>
Year ended December 31, 1993:
Fortis Series Fund, Inc.:
Growth Stock Series....................................... 870,748 86,741 $18,848,153 $1,856,898
U.S. Government Securities Series......................... 356,363 84,648 4,101,566 971,887
Money Market Series....................................... 305,838 312,668 3,163,424 3,233,030
Asset Allocation Series................................... 383,082 41,515 5,311,744 572,086
Diversified Income Series................................. 156,725 41,226 1,934,554 509,368
Global Growth Series...................................... 573,601 62,506 6,887,276 722,115
</TABLE>

27
<PAGE>
2. INVESTMENTS (CONTINUED)

The number of shares and cost of shares issued from reinvestment of dividends
with the Funds were as follows:

<TABLE>
<CAPTION>
COST OF
SHARES SHARES
----------- ---------
<S> <C> <C>
Year ended December 31, 1995:
Fortis Series Fund, Inc.:
Growth Stock Series................................ 18,797 $ 510,059
U.S. Government Securities Series.................. 38 379
Money Market Series................................ 17,356 180,105
Asset Allocation Series............................ 59,192 924,340
Diversified Income Series.......................... 14 155
Global Growth Series............................... 12,645 194,924
Aggressive Growth Series........................... 2,746 32,999
Growth & Income Series............................. 6,670 83,612
High Yield Series.................................. 26,030 252,046
Global Asset Allocation Series..................... 17,511 199,139
Global Bond Series................................. 31,253 349,572
International Stock Series......................... 10,608 117,200
Norwest Select Fund:
Small Company Stock Fund........................... 3,433 38,350
</TABLE>
<TABLE>
<CAPTION>
COST OF
SHARES SHARES
----------- ---------
<S> <C> <C>
Year ended December 31, 1994:
Fortis Series Fund, Inc.:
Growth Stock Series................................ 23,983 $ 524,850
U.S. Government Securities Series.................. 64,492 607,364
Money Market Series................................ -- --
Asset Allocation Series............................ 46,335 626,408
Diversified Income Series.......................... 24,758 257,570
Global Growth Series............................... 11,872 144,687
Aggressive Growth Series........................... 915 8,878
Growth & Income Series............................. 1,288 12,968
High Yield Series.................................. 8,691 81,918

COST OF
SHARES SHARES
----------- ---------
<S> <C> <C>
Year ended December 31, 1993:
Fortis Series Fund, Inc.:
Growth Stock Series................................ 8,199 $ 186,295
U.S. Government Securities Series.................. 47,700 523,262
Money Market Series................................ 3,462 35,403
Asset Allocation Series............................ 25,803 363,460
Diversified Income Series.......................... 10,051 120,019
Global Growth Series............................... 2,026 25,615
</TABLE>

28
<PAGE>
Fortis Benefits' investment in the subaccounts represented the following number
of shares of the Funds held and aggregate cost of amounts invested at December
31, 1995:

<TABLE>
<CAPTION>
NUMBER COST OF
OF SHARES SHARES
----------- ---------
<S> <C> <C>
Fortis Series Fund, Inc.:
Growth Stock Series............................... 57,884 $ 606,788
Asset Allocation Series........................... 49,266 520,632
Global Growth Series.............................. 40,753 411,018
Aggressive Growth Series.......................... 60,008 600,471
Growth & Income Series............................ 60,017 602,897
High Yield Series................................. 130,028 1,293,213
Global Asset Allocation Series.................... 57,884 5,018,346
Global Bond Series................................ 49,266 5,030,752
International Stock Series........................ 40,753 5,008,084
Norwest Select Fund:
Small Company Stock Fund.......................... 103,433 1,038,350
</TABLE>

3. ORGANIZATIONAL EXPENSES AND OTHER CHARGES

ORGANIZATIONAL EXPENSES

Fortis Benefits assumes all organizational expenses of the Account.

PREMIUM EXPENSE CHARGE

For Harmony Investment Life policies a 5% sales charge and a 2.2% state premium
tax is deducted from each premium payment received by Fortis Benefits. The
resulting net premiums are allocated to the subaccounts of the Account and/or to
the Fortis Benefits General Accounts. For Wall Street Series VUL 100, VUL 220
and VUL 500 policies, Fortis Benefits reserves the right to impose a charge up
to 2.5% of each premium payment to be reimbursed for premium taxes or similar
charges it expects to pay.

MONTHLY DEDUCTIONS FROM POLICY VALUE

Monthly deductions from the net assets attributed to each policy are as follows:

- Monthly cost of insurance.

- Monthly cost of any optional insurance benefits added by rider.

For Harmony Investment Life Policies:

- Monthly administrative charge of $5.00 per policy ($3.00 for policies
applied for prior to July 1, 1988).

- For policies issued subsequent to July 1, 1988, Fortis Benefits reserves
the right to impose an expense charge of not more than $15.00 per month
and an additional per-thousand-of-face expense charge of not more than
$.08 per month for insureds age 29 or less and $.25 per month for insureds
age 30 and over during the first twelve policy months. Fortis Benefits
currently does not impose any of the expense charges described in the
preceding sentence.

- For policies issued prior to July 1, 1988, Fortis Benefits currently
imposes an expense charge of $10.00 per month and an additional
per-thousand-of-face expense charge of $.06 per month for insureds age 29
or less and $.20 per month for insureds age 30 and over during the first
twelve policy months.

For Wall Street Series VUL 100, VUL 220 and VUL 500 Policies:

- Monthly administrative charge of $4.50 per policy. Fortis Benefits
reserves the right to change this administrative charge, but it will never
exceed $7.50 per month.

- For VUL 220 and VUL 500, a monthly sales, premium tax and policy advance
charge of $4.00 per policy.

29
<PAGE>
3. ORGANIZATIONAL EXPENSES AND OTHER CHARGES (CONTINUED)
MORTALITY AND EXPENSE RISK AND POLICY ADVANCE CHARGES

Fortis Benefits deducts a daily mortality and expense risk charge from the
Account at an annual rate of .75% of the net assets representing equity of
Harmony Investment Life policyholders and .90% of the net assets representing
equity of Wall Street Series VUL 100, VUL 220 and VUL 500 policyholders held in
each account. These charges will be deducted by Fortis Benefits in return for
its assumption of expenses arising from adverse mortality experience or excess
administrative expenses in connection with policies issued. Fortis Benefits also
deducts a sales, premium tax and policy advance charge from the Account at an
annual rate of .27% of net assets representing equity of Wall Street Series VUL
100, VUL 220 and VUL 500 policyholders. These charges are included in the
statements of changes in net assets as a component of net investment income
(loss).

SURRENDER CHARGES

For Wall Street Series VUL 100, VUL 220 and VUL 500 policies surrendered within
the first eleven years of issuance, Fortis Benefits assesses a surrender charge.
The charge is the sum of any sales, premium tax, and policy advance charges not
previously deducted on a monthly or daily basis. For VUL 220 and VUL 500, there
is an additional surrender charge of $5.00 per thousand of the policy's initial
face amount plus a maximum percentage of the annualized net minimum premiums.
The percentage is 12% for VUL 220 and 22% for VUL 500. The surrender charge for
all Wall Street policies is limited to certain maximums based on the insured
person's age at the time of issuance and decreases at a constant rate on the
fifth and subsequent anniversary until it reaches zero on the eleventh policy
anniversary. A similar schedule of surrender charges is imposed on face
increases.

For Harmony Investment Life policies surrendered within the first nine years of
issuance of the policy or face increase, a surrender charge is assessed. The
charge is a maximum of 25% of the annualized net premium and decreases at a
constant rate on the fifth and subsequent anniversary until it reaches zero on
the ninth policy anniversary.

Surrender charges collected by Fortis Benefits were $2,057,483, $1,475,321 and
$730,008 in 1995, 1994 and 1993, respectively.

4. FEDERAL INCOME TAXES
The operations of the Account form a part of, and are taxed with, the operations
of Fortis Benefits, which is taxed as a life insurance company under the
Internal Revenue Code. As a result, the net asset values of the subaccounts are
not affected by federal income taxes on income distributions received by the
subaccounts.

30
<PAGE>
MEMBER FORTIS FINANCIAL GROUP

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES (HARMONY)

(Minimum Initial Face Amount $25,000)
Issued by

FORTIS BENEFITS INSURANCE COMPANY

PROSPECTUS DATED
May 1, 1995

<TABLE>
<S> <C> <C>
MAILING ADDRESS: STREET ADDRESS: TELEPHONE:
P.O. BOX 64582 500 BIELENBERG 1-800-800-2638,
ST. PAUL, MN DRIVE EXTENSION 3028
55164 WOODBURY, MN 55125
</TABLE>

The flexible premium variable life insurance Policies offered by this Prospectus
are issued by Fortis Benefits Insurance Company and are designed to provide (1)
lifetime insurance coverage on the insureds named in the Policies and (2)
flexibility in connection with premium payments and death benefits. This
flexibility allows an owner of a Policy to provide for changing insurance needs
with a single insurance policy.

With respect to the Policy Value available for investment under a Policy, the
Policy owner may elect to receive a rate of return based on one or more of the
following separate investment portfolios of Fortis Series Fund, Inc.: The
Aggressive Growth Series, the International Stock Series, the Global Growth
Series, the Growth Stock Series, the Growth and Income Series, the Global Asset
Allocation Series, the High Yield Series, the Global Bond Series, the Asset
Allocation Series, the Diversified Income Series, the U.S. Government Securities
Series, or the Money Market Series. There is no guaranteed minimum Policy Value
with respect to these Portfolios, and the Policy owner bears the entire
investment risk that this value (or the Surrender Value) may decline to zero.
Alternatively, a Policy owner may, with respect to all or part of the Policy
Value, elect to receive fixed rates of return.

The Policy may be fully surrendered at any time for its Surrender Value, and,
after the first Policy year, the Policy owner may generally make a partial
withdrawal of Surrender Value once a year. The Policy owner also may take out
Policy loans and has considerable flexibility to vary the frequency and amount
of premium payments. Payment of Planned Periodic Premiums will not necessarily
keep a Policy from lapsing if the Surrender Value is exhausted. However, the
Policy will not lapse in the first two years if certain minimum premium payments
are made. $300 is generally the smallest possible initial annual premium.

This Prospectus contains detailed information about these and other Policy
features, including certain restrictions and limitations which apply. This
Prospectus also discusses the way in which the return earned by the Policy Value
can affect a Policy's death benefit and Surrender Value.

As in the case of other life insurance policies, it may not be advantageous to
purchase flexible premium variable life insurance as a replacement for, or in
addition to, an existing flexible premium variable or other life insurance
policy.

THESE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, NOR ARE THEY GUARANTEED OR
ENDORSED BY, ANY BANK, CREDIT UNION, BROKER-DEALER OR OTHER FINANCIAL
INSTITUTION. THEY ARE NOT FEDERALLY INSURED BY THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY; AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THIS PROSPECTUS IS NOT VALID UNLESS PRECEDED
OR ACCOMPANIED BY THE CURRENT PROSPECTUS FOR FORTIS
SERIES FUND, INC., WHICH CONTAINS ADDITIONAL
INFORMATION ABOUT THAT ENTITY.

THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.

[LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEX OF DEFINED WORDS AND PHRASES............................................... 4
SUMMARY.......................................................................... 5
- Fortis Benefits/Fortis Financial Group Member.............................. 5
- Payment of Premiums........................................................ 5
- Allocation of Net Premiums Among Various Alternatives...................... 6
- Policy Value............................................................... 7
- Surrenders and Exchanges................................................... 7
- Other Charges.............................................................. 8
- Death Benefit.............................................................. 8
- Optional Insurance Benefits................................................ 9
- Benefit at Maturity........................................................ 9
- Policy Loans............................................................... 9
- Settlement Options......................................................... 9
- Taxes...................................................................... 9
- Right to Return a Policy................................................... 9
- How to Exercise Your Rights Under a Policy................................. 10
THE SEPARATE ACCOUNT AND FORTIS SERIES FUND, INC................................. 10
- The Separate Account....................................................... 10
- Fortis Series Fund, Inc.................................................... 11
POLICY BENEFITS.................................................................. 11
- Death Benefit.............................................................. 11
- Death Benefit Options...................................................... 12
- Accelerated Benefit Rider.................................................. 12
- Changes in Face Amount..................................................... 14
- Change in Death Benefit Option............................................. 15
- Policy Value............................................................... 16
- Calculation of Separate Account Policy Value............................... 16
- Separate Account Net Investment Return..................................... 17
PAYMENT AND ALLOCATION OF PREMIUMS............................................... 17
- Issuance of a Policy....................................................... 17
- Premiums................................................................... 18
- Allocation of Premiums and Policy Value.................................... 20
- Policy Lapse and Reinstatement............................................. 21
CHARGES AND DEDUCTIONS........................................................... 22
- Premium Expense Charge..................................................... 22
- Monthly Deduction From Policy Value........................................ 23
- Contingent Deferred Sales Charge........................................... 25
- Miscellaneous.............................................................. 26
- Charges Against the Separate Account....................................... 26
- Guarantee of Certain Charges............................................... 26
LOAN PRIVILEGES.................................................................. 27
- Effect of a Policy Loan.................................................... 27
- Repayment of a Loan........................................................ 28
SURRENDER AND PARTIAL WITHDRAWAL................................................. 28
RIGHTS RESERVED BY FORTIS BENEFITS INSURANCE COMPANY............................. 29
- Payment and Deferment...................................................... 29
</TABLE>

2
<PAGE>
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
PAGE
DISTRIBUTION OF THE POLICIES..................................................... 30
<S> <C>
FEDERAL TAX MATTERS.............................................................. 31
- Tax Status of the Policy................................................... 31
- Taxation of Policy Benefits................................................ 32
- Taxation of Fortis Benefits................................................ 34
OTHER POLICY PROVISIONS.......................................................... 34
MANAGEMENT....................................................................... 37
VOTING PRIVILEGES................................................................ 38
REPORTS.......................................................................... 38
STATE REGULATION................................................................. 39
LEGAL MATTERS.................................................................... 39
EXPERTS.......................................................................... 39
FINANCIAL STATEMENTS............................................................. 39
APPENDIX A
- Optional Income Plans...................................................... A-1
- Optional Insurance Benefits................................................ A-2
APPENDIX B
- Illustrations of Death Benefits, Policy Values, Surrender Values and
Accumulated Premiums....................................................... B-1
APPENDIX C
- The General Account........................................................ C-1
- General Description........................................................ C-1
- General Account Policy Value............................................... C-1
- Transfers, Surrenders and Policy Loans..................................... C-2
TELEPHONE TRANSFER AUTHORIZATION FORM
</TABLE>

THE POLICIES ARE NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. FORTIS BENEFITS DOES NOT AUTHORIZE ANY INFORMATION OR
REPRESENTATION REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS WHICH IS NOT
INCLUDED IN THIS PROSPECTUS OR ANY SUPPLEMENT THERETO OR IN ANY SUPPLEMENTAL
SALES MATERIAL AUTHORIZED BY FORTIS BENEFITS.

The purpose of the Policies is to provide insurance protection for the
beneficiary named therein. No claim is made that the Policies are in any way
similar or comparable to a systematic investment plan of a mutual fund.

3
<PAGE>
INDEX OF DEFINED WORDS AND PHRASES

Below are listed certain words and phrases used in this Prospectus, together
with the page or pages of this Prospectus on which each is defined or explained.

<TABLE>
<CAPTION>
PAGES

<S> <C>
Age............................................................................... 35
Alternative Death Benefit......................................................... 12
Contingent Deferred Sales Charge.................................................. 25
Date of Receipt................................................................... 34
Death Benefit Type A (Type "A")................................................... 12
Death Benefit Type B (Type "B")................................................... 12
Face Amount....................................................................... 17
Fortis Series..................................................................... 11
Fortis Group Funds................................................................ 35
Fortis Benefits................................................................... 5
General Account................................................................... C-1
Grace Period...................................................................... 21
Guideline Annual Premium.......................................................... 25
Home Office....................................................................... 10
Monthly Deduction................................................................. 23
Monthly Anniversary............................................................... 18
Net Amount at Risk................................................................ 23
Net Premium....................................................................... 6
NYSE.............................................................................. 17
Planned Periodic Premium.......................................................... 18
Policy Anniversary................................................................ 17
Policy Date....................................................................... 17
Policy Value...................................................................... 16
Portfolio......................................................................... 11
Premium Expense Charge............................................................ 22
Pro Rata Basis.................................................................... 23
Required Premium.................................................................. 19
Separate Account.................................................................. 10
Subaccount........................................................................ 11
Surrender Value................................................................... 7
Valuation Date.................................................................... 16
Valuation Period.................................................................. 17
1940 Act.......................................................................... 10
</TABLE>

4
<PAGE>
SUMMARY

FORTIS BENEFITS/FORTIS FINANCIAL GROUP MEMBER

Fortis Benefits Insurance Company, the issuer of the Policies, was founded in
1910. At the end of 1994, Fortis Benefits had approximately $61 billion of total
life insurance in force. Fortis Benefits is a Minnesota corporation and is
qualified to sell life insurance and annuity contracts in the District of
Columbia and in all states except New York. Fortis Benefits is an indirectly
wholly-owned subsidiary of Fortis, Inc., which is itself indirectly owned 50% by
Fortis AMEV N.V. and 50% by Fortis Group AG ("Group AG"). Fortis, Inc. manages
the United States operations for these two companies.

Fortis Benefits is a member of the Fortis Financial Group, a joint effort by
Fortis Benefits, Fortis Advisers, Inc., Fortis Investors, Inc. and Time
Insurance Company, offering financial products through the management, marketing
and servicing of mutual funds, annuities, life insurance and disability income
products.

Fortis AMEV N.V. is a diversified financial services company headquartered in
Utrecht, The Netherlands, where its insurance operations began in 1847. Fortis
AG is a diversified financial services company headquartered in Brussels,
Belgium, where its insurance operations began in 1824. Fortis AMEV N.V. and
Fortis AG have merged their operating companies under the trade name of Fortis.
The Fortis group of companies is active in insurance, banking and financial
services, and real estate development in the Netherlands, Belgium, the United
States, Western Europe, and the Pacific Rim. Fortis had over $108 billion in
assets as of year-end 1994.

All of the guarantees and commitments under the Policies are general obligations
of Fortis Benefits, regardless of whether the Policy Value has been allocated to
the Separate Account or to the General Account. None of Fortis Benefits'
affiliated companies has any legal obligation to back Fortis Benefits'
obligations under the Policies.

PAYMENT OF PREMIUMS

At the time of Policy issuance, the Policy owner must either (1) pay in advance
at least the sum of twelve monthly Required Premiums specified in the Policy or
(2) pay at least the initial amount under a Planned Periodic Premium payment
schedule established by the Policy owner which, if followed, will result in the
payment of at least the sum of such Required Premiums in the first Policy year.
If the Planned Periodic Premium is paid monthly, the initial premium must at
least equal two months' Planned Periodic Premiums. The smallest possible monthly
Minimum Premium is generally $25. Thereafter, subject to the limitations
described under "Payment and Allocation of Premiums--Premiums," premium payments
may be made at any time and in any amount. All Policies will specify a Planned
Periodic Premium, but payment of this is optional, except to the extent
described above with respect to the initial premium payment.

A Policy is guaranteed not to lapse in the first two Policy years if, as of each
Monthly Anniversary during that period, (1) the cumulative amount of premiums
paid to date, less the amount of any outstanding Policy loans and cumulative
partial withdrawals taken by the Policy owner, at least equals (2) the
cumulative monthly Required Premiums, assuming regular monthly payment thereof
commencing on the Policy Date and continuing through the current Monthly
Anniversary. If these requirements are not met on any Monthly Anniversary, the
guarantee terminates and may not be reinstated. The initial monthly Required
Premiums are specified in each Policy, and additional minimum premium payments
will be necessary to keep this guarantee in effect if the Face Amount of the
Policy or rider benefits are increased during the first two Policy years. See
"Payment and Allocation of Premiums-- Premiums."

5
<PAGE>
If the minimum premium requirement described above is not met in the first two
Policy years, and in any event thereafter, a Policy will lapse if the Surrender
Value becomes insufficient to pay the continuing charges and deductions. See
"Payment and Allocation of Premiums--Policy Lapse and Reinstatement." Premium
payments in excess of the Planned Periodic Premium payments may therefore be
necessary to keep a Policy in force.

A Premium Expense Charge will be deducted from each premium payment to help
cover premium taxes and sales expenses. See "Charges and Deductions--Premium
Expense Charge." The remainder is the "Net Premium." The Premium Expense Charge,
as a percentage of each premium payment, is currently 2.2% for premium taxes
plus 5% for sales expenses.

ALLOCATION OF NET PREMIUMS AMONG VARIOUS ALTERNATIVES

The owner of a Policy may allocate Net premiums paid under a Policy to one or
more of the Subaccounts of Variable Account C, a separate investment account of
Fortis Benefits (see "The Separate Account and Fortis Series Funds, Inc.")
and/or to Fortis Benefits' General Account. The assets in each of the current
Subaccounts are invested in a separate class (or series) of stock of Fortis
Series Fund, Inc. ("Fortis Series"), a "series" type of mutual fund. Each class
of stock represents a separate investment Portfolio within Fortis Series. The
investment Portfolios of Fortis Series which are currently available are the
Aggressive Growth Series, the International Stock Series, the Global Growth
Series, the Growth Stock Series, the Growth and Income Series, the Global Asset
Allocation Series, the High Yield Series, the Global Bond Series, the Asset
Allocation Series, the Diversified Income Series, the U.S. Government Securities
Series, and the Money Market Series. Premiums allocated to the General Account
are held as part of Fortis Benefits' general investment assets. See Appendix
C--"The General Account."

Each Portfolio has a different investment objective and is managed by Fortis
Advisers, Inc. For providing investment management services to the Portfolios,
Fortis Advisers, Inc. currently receives a fee from the Funds as follows: for
Aggressive Growth Series, .7% of the first $100 million of average daily net
assets and .6% thereafter; for International Stock Series, .85% of the first
$100 million of such assets, and .8% thereafter; for Global Growth Series, .7%
of the first $500 million of average daily net assets, and .6% thereafter; for
Growth Stock Series and Growth and Income Series, .7% of the first $100 million
of average daily net assets, and .6% thereafter; for Global Asset Allocation
Series, .9% of the first $100 million of such assets, and .85% thereafter; for
Asset Allocation Series and High Yield Series, for Global Bond Series, .75% of
the first $100 million of such assets, and .65% thereafter; .5% of the first
$250 million of average daily net assets, and .45% thereafter; for Diversified
Income Series and U.S. Government Securities Series, .5% of the first $50
million of average daily net assets, and .45% thereafter; for Money Market
Series, .3% of the first $500 million of average daily net assets, and .25%
thereafter; and The Portfolios also bear most of their other expenses.

The International Stock Series, the Global Asset Allocation Series and the
Global Bond Series has each retained a sub-adviser to provide investment
research, advice and supervision subject to the general control of Fortis
Advisers, Inc. Lazard Freres Asset Management is the sub-adviser of the
International Stock Series; Morgan Stanley Asset Management Limited is the
sub-adviser of the Global Asset Allocation Series; and Warburg Investment
Management International Ltd. is the sub-adviser of the Global Bond Series.

From its advisory fee, Fortis Advisers, Inc. pays the sub-advisers a fee at an
annual rate as follows: For International Stock Series, .45% of the first $100
million of such Series' average daily net assets, and .375% thereafter; for
Global Asset Allocation Series, .5% of the first $100 million of such assets,
and .4% thereafter; and for the Global Bond Series, .35% of the first $100
million of such assets, and .225% thereafter.

6
<PAGE>
For a full description of the Portfolios, see the prospectus for Fortis Series
which accompanies this Prospectus and the Statement of Additional Information
referred to therein.

A Policy owner may change allocations of future Net premiums at any time without
charge by submitting a written request in form acceptable to Fortis Benefits,
subject to certain limitations. See "Payment and Allocation of
Premiums--Allocation of Premiums and Policy Value." Because investment
performance of a Subaccount (unlike that of the General Account) is not
guaranteed by Fortis Benefits, allocation of Net premiums to a Subaccount
increases the amount of the investment risk to the Policy owner, and allocation
to the General Account decreases such risk. However, the potential benefit of
the General Account is limited to the guaranteed return, plus any discretionary
return declared by Fortis Benefits from time to time.

TRANSFERS OF POLICY VALUE. A Policy owner may transfer amounts among the
Subaccounts at any time. Transfers may also be made at any time from a
Subaccount to the General Account. The Policy owner, under Fortis Benefits'
current rules, may transfer up to 50% of any unloaned Policy Value in the
General Account to one or more Subaccounts. This transfer may be made only once
during the Policy year and Policy Value may not be transferred out of the
General Account at any other time.

For additional conditions and limitations on transfers, see "Payment and
Allocation of Premiums--Allocation of Premiums and Policy Value" and Appendix
C--"Transfers, Surrenders and Policy Loans."

POLICY VALUE

The "Policy Value" is the amount "at work" for the Policy owner earning a return
in the Separate Account and/or in the General Account at any time. It is the
cumulative amount of premiums paid to date, less any withdrawals and less all
deductions and charges imposed to date under the Policy, plus the cumulative net
amount of positive or negative investment return earned to date on amounts
allocated to the Separate Account under the Policy, plus the cumulative net
amount of interest earned to date on amounts held in the General Account under
the Policy.

SURRENDERS AND EXCHANGES

A Policy may be surrendered at any time for all of its Surrender Value, and,
subject to certain conditions, part of the Surrender Value may be withdrawn up
to once a year after the first Policy year. See "Surrender and Partial
Withdrawal." The Surrender Value is the Policy Value, less the amount of the
Contingent Deferred Sales Charge, less the amount of any Policy loan, plus any
loan interest paid for future periods (see "Loan Privileges"). If Death Benefit
Type A is in effect, a partial withdrawal will reduce the Policy's Face Amount
on a dollar-for-dollar basis.

CONTINGENT DEFERRED SALES CHARGE. Assuming no Face Amount increases have been
made, the maximum Contingent Deferred Sales Charge is 25% of the lesser of (1)
the sum of twelve monthly Required Premiums specified in the Policy schedule as
being subject to such charge or (2) the actual amount of premiums paid through
the end of the first two Policy years. The Contingent Deferred Sales Charge
decreases for surrenders after the fifth Policy year and continues to decrease
for each year thereafter until it reaches zero after the ninth Policy year.
Western Life imposes a comparable amount of additional Contingent Deferred Sales
Charge with respect to certain total surrenders following increases in Face
Amount. See "Charges and Deductions--Contingent Deferred Sales Charge," for a
further description of these charges.

7
<PAGE>
EXCHANGE FOR FIXED BENEFIT POLICY. At any time before the second Policy
Anniversary, a Policy may be exchanged for a new policy of fixed benefit
insurance on the insured's life. Such exchanges will be implemented by
transferring all of the Policy Value to the General Account, as described under
"Payment and Allocation of Premiums--Allocation of Premiums and Policy Value"
and Appendix C--"The General Account."

OTHER CHARGES

In addition to the Premium Expense Charge, Fortis Series expenses, and
Contingent Deferred Sales Charge referred to above, the following charges are
imposed under the Policies:

MONTHLY DEDUCTION. The Policy Value will be reduced by a Monthly Deduction equal
to the sum of (1) a monthly cost of insurance charge, (2) the monthly cost of
any optional insurance benefits added by rider, and (3) an administrative charge
of $5.00 per month in each Policy year. See "Charges and Deductions--Monthly
Deduction From Policy Value." Fortis Benefits expects to derive no profit from
the charges set forth in (3) above. For policies applied for prior to July 1,
1988, see "Charges and Deductions--Monthly Deductions From Policy Value."

CHARGES AGAINST THE SEPARATE ACCOUNT. A daily charge at an annual rate of .75%
of the average daily net assets that are attributable to Policies in each
Subaccount of the Separate Account is imposed to compensate Fortis Benefits for
its assumption of certain mortality and expense risks. See "Charges and
Deductions--Charges Against the Separate Account."

Subject to certain limitations, the charge for cost of insurance, the premium
tax charge, the charge for certain optional insurance riders, and the amount of
Required Premiums may be increased in the future. As to charges that may be
imposed or increased in the future, see generally "Charges and Deductions."

DEATH BENEFIT

The Policy provides for the payment of a benefit upon the death of the insured
pursuant to one of two options, as selected in advance by the Policy owner.
Under Death Benefit Type A, the death benefit is the Face Amount of the Policy.
Under Death Benefit Type B, the death benefit is the Face Amount of the Policy
plus the Policy Value on the date of death. If greater than the death benefit
otherwise payable under Type A or Type B, an Alternative Death Benefit equal to
a multiple (determined by Age at death) of the Policy Value will be paid. See
"Policy Benefits-- Death Benefit." The death benefit payable will in any case be
reduced by any outstanding Policy loan and any due and unpaid charges accrued
during the Grace Period.

Subject to certain limitations and conditions, the Policy owner may increase or
decrease the Face Amount of the Policy, change the death benefit from Type A to
Type B or from Type B to Type A. See "Changes in Face Amount" and "Change in
Death Benefit Option" under "Policy Benefits." Any increase in the Face Amount
or change in death benefit from Type A to Type B requires additional evidence of
insurability satisfactory to Fortis Benefits. An increase in Face Amount will
result in additional sales and cost of insurance charges. See "Contingent
Deferred Sales Charge" and "Monthly Deduction From Policy Value" under "Charges
and Deductions." An increase in the initial Face Amount within the first two
Policy years will also increase the monthly Required Premiums that must be paid
to guarantee that the Policy will not lapse during that period. See "Payment and
Allocation of Premiums-- Premiums."

8
<PAGE>
OPTIONAL INSURANCE BENEFITS

A Policy owner has the flexibility to add optional insurance benefits by rider,
to the extent available in the Policy owner's state. These optional benefits are
described in Appendix A--"Optional Insurance Benefits."

BENEFIT AT MATURITY

Unless the Policy owner exercises an option to extend the Maturity date of the
Policy the Policy matures if the insured reaches Age 95. See "Other Policy
Provisions--Option to Extend the Maturity Date." When the Policy matures the
Policy Value, less the amount of any outstanding Policy loan, will be paid to
the Policy owner, upon return of the Policy.

POLICY LOANS

A Policy owner may borrow up to 90% of the difference between the Policy Value
and the amount of any then-applicable Contingent Deferred Sales Charge. In
Texas, the Policy owner may also borrow up to 100% of the Policy Value in the
General Account, less a pro-rata portion of the Contingent Deferred Sales
Charge. The interest rate credited on loaned amounts is 5%, and the interest
rate charged on loans is 7.4% per year, payable in advance, except to the extent
that certain Policy owners may qualify for a higher credited rate for Policy
loans. See "Loan Privileges."

SETTLEMENT OPTIONS

Any amount payable on death of the insured or other termination of a Policy may
be received in cash or pursuant to one of several "settlement" options, at the
election of the Policy owner or beneficiary. See Appendix A--"Optional Income
Plans."

TAXES

For federal income tax purposes, under current law, Fortis Benefits believes
that gains in Policy Value resulting from positive net investment returns will
not be taxed to Policy owners until such gains are distributed to them.

Policy loan interest generally is not deductible for federal income tax
purposes. In addition, certain Policy loans, Policy pledges, or Policy
assignments may constitute taxable distributions.

Also, certain changes under a Policy (such as changes in Face Amount, death
benefit option, and perhaps other changes) or payment of premiums in excess of
certain amounts may have significant tax consequences. Accordingly, Policy
owners are strongly encouraged to consult competent tax advisers in this regard.

For a brief discussion of these and certain other tax implications of owning a
Policy, see "Federal Tax Matters."

RIGHT TO RETURN A POLICY

The Policy owner may return the Policy by delivery or by mailing postmarked
within 10 days after receipt (except where state law requires a longer period),
within 45 days after he or she signs Part I of the application for insurance, or
within 10 days after receipt of a Notice of Withdrawal Right, whichever is the
latest, and receive a refund within 7 days. Nevertheless, under Fortis Benefits'
current administrative practice, the Notice of Withdrawal Right will continue to
be accepted if its Date of Receipt is not more than 20 days after Fortis
Benefits releases the Policy to an active status in its processing system,
pursuant to its administrative and underwriting procedures. The amount refunded
will be the amount of the premiums paid. See "Policy Benefits--Changes in Face
Amount" for a description of similar rights to cancel any increases in Face
Amount.

9
<PAGE>
HOW TO EXERCISE YOUR RIGHTS UNDER A POLICY

To exercise rights under a Policy, the owner must follow the procedures stated
in the Policy. To request a loan, surrender, or partial withdrawal, the owner
must utilize forms prepared by Fortis Benefits for each purpose; and it is
recommended that Fortis Benefits' forms also be used for making any other change
or request. The forms are available from your sales representative or from
Fortis Benefits at its Home Office: P.O. Box 64582, St. Paul, MN 55164,
1-800-800-2638, extension 3028. Should a request be received for a loan,
surrender or partial withdrawal that is not on Fortis Benefits' form, the proper
form will be sent to the Policy owner, and, in the case of a total surrender,
the owner will usually be contacted, as well. The completed forms, as well as
any premium payments, loan and interest payments, and all other communications
should also be submitted to Fortis Benefits' Home Office.

If a Policy owner has submitted a telephone authorization form which has been
received by Fortis Benefits, transfers of Policy Value may be made by telephone.
The number to call for this purpose is 1-800-800-2638, extension 3028. A
Telephone Authorization Form is attached at the end of this Prospectus. Fortis
Benefits will not be responsible for, and the Policy owner will bear the risk of
loss from, oral instructions, including fraudulent instructions which are
reasonably believed to be genuine. Fortis Benefits will employ reasonable
procedures to confirm that telephone instructions are genuine, but if such
procedures are not deemed reasonable, Fortis Benefits may be liable for any
losses due to unauthorized or fraudulent instructions. Fortis Benefit's
procedures are to verify address and social security number, tape record the
telephone call and provide written confirmation of the transaction. Fortis
Benefits reserves the right to modify, condition or terminate this telephone
privilege at any time without prior notice.

Fortis Benefits reserves the right to require return of the Policy with any
request which makes a change in the Policy. After effecting the requested
change, Fortis Benefits will deliver a revised Policy to the Policy owner.
Currently, however, Fortis Benefits requires the Policy to be returned only on
maturity, total surrender or death of the insured.

Unless the context indicates otherwise, the foregoing Summary and the discussion
in the rest of this Prospectus assume that Surrender Values are sufficient to
pay all charges deducted on Monthly Anniversaries and that no Policy loans have
been made.

THE SEPARATE ACCOUNT AND FORTIS SERIES FUND, INC.

THE SEPARATE ACCOUNT

The Separate Account, which is a segregated investment account of Fortis
Benefits, was established as Variable Account C by Fortis Benefits pursuant to
the insurance laws of Minnesota as of March 13, 1986. The Separate Account is
used to fund the Policies, as well as certain other variable life insurance
policies issued by Fortis Benefits. The assets allocated to the Separate Account
are the property of Fortis Benefits. Although the Separate Account is an
integral part of Fortis Benefits, the Separate Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940 ("1940 Act"). Registration does not involve
supervision of the management or investment practices or policies of the
Separate Account or of Fortis Benefits by the Commission.

All income, gains and losses, whether or not realized, from assets allocated to
the Separate Account are credited to or charged against the Separate Account
without regard to other income, gains or losses of Fortis Benefits. Each Policy
provides that assets in the Separate Account representing reserves for variable
life insurance policies shall

10
<PAGE>
not be chargeable with liabilities arising out of any other business of Fortis
Benefits. Fortis Benefits contributed funds to establish various Subaccounts of
the Separate Account and Fortis Benefits or its affiliated companies may
accumulate in the Separate Account proceeds from charges under the Policies and
other amounts in excess of the Separate Account assets representing Policy
reserves. Fortis Benefits may from time to time transfer to its general
investment assets any Separate Account assets in excess of amounts attributable
to Policy reserves.

The assets in each Subaccount are invested in a distinct class (or series) of
stock issued by Fortis Series, each representing a separate investment Portfolio
within Fortis Series. New Subaccounts may be added as new Portfolios are added
to Fortis Series and made available to Policy owners. Correspondingly, if any
Portfolios are eliminated from Fortis Series, Subaccounts may be eliminated from
the Separate Account.

FORTIS SERIES FUND, INC.

Fortis Series is a "series" type of mutual fund which is registered with the
Securities and Exchange Commission as a diversified open-end management
investment company under the 1940 Act. Fortis Series has served as the
investment medium for the Separate Account since the Separate Account commenced
operations. Fortis Series is also an investment medium for Variable Account D of
Fortis Benefits, through which variable annuity contracts are issued. Although
Fortis Benefits does not foresee any material conflicts between the interests of
Policy owners and variable annuity contract owners, Fortis Series' Board of
Directors will monitor to identify any material irreconcilable conflicts that
may develop and to determine what action, if any, should be taken in response.
If it becomes necessary for any separate account to replace shares of any
Portfolio with another investment, the Portfolio may have to liquidate
securities on a disadvantageous basis.

Fortis Benefits purchases and redeems Fortis Series shares for the Separate
Account at their net asset value without the imposition of any sales or
redemption charges. Such shares represent interests in the Portfolios of Fortis
Series, each of which corresponds to one of the Subaccounts of the Separate
Account. Any dividend or capital gain distributions received from a Portfolio
that are attributable to Policies will be reinvested in shares of that Portfolio
at net asset value as of the date paid. Such distributions will have the effect
of reducing the net asset value of each share of the Portfolio and increasing
the number of Portfolio shares outstanding. However, the total Policy Value in
the corresponding Subaccount will not change as a result of any such
distribution.

Fortis Series' Portfolios are the Aggressive Growth, International Stock Series,
Global Growth, Growth Stock, Growth and Income, Global Asset Allocation, Asset
Allocation, High Yield, Global Bond, Diversified Income, U.S. Government
Securities, and Money Market Series. A full description of the Portfolios, their
investment policies and restrictions, their charges, the risks attendant to
investing in them, and other aspects of their operations is contained in the
prospectus for Fortis Series accompanying this Prospectus and in the Statement
of Additional Information referred to therein. The complete risk disclosure in
the Prospectus for the High Yield Series, Global Asset Allocation Series, the
Asset Allocation Series, and the Diversified Income Series should be read before
selection of them for Policy investment.

POLICY BENEFITS

DEATH BENEFIT

As long as the Policy remains in force, Fortis Benefits will, upon due proof of
the insured's death and return of the Policy, pay the insurance proceeds of the
Policy to the named beneficiary. Fortis Benefits will pay interest from the date
of death to the date of commencement of any optional income plan or to the date
of distribution at a minimum of 3 1/2% per annum. See Appendix A--"Optional
Income Plans."

11
<PAGE>
The insurance proceeds are: (1) the death benefit provided under Type A or Type
B, whichever is in effect on the date of death, plus (2) any additional
insurance on the insured's life that is provided by rider, minus (3) any
outstanding Policy loan and any due and unpaid charges accruing during a Grace
Period, plus (4) any loan interest paid by the Policy owner for periods beyond
the date of death.

DEATH BENEFIT OPTIONS

The Policy owner selects one of the two below-described death benefit options in
the application and can thereafter change the option by written request. See
"Change in Death Benefit Option," below.

TYPE A. The death benefit is equal to the Face Amount of insurance.

TYPE B. The death benefit is equal to the Face Amount of insurance plus the
Policy Value at the date of death.

ALTERNATIVE DEATH BENEFIT. Under either Type A or Type B, there is an
Alternative Death Benefit which applies if it provides a death benefit greater
than the death benefit option chosen. The Alternative Death Benefit is a
multiple of the Policy Value at the date of death as set forth in the table
below.

<TABLE>
<CAPTION>
AGE OF
INSURED MULTIPLE OF
AT DEATH POLICY VALUE
- ------------- ---------------
<S> <C>
40 or less 2.50
45 2.15
50 1.85
55 1.50
60 1.30
65 1.20
70 1.15
75 1.05
80 1.05
85 1.05
90 1.05
95 1.00
</TABLE>

For Ages not listed, the progression between the listed Ages is constant.

Both Type A and Type B provide insurance protection, as well as possible
build-up of Policy Value. Under Type A, the insurance coverage remains level
unless the Alternative Death Benefit applies. Under Type B, the insurance
coverage varies as the Policy Value changes.

For any Face Amount, the death benefit under Type B will be greater than or
equal to that under Type A, since the Policy Value is added to the Face Amount
and included in the death benefit under Type B but not under Type A. However,
the cost of insurance included in the Monthly Deduction (see "Charges and
Deductions--Monthly Deduction From Policy Value") will be greater, and thus the
accumulation of Policy Value will be lower, under Type B than under Type A,
assuming the same Face Amount and otherwise identical Policies.

ACCELERATED BENEFIT RIDER

The Accelerated Benefit Rider will be issued as a part of all policies issued in
a state that has approved such rider. The Accelerated Benefit Rider allows a
Policy owner to receive benefits from the Policy that would be otherwise payable
upon the death of the insured. The benefit may vary state-by-state and a Fortis
Benefits representative should be consulted as to whether, and to what extent,
the rider is available in any particular state.

12
<PAGE>
The Accelerated Benefit Rider allows the Policy owner to elect an accelerated
payment of all or part of the death benefit under the Policy and any term
insurance rider that is less than two years prior to expiry or maturity. The
accelerated payment will be discounted for twelve months' interest and will be
reduced by any outstanding loan, if not otherwise paid, multiplied by the
percentage of the eligible amount which is accelerated. The interest rate
discount will be equal to the lesser of (1) the applicable federal interest rate
determined under Section 846(c)(2) of the Internal Revenue Code; (2) the current
maximum statutory adjustable policy loan interest rate or (3) 10%. Fortis
Benefits can furnish details about the amount of the benefit under the
Accelerated Benefit Rider available to an eligible Policy owner under a
particular Policy. The benefits paid under the Accelerated Benefit Rider are
available when Fortis Benefits has received written notice and satisfactory
proof (a certificate by a doctor) that the insured has a life expectancy of
twelve months or less due to an irreversible medical condition. The benefit will
be paid in a lump sum unless otherwise agreed to by Fortis Benefits.

The payment of a benefit must be approved in writing by any irrevocable
beneficiary and any collateral assignee. No benefit is available if the
insured's irreversible medical condition results from self-inflicted injury and
such injury occurs within the first two policy years (one year in Colorado and
North Dakota). If such injury occurs beyond such period, the amount that may be
requested may not include any part of the death benefit that was first effective
within a two year period (one year in Colorado and North Dakota) prior to such
injury.

All or part of the eligible amount may be accelerated under the Accelerated
Benefit Rider. If the death benefit is only partially accelerated, a Face Amount
at least equal to the minimum Face Amount required for the Policy or rider must
remain under the Policy or rider. The benefit payable must be at least
$2,500.00, or if smaller the entire eligible amount. If the entire eligible
amount is accelerated, the Policy or rider will terminate. If the entire
eligible amount is paid on the person who is insured under the base Policy, any
rider on the Policy that provides insurance on the life of any other person will
be administered according to the provisions in the rider concerning the death of
the person insured under the base Policy.

The maximum amount of any benefit payable under a Policy and all of the policies
issued by Fortis Benefits under any other Accelerated Benefit Rider on such
policies is $500,000. If only a portion of the eligible amount is paid, the
Policy and/or rider will remain in force. The amount of insurance, and the loan
amount and Surrender Value if the benefit is paid on the death benefit provided
by the base Policy, of the Policy or rider will be reduced as of the date of
approval of the benefit request by the percentage of the eligible amount which
is accelerated. The monthly Minimum Premiums and cost of insurance will be
adjusted as if (1) a loan repayment were made equal to the reduction in the loan
amount, (2) a withdrawal were made equal to the reduction in Surrender Value (3)
and a face amount decrease were made equal to the difference between the
accelerated eligible amount and the face amount decrease caused by the
withdrawal.

There is no charge for this rider provision as a part of your policy. However,
an administrative fee (not to exceed $300) will be charged at the time the
benefit is paid. The current fee is $50.

Fortis Benefits agrees that unless otherwise required by law, no benefit will be
paid if the Policy owner is required to elect it in order to meet the claims of
creditors or to obtain a government benefit. Receipt of payment of a benefit
under the Accelerated Benefit Rider may affect eligibility for government
sponsored benefit programs, such as Medicaid and Supplemental Security Income.
The rider can be terminated by request.

The Accelerated Benefit Rider is not a long term care rider or nursing home
insurance rider. The amount this rider pays may not be enough to cover medical,
nursing home or other bills. The benefit can be used for any purpose.

13
<PAGE>
Having the Accelerated Benefit Rider as a part of the Policy has no adverse tax
consequences. However, electing to use it could. Although there currently are
proposed IRS regulations which would treat a benefit received under the
Accelerated Benefit Rider for income tax purposes like a death benefit received
by a beneficiary after the death of an insured, receipt of a benefit under the
Accelerated Benefit Rider may give rise to a Federal or State income tax. A
competent tax adviser should be consulted for further information.

CHANGES IN FACE AMOUNT

INCREASE. A Policy owner may at any time increase the Face Amount of a Policy,
subject to the conditions discussed below.

The minimum Face Amount increase currently is $5,000, and all other requirements
are as if the increase were a separate Policy. Increases in Face Amount may be
made only if the Surrender Value after the increase is large enough to cover at
least the Monthly Deduction for the Policy month following the increase. Any
increase requires that additional evidence of insurability be submitted to
Fortis Benefits. No Face Amount increase will be permitted if benefits are being
paid under the terms of a Waiver of Monthly Deductions Rider or the Waiver of
Selected Amount Rider. See Appendix A--"Optional Insurance Benefits." Fortis
Benefits may refuse a Face Amount increase if the effect would be to increase
Fortis Benefits' Net Amount at Risk with respect to any insured under all Fortis
Benefits insurance policies to more than $300,000, if it is unable to reinsure
its risk in excess of that amount on customary terms. (Net Amount at Risk is the
difference in amount between the death benefit and the Policy Value.) Fortis
Benefits reserves the right to establish different maximum or minimum amounts
for future Face Amount increases.

Certain surrenders following a Face Amount increase will be subject to an
additional amount of Contingent Deferred Sales Charge. See "Charges and
Deductions--Contingent Deferred Sales Charge." An increase in the initial Face
Amount requested by the Policy owner in the first two Policy years also will
increase the monthly Required Premium that must be paid to guarantee against
lapse during that period. See "Payment and Allocation of Premiums-- Premiums."

The Policy owner may cancel the Face Amount increase. The cancellation request
must be delivered or mailed to Fortis Benefits by letter postmarked (1) within
10 days after receipt of a Policy schedule amendment reflecting any requested
Face Amount increase, (2) within 45 days after the Policy change application for
such increase is signed, or (3) within 10 days after receipt of a Notice of
Withdrawal Right, whichever is latest. Upon such a cancellation, Monthly
Deductions, including rider costs, arising from the increase are credited to the
Policy Value. No premiums paid will be refunded, except that Fortis Benefits
will promptly refund premiums (including any related premium expense charges) to
the extent necessary to cure any violation of the then current maximum premium
limitations under Section 7702 of the Internal Revenue Code of 1986, as amended
(the "Code"). See "Payment and Allocation of Premiums--Premiums." The Contingent
Deferred Sales Charge and other charges will be adjusted to the level they were
at before the Face Amount increase, as will the monthly Required Premium.

Also, during the first two years following a Face Amount increase requested by a
Policy owner, the Policy owner may transfer all or part of the Policy Value to
the General Account without charge. See "Policy Value Transfer" under "Payment
and Allocation of Premiums--Allocation of Premiums and Policy Values." Such a
transfer to the General Account could be made, for example, in the amount of any
premiums paid which are deemed attributable to the increase. See "Charges and
Deductions--Contingent Deferred Sales Charge" regarding the method of such
attribution.

14
<PAGE>
DECREASE. After the first Policy year, the Policy owner may request a decrease
in the Face Amount of the Policy. Face Amount decreases in the first two Policy
years will be allowed only if the cumulative amount of premiums paid are at
least equal to the sum of 12 monthly Required Premiums (computed without regard
to substandard risk class or optional policy riders). A comparable restriction
on decreases applies in the first two years following a Face Amount increase
requested by the Policy owner.

The Face Amount remaining in force after any requested decrease may not be less
than $25,000. No decrease in the Face Amount will be permitted if it would
result in any violation of the then current maximum premium limitation
determined by Internal Revenue Service rules. A reduction in Face Amount
requested by the Policy owner within the first two Policy years will decrease
the monthly Required Premium necessary to guarantee against lapse during that
period.

For Policies applied for prior to May 1, 1990, the following procedures apply
that are different from those set forth above:

1. There is no prohibition on Face Amount decreases in the first Policy
year (or in the first year following a Face Amount increase) and there is
no requirement that any specific amount of premiums have been paid as a
precondition to making any Face Amount decrease. All other limits and
conditions on Face Amount decreases will apply as set forth in the
prospectus.

2. If the Policy owner elects to decrease the Face Amount within the first
Policy year, the monthly Required Premium will be reduced for purposes of
any guarantee against lapse that may be in effect and for purposes of any
Contingent Deferred Sales Charge. The same is true if the Policy owner
requests a Face Amount decrease within one year after a Face Amount
increase (other than an increase resulting automatically from a change in
death benefit type), except that only the amount of the monthly Required
Premium attributable to the increase will be subject to the decrease. In
either case, the decrease in monthly Required Premiums is the same as
that described in relation to other Face Amount decreases under the
heading "Payment and Allocation of Premiums--Premiums" in the prospectus.

EFFECTIVE DATE. Any Face Amount increase or decrease will become effective on
the Monthly Anniversary on or next following (1) the Date of Receipt of the
request or (2) if evidence of insurability is required, the date Fortis Benefits
approves the request. Nevertheless, there will be no insurance coverage under
any change in Face Amount or other change in benefits requiring evidence of
insurability, unless, at the time of delivery of a Policy schedule amendment
reflecting the change in benefits, the insured's health remains as stated in the
application for the change.

Commencing on its effective date, a change in the Face Amount generally will
also affect the Net Amount at Risk and may affect the insured's rate class, both
of which affect a Policy owner's monthly cost of insurance charge. See "Charges
and Deductions--Monthly Deduction From Policy Value." This in turn can affect
the level of subsequent Policy Values and death benefits.

CHANGE IN DEATH BENEFIT OPTION

The death benefit option in effect may be changed at any time by sending a
written request in form acceptable to Fortis Benefits at its Home Office. The
effective date of any such change will be the Monthly Anniversary on or
following (1) the Date of Receipt of the request or (2) if evidence of
insurability is required, approval by Fortis Benefits.

15
<PAGE>
A change from Type A to Type B requires evidence of insurability and results in
an automatic reduction in the Face Amount by the amount of the Policy Value on
the effective date of the change. This change may not be made if it would result
in a Face Amount which is less than the minimum Face Amount of $25,000. Nor will
a change in death benefit option be permitted if it results in any violation of
the then current maximum premium limitations under Section 7702 of the Code. See
"Payment and Allocation of Premiums--Premiums."

A change from Type A to Type B will not alter the death benefit at the time of
the change, but will affect the determination of the death benefit from then on.
Since, from then on, the Policy Value will be added to the new Face Amount, the
death benefit will vary with the Policy Value. Moreover, under Type B, the Net
Amount at Risk will not vary unless the Alternative Death Benefit is in effect.
Therefore, after a change from Type A to Type B, the cost of insurance will
generally be higher if the Policy Value increases, but lower if the Policy Value
decreases. See "Charges and Deductions--Monthly Deduction From Policy Value."

Although a change from Type A to Type B results in an automatic reduction in
Face Amount, it will not result in any change in the Contingent Deferred Sales
Charge or monthly Required Premium.

If the death benefit option changes from Type B to Type A, the Face Amount will
be increased by the amount of the Policy Value on the effective date of the
change. The death benefit will not be altered at the time of the change.
However, the change in death benefit option will continue to affect the
determination of the death benefit from then on, because the Policy Value will
no longer be added to the Face Amount in determining the death benefit.
Therefore, after a change from Type B to Type A, the cost of insurance charges
will generally be lower if the Policy Value increases but higher if the Policy
Value decreases. See "Charges and Deductions--Monthly Deductions From Policy
Value."

Although a change from Type B to Type A results in an automatic increase in the
Face Amount of a Policy, no additional sales charge or expense charge will be
imposed as a result of such a change, and no evidence of insurability will be
required. Nor will there be any change in the monthly Required Premium under a
Policy or any right to a refund of charges upon cancellation of the Face Amount
increase.

POLICY VALUE

The total Policy Value at any time is the sum of the Policy Values in the
General Account (see Appendix C--"The General Account" and "Loan Privileges")
and the Subaccounts of the Separate Account at such time. The Policy Value in
the Separate Account may increase or decrease on each Valuation Date, depending
on the investment return of the chosen Subaccounts. See "Separate Account Net
Investment Return," below. "Valuation Dates" are all business days, except, with
respect to any Subaccount, days on which the related Fortis Series Portfolio
does not value its shares. Valuations for any date other than a Valuation Date
will be determined as of the next Valuation Date.

CALCULATION OF SEPARATE ACCOUNT POLICY VALUE

On each Valuation Date, the Policy Value in a Subaccount of the Separate Account
will be:

(1) The cumulative amount of Net Premiums allocated to the Subaccount; plus

(2) All amounts transferred to the Subaccount from the General Account or
from another Subaccount; minus

(3) Any amount transferred from the Subaccount to the General Account or to
another Subaccount; minus

16
<PAGE>
(4) Any partial withdrawal from the Subaccount; minus

(5) The portion of the cumulative Monthly Deductions allocated to the
Subaccount (see "Charges and Deductions--Monthly Deduction From Policy
Value"); plus

(6) The cumulative net investment return (discussed below) on the amount of
Policy Value in the Subaccount from time to time.

The Policy's total Policy Value in the Separate Account is the sum of the Policy
Values in each Subaccount, which have no guaranteed minimum.

SEPARATE ACCOUNT NET INVESTMENT RETURN

The net asset value for each Fortis Series Portfolio is determined as of the
close of regular trading on the New York Stock Exchange ("NYSE"), on each
Valuation Date. The net investment return for each Subaccount and all
transactions and calculations with respect to the Policies as of any Valuation
Date are determined as of that time.

Each Subaccount is credited with a rate of net investment return equal to its
gross rate of investment return during each Valuation Period less (1) an
adjustment for the Separate Account's charge for mortality and expense risks (at
an annual rate of .75%) and (2) a charge for Fortis Benefits' income taxes, if
any such tax charge becomes necessary in the future (see "Federal Tax
Matters--Taxation of Fortis Benefits"). Each Subaccount's gross rate of
investment return during a Valuation Period is the rate of increase or decrease
in the per share net asset value of the underlying Fortis Series Portfolio over
the Valuation Period, adjusted upward to take appropriate account of any
dividends or distributions paid by the Portfolio during the period.

A "Valuation Period" is the period between two successive Valuation Dates,
commencing at the close of regular trading on the NYSE on each Valuation Date
and ending at the close of regular trading on the NYSE on the next succeeding
Valuation Date. Depending primarily on the investment experience of the
underlying Portfolio, a Separate Account Subaccount's net investment return may
be either positive or negative during a Valuation Period. Subject to applicable
legal requirements, Fortis Benefits reserves the right to change the times of
day when values under a Policy are determined.

PAYMENT AND ALLOCATION OF PREMIUMS

ISSUANCE OF A POLICY

Individuals wishing to purchase a Policy must complete an application which will
be sent to Fortis Benefits' Home Office. Currently the minimum Face Amount of
insurance for which a Policy may be issued is $25,000. The maximum Face Amount
with respect to any insured will depend on the availability of reinsurance for
the Net Amount at Risk in excess of $300,000 as applied for under the Policy and
all other life insurance policies in force with Fortis Benefits. A Policy will
generally be issued only to insureds Age 70 or under who supply evidence of
insurability satisfactory to Fortis Benefits. Acceptance is subject to Fortis
Benefits' underwriting guidelines and Policy approval procedures. Any premium
payments for a Policy that never goes into effect, or that is subsequently
revoked, will be returned without interest.

If the proposed insured meets certain health requirements, Fortis Benefits will
issue temporary term life insurance to cover the period before the Policy goes
into effect. Temporary insurance will be issued only if the initial premium
payment has been paid with the application and will not exceed $300,000 under
all applications for the proposed

17
<PAGE>
insured pending with Fortis Benefits and any other insurers. If a temporary
insurance benefit is paid, a premium for the amount of temporary coverage from
the date of its issue to the date of death will be charged. Temporary coverage
is subject to certain other conditions, including special limits for temporary
coverage of certain optional benefits provided by rider, and is for a maximum of
ninety days. Except as otherwise provided in any temporary insurance agreement,
there will be no insurance coverage under a Policy unless at the time the Policy
is delivered the insured's health is the same as stated in the application.

The Policy Date is the date used to determine Policy Anniversaries and Monthly
Anniversaries, regardless of when the Policy is delivered. The Policy Date is
also when Monthly Deductions commence. When temporary insurance has been
provided, the Policy Date will ordinarily be the date of part I of the
application, except that if that date is the 29th through 31st of any month, the
Policy Date will be the first of the next month. When no temporary insurance has
been provided, the Policy Date will ordinarily be three days after the date the
application is approved, except that if that date is the 29th through 31st of
any month, the Policy Date will be the first of the next month. A later Policy
Date will result in monthly deductions being taken out later and investment
performance on any premium payment being reflected in the Separate Account
later. A prospective purchaser may request a Policy Date later than that which
otherwise would apply, subject to Fortis Benefits' current administrative
policies. No interest or other return on premium payments will be credited prior
to the Policy Date, however.

Notwithstanding the general procedures outlined above, the purchaser may,
subject to Fortis Benefits' current administrative policies and state insurance
law requirements, request a Policy Date up to six months prior to the date the
Policy is issued, for the purpose of preserving a younger Age of the insured
person under the Policy. A younger Age, in many cases, will result in a smaller
monthly Required Premium, lower costs of insurance rates, and lower Contingent
Deferred Sales Charges. An earlier Policy Date will also result in a
correspondingly earlier commencement of Monthly Deductions. If an earlier Policy
Date is requested, all monthly Required Premiums commencing with that date, plus
the amount of initial premium payment that otherwise would be required, must be
paid before the Policy will be issued.

In other cases, unless otherwise requested, if the insured person's birthday
falls between the date of an application and the date the Policy is approved,
the Policy Date will generally be set early enough to preserve the younger Age.

PREMIUMS

PAYMENT OF PREMIUMS. At least the sum of twelve monthly Required Premiums
specified in the Policy must be paid in advance before a Policy will take
effect; or, alternatively, at least the initial amount must be paid under a
Planned Periodic Premium payment schedule established by the Policy owner which,
if followed, will result in at least that sum being paid within the first Policy
year. The initial amount must cover all monthly Required Premiums from the
Policy Date to the next billing date, generally after the policy is mailed for
delivery. If the Planned Periodic Premium is paid monthly, at least two months'
Planned Periodic Premiums must be paid.

Each Policy owner will determine a Planned Periodic Premium schedule that
provides for the payment of level premiums at specified intervals for the life
of the Policy. (If desired, these may be paid by means of automatic monthly
drafts on the Policy owner's checking account.) The Policy owner, however, is
not required to pay premiums in accordance with the Planned Periodic Premium
schedule, except to the extent described above with respect to the initial
premium payment. THE PAYMENT OF PLANNED PERIODIC PREMIUMS WILL NOT GUARANTEE
THAT THE POLICY REMAINS IN FORCE. Instead, the duration of the Policy depends
upon the Surrender Value. See "Payment and Allocation of Premiums--Policy Lapse
and Reinstatement."

18
<PAGE>
Subject to the limitations described below, a Policy owner may make additional
premium payments at any time in any amount. The total of all premiums paid may
never exceed the then current maximum premium limitations under Section 7702 of
the Code. If at any time a premium is paid that would result in any violation of
the then current maximum premium limitations, Fortis Benefits will accept only
that portion of the premium that will make total premiums equal to the limit.
Fortis Benefits will promptly refund any such excess (including any related
premium expense charge), unless the Policy owner directs otherwise. Any amount
so refunded will include any positive net investment performance attributable to
such amount prior to refund. The amount of any positive net investment
performance refunded will constitute ordinary income to the Policy owner for
federal income tax purposes.

Fortis Benefits reserves the right to impose additional limits on the number or
amount of premium payments. Fortis Benefits currently has no intention of
imposing such limits except when the Alternative Death Benefit is in effect. See
"Policy Benefits--Death Benefit Options."

A Policy is guaranteed not to lapse in the first two Policy years, if as of each
Monthly Anniversary during that period, (1) the cumulative amount of premiums
paid to date, less the amount of any outstanding Policy loans and cumulative
partial withdrawals taken by the Policy owner, at least equals (2) the
cumulative monthly Required Premiums, assuming regular payment of such Required
Premiums commencing on the Policy Date and on each Monthly Anniversary
thereafter, including the current Monthly Anniversary.

REQUIRED PREMIUMS. The monthly Required Premium with respect to a Policy or
benefit change is the estimated monthly premium payment which would keep the
Policy (or benefit change) in force to maturity based on (1) the insured's
then-current Age, sex, and smoking habits and (2) reasonable assumptions for
interest, costs of insurance, and other expense charges described below under
"Charges and Deductions--Monthly Deduction From Policy Value." The smallest
monthly Minimum Premiums for a policy without substandard risks or optional
riders is $25. Fortis Benefits reserves the right to change the monthly Required
Premium both for purposes of the Contingent Deferred Sales Charge and for
purposes of the no-lapse guarantee provided during the first two Policy years or
pursuant to rider. Any such change will affect only subsequent increases in the
monthly Required Premium due to changes in benefits. Also, the sum of twelve
monthly Required Premiums for the initial Policy or any change in benefits will
never exceed the "Guideline Annual Premium" for the Policy or change,
respectively. For a discussion of "Guideline Annual Premium" see "Charges and
Deductions--Contingent Deferred Sales Charge."

Starting with the Monthly Anniversary when any Face Amount increase requested by
the Policy owner becomes effective, the monthly Required Premium will include an
additional amount attributable to the increase above the Face Amount on which
the previous monthly Required Premium was computed.

Starting with the Monthly Anniversary when any Face Amount decrease requested by
the Policy owner becomes effective during the first two Policy years, the
monthly Required Premium for purposes of the two-year guarantee against lapse
will be reduced by an amount attributable to the decrease below the Face Amount
on which the previous monthly Required Premium was computed. If there have been
no Face Amount increases the decrease in any subsequent monthly Required Premium
will be (1) the monthly Required Premium before the change, multiplied by (2)
the proportion that the decrease represents of the Face Amount before the
change. If there has been more than one Face Amount increase within the
preceding Policy year, the decrease will be deemed to reduce the most recent
increase first.

The initial monthly Required Premium for purposes of the two-year no-lapse
guarantee is set forth in the Policy schedule included in the Policy. Any
increased or decreased monthly Required Premium for this purpose will be set

19
<PAGE>
forth in a Policy schedule amendment delivered to the Policy owner following the
change. For the purpose of guaranteeing that a Policy will not lapse in the
first two Policy years (but not for purposes of determining the amount of any
Contingent Deferred Sales Charge), the monthly Required Premium for the Face
Amount or any Face Amount change will include an amount necessary to support any
substandard rate class charges and any optional insurance benefits pursuant to
Policy riders. Accordingly, for this purpose, any increase or decrease in
optional benefits provided by rider will result in a higher or lower monthly
Required Premium.

For the purpose of guaranteeing a Policy against lapse (but not for Contingent
Deferred Sales Charge purposes), the amount of additional monthly Required
Premium attributable to an increase in benefits will be based on the most recent
rate class if the insured's rate class has worsened. On the other hand, the
monthly Required Premium for this purpose will be reduced starting with the
first Monthly Anniversary after Fortis Benefits approves any new rate class for
the insured which is more favorable than that on which the previous monthly
Required Premium was based.

ALLOCATION OF PREMIUMS AND POLICY VALUE

ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policy owner
indicates the initial allocation of Net Premiums among the General Account and
the Subaccounts of the Separate Account. (As discussed below, this allocation
will generally take effect at the end of 20 days following the date the Policy
is mailed for delivery to the Policy owner.) Allocation percentages must be in
whole numbers. The Policy owner may change the allocation of future Net Premiums
without charge at any time (other than during any Grace Period) by submitting a
written request in a form acceptable to Fortis Benefits at its Home Office. The
change will be effective as of the Date of Receipt of such form.

The first Net Premium payment will be allocated automatically to the General
Account as of the later of the Policy Date or Date of Receipt, and, assuming a
Policy goes into effect, will earn a return for the Policy owner. Any other Net
Premiums will be allocated to the General Account as of the later of the Policy
Date or the Date of Receipt. These payments will be held in the General Account
generally until the twentieth day following the date the Policy is mailed for
delivery. Then, all Net Premiums, plus any other amounts previously earned in
the General Account, will be re-allocated among the General Account and the
Subaccounts in accordance with the premium allocation percentage established by
the Policy owner. (If the Policy owner has not established such an allocation,
the General Account will continue to be used.) If the insured is in a
substandard risk category, the reallocation will occur 20 days after the Date of
Receipt by Fortis Benefits of all items necessary under its administrative and
underwriting procedures to release the Policy to an active status in its
processing system.

Each Net Premium payment accepted after this reallocation is credited to the
Subaccounts or General Account as of the Date of Receipt. There is an exception
to this rule, however, with respect to any premium payments as to which
underwriting requirements apply or when Fortis Benefits obtains authorization of
the Policy owner to delay acceptance of the premium until permitted under
Section 7702 of the Code. In such cases, the Net Premium is held in a
non-interest bearing account until it is allocated to the Subaccounts or General
Account as of the later of the Date of Receipt of the premium or the date of
acceptance of such premium by Fortis Benefits.

POLICY VALUE TRANSFERS. After the initial allocation of premiums has occurred,
and subject to the limitations described below, the Policy owner may transfer
Policy Value between the General Account and the Subaccounts of the Separate
Account and among the Subaccounts, except during any Grace Period.

20
<PAGE>
Transfers from the General Account to the Separate Account are limited to one
transfer in each Policy year, which currently may not be for more than 50% of
the General Account Policy Value at the date of transfer (excluding the amount
of any General Account Policy Value attributable to Policy loans). However, if
the unloaned General Account Policy Value at the date of transfer is less than
$1,000, the Policy owner may transfer the entire unloaned balance from the
General Account to the Separate Account. Fortis Benefits reserves the right to
review these limits on an annual basis and, subject to the limits in the Policy,
to reduce them.

Except as noted below, Fortis Benefits will determine all values in connection
with transfers as of the Date of Receipt of the transfer request. Also, Fortis
Benefits may in its discretion permit a continuing request for transfers of
specified amounts automatically on a periodic basis. Fortis Benefits reserves
the right to restrict the number and amount of transfers, but currently has no
plans to impose any such restrictions. Fortis Benefits will give Policy owners
advance notice of any such restrictions, if required under the terms of Policies
issued in their state.

Transfers are not taxable under current law. Except as discussed below, transfer
requests must be in writing, in a form acceptable to Fortis Benefits. Although
it currently has no plans to do so, Fortis Benefits may impose a charge of up to
$25 on transfers. Any such charge would be designed only to cover the
administrative cost of effecting transfers. Telephone transfers may be made if a
telephone authorization form has been received. See "Summary-- How to Exercise
Your Rights Under a Policy."

In no event will Fortis Benefits restrict or prohibit any transfer of all Policy
Value to the General Account (1) during the first two Policy years, (2) within
the first two years after a Face Amount increase requested by the Policy owner,
or (3) within 60 days after the Policy owner receives notice of any material
change in a Portfolio's investment policy. Nor will any transfer charge be
imposed on such transfers, except that a charge may be imposed subsequent to the
first full transfer after issue, a Face Amount increase, or a change in
investment policy.

LIMITATION. Under the Policy, Fortis Benefits reserves the right to control the
amount of any assets in any investment alternative. Pursuant to this authority,
Fortis Benefits has established the following administrative procedures for the
protection of the interests of all investors participating in Fortis Series'
Portfolios: a Policy owner may not invest, allocate, transfer or exchange Policy
Value into any Subaccount if the value allocated to that Subaccount under the
Policy (and under any other insurance or annuity contract directly or indirectly
controlled by the same person, jointly or individually) would immediately
thereafter equal 25% or more of the related Fortis Series Portfolio's net
assets. Fortis Benefits reserves the right to modify these procedures at any
time.

POLICY LAPSE AND REINSTATEMENT

LAPSE. If the Surrender Value on any Monthly Anniversary is insufficient to
cover the Monthly Deduction, Fortis Benefits will notify the Policy owner and
any assignee of record of the shortfall unless the no-lapse guarantee is in
effect during the first two Policy years (see "Payment of Premiums," above). The
Policy owner will have a Grace Period of 61 days to make a premium payment
sufficient to cover at least the difference between the Monthly Deductions until
the end of the Grace Period and the Surrender Value. Failure to make a
sufficient payment within the Grace Period will result in termination of the
Policy, with no remaining Surrender Value. Nevertheless, the Grace Period will
not begin while the no-lapse guarantee is in effect during the first two Policy
years.

If the insured dies during the Grace Period, the insurance proceeds payable will
be the Death Benefit in effect immediately prior to entering the Grace Period,
but any due and unpaid Monthly Deductions will be deducted from the proceeds.

21
<PAGE>
REINSTATEMENT. A lapsed Policy may be reinstated at any time within five years
after the end of the Grace Period and before the maturity date by submitting the
following items to Fortis Benefits: (1) a written application for reinstatement;
(2) evidence of insurability satisfactory to Fortis Benefits; (3) a premium
that, after deduction of the Premium Expense Charge (see "Charges and
Deductions--Premium Expense Charge"), at least equals the sum of (a) an amount
necessary to keep the Policy in force for at least the two Policy months
commencing with the effective date of reinstatement, which consists of two
Monthly Deductions and, for reinstatements in the first two Policy years or
within two years following a Face Amount increase requested by the Policy owner,
any increase in the Contingent Deferred Sales Charge to the effective date of
the reinstatement, (b) the balance needed to cover any due and unpaid Monthly
Deductions through the end of the Grace Period, and (c) the amount of any unpaid
monthly expense charges that would have applied from the end of the Grace Period
until the earlier of the reinstatement date or the end of the first Policy year
(see "Charges and Deductions--Monthly Deduction From Policy Value").

Any Policy loan on the date of termination will be automatically cancelled
(except in jurisdictions where such cancellation is not permitted) and in that
case need not otherwise be repaid or reinstated. The amount of Policy Value on
the date of reinstatement will be equal to the premium paid at reinstatement,
less the Premium Expense Charge, less the first Monthly Deduction paid in
accordance with (a) above, and less the amounts paid in accordance with (b) and
(c) above and plus the Contingent Deferred Sales Charge assumed at lapse. (The
last addition to Policy Value is designed to avoid duplicate Contingent Deferred
Sales Charges.) This Policy Value will be allocated as the Policy owner requests
or, in the absence of a request, to the General Account. If the Policy loan must
be reinstated, the Policy Value will be increased by the amount of the loan, and
that portion of the Policy Value will be held in the General Account and
credited with interest at a rate of 5% per annum.

The date of reinstatement will be the first Monthly Anniversary on or following
approval of the application for reinstatement. The no-lapse guarantee benefit
provided during the first two Policy years or by rider will not be reinstated.
Following reinstatement, the Contingent Deferred Sales Charge will be reinstated
and will be calculated using the original Policy Date and Face Amount increase
dates as appropriate. See "Charges and Deductions-- Contingent Deferred Sales
Charge."

CHARGES AND DEDUCTIONS

PREMIUM EXPENSE CHARGE

SALES CHARGE. A 5% sales charge is deducted from each premium payment received
by Fortis Benefits.

This charge and the Contingent Deferred Sales Charge discussed below help to
defray sales expenses, including sales commissions and the cost of prospectuses,
other sales material and advertising. The amount of sales charges deducted in
any year, however, cannot be specifically related to actual sales expenses for
that year. Fortis Benefits does not expect to recover all of its sales expenses
from the sales charges. The balance will be recovered from other sources,
including any profits attributable to cost of insurance and mortality and
expense risk charges under the Policies and Fortis Benefits' general assets and
surplus.

STATE PREMIUM TAX CHARGE. A charge is made for state premium taxes, currently
2.2% of each premium payment. The charge for premium taxes is imposed on all
Policies even though there may be no premium tax assessed by the jurisdiction in
which the Policy is purchased. Rather the 2.2% rate is the average tax rate
Fortis Benefits estimates will be paid on premiums from all states. Fortis
Benefits may change the amount of this charge if its estimates change. Fortis
Benefits does not expect to make a profit from the premium tax charge.

22
<PAGE>
MONTHLY DEDUCTION FROM POLICY VALUE

The Monthly Deduction from Policy Value includes the cost of insurance charge,
the charge for optional insurance benefits added by rider (see Appendix
A--"Optional Insurance Benefits") and the monthly administrative and expense
charges. The cost of insurance charges and monthly administrative and expense
charges are discussed separately in the paragraphs that follow.

The Monthly Deduction will be deducted as of each Monthly Anniversary commencing
with the Policy Date. The Monthly Deduction will be allocated among the General
Account and each Subaccount of the Separate Account selected by the Policy
owner. If no such selection is made, or if there are insufficient funds in the
selected Subaccounts, then the allocation will be made in the proportion that
the Policy Value in the General Account (excluding the amount of any General
Account Policy Value attributable to Policy loans) and the Policy Value in each
Subaccount, respectively, bear to the Policy's total Policy Value (excluding the
amount of any General Account Policy Value attributable to Policy Loans) as of
the date of the transaction (that is, on a "Pro Rata Basis").

If any part of a Monthly Deduction is not made because of insufficient Policy
Value, and if the Policy nevertheless does not lapse, the undeducted amount will
be deducted on receipt of any subsequent premium payment.

COST OF INSURANCE. Because the cost of insurance depends upon a number of
variables, it can vary from month to month. Fortis Benefits will determine the
monthly cost of insurance charge by multiplying the applicable cost of insurance
rate or rates by the Net Amount at Risk for each Policy month. The Net Amount at
Risk for a Policy month is (1) the death benefit, divided by 1.0040741, at the
beginning of the Policy month, less (2) the Policy Value at the beginning of the
Policy month. Additional amounts may be charged if the insured's rate class is
less favorable than standard.

If two Policies are otherwise identical, a Type A Policy will have a lower death
benefit, higher Policy Value, and lower cost of insurance charges than a Type B
Policy. Since the death benefit payable under Type A remains constant while the
death benefit payable under Type B varies with the Policy Value, Policy Value
increases will generally reduce the Net Amount at Risk under Type A but not
under Type B. If the Net Amount at Risk is greater, the cost of insurance will
be greater. If the Alternative Death Benefit is in effect (see "Policy
Benefits--Death Benefit Options"), the cost of insurance will vary directly with
the Policy Value under both death benefit options.

Cost of insurance rates are based on the Age, sex, and rate class of the
insured. The actual monthly cost of insurance deductions will be based on Fortis
Benefits' expectations as to future experience, and may increase each year as
the insured's Age increases. The maximum cost of insurance rates for standard
risk insureds will not exceed the rates provided by certain of the 1980
Commissioners Standard Ordinary Mortality Tables and the insured's sex, Age and
smoking status. These tables set forth different mortality estimates for males
and females and for smokers and non-smokers. The maximum cost of insurance rates
for a table-rated substandard insured are a multiple (shown on the Policy
schedule page) of the above rates. Additional level amounts per thousand dollars
of face amount are charged if a substandard insured is assigned a flat extra
rating.

Any change in the cost of insurance rates or charges will apply to all insureds
of the same Age, sex, and rate class.

Cost of insurance rates that differ as between male and female insureds are not
permitted under current law in Montana, and perhaps other states or in
connection with certain employee benefit arrangements. Employers should
therefore seek legal advice as to any questions they may have in this regard. To
the extent legally necessary, Fortis Benefits intends to make available
gender-neutral cost of insurance rates, and affected purchasers should inquire

23
<PAGE>
of their sales representative whether these are currently available in their
states. The gender-neutral rates may be higher than those otherwise applicable
to females and lower than those otherwise applicable to males. Where
gender-neutral rates are required, Required Premiums also will be the same as
between otherwise comparable Policies for male and female insureds.

RATE CLASS. Fortis Benefits currently places insureds into a standard rate class
or rate classes involving a higher or lower mortality risk. For an otherwise
identical Policy, insureds in the standard rate class will have a lower cost of
insurance than those in a rate class with a higher mortality risk and a higher
cost of insurance than those in a rate class with a lower mortality risk.

If a Policy owner requests a Face Amount increase at a time when the insured is
in a less favorable rate class than previously, a higher cost of insurance
deduction will apply to that portion of the Net Amount at Risk attributable to
the increase. (This does not apply to Face Amount increases resulting
automatically from a change from Death Benefit Type B to Type A, as described
under "Policy Benefits--Change in Death Benefit Option.") When the Alternative
Death Benefit is in effect, the Net Amount at Risk can exceed the Policy's Face
Amount, in which case the rate used for such excess approximately equals the
blended rate for the other portion of the Net Amount at Risk. If the insured's
rate class improves, the lower cost of insurance deduction will apply to the
entire Net Amount at Risk, commencing on the Monthly Anniversary on or after
Fortis Benefits approves the new rate class.

Any change from smoker to non-smoker rate class will take effect on the next
Monthly Anniversary, and the non-smoker rates for the coverage under the base
Policy will be applicable for the previous 12 months from the effective date of
the change. Such reduced rates for the previous 12 months will be implemented by
a refund credited at the effective date of the change.

For purposes of determining the cost of insurance charge, any decrease in the
Face Amount will reduce the Face Amount in the following order: (1) the Face
Amount provided by the most recent increase; (2) the next most recent increases
successively; and (3) the Face Amount when the Policy was issued.

MONTHLY ADMINISTRATIVE AND EXPENSE CHARGES. A monthly administrative charge of
$5.00 per Policy ($3.00 for Policies applied for prior to July 1, 1988) will be
deducted from Policy Value as part of the Monthly Deduction for each Policy
Month. This charge compensates Fortis Benefits for expenses incurred in
administering the Policy. Fortis Benefits reserves the right to change this
administrative charge, but it will never exceed $5.00 per month.

Also, during the first twelve Policy months, Fortis Benefits reserves the right
to impose (1) a monthly expense charge of not more than $15.00 per month and (2)
an additional monthly expense charge per $1,000 of Face Amount of not more than
$.08 per month for insureds Age 29 and less and $.25 per month for insureds Age
30 and over. Fortis Benefits reserves the right again to impose these charges in
full for twelve months following any Face Amount increase requested by the
Policy owner, the additional "per thousand" charge being based on the dollar
amount of the increase. These charges would be designed primarily to compensate
Fortis Benefits for underwriting and other start-up expenses incurred in
connection with the Policy or increase. Such expenses include the cost of
processing applications, conducting medical examinations, determining
insurability and the insured's risk class, and establishing Policy records
(including computer set-up costs). Fortis Benefits currently does not impose any
of the monthly expense charges described in this paragraph (except pursuant to
Policies applied for prior to July 1, 1988).

24
<PAGE>
Under Policies applied for prior to July 1, 1988, Fortis Benefits currently
imposes an expense charge of $10.00 per month during the first twelve Policy
months following issuance or a Face Amount increase requested by the Policy
owner.

Fortis Benefits does not expect its revenues from the monthly administrative and
expense charges to exceed its costs and expenses in issuing and administering
the Policies.

CONTINGENT DEFERRED SALES CHARGE

In addition to the 5% sales charge deducted from each premium payment (see
"Charges and Deductions--Premium Expense Charge"), the Policies impose a
Contingent Deferred Sales Charge on total surrenders during the first nine
Policy years to help defray Fortis Benefits' sales expenses. The amount of the
Contingent Deferred Sales Charge is a percentage of the lesser of (1) the sum of
twelve monthly Required Premiums specified in the Policy schedule as being
subject to such charge or (2) the actual amount of premium payments paid through
the end of the first two Policy years. This percentage varies as follows:

<TABLE>
<CAPTION>
FOR A TOTAL PERCENTAGE OF THE LESSER OF 12
SURRENDER DURING MONTHS' REQUIRED OR 24 MONTHS'
POLICY YEAR ACTUAL PREMIUMS

<S> <C>
1 through 5 25%
6 20%
7 15%
8 10%
9 5%
10 or later 0%
</TABLE>

Accordingly, for a Policy with premiums totalling $900 in the first year (for
example, the Policy illustrated on page B-3 of Appendix B to this Prospectus),
the Contingent Deferred Sales Charge that could be imposed would be $195.75,
assuming no Face Amount increases. The maximum total sales charge with respect
to such a $900 premium payment (including both the sales charge deducted from
premiums and the Contingent Deferred Sales Charge) would be $240.75.

An additional amount of Contingent Deferred Sales Charge will be payable on
certain total surrenders following an increase in Face Amount requested by the
Policy owner. The additional Contingent Deferred Sales Charge will be 25% of the
lesser of (1) the sum of twelve monthly Required Premiums (calculated without
regard to the $25 limit or any charges for riders or substandard risks) for the
Face Amount increase or (2) the amount of actual premium payments deemed
attributable to the increase which are made within two years after the date of
the increase. For purposes of determining the amount of the Contingent Deferred
Sales Charge, a pro-rata portion of premium payments made after an increase in
Face Amount and a pro-rata portion of Policy Value will be deemed actual premium
payments attributable to the increase. The proportion of such premiums and
Policy Value deemed attributable to the increase is the proportion which the
"Guideline Annual Premium" for the increase bears to the sum of the "Guideline
Annual Premiums" for the initial Face Amount and each layer of increase. (The
"Guideline Annual Premium" is the amount of annual premium which would be
necessary to provide the benefits under the Policy (or benefit change),
including benefits under riders, until maturity, assuming a net investment
return of 5% per annum, cost of insurance charge deductions based on the 1980
Commissioners Standard Ordinary Mortality Tables, any additional charges which
are applicable because of substandard mortality risks, and other expense

25
<PAGE>
charges at applicable levels under the Code.) This method of attributing
premiums to Face Amount increases may be changed to conform with any other
attribution procedure permitted or required by the Securities and Exchange
Commission for this purpose.

Commencing five years after the increase in Face Amount, the amount of the
Contingent Deferred Sales Charge for that increase decreases in the same way as
set forth in the above table, so that it will be zero for surrenders more than
nine years after the date of the increase.

Following any change in the Contingent Deferred Sales Charge, a new Policy
Schedule setting forth the revised charge will be delivered to the Policy owner.
No Contingent Deferred Sales Charge whatsoever will be imposed on any
termination of a Policy more than nine years after the later of the Policy Date
or the date of any increase in Face Amount. Nor will any Contingent Deferred
Sales Charge be deducted from any partial withdrawal of Surrender Value by the
Policy owner.

MISCELLANEOUS

As discussed under "Payment and Allocation of Premiums--Allocation of Premiums
and Policy Value" and "Surrender and Partial Withdrawal," Fortis Benefits
reserves the right to impose charges to defray its administrative expenses in
effecting transfers of Policy Value and partial withdrawals. Fortis Benefits
currently has no plans to impose any such charges, which in any event would not
be designed to yield revenues to Fortis Benefits in excess of its costs of
effecting such transactions. Nor will these charges be imposed if such revenues,
together with Fortis Benefits revenues from all other administrative and expense
charges under the Policies, are expected to exceed Fortis Benefits total costs
of issuing and administering the Policies.

CHARGES AGAINST THE SEPARATE ACCOUNT

CHARGE FOR MORTALITY AND EXPENSE RISKS. Commencing on the Policy Date, a daily
charge is made for mortality and expense risks assumed by Fortis Benefits. The
charge is at an annual rate of .75% of the average daily value of the net assets
in the Separate Account that are attributable to the Policies.

The mortality risk assumed is that the insured may live for a shorter period of
time than estimated. The expense risk assumed is that expenses incurred in
issuing and administering the Policies will be greater than estimated. Fortis
Benefits will realize a gain if the charges under the Policies prove to be more
than sufficient to cover the actual costs of its mortality and expense
commitments. If the charges are not sufficient, the loss will fall on Fortis
Benefits.

CHARGE FOR INCOME TAXES. Currently, no charge is made against the Separate
Account for income taxes deemed attributable to the policies. However, Fortis
Benefits may decide to make such a charge in the future. See "Federal Tax
Matters--Taxation of Fortis Benefits."

GUARANTEE OF CERTAIN CHARGES

Fortis Benefits guarantees, and may not increase, the sales charge deducted from
premiums, the maximum monthly administrative and expense charges, the charge
against the Separate Account for mortality and expense risks with respect to the
Policies, the maximum cost of insurance rates, and the maximum amount of any
charges for transfers or partial withdrawals of Policy Value. Although the rate
of the Contingent Deferred Sales Charge is guaranteed not

26
<PAGE>
to change, Fortis Benefits reserves the right to change the monthly Required
Premium subject to the Contingent Deferred Sales Charge and that used for the
purpose of the no-lapse guarantee. Any such change will affect only subsequent
increases in the monthly Required Premium due to changes in benefits.

LOAN PRIVILEGES

The Policy owner may borrow money from Fortis Benefits using the Policy as the
only security for the loan. The maximum amount that may be borrowed at any time
is 90% of the difference between the Policy Value and the amount of any
Contingent Deferred Sales Charge then in effect. In Texas, the Policy owner may
also borrow up to 100% of the Policy Value in the General Account, less a
pro-rata portion of the Contingent Deferred Sales Charge. Fortis Benefits will
allocate a Policy loan among the General Account and the Subaccounts of the
Separate Account selected by the Policy owner. If no selection is made, then the
allocation will be on a Pro-Rata Basis.

Interest on Policy loans is at a fixed rate of 7.4% per year, payable annually
in advance. If not paid when due, loan interest at the same rate will be added
to the loan. The additional interest will be taken from the General Account and
the Subaccounts on the same basis that Monthly Deductions are allocated.

EFFECT OF A POLICY LOAN

As of the Date of Receipt at Fortis Benefits Home Office of the loan request
form and assignment of the Policy for security, Policy Value equal to the
portion of the Policy loan allocated to each Subaccount will be transferred from
such Subaccount to the General Account. This amount, plus the portion of the
Policy loan allocable to Policy Value already being held in the General Account,
will be credited with interest at an effective rate of 5% per annum. NO
ADDITIONAL INTEREST WILL BE CREDITED TO SUCH LOANED POLICY VALUES NOR WILL
POLICY VALUES IN THE GENERAL ACCOUNT PARTICIPATE IN ANY INVESTMENT EXPERIENCE
APPLICABLE TO THE SEPARATE ACCOUNT.

A loan, whether or not repaid, will have a permanent effect on Policy Value, to
the extent that the investment results of the Subaccounts differ from the 5%
annual rate credited to loaned amounts. A loan may also have a permanent effect
on the death benefit, since a Type B benefit varies with the Policy Value and a
Type A benefit may have resulted in an Alternative Death Benefit coming into
effect if no loans were made. A loan may also cause the termination of the
no-lapse guarantee provided during the first two policy years or pursuant to an
optional rider because the loan amount is deducted from the total premiums paid
in determining whether the Required Premiums have been paid for purposes of the
guarantee.

A loan may also cause the Policy to lapse if projected earnings are not
achieved. Adverse tax consequences may result if the Policy lapses, matures or
is surrendered with loans outstanding. For Policies that are not modified
endowment contracts, loans will be treated as ordinary income to the extent of
the gain upon lapse, surrender or maturity. For Policies which are modified
endowment contracts, loans are taxable distributions when taken. See "Federal
Tax Matters-- Taxation of Policy Benefits."

The loaned Policy Value on any Valuation Date will be the amount of the
outstanding loan plus any interest credited on loaned Policy Value which has not
yet been reallocated to the unloaned portion of the General Account or to the
Subaccounts of the Separate Account as of the Valuation Date. Interest credited
to loaned Policy Values will generally be reallocated upon each Policy
Anniversary on the same basis that the Monthly Deductions are allocated.
Interest credited will also be reallocated upon full repayment of the loan on
the same basis as the repayment is reallocated.

27
<PAGE>
REPAYMENT OF A LOAN

Indebtedness may be repaid in whole or in part any time before the Maturity Date
while the insured is living. As of the Date of Receipt of the repayment, unless
the Policy owner specifies otherwise, loaned Policy Value equal to the amount of
the repayment will be reallocated among the unloaned portion of the General
Account and the Subaccounts of the Separate Account in the same proportion as
Net premiums are then being allocated to those accounts. The Policy owner must
designate whether a payment is intended as a loan payment or as a premium
payment. Any payment for which no designation is made will be treated as a
premium payment.

SURRENDER AND PARTIAL WITHDRAWAL

Full surrender of the Policy for the Surrender Value may be made at any time
during the insured's lifetime. A Contingent Deferred Sales Charge will be
deducted from the Policy Value on any full surrender within nine years after the
Policy Date. An additional amount of Contingent Deferred Sales Charge may also
be deducted on any full surrender within nine years after the date of any Face
Amount increase above the amount on which such charge was previously calculated.
See "Charges and Deductions--Contingent Deferred Sales Charge." (This does not
apply to a Face Amount increase occurring automatically upon a change from a
Type B to a Type A death benefit.)

Partial withdrawals of Surrender Value may be made once each Policy year after
the first Policy year during the insured's lifetime. Partial withdrawals in the
first two Policy years will be allowed only if cumulative premiums paid to date
are at least equal to the sum of 12 monthly Required Premiums (calculated
without regard to any charges for riders or substandard risks) for the initial
Face Amount. A comparable restriction applies in the first two years following
any Face Amount increases requested by the Policy owner. For policies applied
for prior to May 1, 1990 partial withdrawals are not subject to a requirement
that any specific amount of premiums have been paid. The amount withdrawn will
be deducted from the General Account and the Subaccounts of the Separate Account
selected by the Policy owner. If no selection is made, then the amount will be
withdrawn on a Pro Rata Basis. Fortis Benefits reserves the right to deduct a
withdrawal charge from the proceeds of partial withdrawals, although it has no
current plans to do so. Any such charge would not be imposed on a full
surrender, would not be designed to yield a profit to Fortis Benefits, and would
not exceed $25 per withdrawal (or, if less, 2% of the amount withdrawn).

When Death Benefit Type A is in effect, any partial withdrawal will reduce the
Face Amount and thus the death benefit, by the amount withdrawn. Such an
automatic reduction in Face Amount does not result in any change in the monthly
Required Premium, or the Contingent Deferred Sales Charge, but may result in a
distribution (as a further partial withdrawal) of any additional amount
necessary to comply with the maximum premium limitation under then-applicable
Internal Revenue Service Rules. See "Payment and Allocation of
Premiums--Premiums" and "Charges and Deductions--Contingent Deferred Sales
Charge."

When Death Benefit Type B is in effect, the amount withdrawn will not reduce the
Face Amount. However, the death benefit will be reduced by the amount withdrawn,
because Policy Value is reduced by the amount withdrawn. Under either Type A or
Type B, when the Alternative Death Benefit is in effect, a partial withdrawal
will reduce the death benefit by a greater amount than otherwise would be the
case.

A partial withdrawal may also cause the termination of the no-lapse guarantee
provided during the first two Policy years or pursuant to an optional rider,
because the partial withdrawal amount is deducted from the total premiums paid
in determining whether the minimum Required Premiums have been paid for the
purpose of the guarantee.

28
<PAGE>
A Policy owner will not be permitted to make any partial withdrawal that would
reduce the Face Amount of the Policy below the minimum Face Amount of $25,000.
If a request for a partial withdrawal is received that would reduce the Face
Amount below the minimum, Fortis Benefits will not implement the partial
withdrawal request, but will contact the Policy owner as to whether the request
should be disregarded, reduced to a smaller amount or changed to a request for a
full surrender.

Surrenders or partial withdrawals are made by sending a written request on
Fortis Benefits form to its Home Office, together with the Policy, in the case
of total surrender. See "Summary--How To Exercise Your Rights Under a Policy."
The surrender or withdrawal, and any related automatic Face Amount reduction,
will be effective as of the Date of Receipt by Fortis Benefits of the request on
its form and, if required, the Policy.

RIGHTS RESERVED BY FORTIS BENEFITS

Fortis Benefits reserves the right to make certain changes if, in its judgement,
they would best serve the interests of the Policy owners or would be appropriate
in carrying out the purposes of the Policies. Any changes will be made only to
the extent and in the manner permitted by applicable laws. Also, when required
by law, Fortis Benefits will obtain Policy owner approval of the changes and
approval from any appropriate regulatory authority. Such approval may not be
required in all cases, however. Examples of the changes Fortis Benefits may make
include:

-To operate the Separate Account in any form permitted under the 1940 Act
or in any other form permitted by law.

-To take any action necessary to comply with or obtain and continue any
exemptions from the 1940 Act or otherwise to comply with laws, rules,
regulations, interpretations, holdings, orders or rulings which
necessarily or appropriately must be complied with for the Policies to
serve their intended purposes.

-To transfer or limit any assets in any Subaccount to another Subaccount,
or to one or more separate accounts, or to the General Account; or to
add, combine or remove Subaccounts in the Separate Account.

-To substitute, for the Portfolio shares held in any Subaccount, the
shares of another Portfolio of Fortis Series or the shares of another
investment company or any other investment permitted by law.

-To make any other necessary technical changes in the Policy in order to
conform with any action the above provisions permit Fortis Benefits to
take, including to change the way Fortis Benefits assesses charges, but
without increasing as to any then outstanding Policy the aggregate
amount of the types of charges which Fortis Benefits has guaranteed. See
"Charges and Deductions--Guarantee of Certain Charges."

If any Portfolio materially changes its investment policy, a Policy owner will
have sixty days after receiving notice of the change to transfer all of the
Policy Value to the General Account, as described under "Payment and Allocation
of Premiums--Allocation of Premiums and Policy Value."

PAYMENT AND DEFERMENT

With respect to amounts in the Subaccounts of the Separate Account, payment of
the maturity proceeds, death benefit, all or a portion of the Surrender Value or
a loan will ordinarily be made within five days after the Date of Receipt of all
documents required for such payment. Also, death benefit payments will be made
only after all state insurance law requirements (including receipt of any
required tax waiver) are satisfied.

29
<PAGE>
However, Fortis Benefits may defer the determination, application or payment of
any death benefit, loan, partial withdrawal, surrender or any transfer of Policy
Value for any period during which the New York Stock Exchange is closed (other
than customary weekend and holiday closings), for any period during which any
emergency exists as a result of which it is not reasonably practicable for
Fortis Benefits to determine the investment experience for a Policy, or for such
other periods as the Securities and Exchange Commission may by order permit for
the protection of Policy owners.

As with traditional life insurance, Fortis Benefits may delay payment of the
entire insurance proceeds or other Policy benefits if entitlement to payment is
being questioned. Fortis Benefits may also defer the payment of any amount
attributable to a premium payment made by check to allow the check reasonable
time to clear. To the extent permitted under the Policies and applicable state
insurance laws, Fortis Benefits may also defer payment of Policy loans, partial
withdrawals or other proceeds payable out of the General Account for a period of
up to 6 months, although no such deferrals will be made of amounts to be used to
pay premiums on insurance policies issued by Fortis Benefits.

DISTRIBUTION OF THE POLICIES

The Policies will be sold by individuals who, in addition to being licensed by
state insurance authorities to sell the policies of Fortis Benefits, are also
registered representatives of Fortis Investors, Inc. ("Investors"), the
principal underwriter of the Policies, or registered representatives of other
broker-dealer firms or representatives of firms that are exempt from
broker-dealer regulation. Investors and any such other broker-dealer firms are
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as broker-dealers and are members of the National
Association of Securities Dealers, Inc.

When payable in full, the basic commission paid to representatives is 50% of all
premiums, regardless of when paid, up to the first twelve monthly Required
Premiums (and up to the amount of twelve months' Required Premiums attributable
to Face Amount increases); 2% of all other premiums paid during the first six
years after the Policy Date (or after increases in Face Amount); and .5% of all
premiums paid thereafter. The Required Premiums for these purposes are those
used to compute the maximum Contingent Deferred Sales Charge increased for
substandard risk and certain riders and decreased by any term conversion credit.
In many cases, representatives, broker-dealers or exempt firms are eligible for
additional compensation, and general agents and managing general agents also
receive additional compensation, based on meeting certain production standards.
Commissions with respect to premium payments which are refunded are returned.

The commissions and other compensation are paid by Fortis Benefits on behalf of
Investors under a distribution agreement entered into by them as of September 9,
1986. The commissions and other compensation do not, however, represent a charge
or deduction against the Policy in addition to those set forth under "Charges
and Deductions." Pursuant to the distribution agreement, Fortis Benefits also
reimburses Investors for all of its expenses in serving as principal underwriter
of the Policies and of Fortis Series shares offered in connection with the
Policies. Such reimbursements for the Policies and for all other variable
universal life policies issued by Fortis Benefits totaled $24,147,115 for 1994.
The distribution agreement may be terminated by either party upon 60 days'
notice to the other.

Investors is a Minnesota corporation engaged primarily in the sale of investment
company securities. Investors is the principal underwriter for the following
registered investment companies (in addition to the Separate Account and Fortis
Series): Variable Account D of Fortis Benefits, Fortis Advantage Portfolios,
Inc., Fortis Capital Fund, Inc.,

30
<PAGE>
Fortis Growth Fund, Inc., Fortis Fiduciary Fund, Inc., Fortis Tax-Free
Portfolios, Inc., Fortis Money Fund, Inc., Fortis Income Portfolios, Inc.,
Fortis Worldwide Portfolios, Inc. and Special Portfolios, Inc. Investors'
address is 500 Bielenberg Drive, Woodbury, Minnesota 55125.

Officers, directors, and employees of Fortis Benefits and Investors, together
with those of Fortis, Inc. and its other subsidiaries, are bonded pursuant to a
joint fidelity bond, in the amount of $5,000,000 per occurrence, in favor of
such companies.

FEDERAL TAX MATTERS

The following description is a brief summary of the tax rules, primarily related
to federal income and estate taxes, which in the opinion of Fortis Benefits are
currently in effect.

The following discussion is intended to provide a general description of the
federal income tax considerations associated with the Policy. It does not
purport either to be complete or to cover all situations; this discussion is not
intended to be taken as tax advice. Consult a qualified tax adviser for more
complete information. This discussion is based upon Fortis Benefits
understanding of the present federal income tax laws as they are currently
interpreted by the Internal Revenue Service. No representation is made as to the
likelihood of continuation of the present federal income tax laws or of the
current interpretation by the Internal Revenue Service.

TAX STATUS OF THE POLICY

Section 7702 of the Internal Revenue Code of 1986, as amended, (the "Code")
includes a definition of life insurance for federal income tax purposes. This
definition can be satisfied by complying with either of two tests set forth in
Section 7702. Although the Secretary of the Treasury is authorized to prescribe
regulations interpreting the manner in which the tests under Section 7702 are to
be applied, such regulations have not been issued. In addition, the Technical
and Miscellaneous Revenue Act of 1988 (TAMRA) provides certain requirements
under Section 7702 of the Code for mortality and other expense charges of life
insurance contracts. The Treasury issued proposed regulations on mortality
charges in 1991. Fortis Benefits believes the Policies qualify as life insurance
under the proposed regulations.

If it is subsequently determined that a Policy does not satisfy Section 7702,
Fortis Benefits reserves the right to modify the Policy as appropriate, and to
the extent possible, to qualify it as a life insurance contract under Section
7702.

If a Policy were determined not to be a life insurance contract for Section 7702
purposes, such Policy would not provide any of the tax advantages normally
provided by a life policy.

Section 817(h) of the Code also authorizes the Secretary of the Treasury (the
"Treasury") to set standards by regulation or otherwise for investments of the
Separate Account to be "adequately diversified" in order for the Policy to be
treated as life insurance for federal tax purposes. The Separate Account,
through Fortis Series, intends to comply with the diversification requirements
prescribed in Regulations Section 1.817-5, which affect how the assets of Fortis
Series may be invested. Fortis Benefits believes that Fortis Series will be
operated in compliance with the requirements prescribed by the Treasury.

In connection with the issuance of the temporary regulations on diversification
requirements, the Treasury announced that such regulations do not provide
guidance concerning the extent to which Policy owners may direct

31
<PAGE>
their investments to particular Subaccounts of the Separate Account. Additional
guidance may come from the Treasury in the future. In that case the Treasury
might treat a Policy owner as the owner of the assets of the Separate Account if
a Fortis Series Portfolio is too narrow in its investment strategy, even though
it technically meets the diversification requirements. It is not clear whether
Treasury's position, if promulgated, would be applied on a prospective basis
only. While Fortis Benefits believes that the investment strategies of the
Policy's Portfolios are sufficiently broad, it reserves the right to modify the
Policy as necessary to prevent the Policy 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 income tax purposes.

TAXATION OF POLICY BENEFITS

IN GENERAL. Fortis Benefits believes that the proceeds and Policy Value
increases of a Policy should be treated in a manner consistent with a
fixed-benefit life insurance policy for federal income tax purposes. Thus, the
death benefit under the Policy should be excludable from the gross income of the
beneficiary under Section 101(a)(1) of the Code.

The exchange of the Policy for another life insurance policy, the payment of a
premium, a change in Face Amount or death benefit option, a transfer or
assignment of a Policy, a Policy loan, a lapse with an outstanding indebtedness,
a partial withdrawal or the surrender of a Policy may have tax consequences
depending on the circumstances. Federal estate and state and local estate,
inheritance and other tax consequences of ownership or receipt of Policy
proceeds depend upon the circumstances of each owner or beneficiary.

Generally, the Policy owner will not be deemed to be in constructive receipt of
the Policy Value, including increments thereof, under the Policy until there is
a distribution. The tax consequences of a distribution from a Policy depend, in
part, on whether the Policy is classified as a "modified endowment contract"
under Section 7702A.

MODIFIED ENDOWMENT CONTRACTS. A Policy entered into after June 20, 1988, may be
treated as a modified endowment contract depending upon the amount of premiums
paid for such Policy. Policies entered into before June 21, 1988, that are
materially changed after June 20, 1988, may in certain circumstances also be
treated as modified endowment contracts. The premium limitation and material
change rules for determining whether a Policy will be treated as a modified
endowment contract are extremely complex. Moreover, due to the Policy's
flexibility, classification as a modified endowment contract will depend on the
circumstances of each Policy. Accordingly, a current or prospective Policy owner
is strongly advised to contact a competent tax adviser before purchasing a
Policy or paying a premium or making any other change in any existing Policy to
determine whether the Policy would be treated as a modified endowment contract.

DISTRIBUTIONS FROM MODIFIED ENDOWMENT CONTRACTS. Policies classified as modified
endowment contracts are subject to the following tax rules: First, all
distributions from such a Policy are treated as taxable up to an amount equal to
the excess (if any) of the Policy Value immediately before the distribution over
the investment in the Policy (described below) at such time. Second, loans taken
from or secured by such a Policy, and assignments as well as surrenders,
withdrawals and benefits paid at maturity, are treated as taxable distributions.
Third, a 10% additional income tax is imposed on the portion of any distribution
or deemed distribution from such a Policy that is included in income except
where the distribution, loan, assignment or pledge is made on or after the
Policy owner attains age 59 1/2, is attributable to the Policy owner becoming
disabled, or is a part of a series of substantially equal periodic payments for
the life of the Policy owner or the joint lives of the Policy owner and Policy
owner's beneficiary.

32
<PAGE>
DISTRIBUTIONS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS. The
distribution rules for Policies that are not modified endowment contracts are
the same as those that applied to all life insurance contracts before TAMRA was
enacted. Thus, distributions from Policies that are not classified as modified
endowment contracts are generally treated as first recovering the investment in
the Policy (see below) and then only after the return of all such investment in
the Policy as disbursing taxable income. An exception to this general rule
occurs in the case of a decrease in the Policy's death benefit or any other
change that reduces benefits under the Policy in the first 15 years after the
Policy is issued and that results in a cash distribution to the owner in order
for the Policy to continue complying with the Section 7702 definitional limits.
Such cash distribution will be taxed in whole or in part as ordinary income (to
the extent of any gain in the Policy) under rules prescribed in Section 7702.

Loans from Policies that are not modified endowment contracts are not treated as
distributions. Instead, such loans are treated as indebtedness of an owner.

In addition, upon a complete surrender or lapse of a Policy that is not a
modified endowment contract, or when benefits are paid at such a Policy's
maturity date, if the amount received plus the amount of indebtedness exceeds
the total investment in the Policy, the excess will generally be treated as
ordinary income.

Finally, neither distributions nor loans from Policies that are not modified
endowments are subject to the 10% additional income tax.

POLICY LOAN INTEREST. Generally, interest paid on any loan under a Policy which
is owned by an individual is not 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 contracts covering such individual exceeds $50,000.

No amount of Policy loan interest is, however, deductible if the Policy were
deemed for federal tax purposes to be a single premium life insurance contract.
The Policy owner should consult a tax adviser as to whether the Policy would be
so deemed.

INVESTMENT IN THE POLICY. Investment in the Policy means (i) the aggregate
amount of any premiums or other consideration paid for the Policy including the
amount of any loan received under the Policy to the extent that the loan is
included in the gross income of the Policy owner minus (ii) the aggregate amount
received under the Policy which was excluded from the gross income of the Policy
owner, except that the amount of any loan received under the policy which is
excluded from gross income shall be disregarded.

MULTIPLE CONTRACTS. Under TAMRA, all modified endowment contracts that are
issued by Fortis Benefits (or its affiliates) to the same Policy owner during a
calendar year are treated as one modified endowment contract for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.

EXCHANGES. TAMRA also provides that a life insurance contract received in
exchange for a Policy classified as a modified endowment contract will also be
treated as a modified endowment contract. Accordingly, a Policy owner should
consult a tax adviser before effecting an exchange of a Policy.

33
<PAGE>
TAXATION OF FORTIS BENEFITS

Fortis Benefits does not initially expect to incur any federal income tax upon
the earnings or capital gains attributable to the Separate Account. Based upon
these expectations, no charge is currently being made against the Separate
Account for federal income taxes which may be attributable to the Separate
Account. If, however, Fortis Benefits determines that it may incur such taxes,
it may assess a charge against the Separate Account for those taxes, which would
reduce a Policy's net investment return.

Under present laws, Fortis Benefits may incur state and local taxes (in addition
to premium taxes) in several states. At present, these taxes are not
significant. If they increase, however, Fortis Benefits may decide to make
charges for such taxes or provisions for such taxes against the Separate
Account.

OTHER POLICY PROVISIONS

OWNER. The owner of a Policy is the insured, unless another owner has been named
in the application for the Policy. The owner is entitled to exercise all rights
under a Policy while the insured is alive, including the right to name a new
owner or a successor who would become the Policy owner if the owner should die
before the insured dies. Otherwise the owner's estate would become the owner.

BENEFICIARY. The beneficiary is the person or persons to whom the insurance
proceeds are payable upon the insured's death. The owner may name a contingent
beneficiary to become the beneficiary if all the beneficiaries die while the
insured is alive. If no beneficiary or contingent beneficiary is alive when the
insured dies, the owner (or the owner's estate) will be the beneficiary. While
the insured is alive, the owner may change any beneficiary or contingent
beneficiary.

Under certain retirement programs, however, spousal consent may be required to
name or change a beneficiary, and the right to name a beneficiary other than the
spouse of the insured may be subject to applicable laws and regulations. Fortis
Benefits is not responsible for the validity of any change.

COLLATERAL ASSIGNMENT. The owner may assign a Policy as collateral. Rights under
the Policy will be transferred to the extent of the assignee's interest. Fortis
Benefits is not bound by an assignment or release thereof, unless it is in
writing and is recorded at its Home Office. Fortis Benefits is not responsible
for the validity of any assignment or release thereof.

DATE OF RECEIPT. The Date of Receipt by Fortis Benefits of any payment or other
communication is the actual date it is received at Fortis Benefits Home Office
in proper form unless received (1) after the close of the NYSE, or (2) on a date
which is not a Valuation Date. In either of these two cases, the Date of Receipt
will be deemed to be the next Valuation Date.

DATE OF CERTAIN CHANGES. Changes in beneficiaries and successor owners and
assignments take effect as of the date the owner signed the change request,
subject to any actions taken by Fortis Benefits prior to the Date of Receipt of
written notice of the change in form satisfactory to Fortis Benefits or, in the
case of an assignment, recording by Fortis Benefits.

SUICIDE. The insurance proceeds will not be paid if the insured commits suicide
within two years (one year in Colorado and North Dakota) from the Policy Date.
Instead, Fortis Benefits will pay the beneficiary an amount equal to all
premiums paid for the Policy, without interest, less any outstanding Policy
loan, plus any loan interest paid for

34
<PAGE>
periods beyond the date of death, and less any partial withdrawals. If the
insured commits suicide more than two years after the Policy Date but within two
years (one year in Colorado and North Dakota) from the effective date of any
reinstatement or increase in Face Amount requested by the Policy owner, Fortis
Benefits liability with respect to such increase or reinstatement will be
limited to the cost of insurance attributable to such increase or reinstatement
since that date.

AGE AND SEX. If the insured's Age or sex as stated in the application is not
correct, the death benefit under a Policy will be adjusted to reflect the amount
of insurance coverage which the most recent cost of insurance charges and
deductions for riders would have purchased at the correct Age and sex. As used
herein, "Age" is the insured's actual age on the most recent Policy Anniversary.

INCONTESTABILITY. Fortis Benefits may contest the validity of a Policy, any Face
Amount increase, or any optional insurance benefit based on other misstatements
in the application therefor. However, any such statements will be considered
representations and not warranties. Fortis Benefits will not contest the
validity of a Policy after it has been in force during the insured's lifetime
for two years from the Policy Date. Fortis Benefits will not contest the
validity of any optional insurance benefit, reinstatement or increase in Face
Amount after it has been in force during the insured's lifetime for two years
from its effective date.

OPTION TO EXTEND MATURITY DATE. This option is available as part of Policies
issued in a state that has approved the endorsement containing this provision.
This option allows the Policy owner to request a later maturity date, if the
Policy Value is at least $2,000. The request must be in writing and must be made
within 60 days of the current maturity date.

If this option is exercised the Policy owner will not be permitted to (1) make
any further premium payments except if necessary to prevent lapse of the Policy
(2) make any Face Amount or death benefit option changes or (3) make any partial
withdrawals that would reduce the Policy Value below $2,000.

Also, upon exercise of this option the following occurs: (1) No further cost of
insurance charges are deducted as part of the Monthly Deduction (2) The
Guaranteed Death Benefit lapses and the Death Benefit becomes the Alternative
Death Benefit (see Death Benefit Options--Alternative Death Benefit) (3) No
further Policy Value Advances or Cash Value Bonuses are credited (4) All
supplemental riders except the Accelerated Benefit Rider terminate and (5) Any
Policy loan will be charged interest at an effective annual rate of 3.85% per
year payable in advance.

DIVIDENDS. The Policies are nonparticipating. This means that they are not
eligible for dividends and they do not participate in any distribution of Fortis
Benefits' surplus.

ADDITIONAL CREDITS FOR CERTAIN GROUPS. The credits described below will be made
under Policies owned by Fortis, Inc., its subsidiaries, any individual who at
the time of purchase is an officer, director, employee, retiree or sales
representative of any such company, any Fortis Series director, any director of
any of the other mutual funds managed by Fortis Advisers, Inc., or a spouse or
child under the age of 21 of any such person, or a representative or employee of
a broker-dealer that has a selling agreement with Fortis Investors, Inc. No
credit will be made for any policy for which sales compensation is paid. In
Fortis Benefits discretion, certain charges may also be reduced or waived for
these categories of persons.

35
<PAGE>
Fortis Benefits will credit 40% of the sum of twelve monthly Required Premiums
(calculated without regard to the $25 limit and any optional riders or
substandard risks) in the first Policy year and 25% of the sum of twelve such
monthly Required Premiums then in effect in the second Policy year. The first
credit, after deduction of the Premium Expense Charge, will be applied as if it
were a premium payment received on the date the Policy is released by Fortis
Benefits to an active status in its processing system. The second credit will be
applied similarly on the first Policy Anniversary, unless the Policy owner has
requested a Face Amount decrease (in which case, the second credit will be
forfeited). The premium returned upon exercise of the Policy owner's right to
cancel a Policy will not include the amount of any credit.

The foregoing program is subject to termination at any time without notice. All
charge variations will reflect differences in Fortis Benefits expected
commissions, sales or administrative expenses or mortality experience with
respect to the group of persons to whom such variations apply. All such
variations will be pursuant to administrative rules and procedures established
by Fortis Benefits from time to time and will be designed to be fair, reasonable
and non-discriminatory with respect to each group of Policy owners.

PURCHASES BY LIFE INSURANCE POLICY HOLDERS. When issuing a Policy or increasing
the Face Amount for an insured who is already covered by one of its life
insurance policies, Fortis Benefits may rely on the evidence of insurability
previously provided, rather than relying on new evidence, in which case the
suicide and contestability periods will run from the original date of coverage.
This procedure applies only to that portion of the Policy's Face Amount which is
not in excess of the amount of existing insurance coverage, and the insurance
will terminate when the new coverage becomes effective. Any premium paid under
the insurance policy for periods beyond the date of termination of that coverage
will be refunded.

If the value of an existing life insurance policy which was issued by Fortis
Benefits Insurance Company is transferred to a Policy under the provisions of
Section 1035 of the Internal Revenue Code, then the Premium Expense Charge
attributable to the amount transferred will be waived.

Also, for term insurance policy holders, if the term policy has been outstanding
for at least one year, Fortis Benefits will give the Policy owner a "conversion
credit" in the amount of the lesser of the prior twelve months' premiums on the
term policy or 25% of twelve monthly Required Premiums for the amount of Policy
Face Amount established by the conversion, without regard to any optional
benefits provided by rider. The conversion credit, after deduction of the
Premium Expense Charge will be applied as if it were a premium payment received
by us on the date the Policy is released by Fortis Benefits to an active status
in its processing system (or, in the case of an existing Policy, on the
effective date of the Face Amount increase). The Policy's Surrender Value and
Policy loan value during the first year following the conversion do not include
the amount of the conversion credit, nor does the amount paid upon an exercise
of the Policy owner's right to cancel a Policy or Face Amount increase.

The foregoing procedures are subject to Fortis Benefits administrative rules as
in effect from time to time and may be terminated at any time.

36
<PAGE>
MANAGEMENT

The directors, executive officers, and, to the extent responsible for variable
life insurance operations, other officers of Fortis Benefits are listed below,
together with their principal occupations and business experience for the past
five years:

<TABLE>
<S> <C>
OFFICER-DIRECTORS
Robert Brian Pollock (4) President and Chief Executive Officer; before then
Senior Vice President-- Life and Disability.
Thomas Michael Keller (5) Executive Vice President; before then Senior Vice
President of Fortis, Inc.
Dean C. Kopperud (1) Senior Vice President--also officer of affiliated
companies; before then Senior Vice President, Integrated
Resources, Inc.
OTHER DIRECTORS
Allen Royal Freedman (2) Chairman and Chief Executive Officer of Fortis, Inc.
Henry Carroll Mackin (2) Executive Vice President of Fortis, Inc.
Arie Aristide Fakkert (3) Assistant General Manager of Fortis International N.V.
EXECUTIVE OFFICERS
Larry A. Medin (1) Senior Vice President--Sales; before then Senior Vice
President--Western Divisional Officer, Colonial Group,
Inc.
Robert James Clancy (1) Senior Vice President--Investment Products; also officer
of affiliated companies.
Anthony J. Rotondi (1) Senior Vice President--Life Operations, also officer of
affiliated companies.
John W. Norton (1) Senior Vice President and General Counsel--Life and
Investment Products; also officer of affiliated
companies.
Michael John Peninger (4) Senior Vice President and Chief Financial Officer
Jon H. Nicholson (1) Vice President--Product Development and Marketing
</TABLE>

- -------------------------------------------
(1) Address: Fortis Benefits Insurance Company, P. O. Box 64271, St. Paul, MN
55164. Fortis Benefits is a wholly-owned subsidiary of Time Insurance
Company, 515 West Wells, Milwaukee, WI 53201, which is itself wholly-owned
by Fortis, Inc.

(2) Address: Fortis, Inc., One World Trade Center, Suite 5001, New York, NY
10048. Fortis, Inc. is wholly-owned by Fortis International, N.V., which is
itself wholly-owned by AMEV/VSB 1990 N.V. The latter two companies share the
same address as N.V. AMEV. AMEV/VSB 1990 N.V. is 50% owned by N.V. AMEV and
50% owned by Groupe Compaignie Financiere et de Reassurance du Groupe AG,
Boulevard Emil Jacqmain 53, Brussels, Belgium.

(3) Address: N.V. AMEV, Archmideslaan 10, 3584 BA Utrecht, The Netherlands.

(4) Address: 2323 Grand Avenue, Kansas City, MO 64108.

(5) Address: 515 West Wells, Milwaukee, WI 53201.

37
<PAGE>
VOTING PRIVILEGES

In accordance with its view of current applicable law, Fortis Benefits will,
with respect to certain matters, vote each Subaccount's shares in the
corresponding Portfolio at regular and special meetings of the shareholders of
Fortis Series in proportion to instructions received from persons having the
voting interest in the corresponding Subaccount of the Separate Account.
However, if the 1940 Act or any rules thereunder should be amended or if the
present interpretation thereof should change, and as a result Fortis Benefits
determines that it is permitted to vote such shares of the Portfolios in its own
right, it may elect to do so.

Each Policy owner participating in a Subaccount will be entitled to cast one
vote with respect to that Subaccount for each $100 of Policy Value in that
Subaccount as of the date stock ownership is determined for the corresponding
Fortis Series shareholder meeting. (Fractional votes will be counted.) All
shares of the Portfolio held by that Subaccount will be voted in proportion to
the votes of Policy owners participating in that Subaccount. Shares held in
other separate accounts will in general be voted in accordance with instructions
of the participants therein. This tends to diminish the relative voting
influence of the Policies. Any shares of a Portfolio owned by Fortis Benefits in
its General Account or by affiliated companies of Fortis Benefits will be voted
in the same proportion as instructions for that Portfolio which are received
from persons having the voting interest in all of Fortis Benefits' separate
accounts investing in Fortis Series.

The Policy owners may give instructions regarding the election of the Board of
Directors of Fortis Series, ratification of the selection of its independent
auditors, the approval of the investment adviser of a Portfolio, changes in
fundamental investment policies of a Portfolio, and all other matters that are
put to a vote by Fortis Series shareholders.

Notwithstanding contrary Policy owner voting instructions, Fortis Benefits may
vote Portfolio shares in any manner necessary to enable any Portfolio to (1)
make or refrain from making any change in the investments or investment policies
of any Portfolio, if required by any insurance regulatory authority; (2) refrain
from making any change in the investment policies or any investment adviser or
principal underwriter of any Portfolio which may be initiated by Policy owners
or the Fortis Series Board of Directors, provided that Fortis Benefits
disapproval of the change is reasonable and, in the case of a change in
investment policies or investment adviser, based on a good faith determination
that such change would be contrary to state law or otherwise inappropriate in
light of the Portfolio's objective and purposes; or (3) enter into or refrain
from entering into any advisory agreement or underwriting contract, if required
by any insurance regulatory authority. If Fortis Benefits does disregard Policy
owner voting instructions, an explanation of this action and the reasons for it
will be included in the next semi-annual report to Policy owners.

REPORTS

Policy owners will receive promptly statements of significant transactions such
as changes in Face Amount, changes in death benefit option, transfers among
Subaccounts, partial withdrawals, Policy loans, loan repayments, termination for
any reason, reinstatement, premium payments (except for scheduled monthly
payments) and unpaid loan interest added to loan principal. These transactions
will also be summarized in an annual statement sent to the Policy owner. The
annual statement will be as of a date not more than 60 days prior to mailing,
and will also summarize the following other items: premiums paid by use of a
plan selected by the Policy owner authorizing monthly withdrawals of premiums
from the Policy owner's checking account, paycheck or government payment during
the annual period, deductions of charges occurring during that annual period,
and the status of the death

38
<PAGE>
benefit, Policy Value (both total and net of any Contingent Deferred Sales
Charge), amounts in the Subaccounts and General Account, and any Policy loan. In
addition, an owner will be sent semi-annual reports containing financial
statements for Fortis Series, as required by the 1940 Act. Fortis Benefits'
current policy is to honor requests for statements of Policy values during a
Policy year, although Fortis Benefits reserves the right at any time to cease
offering or to charge for this service. Such statements may be requested through
the phone number on the cover of this Prospectus.

STATE REGULATION

Fortis Benefits is subject to regulation and supervision by the Commerce
Department of the State of Minnesota, which periodically examines its affairs.
It is also subject to the insurance laws and regulations of all jurisdictions
where it is authorized to do business. Fortis Benefits intends to satisfy the
necessary requirements to sell the Policies in all states, other than New York,
as soon as possible.

LEGAL MATTERS

The legality of the Policies described in this Prospectus has been passed upon
by Douglas R. Lowe, Esquire, Associate General Counsel of Fortis Benefits.
Messrs. Freedman, Levy, Kroll & Simonds, Washington, D.C., have advised Fortis
Benefits on certain federal securities law matters.

EXPERTS

The financial statements of Fortis Benefits Insurance Company and Fortis
Benefits Insurance Company Variable Account C appearing in this Prospectus have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein, and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing.

Actuarial matters included in this Prospectus have been examined by Renee C.
West, FSA, MAAA, Actuarial Officer, Individual Actuarial Department of Fortis
Benefits, as stated in her opinion filed as an exhibit to the registration
statement.

FINANCIAL STATEMENTS

The financial statements of Fortis Benefits included in this Prospectus should
be considered only as bearing upon the ability of Fortis Benefits to meet its
obligations under the Policies.

Fortis Benefits generally reinsures risks for non-group insurance in excess of
$500,000 per insured with other insurance companies. See Notes 2 and 11 to
Fortis Benefits' financial statements.

39
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Fortis Benefits Insurance Company

We have audited the accompanying balance sheets of Fortis Benefits Insurance
Company as of December 31, 1994 and 1993, and the related statements of income,
shareholder's equity and cash flows for each of the three years in the period
ended December 31, 1994. 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fortis Benefits Insurance
Company at December 31, 1994 and 1993, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.

[SIGNATURE]
Minneapolis, Minnesota
February 16, 1995

40
<PAGE>
BALANCE SHEETS
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1994 1993
--------- ---------
<S> <C> <C>
ASSETS
Investments--Note 4
Fixed maturities, at fair value (amortized cost
1994--$1,749,347, 1993-- $1,630,393)......................... $1,674,782 $1,706,702
Equity securities, at fair value (cost 1994--$59,010
1993--$56,126)............................................... 64,552 65,905
Mortgage loans on real estate, less allowance for possible
losses (1994-- $7,429; 1993--$6,324)......................... 452,547 355,515
Policy loans.................................................. 49,221 47,009
Short-term investments........................................ 117,562 73,382
Real estate and other investments............................. 13,441 10,976
--------- ---------
2,372,105 2,259,489

Cash............................................................ 10,888 6,675

Receivables:
Uncollected premiums.......................................... 40,667 33,910
Reinsurance recoverable on unpaid and paid losses............. 15,181 16,554
Due from affiliates........................................... 2,220 4,555
Other......................................................... 12,593 3,720
--------- ---------
70,661 58,739

Accrued investment income....................................... 38,584 32,591
Deferred policy acquisition costs--Note 5....................... 232,198 196,483
Property and equipment at cost, less accumulated
depreciation--Note 6........................................... 56,939 53,540
Deferred federal income taxes--Note 8........................... 48,509 --
Other assets.................................................... 1,120 985
Assets held in separate accounts--Note 9........................ 1,212,910 975,637
--------- ---------
TOTAL ASSETS.................................................... $4,043,914 $3,584,139
--------- ---------
--------- ---------
</TABLE>

See notes to financial statements.

41
<PAGE>
BALANCE SHEETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1994 1993
---------- ----------
<S> <C> <C>
POLICY RESERVES, LIABILITIES, AND SHAREHOLDER'S EQUITY
POLICY RESERVES AND LIABILITIES
Future policy benefit reserves:
Traditional life insurance.................................................. $ 375,257 $ 353,407
Interest sensitive and investment products.................................. 912,653 690,061
Accident and health......................................................... 798,293 752,047
---------- ----------
2,086,203 1,795,515

Unearned premiums............................................................. 16,145 18,574
Other policy claims and benefits payable...................................... 169,864 158,705
Policyholder dividends payable................................................ 6,793 10,561
---------- ----------
2,279,005 1,983,355
Accrued expenses.............................................................. 45,905 45,035
Current income taxes payable.................................................. 4,352 1,069
Deferred federal income taxes--Note 8......................................... -- 4,229
Other liabilities............................................................. 32,416 48,107
Liabilities related to separate accounts...................................... 1,208,039 970,436
---------- ----------
TOTAL POLICY RESERVES AND LIABILITIES........................................... 3,569,717 3,052,231

SHAREHOLDER'S EQUITY--Notes 1, 10 and 12
Common stock, $5 par value, 1,000,000 shares authorized, issued and
outstanding.................................................................. 5,000 5,000
Additional paid-in capital.................................................... 358,000 345,000
Retained earnings............................................................. 153,551 130,694
Unrealized gains (losses) on investments, net--Note 4......................... (42,908) 50,144
Unrealized gains on assets held in separate accounts net of deferred taxes of
$298 in 1994 and $576 in 1993................................................ 554 1,070
---------- ----------
TOTAL SHAREHOLDER'S EQUITY...................................................... 474,197 531,908
---------- ----------
TOTAL RESERVES, LIABILITIES, AND SHAREHOLDER'S EQUITY........................... $4,043,914 $3,584,139
---------- ----------
---------- ----------
</TABLE>

See notes to financial statements.

42
<PAGE>
STATEMENTS OF INCOME
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Insurance operations
Traditional life insurance premiums................. $ 207,824 $ 187,863 $ 191,887
Interest sensitive and investment product policy
charges............................................ 37,823 28,778 23,690
Accident and health premiums........................ 776,799 738,412 751,534
--------- --------- ---------
1,022,446 955,053 967,111
Net investment income--Note 4......................... 162,514 153,657 156,431
Realized gains (losses) on investments--Note 4........ (28,815) 73,623 37,928
Other income.......................................... 35,958 27,100 26,176
--------- --------- ---------
TOTAL REVENUES.................................... 1,192,103 1,209,433 1,187,646

BENEFITS AND EXPENSES
Benefits to policyholders:
Traditional life insurance.......................... 162,168 145,958 151,291
Interest sensitive and investment products.......... 55,026 50,935 46,490
Accident and health................................. 620,367 598,146 591,927
--------- --------- ---------
837,561 795,039 789,708
Policyholder dividends................................ 1,986 5,855 5,061
Amortization of deferred policy acquisition
costs--Note 5........................................ 34,566 36,503 37,005
Insurance commissions................................. 86,111 76,816 80,275
General and administrative expenses................... 197,427 185,986 199,481
--------- --------- ---------
TOTAL BENEFITS AND EXPENSES....................... 1,157,651 1,100,199 1,111,530
--------- --------- ---------
Income before federal income taxes and cumulative effect
of accounting changes.................................. 34,452 109,234 76,116
Federal income taxes--Note 8............................ 11,595 31,090 25,660
--------- --------- ---------
Income before cumulative effect of accounting changes... 22,857 78,144 50,456
Cumulative effect of change in accounting for income
taxes-- Note 2....................................... -- 4,814 --
Cumulative effect of change in accounting for
postretirement benefits other than pensions, net of
tax--Note 2.......................................... -- (1,251) --
--------- --------- ---------
NET INCOME........................................ $ 22,857 $ 81,707 $ 50,456
--------- --------- ---------
--------- --------- ---------
</TABLE>

See notes to financial statements.

43
<PAGE>
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
GAINS ON
UNREALIZED ASSETS
ADDITIONAL GAINS HELD IN
COMMON PAID-IN RETAINED (LOSSES) ON SEPARATE
STOCK CAPITAL EARNINGS INVESTMENTS ACCOUNTS TOTAL
----------- ----------- ----------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance January 1,
1992................. $ 5,000 $ 345,000 $ 2,178 $ 860 $ 588 $ 353,626
Net income............ -- -- 50,456 -- -- 50,456
Change in unrealized
gains on investments,
net.................. -- -- -- 3,403 -- 3,403
Change in unrealized
gains on assets held
in separate account,
net of deferred tax
expense of $36....... -- -- -- -- 69 69
----- ----------- ----------- ------------- ----- ---------
Balance December 31,
1992................. 5,000 345,000 52,634 4,263 657 407,554
Net income............ -- -- 81,707 -- -- 81,707
Dividends to
shareholder.......... -- -- (4,000) -- -- (4,000)
Other................. -- -- 353 -- -- 353
Change in unrealized
gains on investments,
net.................. -- -- -- 2,099 -- 2,099
Change in unrealized
gains on investments,
net, resulting from
initial adoption of
FASB 115 (Note 1).... -- -- -- 43,782 -- 43,782
Change in unrealized
gain on assets held
in separate account,
net of deferred tax
expense of $238...... -- -- -- -- 413 413
----- ----------- ----------- ------------- ----- ---------
Balance December 31,
1993................. 5,000 345,000 130,694 50,144 1,070 531,908
Net income............ -- -- 22,857 -- -- 22,857
Additional paid-in
capital.............. -- 13,000 -- -- -- 13,000
Change in unrealized
losses on
investments, net..... -- -- -- (93,052) -- (93,052)
Change in unrealized
loss on assets held
in separate account,
net of deferred tax
benefit of $277...... -- -- -- -- (516) (516)
----- ----------- ----------- ------------- ----- ---------
Balance December 31,
1994................. $ 5,000 $ 358,000 $ 153,551 $ (42,908) $ 554 $ 474,197
----- ----------- ----------- ------------- ----- ---------
----- ----------- ----------- ------------- ----- ---------
</TABLE>

See notes to financial statements.

44
<PAGE>
STATEMENT OF CASH FLOWS
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------
1994 1993 1992
----------- ----------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................................... $ 22,857 $ 81,707 $ 50,456
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of accounting changes..................................... -- (3,563) --
Increase in future policy benefit reserves for traditional, interest
sensitive and accident and health policies................................. 79,014 58,299 44,582
Increase (decrease) in other policy claims and benefits and policyholder
dividends payable.......................................................... 10,075 (15,868) (8,318)
Decrease in deferred federal income taxes................................... (2,356) (9,776) (28,923)
Increase (decrease) in income taxes payable................................. 3,283 (12,733) (3,218)
Amortization of policy acquisition costs.................................... 34,566 36,503 37,005
Policy acquisition costs deferred........................................... (54,349) (45,841) (31,232)
Provision for mortgage loan losses.......................................... 1,105 1,648 1,653
Provision for depreciation.................................................. 12,267 9,399 7,506
Accrual of discount, net.................................................... (914) 72 3,868
Change in uncollected premiums, accrued investment income, other
receivables, unearned premiums, accrued expenses and other liabilities..... (36,650) 5,751 1,135
Net realized (gains) losses on investments.................................. 28,815 (73,623) (37,928)
Other....................................................................... (135) 164 289
----------- ----------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES................................. 97,578 32,139 36,875
INVESTING ACTIVITIES
Purchase of fixed maturity investments........................................ (1,943,697) (2,337,842) (2,459,482)
Sales or maturities of fixed maturity investments............................. 1,798,184 2,358,288 2,431,920
(Increase) decrease in short-term investments................................. (44,266) 28,756 (76,226)
Purchase of other investments................................................. (211,836) (201,601) (46,054)
Sales or maturities of other investments...................................... 104,399 75,539 33,414
Purchase of property and equipment............................................ (16,164) (13,155) (27,370)
Purchase of group insurance business.......................................... (6,644) (5,521) (8,685)
Other......................................................................... 500 49 12,241
----------- ----------- ----------
NET CASH USED BY INVESTING ACTIVITIES..................................... (319,524) (95,487) (140,242)
FINANCING ACTIVITIES
Activities related to investment products:
Considerations received..................................................... 200,499 68,943 99,631
Surrenders and death benefits............................................... (19,207) (37,262) (23,371)
Interest credited to policyholders.......................................... 31,867 30,024 27,958
Additional paid-in capital from shareholder................................... 13,000 -- --
Dividends paid to shareholder................................................. -- (4,000) (8,000)
----------- ----------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES................................. 226,159 57,705 96,218
----------- ----------- ----------
INCREASE (DECREASE) IN CASH............................................... 4,213 (5,643) (7,149)
Cash at beginning of year....................................................... 6,675 12,318 19,467
----------- ----------- ----------
CASH AT END OF YEAR....................................................... $ 10,888 $ 6,675 $ 12,318
----------- ----------- ----------
----------- ----------- ----------
</TABLE>

See notes to financial statements.

45
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FORTIS BENEFITS INSURANCE COMPANY
DECEMBER 31, 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF STATEMENT PRESENTATION: Fortis Benefits Insurance Company (the Company)
is incorporated in Minnesota and is an indirect wholly-owned subsidiary of
Fortis, Inc. The financial statements are presented in conformity with generally
accepted accounting principles. Certain amounts included in the 1993 and 1992
financial statements have been reclassified to conform to the 1994 presentation.

For traditional life, interest sensitive and investment products in force at
inception, the Company recorded the present value of future profits as
deferred policy acquisition costs. For traditional life, such costs are
amortized in proportion to premium revenue over the estimated premium paying
period of the related policies. For interest sensitive and investment
products, such costs are amortized in relation to statutory profits. For
group life, accident and health, disability, and dental insurance business
acquired on October 1, 1991 (see Note 3), the Company recorded the present
value of future profits as deferred policy acquisition costs. These

46
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
costs are amortized in proportion to premium revenue over the estimated
premium paying period of the related policies and, if required, are expensed
when such costs are deemed not to be recoverable from future policy
revenues, including the related investment income.

47
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT: Property and equipment are recorded at cost less
accumulated depreciation. The Company provides for depreciation principally on
the straight line method over the estimated useful lives of the related
property.

SEPARATE ACCOUNTS: Assets and liabilities associated with separate accounts
relate to premium and annuity considerations for variable life and annuity
products for which the contractholder, rather than the Company, bears the
investment risk. Separate account assets are reported at fair value.

2. CHANGES IN ACCOUNTING PRINCIPLES
EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: Effective
January 1, 1993, the Company adopted FASB Statement 106, EMPLOYERS' ACCOUNTING
FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. The Company elected to
immediately recognize the cumulative effect of this change in accounting for
postretirement benefits of $1,895,000 ($1,251,000 net of deferred income tax
benefit), which represents the accumulated postretirement benefit obligation
existing at January 1, 1993. Prior years' financial statements have not been
restated. The impact of Statement 106 on operating results for 1993 was not
material.

48
<PAGE>
3. ACQUIRED BUSINESS
In October, 1991, the Company purchased certain assets and assumed certain
liabilities from The Mutual Benefit Life Insurance Company in Rehabilitation
(MBL). The seller transferred to the Company, the assets and liabilities
relating to the group life, accident and health, disability and dental insurance
business of MBL. The acquisition was accounted for as a purchase. The Company
purchased this business for $318,000,000. Per contractual agreement, additional
payments were paid to MBL based upon the persistency of the long term disability
portion of the business. Under terms of this agreement, the Company paid
$6,644,000, $5,521,000 and $8,685,000 in 1994, 1993, and 1992, respectively.
This additional purchase price was accounted for as deferred policy acquisition
costs. No additional payments will be made.

4. INVESTMENTS
AVAILABLE FOR SALE SECURITIES: The following is a summary of the available for
sale securities (in thousands):

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
December 31, 1994:
Fixed Income Securities:
Governments............................ $ 829,607 $ 1,129 $ 40,642 $ 790,094
Public utilities....................... 60,885 1,132 1,389 60,628
Industrial & miscellaneous............. 847,018 3,184 38,505 811,697
Other.................................. 11,837 764 238 12,363
----------- ----------- ----------- ---------
Total................................ 1,749,347 6,209 80,774 1,674,782
Equity Securities........................ 59,010 9,896 4,354 64,552
----------- ----------- ----------- ---------
Total................................ $1,808,357 $ 16,105 $ 85,128 $1,739,334
----------- ----------- ----------- ---------
----------- ----------- ----------- ---------
December 31, 1993:
Fixed Income Securities:
Governments............................ $ 323,629 $ 8,684 $ 2,642 $ 329,671
Public utilities....................... 108,444 9,583 -- 118,027
Industrial & miscellaneous............. 1,010,933 58,880 3,294 1,066,519
Other.................................. 187,387 5,338 240 192,485
----------- ----------- ----------- ---------
Total................................ 1,630,393 82,485 6,176 1,706,702
Equity Securities........................ 56,126 12,040 2,261 65,905
----------- ----------- ----------- ---------
Total................................ $1,686,519 $ 94,525 $ 8,437 $1,772,607
----------- ----------- ----------- ---------
----------- ----------- ----------- ---------
</TABLE>

49
<PAGE>
4. INVESTMENTS (CONTINUED)
The amortized cost and fair value of available-for-sale investments in fixed
maturities at December 31, 1994, by contractual maturity, are shown below (in
thousands). Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- ---------
<S> <C> <C>
Due in one year or less........................... $ 54,540 $ 54,333
Due after one year through five years............. 407,103 393,734
Due after five years through ten years............ 650,526 629,070
Due after ten years............................... 637,178 597,645
----------- ---------
Total........................................... $1,749,347 $1,674,782
----------- ---------
----------- ---------
</TABLE>

MORTGAGE LOANS: The Company has issued commercial mortgage loans on properties
located throughout the country. Approximately 34% of outstanding principal is
concentrated in the states of California, Florida and Texas at December 31, 1994
as compared to 38% at December 31, 1993. Loan commitments outstanding at
December 31, 1994 totalled $47,375,000.

In May 1993, FASB issued Statement 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT
OF A LOAN, which becomes effective for fiscal years beginning after December 15,
1994, and which the Company will adopt in 1995. Statement 114 requires that
impaired loans are to be valued at the present value of expected future cash
flows discounted at the loan's effective interest rate, or, as a practical
expedient, at the loan's observable market price, or the fair market value of
the collateral if the loan is collateral dependent. The Company does not expect
the impact of adoption to be material to its financial position or operating
results.

INVESTMENTS ON DEPOSIT: The Company had fixed maturities and mortgage loans on
real estate carried at $2,635,000 and $8,132,000, respectively, at December 31,
1994, and $2,470,000 and $8,132,000 respectively, at December 31, 1993 on
deposit with various governmental authorities as required by law.

NET UNREALIZED GAINS (LOSSES): The adjusted net unrealized gains (losses)
recorded in shareholder's equity (See Note 1) were as follows (in thousands):

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Change in unrealized gains (losses) before adjustment for the
following items (for equity securities only in 1993 and
1992)....................................................... $(155,923) $ 3,979 $ 5,705
Capitalization (amortization) of deferred policy
acquisition costs......................................... 9,288 -- --
Effect of initial adoption of FASB 115..................... -- 43,782 --
Participating policyholders' share of earnings............. 2,684 -- --
Deferred income taxes...................................... 50,383 (1,467) (2,233)
--------- --------- ---------
Change in net unrealized gains (losses)...................... (93,568) 46,294 3,472
Net unrealized gains, beginning of the year.................. 51,214 4,920 1,448
--------- --------- ---------
Net unrealized gains (losses), end of year................... $ (42,354) $ 51,214 $ 4,920
--------- --------- ---------
--------- --------- ---------
</TABLE>

50
<PAGE>
4. INVESTMENTS (CONTINUED)
The increase (decrease) in unrealized gains on fixed maturity investments was
$31,079,000 in 1993 and $(5,538,000) in 1992. The deferred tax expense (benefit)
would have been $10,878,000 in 1993 and $(1,883,000) in 1992.

NET INVESTMENT INCOME AND REALIZED GAINS (LOSSES) ON INVESTMENTS: Major
categories of net investment income and realized gains (losses) on investments
for each year were as follows (in thousands):

<TABLE>
<CAPTION>
REALIZED GAINS (LOSSES)
NET INVESTMENT INCOME ON INVESTMENTS
------------------------------- -------------------------------
1994 1993 1992 1994 1993 1992
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fixed maturities................ $ 119,668 $ 120,844 $ 128,532 $ (27,854) $ 70,626 $ 38,864
Equity securities............... 1,937 1,490 654 1,352 3,955 10
Mortgage loans on real estate... 36,816 28,370 25,205 (2,992) (1,805) (1,700)
Policy loans.................... 2,731 3,004 2,968 -- -- --
Short-term investments.......... 4,671 4,282 3,152 (60) 1 4
Real estate & other
investments.................... 2,138 1,171 1,132 739 846 750
--------- --------- --------- --------- --------- ---------
Total......................... 167,961 159,161 161,643 $ (28,815) $ 73,623 $ 37,928
--------- --------- ---------
--------- --------- ---------
Expenses........................ (5,447) (5,504) (5,212)
--------- --------- ---------
$ 162,514 $ 153,657 $ 156,431
--------- --------- ---------
--------- --------- ---------
</TABLE>

Proceeds from sales of investments in fixed maturities were $1,798,185,000,
$335,230,000, and $2,425,212,000 in 1994, 1993, and 1992, respectively. Gross
gains of $16,618,000, $75,133,000 and $55,833,000 and gross losses of
$44,472,000, $4,507,000, and $16,969,000 were realized on the sales in 1994,
1993, and 1992, respectively.

51
<PAGE>
5. DEFERRED POLICY ACQUISITION COSTS
The changes in deferred policy acquisition costs by product were as follows
(in thousands):

<TABLE>
<CAPTION>
INTEREST
TRADITIONAL SENSITIVE AND ACCIDENT AND
LIFE INVESTMENT HEALTH TOTAL
----------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Balance January 1, 1993................ $ 74,325 $ 59,212 $ 54,354 $ 187,891
Acquisition costs deferred:
Acquired business.................... -- -- 5,521 5,521
Other business....................... -- 45,841 -- 45,841
Acquisition costs amortized............ (12,851) (10,839) (12,812) (36,502)
Allowance for additional amortization
from unrealized gains on
available-for-sale securities......... -- (6,268) -- (6,268)
----------- ------------- ------------- ---------
Balance December 31, 1993.............. 61,474 87,946 47,063 196,483
Acquisition costs deferred:
Acquired business.................... -- -- 6,644 6,644
Other business....................... -- 54,349 -- 54,349
Acquisition costs amortized............ (11,564) (10,274) (12,728) (34,566)
Additional deferred acquisition costs
from unrealized losses on
available-for-sale securities......... -- 9,288 -- 9,288
----------- ------------- ------------- ---------
Balance December 31, 1994.............. $ 49,910 $ 141,309 $ 40,979 $ 232,198
----------- ------------- ------------- ---------
----------- ------------- ------------- ---------
</TABLE>

Included within total deferred policy acquisition costs at December 31, 1994 is
$68,194,000 of present value of future profits (PVP) resulting from acquisitions
accounted for as a purchase. The estimated amount of PVP to be amortized during
each of the next four years is as follows: 1995--$21,444,000; 1996--$19,210,000;
1997-- $17,262,000; 1998--$10,278,000.

During 1994, 1993, and 1992, the Company sold portions of its investment
portfolio and in accordance with FASB Statement 97, the recognition of the
realized capital (losses) gains resulted in (reduced) additional amortization of
acquisition costs deferred of $(935,000), $5,400,000, and $5,300,000,
respectively. In addition, the Company (reduced) recorded additional
policyholder dividends payable of $(761,000) in 1994 and $2,800,000 in 1993.

6. PROPERTY AND EQUIPMENT
A summary of property and equipment for each year follows (in thousands):

<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Land......................................................... $ 1,900 $ 1,900
Building and improvements.................................... 23,084 22,382
Furniture and equipment...................................... 68,017 55,896
--------- ---------
93,001 80,178
Less accumulated depreciation................................ (36,062) (26,638)
--------- ---------
NET PROPERTY AND EQUIPMENT................................. $ 56,939 $ 53,540
--------- ---------
--------- ---------
</TABLE>

52
<PAGE>
7. UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES
Activity for the liability for unpaid accident and health claims and claims
adjustment expense is summarized as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Balance as of January 1, net of reinsurance recoverables.... $ 806,538 $ 776,194 $ 755,849
Add: Incurred losses related to:
Current year.............................................. 656,052 612,621 645,008
Prior years............................................... (58,218) (41,619) (54,869)
--------- --------- ---------
Total incurred losses....................................... 597,834 571,002 590,139
Deduct: Paid losses related to:
Current year.............................................. 377,595 353,124 378,879
Prior years............................................... 187,967 187,534 190,915
--------- --------- ---------
Total paid losses........................................... 565,562 540,658 569,794
--------- --------- ---------
Balance as of December 31, net of reinsurance
recoverables............................................... $ 838,810 $ 806,538 $ 776,194
--------- --------- ---------
--------- --------- ---------
</TABLE>

In 1994 and 1993, the accident/health business experienced overall favorable
development on claims reserves established as of the previous year end. The
favorable development was a result of lower medical costs due to less
uncertainty in the health business, a reduction of loss reserves which
considered historically high inflation in medical costs and, in 1994, a
refinement in the claims reserve estimates.

Deferred income taxes reflect the net tax effects of temporary differences
between the basis of assets and liabilities for financial statement purposes and
for income tax purposes.

53
<PAGE>
8. FEDERAL INCOME TAXES (CONTINUED)
The significant components of the Company's deferred tax liabilities and assets
as of December 31, 1994 and 1993 are as follows (in thousands):

<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Deferred tax assets:
Reserves............................................ $ 42,715 $ 46,823
Separate account assets/liabilities................. 27,663 19,313
Unrealized losses................................... 22,806 --
Accrued liabilities................................. 14,565 12,142
Claims and benefits payable......................... 1,976 1,860
Other............................................... 1,393 1,268
--------- ---------
Total deferred tax assets......................... 111,118 81,406

Deferred tax liabilities:
Unrealized gains.................................... -- 27,577
Deferred policy acquisition costs................... 55,329 43,336
Investments......................................... 1,194 9,949
Fixed assets........................................ 6,086 4,585
Other............................................... -- 188
--------- ---------
Total deferred tax liabilities.................... 62,609 85,635
--------- ---------
Net deferred tax asset (liability)................ $ 48,509 $ (4,229)
--------- ---------
--------- ---------
</TABLE>

The components of the provision for deferred income taxes for the year ended
December 31, 1992 based on APB Opinion 11 are as follows (in thousands):

<TABLE>
<CAPTION>
1992
---------
<S> <C>
Amortization of present value of future profits............... $ (4,709)
Deferred policy acquisition costs............................. 2,898
Increase in policy reserves................................... (10,568)
Accrual of discount on investments............................ 474
Purchase accounting adjustments............................... (24,711)
Depreciation expense.......................................... 1,323
Discounting of post-1986 unpaid losses and loss adjustment
expenses..................................................... 660
Expenses accrued not currently deductible for tax............. (4,369)
Other......................................................... (1,648)
---------
Deferred income tax expense (benefit)....................... $ (40,650)
---------
---------
</TABLE>

54
<PAGE>
8. FEDERAL INCOME TAXES (CONTINUED)
The Company's tax expense before cumulative effect of accounting changes is
shown as follows (in thousands):

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Current............................... $ 15,046 $ 35,747 $ 66,310
Deferred.............................. (3,451) (4,657) (40,650)
--------- --------- ---------
$ 11,595 $ 31,090 $ 25,660
--------- --------- ---------
--------- --------- ---------
</TABLE>

Tax payments were made of $18,080,000, $53,600,000, and $64,600,000 in 1994,
1993, and 1992, respectively. Tax refunds were received of $7,729,000 and
$17,130,493 in 1994 and 1992, respectively.

The Company's effective income tax rate varied from the statutory federal income
tax rate as follows:

<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Statutory income tax rate.................. 35.0% 35.0% 34.0%
Tax audit provision........................ 0.8% (4.6)% --
Other, net................................. (2.1)% (1.9)% (0.3)%
--- --- ---
33.7% 28.5% 33.7%
--- --- ---
--- --- ---
</TABLE>

9. ASSETS HELD IN SEPARATE ACCOUNTS
Separate account assets were as follows (in thousands):

<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Premium and annuity considerations for the variable
annuity products and variable universal life
product for which the contractholder, rather than
the Company, bears the investment risk............ $1,208,038 $ 970,436
Assets of the separate accounts owned by the
Company, at fair value............................ 4,872 5201
--------- ---------
$1,212,910 $ 975,637
--------- ---------
--------- ---------
</TABLE>

55
<PAGE>
10. STATUTORY ACCOUNTING PRACTICES
Reconciliations of net income and shareholder's equity on the basis of
statutory accounting to the related amounts presented in the accompanying
statements were as follows (in thousands):

<TABLE>
<CAPTION>
SHAREHOLDER'S EQUITY
NET INCOME
------------------------------- --------------------
1994 1993 1992 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Based on statutory accounting
practices.............................. $ 49,759 $ 46,605 $ 26,499 $ 304,231 $ 258,574
Deferred policy acquisition costs....... 19,783 9,338 (5,772) 232,198 196,483
Investment valuation differences........ 370 520 (17) (85,944) 65,716
Deferred and uncollected premiums....... (14) 1,655 763 (8,393) (8,680)
Unearned premiums....................... 1,126 7,035 (1,253) (13,008) (14,133)
Loading and equity in unearned
premiums............................... 316 (179) (248) 85 82
Property and equipment.................. (204) (63) (20) 22,027 18,424
Policy reserves......................... (26,655) (38,558) (19,606) (72,192) (45,547)
Current income taxes payable............ -- 4,656 (1,609) (4,786) (4,786)
Deferred income taxes................... 2,356 9,776 40,650 48,509 (4,229)
Realized gains (losses) on
investments............................ (1,052) 3,651 (781) -- --
Realized gains (losses) transferred to
the Interest Maintenance Reserve (IMR),
net of tax............................. (18,456) 40,459 23,266 -- --
Amortization of IMR, net of tax......... (5,479) (3,777) (8,649) -- --
Interest maintenance reserve............ -- -- -- 27,364 51,299
Asset valuation reserve................. -- -- -- 32,011 31,233
Cumulative effect of accounting
changes................................ -- 3,563 -- -- --
Other, net.............................. 1,007 (2,974) (2,767) (7,905) (12,528)
--------- --------- --------- --------- ---------
$ 22,857 $ 81,707 $ 50,456 $ 474,197 $ 531,908
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

Ceded reinsurance premiums were as follows (in thousands):

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Life Insurance........................ $ 5,571 $ 4,366 $ 5,772
Accident & Health Insurance........... 36,782 37,088 46,508
--------- --------- ---------
$ 42,353 $ 41,454 $ 52,280
--------- --------- ---------
--------- --------- ---------
</TABLE>

56
<PAGE>
11. REINSURANCE (CONTINUED)
Recoveries under reinsurance contracts were as follows (in thousands):

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Life Insurance........................ $ 1,650 $ 6,963 $ 5,669
Accident & Health Insurance........... 19,913 15,448 47,482
--------- --------- ---------
$ 21,563 $ 22,411 $ 53,151
--------- --------- ---------
--------- --------- ---------
</TABLE>

12. DIVIDEND RESTRICTIONS
Dividend distributions to parent are restricted as to amount by state
regulatory requirements. The Company had $41,595,000 free from such restrictions
at December 31, 1994. Distributions in excess of this amount would require
regulatory approval.

13. TRANSACTIONS WITH AFFILIATED COMPANIES
The Company receives various services from Fortis, Inc. These services
include assistance in benefit plan administration, corporate insurance,
accounting, tax, auditing, investment and other administrative functions. The
fees paid to Fortis, Inc. for these services for the years ended December 31,
1994, 1993, and 1992, were $8,944,000, $8,595,000, and $8,239,000 respectively.

In conjunction with the marketing of its variable annuity products, the Company
paid $57,307,000, $27,931,000, and $19,898,000 in commissions to its affiliate,
Fortis Investors, Inc. for the years ended December 31, 1994, 1993, and 1992,
respectively.

14. FAIR VALUE DISCLOSURES
VALUATION METHODS AND ASSUMPTIONS: Investments are reported in the accompanying
balance sheets on the following basis:

The fair values for the Company's policy reserves under investment products
are determined using cash surrender value.

57
<PAGE>
14. FAIR VALUE DISCLOSURES (CONTINUED)
The fair values under all insurance contracts are taken into consideration
in the Company's overall management of interest rate risk, such that the
Company's exposure to changing interest rates is minimized through the matching
of investment maturities with amounts due under insurance contracts.

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------
1994 1993
---------------------- ----------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturities............................ $1,674,782 $1,674,782 $1,706,702 $1,706,702
Equity securities........................... 64,552 64,552 65,905 65,905
Mortgage loans on real estate................. 452,547 434,503 355,515 367,746
Policy loans.................................. 49,221 49,221 47,009 47,009
Short-term investments........................ 117,562 117,562 73,382 73,382
Cash.......................................... 10,888 10,888 6,675 6,675
Assets held in separate accounts.............. 1,212,910 1,212,910 975,637 975,637
Liabilities:
Individual and group annuities (subject to
discretionary withdrawal)...................... 692,196 657,454 480,900 456,300
</TABLE>

The Company has a profit sharing plan covering substantially all employees which
provides benefits payable to participants on retirement or disability and to
beneficiaries of participants in event of the participant's death. Amounts
contributed to the plan and expensed by the Company were $3,536,000 and
$3,399,000 in 1994 and 1993, respectively.

58
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors
Fortis Benefits Insurance Company

We have audited the accompanying statement of net assets of Fortis Benefits
Insurance Company Variable Account C (comprising, respectively, the Fortis
Series Fund's Growth Stock, U.S. Government Securities, Money Market, Asset
Allocation, Diversified Income, Global Growth, Aggressive Growth, Growth &
Income, and High Yield Subaccounts) as of December 31, 1994, and the related
statements of operations and changes in net assets for each of the three years
then ended, except for the Fortis Series Fund's Aggressive Growth, Growth &
Income, and High Yield Subaccounts which are for the year ended December 31,
1994. These financial statements are the responsibility of the management of
Fortis Benefits Insurance Company. 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 as of December 31, 1994 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the portfolio
subaccounts constituting Fortis Benefits Insurance Company Variable Account C at
December 31, 1994, and the results of their operations and changes in their net
assets for the periods described in the first paragraph, in conformity with
generally accepted accounting principles.

[SIGNATURE]

Minneapolis, Minnesota
March 24, 1995

59
<PAGE>
STATEMENT OF NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
DECEMBER 31, 1994
<TABLE>
<CAPTION>
U.S. GOVT. MONEY ASSET DIVERSIFIED AGGRESSIVE
GROWTH STOCK SECURITIES MARKET ALLOCATION INCOME GLOBAL GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Fortis Series
Funds, Inc., at market value
(Note 2):
Growth Stock Series (3,237,912
shares; cost--$63,961,752)... $71,580,527
U.S. Government Securities
Series (758,711 shares;
cost-- $8,172,171)........... $7,129,989
Money Market Series (397,488
shares; cost--$4,145,861).... $4,225,618
Asset Allocation Series
(1,215,468 shares;
cost--$15,835,476)........... 1$6,483,814
Diversified Income Series
(306,614 shares;
cost--$3,574,792)............ $3,189,335
Global Growth Series
(1,733,570 shares;
cost--$21,153,654)........... $21,333,481
Aggressive Growth Series
(233,631 shares;
cost--$2,257,975)............ $2,288,670
Growth & Income Series
(124,756 shares;
cost--$1,256,389)............
High Yield Series (183,296
shares; cost--$1,824,469)....
------------ ----------- ----------- ----------- ----------- ------------- -----------
71,580,527 7,129,989 4,225,618 16,483,814 3,189,335 21,333,481 2,288,670
Attributable to Fortis Benefits
Insurance Company.............. 1,279,487 -- -- 667,902 -- 501,474 587,791
------------ ----------- ----------- ----------- ----------- ------------- -----------
Net assets for variable life
insurance policies............. $70,301,040 $7,129,989 $4,225,618 1$5,815,912 $3,189,335 $20,832,007 $1,700,879
------------ ----------- ----------- ----------- ----------- ------------- -----------
------------ ----------- ----------- ----------- ----------- ------------- -----------
Accumulation units
outstanding.................... 4,345,216 545,205 343,687 1,073,015 235,648 1,692,124 172,983
------------ ----------- ----------- ----------- ----------- ------------- -----------
------------ ----------- ----------- ----------- ----------- ------------- -----------
Net asset value for variable
life insurance policies per
accumulation unit.............. $ 16.18 $ 13.08 $ 12.29 $ 14.74 $ 13.53 $ 12.31 $ 9.83
------------ ----------- ----------- ----------- ----------- ------------- -----------
------------ ----------- ----------- ----------- ----------- ------------- -----------

<CAPTION>
GROWTH &
INCOME HIGH YIELD
PORTFOLIO SERIES
SUBACCOUNT SUBACCOUNT
----------- -----------
<S> <C> <C>
ASSETS
Investments in Fortis Series
Funds, Inc., at market value
(Note 2):
Growth Stock Series (3,237,912
shares; cost--$63,961,752)...
U.S. Government Securities
Series (758,711 shares;
cost-- $8,172,171)...........
Money Market Series (397,488
shares; cost--$4,145,861)....
Asset Allocation Series
(1,215,468 shares;
cost--$15,835,476)...........
Diversified Income Series
(306,614 shares;
cost--$3,574,792)............
Global Growth Series
(1,733,570 shares;
cost--$21,153,654)...........
Aggressive Growth Series
(233,631 shares;
cost--$2,257,975)............
Growth & Income Series
(124,756 shares;
cost--$1,256,389)............ $1,256,238
High Yield Series (183,296
shares; cost--$1,824,469).... $1,735,443
----------- -----------
1,256,238 1,735,443
Attributable to Fortis Benefits
Insurance Company.............. 604,185 1,231,006
----------- -----------
Net assets for variable life
insurance policies............. $ 652,053 $ 504,437
----------- -----------
----------- -----------
Accumulation units
outstanding.................... 62,693 50,920
----------- -----------
----------- -----------
Net asset value for variable
life insurance policies per
accumulation unit.............. $ 10.40 $ 9.91
----------- -----------
----------- -----------
</TABLE>

See accompanying notes.

60
<PAGE>
STATEMENTS OF OPERATIONS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
GROWTH STOCK PORTFOLIO SUBACCOUNT
Investment income:
Dividend income...................................... $ 524,850 $ 186,295 $ 194,919
Mortality and expense and policy advance charges
(Note 3)............................................ (630,146) (406,385) (196,675)
--------- --------- ---------
Net investment loss.................................... (105,296) (220,090) (1,756)
Net realized gain on redemption of Fortis Series Fund,
Inc. portfolio shares................................. 193,238 315,227 --
Net change in unrealized (depreciation) appreciation on
investments........................................... (1,828,331) 3,121,509 1,311,743
--------- --------- ---------
Net (decrease) increase in net assets from
operations............................................ $(1,740,389) $3,216,646 $1,309,987
--------- --------- ---------
--------- --------- ---------
U.S. GOVERNMENT SECURITIES PORTFOLIO SUBACCOUNT
Investment income:
Dividend income...................................... $ 607,364 $ 523,262 $ 251,334
Mortality and expense and policy advance charges
(Note 3)............................................ (79,454) (51,142) (34,292)
--------- --------- ---------
Net investment income.................................. 527,910 472,120 217,042
Net realized (loss) gain on redemption of Fortis Series
Fund, Inc. portfolio shares........................... (126,731) 56,486 --
Net change in unrealized depreciation on investments... (967,547) (133,072) (66,898)
--------- --------- ---------
Net (decrease) increase in net assets from
operations............................................ $(566,368) $ 395,534 $ 150,144
--------- --------- ---------
--------- --------- ---------
MONEY MARKET PORTFOLIO SUBACCOUNT
Investment income:
Dividend income...................................... $ -- $ 35,403 $ 37,503
Mortality and expense and policy advance charges
(Note 3)............................................ (21,446) (14,578) (9,903)
--------- --------- ---------
Net investment (loss) income........................... (21,446) 20,825 27,600
Net realized gain on redemption of Fortis Series Fund,
Inc. portfolio shares................................. 13,988 4,990 --
Net change in unrealized appreciation (depreciation) on
investments........................................... 100,566 (3,006) 5,429
--------- --------- ---------
Net increase in net assets from operations............. $ 93,108 $ 22,809 $ 33,029
--------- --------- ---------
--------- --------- ---------
</TABLE>

See accompanying notes.

61
<PAGE>
STATEMENTS OF OPERATIONS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
ASSET ALLOCATION PORTFOLIO SUBACCOUNT
Investment income:
Dividend income......................................... $ 626,408 $ 363,460 $ 194,016
Mortality and expense and policy advance charges (Note
3)..................................................... (146,296) (91,158) (43,171)
--------- --------- ---------
Net investment income..................................... 480,112 272,302 150,845
Net realized gain on redemption of Fortis Series Fund,
Inc. portfolio shares.................................... 42,277 67,563 --
Net change in unrealized (depreciation) appreciation on
investments.............................................. (652,759) 432,499 184,791
--------- --------- ---------
Net (decrease) increase in net assets from operations..... $(130,370) $ 772,364 $ 335,636
--------- --------- ---------
--------- --------- ---------
DIVERSIFIED INCOME PORTFOLIO SUBACCOUNT
Investment income:
Dividend income......................................... $ 257,570 $ 120,019 $ 16,039
Mortality and expense and policy advance charges (Note
3)..................................................... (29,757) (11,358) (2,020)
--------- --------- ---------
Net investment income..................................... 227,813 108,661 14,019
Net realized (loss) gain on redemption of Fortis Series
Fund, Inc. portfolio shares.............................. (32,443) 16,707 --
Net change in unrealized depreciation on investments...... (335,368) (49,202) (3,365)
--------- --------- ---------
Net (decrease) increase in net assets from operations..... $(139,998) $ 76,166 $ 10,654
--------- --------- ---------
--------- --------- ---------
GLOBAL GROWTH PORTFOLIO SUBACCOUNT
Investment income:
Dividend income......................................... $ 144,687 $ 25,615 $ 10,131
Mortality and expense and policy advance charges (Note
3)..................................................... (157,000) (35,224) (2,084)
--------- --------- ---------
Net investment income (loss).............................. (12,313) (9,609) 8,047
Net realized gain on redemption of Fortis Series Fund,
Inc. portfolio shares.................................... 490,813 33,810 --
Net change in unrealized (depreciation) appreciation on
investments.............................................. (1,085,870) 930,476 254,238
--------- --------- ---------
Net (decrease) increase in net assets from operations..... $(607,370) $ 954,677 $ 262,285
--------- --------- ---------
--------- --------- ---------
</TABLE>

See accompanying notes.

62
<PAGE>
STATEMENTS OF OPERATIONS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994
-------------
<S> <C>
AGGRESSIVE GROWTH PORTFOLIO SUBACCOUNT
Investment income:
Dividend income........................................................ $ 8,878
Mortality and expense and policy advance charges (Note 3).............. (4,484)
-------------
Net investment income.................................................... 4,394
Net realized loss on redemption of Fortis Series Fund, Inc. portfolio
shares.................................................................. (2,388)
Net change in unrealized appreciation on investments..................... 33,036
-------------
Net increase in net assets from operations............................... $ 35,042
-------------
-------------
GROWTH & INCOME PORTFOLIO SUBACCOUNT
Investment income:
Dividend income........................................................ $ 12,968
Mortality and expense and policy advance charges (Note 3).............. (1,404)
-------------
Net investment income.................................................... 11,564
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares.................................................................. 124
Net change in unrealized appreciation on investments..................... 6,216
-------------
Net increase in net assets from operations............................... $ 17,904
-------------
-------------
HIGH YIELD PORTFOLIO SUBACCOUNT
Investment income:
Dividend income........................................................ $ 81,918
Mortality and expense and policy advance charges (Note 3).............. (1,463)
-------------
Net investment income.................................................... 80,455
Net realized loss on redemption of Fortis Series Fund, Inc. portfolio
shares.................................................................. (3,503)
Net change in unrealized depreciation on investments..................... (29,639)
-------------
Net increase in net assets from operations............................... $ 47,313
-------------
-------------
</TABLE>

See accompanying notes.

63
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
GROWTH STOCK PORTFOLIO SUBACCOUNT
From operations:
Net investment loss........................................................... $ (105,296) $ (220,090) $ (1,756)
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 193,238 315,227 --
Net change in unrealized (depreciation) appreciation on investments........... (1,828,331) 3,121,509 1,311,743
----------- ----------- -----------
Net (decrease) increase in net assets resulting from operations................. (1,740,389) 3,216,646 1,309,987
Capital transactions:
Purchase of Variable Account C units.......................................... 24,347,849 18,848,153 13,122,018
Redemption of Variable Account C units........................................ (1,563,675) (1,856,898) (1,607,358)
Mortality and expense charge redeemed from Fortis Series Funds, Inc........... 630,146 -- 196,675
Mortality and expense charge due from Fortis Series Funds, Inc................ -- 406,385 --
Dividend income distribution to Fortis Benefits Insurance Company............. (9,364) -- (3,950)
----------- ----------- -----------
Net increase in net assets from capital transactions............................ 23,404,956 17,397,640 11,707,385
----------- ----------- -----------
Total increase in net assets.................................................... 21,664,567 20,614,286 13,017,372
Net assets, beginning of year................................................... 49,915,960 29,301,674 16,284,302
----------- ----------- -----------
Net assets, end of year......................................................... $71,580,527 $49,915,960 $29,301,674
----------- ----------- -----------
----------- ----------- -----------
U.S. GOVERNMENT SECURITIES PORTFOLIO SUBACCOUNT
From operations:
Net investment income......................................................... $ 527,910 $ 472,120 $ 217,042
Net realized (loss) gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... (126,731) 56,486 --
Net change in unrealized depreciation on investments.......................... (967,547) (133,072) (66,898)
----------- ----------- -----------
Net (decrease) increase in net assets resulting from operations................. (566,368) 395,534 150,144
Capital transactions:
Purchase of Variable Account C units.......................................... 1,951,506 4,101,566 2,384,230
Redemption of Variable Account C units........................................ (1,984,288) (971,887) (385,801)
Mortality and expense charge redeemed from Fortis Series Funds, Inc........... 79,454 -- 34,292
Mortality and expense charge due from Fortis Series Funds, Inc................ -- 51,142 --
Redemption of Fortis Benefits Insurance Company investment in subaccount...... -- -- (1,390,338)
----------- ----------- -----------
Net increase in net assets from capital transactions............................ 46,672 3,180,821 642,383
----------- ----------- -----------
Total (decrease) increase in net assets......................................... (519,696) 3,576,355 792,527
Net assets, beginning of year................................................... 7,649,685 4,073,330 3,280,803
----------- ----------- -----------
Net assets, end of year......................................................... $ 7,129,989 $ 7,649,685 $ 4,073,330
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

See accompanying notes.

64
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------
1994 1993 1992
----------- ----------- ----------
<S> <C> <C> <C>
MONEY MARKET PORTFOLIO SUBACCOUNT
From operations:
Net investment (loss) income.................................................. $ (21,446) $ 20,825 $ 27,600
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 13,988 4,990 --
Net change in unrealized appreciation (depreciation) on investments........... 100,566 (3,006) 5,429
----------- ----------- ----------
Net increase in net assets from operations...................................... 93,108 22,809 33,029
Capital transactions:
Purchase of Variable Account C units.......................................... 4,963,584 3,163,424 2,473,144
Redemption of Variable Account C units........................................ (2,269,774) (3,233,030) (1,783,229)
Mortality and expense charge redeemed from Fortis Series Funds, Inc........... 21,446 -- 9,903
Mortality and expense charge due from Fortis Series Funds, Inc................ -- 14,578 --
Redemption of Fortis Benefits Insurance Company investment in the
subaccount................................................................... -- -- (1,070,910)
----------- ----------- ----------
Net increase (decrease) in net assets from capital transactions................. 2,715,256 (55,028) (371,092)
----------- ----------- ----------
Total increase (decrease) in net assets......................................... 2,808,364 (32,219) (338,063)
Net assets, beginning of year................................................... 1,417,254 1,449,473 1,787,536
----------- ----------- ----------
Net assets, end of year......................................................... $ 4,225,618 $ 1,417,254 $1,449,473
----------- ----------- ----------
----------- ----------- ----------
ASSET ALLOCATION PORTFOLIO SUBACCOUNT
From operations:
Net investment income......................................................... $ 480,112 $ 272,302 $ 150,845
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 42,277 67,563 --
Net change in unrealized (depreciation) appreciation on investments........... (652,759) 432,499 184,791
----------- ----------- ----------
Net (decrease) increase in net assets resulting from operations................. (130,370) 772,364 335,636
Capital transactions:
Purchase of Variable Account C units.......................................... 5,042,184 5,311,744 2,431,645
Redemption of Variable Account C units........................................ (514,392) (572,086) (210,349)
Mortality and expense charge redeemed from Fortis Series Funds, Inc........... 146,296 -- 43,171
Mortality and expense charge due from Fortis Series Funds, Inc................ -- 91,158 --
Dividend income distribution to Fortis Benefits Insurance Company............. (26,122) -- (15,527)
----------- ----------- ----------
Net increase in net assets from capital transactions............................ 4,647,966 4,830,816 2,248,940
----------- ----------- ----------
Total increase in net assets.................................................... 4,517,596 5,603,180 2,584,576
Net assets, beginning of year................................................... 11,966,218 6,363,038 3,778,462
----------- ----------- ----------
Net assets, end of year......................................................... $16,483,814 $11,966,218 $6,363,038
----------- ----------- ----------
----------- ----------- ----------
</TABLE>

See accompanying notes.

65
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------
1994 1993 1992
----------- ----------- ----------
<S> <C> <C> <C>
DIVERSIFIED INCOME PORTFOLIO SUBACCOUNT
From operations:
Net investment income......................................................... $ 227,813 $ 108,661 $ 14,019
Net realized (loss) gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... (32,443) 16,707 --
Net change in unrealized depreciation on investments.......................... (335,368) (49,202) (3,365)
----------- ----------- ----------
Net (decrease) increase in net assets resulting from operations................. (139,998) 76,166 10,654
Capital transactions:
Purchase of Variable Account C units.......................................... 2,099,560 1,934,554 444,073
Redemption of Variable Account C units........................................ (601,619) (509,368) (314,214)
Mortality and expense charge redeemed from Fortis Series Funds, Inc........... 29,757 -- 2,020
Mortality and expense charge due from Fortis Series Fund, Inc................. -- 11,358 --
----------- ----------- ----------
Net increase in net assets from capital transactions............................ 1,527,698 1,436,544 131,879
----------- ----------- ----------
Total increase in net assets.................................................... 1,387,700 1,512,710 142,533
Net assets, beginning of year................................................... 1,801,635 288,925 146,392
----------- ----------- ----------
Net assets, end of year......................................................... $ 3,189,335 $ 1,801,635 $ 288,925
----------- ----------- ----------
----------- ----------- ----------
GLOBAL GROWTH PORTFOLIO SUBACCOUNT
From operations:
Net investment (loss) income.................................................. $ (12,313) $ (9,609) $ 8,047
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares....................................................................... 490,813 33,810 --
Net change in unrealized (depreciation) appreciation on investments........... (1,085,870) 930,476 254,238
----------- ----------- ----------
Net (decrease) increase in net assets from operations........................... (607,370) 954,677 262,285
Capital transactions:
Purchase of Variable Account C units.......................................... 14,421,587 6,887,276 723,203
Redemption of Variable Account C units........................................ (702,164) (722,115) (28,714)
Mortality and expense charge redeemed from Fortis Series Funds, Inc........... 157,000 -- 2,084
Mortality and expense charge due from Fortis Series Fund, Inc................. -- 35,224 --
Funding of subaccount by Fortis Benefits Insurance Company.................... -- -- 2,461,249
Redemption of Fortis Benefits Insurance Company investment in subaccount...... (2,500,000) -- --
Dividend income distributed to Fortis Benefits Insurance Company.............. (3,407) -- (7,334)
----------- ----------- ----------
Net increase in net assets from capital transactions............................ 11,373,016 6,200,385 3,150,488
----------- ----------- ----------
Total increase in net assets.................................................... 10,765,646 7,155,062 3,412,773
Net assets, beginning of year................................................... 10,567,835 3,412,773 --
----------- ----------- ----------
Net assets, end of year......................................................... $21,333,481 $10,567,835 $3,412,773
----------- ----------- ----------
----------- ----------- ----------
</TABLE>

See accompanying notes.

66
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994
------------
<S> <C>
AGGRESSIVE GROWTH PORTFOLIO SUBACCOUNT
From operations:
Net investment income.................................................. $ 4,394
Net realized loss on redemption of Fortis Series Fund, Inc. portfolio
shares................................................................ (2,388)
Net change in unrealized appreciation on investments................... 33,036
------------
Net increase in net assets from operations............................... 35,042
Capital transactions:
Purchase of Variable Account C units................................... 1,858,035
Redemption of Variable Account C units................................. (206,503)
Mortality and expense charge redeemed from Fortis Series Funds, Inc.... 4,484
Funding of subaccount by Fortis Benefits Insurance Company............. 600,000
Dividend income distributed to Fortis Benefits Insurance Company....... (2,388)
------------
Net increase in net assets from capital transactions..................... 2,253,628
------------
Total increase in net assets............................................. 2,288,670
Net assets, beginning of year............................................ --
------------
Net assets, end of year.................................................. $2,288,670
------------
------------
GROWTH & INCOME PORTFOLIO SUBACCOUNT
From operations:
Net investment income.................................................. $ 11,564
Net realized gain on redemption of Fortis Series Fund, Inc. portfolio
shares................................................................ 124
Net change in unrealized appreciation on investments................... 6,216
------------
Net increase in net assets from operations............................... 17,904
Capital transactions:
Purchase of Variable Account C units................................... 656,805
Redemption of Variable Account C units................................. (13,437)
Mortality and expense charge redeemed from Fortis Series Funds, Inc.... 1,404
Funding of subaccount by Fortis Benefits Insurance Company............. 600,000
Dividend income distributed to Fortis Benefits Insurance Company....... (6,438)
------------
Net increase in net assets from capital transactions..................... 1,238,334
------------
Total increase in net assets............................................. 1,256,238
Net assets, beginning of year............................................ --
------------
Net assets, end of year.................................................. $1,256,238
------------
------------
</TABLE>

See accompanying notes.

67
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994
------------
<S> <C>
HIGH YIELD PORTFOLIO SUBACCOUNT
From operations:
Net investment income.................................................. $ 80,455
Net realized loss on redemption of Fortis Series Fund, Inc. portfolio
shares................................................................ (3,503)
Net change in unrealized depreciation on investments................... (29,639)
------------
Net increase in net assets from operations............................... 47,313
Capital transactions:
Purchase of Variable Account C units................................... 733,981
Redemption of Variable Account C units................................. (288,164)
Mortality and expense charge redeemed from Fortis Series Funds, Inc.... 1,463
Funding of subaccount by Fortis Benefits Insurance Company............. 1,300,000
Dividend income distributed to Fortis Benefits Insurance Company....... (59,150)
------------
Net increase in net assets from capital transactions..................... 1,688,130
------------
Total increase in net assets............................................. 1,735,443
Net assets, beginning of year............................................ --
------------
Net assets, end of year.................................................. $1,735,443
------------
------------
</TABLE>

See accompanying notes.

68
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
DECEMBER 31, 1994

Fortis Benefits was founded in 1910. At the end of 1994, Fortis Benefits had
approximately $61 billion of total life insurance in force. Fortis Benefits is a
Minnesota corporation and is qualified to sell life insurance and annuity
contracts in the District of Columbia and in all states except New York. Fortis
Benefits is an indirectly wholly-owned subsidiary of Fortis, Inc., which is
itself indirectly owned 50% by N.V. AMEV and 50% by Compagnie Financiere et de
Reassurance du Group AG ("Group AG"). Fortis, Inc. manages the United States
operations for these two companies.

Fortis Advisers, Inc. (a wholly-owned subsidiary of Fortis, Inc.) provides
investment management services to the portfolios in exchange for investment
advisory and management fees. Investment advisory and management fees are based
on each portfolio's daily net assets and decrease in reduced percentages as
average daily net assets increase. The fees represent an investment expense to
Fortis Series Funds, Inc. (the Fund) which reduces the portfolios' net assets.
The fees charged by Fortis Advisers, Inc. are not available on an individual
variable account basis. Fees for all variable accounts to which Fortis Advisers,
Inc. provided investment management services amounted to $5,839,044, $3,748,274
and $1,791,966 in 1994, 1993 and 1992, respectively.

There are nine subaccounts within the Account, each of which invests only in a
corresponding portfolio of the Fund. The investment objectives and policies of
each of the Account's subaccounts are as follows:

- GROWTH STOCK PORTFOLIO SUBACCOUNT--seeks growth of capital through
short-term and long-term appreciation.

- U.S. GOVERNMENT SECURITIES PORTFOLIO SUBACCOUNT--seeks to earn a high
level of current income consistent with prudent investment risk.

- MONEY MARKET PORTFOLIO SUBACCOUNT--seeks high levels of capital stability
and liquidity and, to the extent consistent with these objectives, a high
level of current income.

69
<PAGE>
1. GENERAL (CONTINUED)
- ASSET ALLOCATION PORTFOLIO SUBACCOUNT--seeks favorable overall rates of
return on capital, primarily through increased ownership of equity
securities during periods when stock market conditions appear favorable,
and short-term and long-term debt instruments during periods when stock
market conditions are less favorable.

- DIVERSIFIED INCOME PORTFOLIO SUBACCOUNT--seeks high level of current
income by investing primarily in a diversified portfolio of government
securities and investment grade corporate bonds.

- GLOBAL GROWTH PORTFOLIO SUBACCOUNT--seeks growth of capital through
long-term capital appreciation, through ownership of equity securities,
allocated among diverse international markets.

- AGGRESSIVE GROWTH PORTFOLIO SUBACCOUNT--Seeks long-term capital
appreciation in equity securities.

- GROWTH & INCOME PORTFOLIO SUBACCOUNT--Seeks growth of capital and current
income through ownership of equity securities that provide an income
component and the potential for growth.

- HIGH YIELD PORTFOLIO SUBACCOUNT--Seeks maximum total return through
current income and capital appreciation through ownership of a
diversified portfolio of high-yielding fixed-income securities.

2. INVESTMENT IN FORTIS SERIES FUNDS, INC.
INVESTMENTS

Investment in shares of the Fund is stated at market value, which is based on
the percentage owned by the Account of the net asset value of the respective
portfolios of the Fund. The Fund's net asset value is based on market quotations
of the securities held in the portfolio. The cost of investments sold and
redeemed is determined on the average cost method. Prior to 1993 the Account was
not able to separately identify realized gains or losses on redemption of the
Fund portfolio shares. Any such gains or losses were netted with redemption of
Account units. Unrealized appreciation or depreciation of investments represents
the Account's share of the mutual fund's undistributed net investment income,
undistributed realized gains or losses and unrealized appreciation or
depreciation in the Fund's investments.

Purchases and sales of shares of the Fund are recorded on the trade date. The
number of shares and aggregate cost of purchases and proceeds from sales of
shares were as follows:

<TABLE>
<CAPTION>
SHARES
------------------- COST OF PROCEEDS
PURCHASED SOLD PURCHASES FROM SALES
---------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1994:
Growth Stock Series............................. 1,106,287 70,314 $24,347,849 $1,563,675
U.S. Government Securities Series............... 188,049 192,822 1,951,506 1,984,288
Money Market Series............................. 476,828 217,878 4,963,584 2,269,774
Asset Allocation Series......................... 361,546 37,257 5,042,184 514,392
Diversified Income Series....................... 183,908 53,081 2,099,560 601,619
Global Growth Series............................ 1,156,826 261,960 14,421,587 3,202,164
Aggressive Growth Series........................ 254,672 21,957 2,458,035 206,503
Growth & Income Series.......................... 124,784 1,316 1,256,805 13,437
High Yield Series............................... 203,595 28,990 2,033,981 288,164
</TABLE>

70
<PAGE>
2. INVESTMENT IN FORTIS SERIES FUNDS, INC. (CONTINUED)

<TABLE>
<CAPTION>
SHARES
------------------- COST OF PROCEEDS
PURCHASED SOLD PURCHASES FROM SALES
---------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1993:
Growth Stock Series....................................... 870,748 86,471 $18,848,154 $1,856,898
U.S. Government Securities Series......................... 356,363 84,648 4,101,566 971,887
Money Market Series....................................... 305,838 312,668 3,163,424 3,233,030
Asset Allocation Series................................... 383,082 41,515 5,311,744 572,086
Diversified Income Series................................. 156,725 41,226 1,934,555 509,368
Global Growth Series...................................... 573,601 62,506 6,887,276 722,115

Year ended December 31, 1992:
Growth Stock Series....................................... 671,220 81,875 $13,122,018 $1,615,536
U.S. Government Securities Series......................... 216,618 165,246 2,384,230 1,776,139
Money Market Series....................................... 239,206 277,163 2,473,144 2,854,139
Asset Allocation Series................................... 188,477 17,567 2,431,644 230,753
Diversified Income Series................................. 37,743 26,729 444,073 314,214
Global Growth Series...................................... 317,627 3,512 3,192,402 36,664
</TABLE>

The number of shares and cost of shares issued from reinvestment of dividends
with the Fund were as follows:

<TABLE>
<CAPTION>
COST OF
SHARES SHARES
----------- ---------
<S> <C> <C>
Year ended December 31, 1994:
Growth Stock Series.............................. 23,983 $ 524,850
U.S. Government Securities Series................ 64,492 607,364
Money Market Series.............................. -- --
Asset Allocation Series.......................... 46,335 626,408
Diversified Income Series........................ 24,758 257,570
Global Growth Series............................. 11,872 144,686
Aggressive Growth Series......................... 915 8,878
Growth & Income Series........................... 1,288 12,968
High Yield Series................................ 8,691 81,918

Year ended December 31, 1993:
Growth Stock Series.............................. 8,199 $ 186,295
U.S. Government Securities Series................ 47,700 523,262
Money Market Series.............................. 3,462 35,403
Asset Allocation Series.......................... 25,803 363,460
Diversified Income Series........................ 10,051 120,018
Global Growth Series............................. 2,026 25,615
</TABLE>

71
<PAGE>
2. INVESTMENT IN FORTIS SERIES FUNDS, INC. (CONTINUED)
<TABLE>
<CAPTION>
COST OF
SHARES SHARES
----------- ---------

Year ended December 31, 1992:
<S> <C> <C>
Growth Stock Series.............................. 8,949 $ 186,742
U.S. Government Securities Series................ 23,459 251,334
Money Market Series.............................. 3,672 37,503
Asset Allocation Series.......................... 13,141 173,613
Diversified Income Series........................ 1,416 16,039
Global Growth Series............................. 202 2,181
</TABLE>

Fortis Benefits' investment in the subaccounts represented the following number
of shares of the Fund held and aggregate cost of amounts invested at December
31, 1994:

<TABLE>
<CAPTION>
GROWTH ASSET GLOBAL AGGRESSIVE GROWTH & HIGH
STOCK ALLOCATION GROWTH GROWTH INCOME YIELD
SERIES SERIES SERIES SERIES SERIES SERIES
--------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Number of shares.......... 57,877 49,249 40,750 60,003 60,001 130,018
Cost...................... $ 602,256 $ 510,433 $ 409,185 $ 599,953 $ 600,052 $1,296,735
</TABLE>

3. ORGANIZATIONAL EXPENSES AND OTHER CHARGES
ORGANIZATIONAL EXPENSES

Fortis Benefits assumed all organizational expenses of the Account.

PREMIUM EXPENSE CHARGE

For Harmony Investment Life policies a 5% sales charge and a charge for state
premium taxes (currently 2.2% of each premium payment) is deducted from each
premium payment received by Fortis Benefits. The resulting net premiums are
allocated to the subaccounts of the Account and/or to the Fortis Benefits
General Account. For Wall Street Series VUL 100, VUL 220 and VUL 500 policies,
Fortis Benefits reserves the right to impose a charge up to 2.5% of each premium
payment, to be reimbursed to a greater extent for premium taxes or similar
charges it expects to pay.

MONTHLY DEDUCTIONS FROM POLICY VALUE

Monthly deductions from the net assets attributed to each policy are as follows:

- Monthly cost of insurance.

- Monthly cost of any optional insurance benefits added by rider.

For Harmony Investment Life Policies:

- Monthly administrative charge of $5.00 per policy ($3.00 for policies
applied for prior to July 1, 1988).

- For policies issued subsequent to July 1, 1988, Fortis Benefits reserves
the right to impose a monthly expense charge of not more than $15.00 per
month and an additional monthly per thousand of face

72
<PAGE>
3. ORGANIZATIONAL EXPENSES AND OTHER CHARGES (CONTINUED)
expense charge of not more than $.08 per month for insureds age 29 and
less, and $.25 per month for insureds age 30 and over during the first
twelve policy months. Fortis Benefits currently does not impose any of
the expense charges described in the preceding sentence.

- For policies issued prior to July 1, 1988, Fortis Benefits currently
imposes a monthly expense charge at $10.00 per month and an additional
monthly per thousand of face expense charge of $.06 per month for
insureds age 29 or less and $.20 per month for insureds age 30 and over
during the first twelve policy months.

For Wall Street Series VUL 100, VUL 220 and VUL 500 Policies:

- Monthly administrative charge of $4.50 per policy. Fortis Benefits
reserves the right to change this administrative charge, but it will
never exceed $7.50 per month.

- For VUL 220 and VUL 500, monthly sales, premium tax and policy advance
charge of $4.00 per policy.

MORTALITY AND EXPENSE RISK AND POLICY ADVANCE CHARGES

Except for Fortis Benefits mortality and expense risk and policy advance charges
which are recorded in the statement of operations, these monthly deductions are
included in the statement of changes in net assets as a part of the redemption
of Variable Account C units.

SURRENDER CHARGE

For Wall Street Series VUL 100, VUL 220 and VUL 500 policies surrendered within
the first eleven years of issuance, Fortis Benefits assesses a surrender charge.
The charge is the sum of any sales, premium tax and policy advance charges not
previously deducted on a monthly or daily basis. For VUL 220 and VUL 500, an
additional surrender charge of $5.00 per thousand of the policies initial face
amount, plus a maximum percentage of the annualized net minimum premiums. The
percentage is 12% for VUL 220 and 22% for VUL 500. The surrender charge for all
Wall Street Series policies is limited to certain maximums based on the
insured's age at the time of issuance and decreases at a constant rate on the
fifth and subsequent anniversary until it reaches zero on the eleventh policy
anniversary. A similar schedule of surrender charges is imposed on a face
increase.

73
<PAGE>
3. ORGANIZATIONAL EXPENSES AND OTHER CHARGES (CONTINUED)
Surrender charges collected by Fortis Benefits were $1,475,321, $730,008 and
$415,231 in 1994, 1993 and 1992, respectively.

4. FEDERAL INCOME TAXES
The operations of the Account form a part of, and are taxed with, the
operations of Fortis Benefits, which is taxed as a life insurance company under
the Internal Revenue Code. As a result, the net asset values of the subaccounts
are not affected by federal income taxes on income distributions received by the
subaccounts.

74
<PAGE>
APPENDIX A

OPTIONAL INCOME PLANS

The insurance proceeds when the insured dies or the Surrender Value on the
maturity date or on full surrender of the Policy, instead of being paid in one
lump sum, may be applied under one or more of the following income plans. Values
under the income plans do not depend upon the investment experience of a
separate account. Under options 3 or 4, unless a guaranteed period or refund
alternative is selected, it would be possible to receive only one payment, in
the case of the payee's early death.

OPTION 1. INTEREST PAYMENTS

Fortis Benefits will pay interest at twelve, six, three or one month intervals
for a specified period, as selected by the Policy owner. At the end of the
selected period, Fortis Benefits will pay the proceeds in a single sum or under
any other option selected when this option is chosen.

OPTION 2. PAYMENTS OF A FIXED AMOUNT OR FOR A FIXED PERIOD

Fortis Benefits will make payments in an amount the Policy owner selects when
choosing this option or equal payments for a period of from one to thirty years,
at the choice of the Policy owner. In either case, the Policy owner may request
payments at twelve, six, three or one month intervals.

OPTION 3. LIFE INCOME PAYMENTS

(1) Life Annuity: a monthly income during the lifetime of the payee; or

(2) Life Annuity with a Guaranteed Period: a monthly income with payments
guaranteed for either ten or twenty years, as the Policy owner chooses,
continuing during the payee's lifetime; or

(3) Refund Life Annuity: a monthly income with payments guaranteed for the
number of months determined by dividing the proceeds by the first monthly
payment. The payments continue during the payee's lifetime.

OPTION 4. JOINT LIFE INCOME PAYMENTS

The Policy owner names two payees to whom Fortis Benefits will pay a joint
monthly income during their joint lifetime. After either payee's death, Fortis
Benefits will make monthly payments equal to 2/3 of the joint monthly payment
during the survivor's lifetime.

For options 3 and 4, the amount of the monthly payments depends on the type of
income selected, the Ages of the payees on the settlement date and the amount of
the proceeds. The minimum amounts payable for selected Ages are set forth in the
Policy.

APPLICABLE RATES. The interest rate under options 1, 2, 3 and 4 above will
effectively be at least 3 1/2% per year. If option 1 is chosen, Fortis Benefits
may pay excess interest. If options 2, 3, or 4 are chosen and the monthly
payments are less than those provided by Fortis Benefits under settlement rates
that Fortis Benefits is then currently offering, Fortis Benefits will pay the
larger amount.

OTHER TERMS AND CONDITIONS. The Policy owner may also choose any other option
agreed to by Fortis Benefits. The Policy owner may also change or revoke a
choice of options under which payments have not yet commenced. If the Policy
owner does not choose an option before the insured dies, the beneficiary will
have the right to choose an option.

A-1
<PAGE>
No payee has the right to change the settlement option chosen before the
insured's death. Payments may not be assigned or commuted.

If the payee dies before receiving all proceeds payable, Fortis Benefits will
pay any amount still due to the payee's estate.

Fortis Benefits has the right to pay the proceeds in a single sum if (1) the
proceeds payable are less than $2,000; or (2) payments under the settlement
option chosen would be less than $20 each. When an income plan starts, a
separate contract will be issued describing the terms of the plan, and the
Policy must be returned to us at that time. Specimen plans may be obtained from
Fortis Benefits' Home Office and reference should be made to these forms for
further details.

OPTIONAL INSURANCE BENEFITS

Optional insurance benefit riders may be attached to a Policy, subject to
certain insurance underwriting requirements, approval in the state where the
Policy is sold, and the payment of additional charges. These riders are
described in general terms below. Limitations and conditions are contained in
the riders, and the description below is subject to the specific terms of the
riders. A prospective purchaser may obtain specimen riders from Fortis Benefits'
Home Office. The charges for these riders are deducted each month as part of the
Monthly Deduction from Policy Value.

Any rider selected becomes a part of the Policy and is subject to all terms of
the Policy which are not inconsistent with the terms of the rider. Fortis
Benefits may decline to issue any optional insurance rider in its sole
discretion based on current underwriting guidelines and other regulatory
restrictions. Riders may be cancelled by Policy owners in accordance with the
procedures established by Fortis Benefits from time to time.

WAIVER OF MONTHLY DEDUCTIONS RIDER. If the insured is totally disabled for more
than six months while this rider is in effect, Fortis Benefits will waive
subsequent Monthly Deductions, so long as the total disability continues. Any
monthly charges deducted after disability begins but before Fortis Benefits
approves the disability claim will be added to the Policy Value in a lump sum as
of the date of approval, based on the premium allocation percentage then in
effect. For any month that deductions are waived, otherwise applicable
requirements to make additional Minimum Premium payments will be waived or
suspended. You should consult your sales representative for details. The rider
does not cover pre-existing disabilities and terminates when the insured reaches
Age 60, except as to any disability commencing prior to that time. The charges
for this rider are based on the Net Amount at Risk under a Policy from time to
time and the insured's Age and rate class. The rates of charges for this rider
are set forth in the rider, and the rate at which the charge is imposed
increases from year to year. An increase or decrease in the Net Amount at Risk,
or the addition or cancellation of any benefits under riders the charges for
which are covered under this rider, will result in an increase or decrease in
the charges for this rider. The charges for this rider will also be decreased if
Fortis Benefits approves a more favorable rate class for the insured.

GUARANTEED DEATH BENEFIT RIDER. This rider guarantees that a Policy will not
lapse so long as (1) the cumulative amount of premiums paid as of each Monthly
Anniversary, less the outstanding amount of any Policy loans and cumulative
partial withdrawals taken by the Policy owner, at least equals (2) the
cumulative monthly Required Premiums, assuming regular payment of such Required
Premiums commencing on the Policy Date and on each Monthly Anniversary
thereafter, including the current Monthly Anniversary. If issued after July 1,
1988, this rider and the benefits thereunder terminate on the first Policy
Anniversary on or after the insured person reaches age 65 (or, if later, at the
end of the fifth Policy year).

A-2
<PAGE>
The monthly Required Premiums for a Policy's initial Face Amount are set forth
in the Policy schedule page included in the Policy. The monthly Required
Premiums for this purpose will increase or decrease as a result of Policy owner
requests for (1) Face Amount increases, (2) Face Amount decreases, or (3)
changes in the insured's rate class, to the extent and in the manner set forth
under "Payment and Allocation of Premiums--Premiums" with respect to the
no-lapse guarantee during the first two Policy years. As described there, Fortis
Benefits also will increase or decrease the amount of the monthly Required
Premium for purposes of this rider, if benefits under other riders to a Policy
are subsequently added or deleted, respectively. Any new monthly Required
Premium would be shown in a revised Policy schedule which will be delivered to
the Policy owner following any change. For any month that deductions are waived
pursuant to a Waiver of Monthly Deductions Rider, the Required Premium is deemed
to be zero.

If, on any Monthly Anniversary, the minimum Required Premiums necessary to keep
this rider in force have not been paid, Fortis Benefits will send the Policy
owner a notice of the minimum amount required to be paid. This rider will
terminate if at least this amount is not paid, or if the Date of Receipt by
Fortis Benefits of this amount is not prior to the next Monthly Anniversary.
Except as discussed below with respect to a previous form of this rider, any
Grace Period under the Policy will end on the date otherwise provided in the
Policy, but in no event earlier than the Monthly Anniversary following lapse of
the rider. This rider will also terminate as of the Monthly Anniversary next
following the Date of Receipt of the Policy owner's request for termination.
Once this rider terminates, it may not be reinstated. If the owner permits a
rider issued on or before July 1, 1988 to lapse, any Grace Period which would
otherwise be in effect will commence on the Monthly Anniversary following the
date of the first Policy owner notice or, if later, the date on which such Grace
Period would otherwise commence.

This rider will be issued only at the time the Policy is issued. The monthly
charge for this rider is $.01 per thousand dollars of Face Amount in effect
under the Policy or under a "child insurance" rider. The initial charge is set
forth in the Policy schedule. A subsequent increase or decrease in Face Amount
will result in an increase or decrease, respectively, in the level of charges
for this rider. The same is true of the addition or cancellation of any benefits
under a "child insurance" rider. The new charges will be set forth in the
revised Policy schedule delivered following any change. If this rider terminates
for any reason, the charge for it will terminate at the same time.

In Texas, the guaranteed death benefit option is available as part of the basic
Policy, rather than by rider. Nevertheless, the terms and conditions in
connection therewith are the same as described herein for a Policy with a
guaranteed death benefit rider, except that the guaranteed death benefit may not
be terminated by request of the Policy owner. The term "Minimum Monthly Premium"
is used in place of "Monthly Required Premium" in Policies issued with the
guaranteed death benefit feature in Texas, but these terms have the same
meaning.

CHILD INSURANCE RIDER. This rider provides fixed amounts of insurance on the
life of each child of the primary insured named in the application and accepted
by Fortis Benefits, and any subsequent child acquired after the date of the
application. This coverage, however, will not apply for any child who is age 15
or more at the time the coverage on that child is to take effect. Nor is there
any insurance coverage for a child until 15 days after that child's birth, or
after the first Policy Anniversary on or after that child's 25th birthday.

The charge for this rider is shown on the Policy schedule and is paid in level
amounts. The insurance under this rider becomes fully paid-up upon receipt by
Fortis Benefits of due proof of the primary insured's death while the rider is
in force. This rider terminates when the Policy terminates or on the first
Policy Anniversary on or after the primary insured's 65th birthday.

A-3
<PAGE>
APPENDIX B

ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES,
SURRENDER VALUES AND ACCUMULATED PREMIUMS

The tables on pages B-2 to B-5 illustrate the way in which a Policy's death
benefit, Policy Value and Surrender Value could vary over an extended period of
time, assuming that all premiums are allocated to the Subaccounts of the
Separate Account for the entire period shown and assuming hypothetical gross
investment rates of return for the underlying Fortis Series Portfolios (i.e.,
investment income and capital gains and losses, realized and unrealized)
equivalent to constant gross annual rates of 0%, 4%, 8% and 12%.

The tables are based on Face Amounts of $100,000 for a male Age 35. Each
illustration assumes that the insured is in the non-smoker underwriting risk
classification. Illustrations for an insured in the standard or a substandard
underwriting risk classification would show, for the same Age and premium
payments, lower Policy Values and, therefore, lower Surrender Values and, for
the Alternative Death Benefit and Death Benefit Type B, lower death benefits.
These values would be higher, however, for an otherwise comparable Policy on the
life of a non-smoker female insured.

The illustrations on pages B-2 and B-3 are based on the expense charges and cost
of insurance rates now in effect for Policies currently being sold; those on
pages B-4 and B-5 are based on the maximum guaranteed expense charges and cost
of insurance rates. See "Charges and Deductions--Monthly Deduction From Cash
Value."

The amounts shown for the death benefits, Policy Values and Surrender Values
take into account the deductions from premiums and the Monthly Deduction, as
well as the daily charge against the Separate Account for mortality and expense
risks equivalent to an annual rate of .75% of the Policy Value in the Separate
Account and assumed Portfolio investment advisory fees equivalent to an annual
rate of .62% and other Portfolio operating expenses equivalent to an annual rate
of .07% of the average daily value of the aggregate net assets of the Portfolio.
(.62% is the average of the advisory fee rates paid by the currently available
Portfolios and .07% is the actual amount of other expenses that such Portfolios
incurred in 1994).

Taking account of the charges for mortality and expense risks and assumed
Portfolio operating expenses, the gross annual investment rates of return of 0%,
4%, 8% and 12% correspond to actual (or net) annual rates of: -1.44%, 2.56%,
6.56%, and 10.56%, respectively.

The hypothetical returns in the tables do not reflect any charges for income
taxes against the Separate Account, since no such charges are currently made.
However, if in the future such charges are made, in order to produce the death
benefits, Policy Values and Surrender Values illustrated, the gross annual
investment rate of return would have to exceed 0%, 4%, 8% or 12% by a sufficient
amount to cover the tax charges. See "Federal Tax Matters-- Taxation of Fortis
Benefits."

The second column of the tables shows the amount which would accumulate if each
year an amount equal to the stated premiums were invested to earn interest,
after taxes, at 5% compounded annually. The difference between Policy Values and
Surrender Values during the first nine Policy years, as shown in the tables, is
the amount of Contingent Deferred Sales Charge.

Upon request, Fortis Benefits will furnish an illustration reflecting the
proposed insured's age and sex, the Face Amount and premium amounts requested,
frequency of premium payments, the death benefit option selected and any
available rider requested.

B-1
<PAGE>
MALE ISSUE AGE 35
NONSMOKER UNDERWRITING RISK
FACE AMOUNT: $100,000--DEATH BENEFIT TYPE A
CURRENT COST OF INSURANCE AND EXPENSE CHARGES

<TABLE>
<CAPTION>
VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF
----------------------------------------------------------------------------------------------------------
PREMIUMS 0% (1)(2) 4% (1)(2) 8% (1)(2) 12% (1)(2)
END OF ACCUMULATED ------------------------- ------------------------- ------------------------- -------------------------
POLICY AT 5% INTEREST DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER
YEAR PER YEAR (1) BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- ------ -------------- ------- ------- --------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 945 100,000 615 419 100,000 643 448 100,000 672 477 100,000 701 505
2 1,937 100,000 1,211 1,016 100,000 1,294 1,098 100,000 1,380 1,184 100,000 1,467 1,271
3 2,979 100,000 1,791 1,595 100,000 1,953 1,757 100,000 2,124 1,928 100,000 2,305 2,109
4 4,073 100,000 2,351 2,155 100,000 2,617 2,422 100,000 2,907 2,711 100,000 3,221 3,023
5 5,222 100,000 2,892 2,696 100,000 3,288 3,092 100,000 3,730 3,534 100,000 4,222 4,026
6 6,428 100,000 3,412 3,256 100,000 3,963 3,806 100,000 4,594 4,437 100,000 5,316 5,160
7 7,694 100,000 3,911 3,794 100,000 4,641 4,524 100,000 5,501 5,384 100,000 6,513 6,396
8 9,024 100,000 4,387 4,309 100,000 5,321 5,243 100,000 6,453 6,375 100,000 7,822 7,744
9 10,420 100,000 4,838 4,799 100,000 6,001 5,962 100,000 7,450 7,411 100,000 9,253 9,214
10 11,886 100,000 5,263 5,263 100,000 6,678 6,678 100,000 8,494 8,494 100,000 10,817 10,817
15 20,392 100,000 6,887 6,887 100,000 9,922 9,922 100,000 14,428 14,428 100,000 21,122 21,122
20 31,247 100,000 7,509 7,509 100,000 12,705 12,705 100,000 21,748 21,748 100,000 37,517 37,517
25 45,102 100,000 6,749 6,749 100,000 14,570 14,570 100,000 30,796 30,796 100,000 64,410 64,410
30 62,785 100,000 3,898 3,898 100,000 14,689 14,689 100,000 42,065 42,065 133,622 109,527 109,527
</TABLE>

(1) Assumes annual premium payments of $900 paid in full at beginning of each
Policy year. The values would vary from those shown if the amount or
frequency of payments varies.

(2) Assumes that no Policy loan or partial withdrawal has been made and no
optional insurance riders have been selected. Zero values indicate Policy
lapse in the absence of sufficient additional premium payments.

(3) Alternative Death Benefit applies; see "Policy Benefits--Death Benefit
Options" for further details.

IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON A NUMBER OF FACTORS INCLUDING THE
PREMIUM AND POLICY VALUE ALLOCATIONS MADE BY AN OWNER AND THE DIFFERENT RATES OF
RETURN OF THE PORTFOLIOS. THE DEATH BENEFIT, POLICY VALUE AND SURRENDER VALUE
FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES
OF RETURN AVERAGED 0%, 4%, 8% AND 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS OR IF ANY PREMIUMS
WERE ALLOCATED OR POLICY VALUE TRANSFERRED TO THE GENERAL ACCOUNT. NO
REPRESENTATIONS CAN BE MADE BY FORTIS BENEFITS OR FORTIS SERIES THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.

B-2
<PAGE>
MALE ISSUE AGE 35
NONSMOKER UNDERWRITING RISK
FACE AMOUNT: $100,000--DEATH BENEFIT TYPE B
CURRENT COST OF INSURANCE AND EXPENSE CHARGES

<TABLE>
<CAPTION>
VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF
----------------------------------------------------------------------------------------------------------
PREMIUMS 0% (1)(2) 4% (1)(2) 8% (1)(2) 12% (1)(2)
END OF ACCUMULATED ------------------------- ------------------------- ------------------------- -------------------------
POLICY AT 5% INTEREST DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER
YEAR PER YEAR (1) BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- ------ -------------- ------- ------- --------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 945 100,613 613 418 100,642 642 447 100,671 671 475 100,700 700 504
2 1,937 101,208 1,208 1,012 101,291 1,291 1,095 101,376 1,376 1,180 101,464 1,464 1,268
3 2,979 101,784 1,784 1,589 101,946 1,946 1,750 102,117 2,117 1,921 102,297 2,297 2,101
4 4,073 102,341 2,341 2,145 102,606 2,606 2,410 102,894 2,894 2,698 103,206 3,206 3,010
5 5,222 102,876 2,876 2,680 103,269 3,269 3,074 103,709 3,709 3,513 104,198 4,198 4,002
6 6,428 103,390 3,390 3,233 103,936 3,936 3,779 104,562 4,562 4,406 105,279 5,279 5,122
7 7,694 103,880 3,880 3,763 104,603 4,603 4,486 105,455 5,455 5,338 106,458 6,458 6,340
8 9,024 104,346 4,346 4,268 105,270 5,270 5,191 106,389 6,389 6,310 107,742 7,742 7,664
9 10,420 104,785 4,785 4,746 105,933 5,933 5,894 107,362 7,362 7,323 109,141 9,141 9,102
10 11,886 105,196 5,196 5,196 106,590 6,590 6,590 108,376 8,376 8,376 110,663 10,663 10,663
15 20,392 106,707 6,707 6,707 109,649 9,649 9,649 114,014 14,014 14,014 120,494 20,494 20,494
20 31,247 107,127 7,127 7,127 112,035 12,035 12,035 120,566 20,566 20,566 135,422 35,422 35,422
25 45,102 106,071 6,071 6,071 113,152 13,152 13,152 127,821 27,821 27,821 158,167 58,167 58,167
30 62,785 102,890 2,890 2,890 112,005 12,005 12,005 135,138 35,138 35,138 192,838 92,838 92,838
</TABLE>

(1) Assumes annual premium payments of $900 paid in full at beginning of each
Policy year. The values would vary from those shown if the amount or
frequency of payments varies.

B-3
<PAGE>
MALE ISSUE AGE 35
NONSMOKER UNDERWRITING RISK
FACE AMOUNT: $100,000--DEATH BENEFIT TYPE A
GUARANTEED COST OF INSURANCE AND EXPENSE CHARGES

<TABLE>
<CAPTION>
VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF
----------------------------------------------------------------------------------------------------------
PREMIUMS 0% (1)(2) 4% (1)(2) 8% (1)(2) 12% (1)(2)
END OF ACCUMULATED ------------------------- ------------------------- ------------------------- -------------------------
POLICY AT 5% INTEREST DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER
YEAR PER YEAR (1) BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- ------ -------------- ------- ------- --------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 945 100,000 81 0 100,000 97 0 100,000 114 0 100,000 131 0
2 1,937 100,000 628 432 100,000 675 479 100,000 724 528 100,000 775 579
3 2,979 100,000 1,156 961 100,000 1,257 1,061 100,000 1,363 1,168 100,000 1,475 1,280
4 4,073 100,000 1,666 1,470 100,000 1,842 1,646 100,000 2,032 1,837 100,000 2,238 2,042
5 5,222 100,000 2,155 1,960 100,000 2,430 2,234 100,000 2,733 2,537 100,000 3,068 2,872
6 6,428 100,000 2,623 2,466 100,000 3,017 2,860 100,000 3,467 3,307 100,000 3,971 3,814
7 7,694 100,000 3,067 2,950 100,000 3,603 3,486 100,000 4,227 4,110 100,000 4,954 4,836
8 9,024 100,000 3,488 3,410 100,000 4,187 4,109 100,000 5,024 4,946 100,000 6,024 5,946
9 10,420 100,000 3,885 3,845 100,000 4,768 4,729 100,000 5,816 5,816 100,000 7,190 7,151
10 11,886 100,000 4,254 4,254 100,000 5,343 5,343 100,000 6,720 6,720 100,000 8,460 8,460
15 20,392 100,000 5,807 5,807 100,000 8,052 8,052 100,000 11,587 11,587 100,000 16,762 16,762
20 31,247 100,000 5,965 5,965 100,000 10,147 10,147 100,000 17,334 17,334 100,000 29,694 29,694
25 45,102 100,000 4,500 4,500 100,000 10,754 10,754 100,000 23,679 23,679 100,000 50,218 50,218
30 62,785 100,000 0 0 100,000 8,312 8,312 100,000 30,041 30,041 103,010 84,435 84,435
</TABLE>

(1) Assumes annual premium payments of $900 paid in full at beginning of each
Policy year. The values would vary from those shown if the amount or
frequency of payments varies.

(2) Assumes that no Policy loan or partial withdrawal has been made and no
optional insurance riders have been selected. Zero value in Death Benefit
column indicates Policy lapse in the absence of sufficient additional
premium payments.

(3) Alternative Death Benefit applies; see "Policy Benefits--Death Benefit
Options" for further details.

B-4
<PAGE>
MALE ISSUE AGE 35
NONSMOKER UNDERWRITING RISK
FACE AMOUNT: $100,000--DEATH BENEFIT TYPE B
GUARANTEED COST OF INSURANCE AND EXPENSE CHARGES

<TABLE>
<CAPTION>
VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF
----------------------------------------------------------------------------------------------------------
PREMIUMS 0% (1)(2) 4% (1)(2) 8% (1)(2) 12% (1)(2)
END OF ACCUMULATED ------------------------- ------------------------- ------------------------- -------------------------
POLICY AT 5% INTEREST DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER
YEAR PER YEAR (1) BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- ------ -------------- ------- ------- --------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 945 100,080 80 0 100,096 96 0 100,113 113 0 100,131 130 0
2 1,937 100,626 626 430 100,673 673 477 100,722 722 526 100,773 772 577
3 2,979 101,152 1,152 956 101,252 1,252 1,056 101,358 1,358 1,162 101,471 1,469 1,273
4 4,073 101,658 1,658 1,462 101,833 1,833 1,637 102,022 2,022 1,826 102,230 2,226 2,034
5 5,222 102,142 2,142 1,946 102,414 2,414 2,219 102,715 2,715 2,520 103,054 3,048 2,852
6 6,428 102,603 2,603 2,446 102,994 2,994 2,837 103,437 3,437 3,280 103,949 3,939 3,783
7 7,694 103,040 3,040 2,922 103,570 3,570 3,452 104,187 4,187 4,070 104,919 4,905 4,788
8 9,024 103,451 3,451 3,373 104,141 4,141 4,063 104,967 4,967 4,888 105,973 5,954 5,875
9 10,420 103,836 3,836 3,797 104,706 4,706 4,667 105,776 5,776 5,737 107,116 7,090 7,051
10 11,886 104,191 4,191 4,191 105,261 5,261 5,261 106,614 6,614 6,614 108,356 8,322 8,322
15 20,392 105,473 5,473 5,473 107,805 7,805 7,805 111,216 11,216 11,216 116,312 16,207 16,207
20 31,247 105,620 5,620 5,620 109,548 9,548 9,548 116,288 16,286 16,286 128,124 27,860 27,860
25 45,102 103,897 3,897 3,897 109,483 9,483 9,483 120,012 21,012 21,012 145,240 44,657 44,657
30 62,785 100,000 0 0 105,966 5,966 5,966 123,734 23,734 23,734 194,383 68,282 68,282
</TABLE>

(1) Assumes annual premium payments of $900 paid in full at beginning of each
Policy year. The values would vary from those shown if the amount or
frequency of payments varies.

B-5
<PAGE>
APPENDIX C

THE GENERAL ACCOUNT

A POLICY OWNER MAY ALLOCATE NET PREMIUMS OR TRANSFER POLICY VALUE TO THE GENERAL
ACCOUNT, WHICH CONSISTS OF ALL FORTIS BENEFITS' ASSETS NOT HELD IN THE SEPARATE
ACCOUNT OR OTHER SEGREGATED ASSET ACCOUNTS. BECAUSE OF EXEMPTIVE AND
EXCLUSIONARY PROVISIONS, INTERESTS IN THE GENERAL ACCOUNT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND THE GENERAL ACCOUNT HAS NOT
BEEN REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY,
NEITHER THE GENERAL ACCOUNT NOR ANY INTERESTS THEREIN ARE GENERALLY SUBJECT TO
THE PROVISIONS OF THOSE ACTS AND FORTIS BENEFITS HAS BEEN ADVISED THAT THE STAFF
OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURES IN
THIS PROSPECTUS RELATING TO THE GENERAL ACCOUNT. DISCLOSURES REGARDING THE
GENERAL ACCOUNT MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND
COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.

This Prospectus is generally intended to serve as a disclosure document only for
the aspects of the Policy involving the Separate Account and contains only
selected information regarding the General Account. More information regarding
the General Account may be obtained from Fortis Benefits' Home Office or from
your sales representatives.

GENERAL DESCRIPTION

Subject to applicable law, Fortis Benefits has sole discretion over the
investment of the assets of the General Account. Unlike the assets of the
Separate Account, the assets of the General Account are chargeable with
liabilities arising out of any other business of Fortis Benefits.

The allocation or transfer of amounts to the General Account does not entitle a
Policy owner to share in the investment experience of the General Account.
Instead, Fortis Benefits' guarantees that Policy Value in the General Account
will accrue interest at an effective annual rate of at least 5%, independent of
the actual investment experience of the General Account. Fortis Benefits is not
obligated to credit interest at any higher rate, although Fortis Benefits may,
in its sole discretion, do so (except with respect to loaned Policy Values being
held in the General Account). The rates of interest actually credited to any
amount in the General Account from time to time may vary depending on when that
amount was first allocated to the General Account.

The Policy owner may select either Death Benefit Type A or B under the Policy
and may change such option or the Policy's Face Amount, subject to satisfactory
evidence of insurability where required and subject to all the conditions and
limitations applicable to such transactions generally. See "Policy Benefits."

GENERAL ACCOUNT POLICY VALUE

The Policy Value in the General Account will reflect the amount and frequency of
premium payments allocated to the General Account, the amount of interest
credited to amounts in the General Account, any partial withdrawals, any
transfers from or to the Separate Account, any Policy loans and the Monthly
Deduction imposed on amounts in the General Account in connection with the
Policy. Charges under a Policy are the same as when the Separate Account is
being used, except that no charge for mortality and expense risk is imposed on
amounts of Policy Value in the General Account. See "Charges and
Deductions--Charges Against the Separate Account."

C-1
<PAGE>
TRANSFERS, SURRENDERS AND POLICY LOANS

Amounts in the General Account are generally subject to the same rights and
limitations and will be subject to the same charges as are amounts allocated to
the Subaccounts of the Separate Account with respect to transfers, total
surrenders, partial withdrawals, and Policy loans. See "Payment and Allocation
of Premiums--Allocation of Premiums and Policy Value," "Loan Privileges," and
"Surrender and Partial Withdrawal." One exception is that transfers out of the
General Account are limited to one transfer in each Policy year, which may not
be for more than 50% of the Policy Value in the General Account (excluding the
amount of General Account Policy Value attributable to Policy loans) at the date
of transfer. However, if the unloaned General Account Policy Value at the date
of transfer is less than $1,000, the entire unloaned balance may be transferred
from the General Account to the Separate Account. See "Payment and Allocation of
Premiums--Allocation of Premiums and Policy Value." Fortis Benefits reserves the
right to review these limits on an annual basis and, subject to the limits in
the Policy, to reduce them.

C-2
<PAGE>

PART II

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

Facing Sheet

Cross-Reference Table (Filed as part of Post-Effective Amendment No. 4
to this Registration Statement filed on April 29, 1988)

Prospectus and Prospectus supplement, consisting of 84 pages and 30 pages,
respectively

Undertaking to File Reports (filed as part of the initial filing of
this Registration Statement made on March 17, 1986)

Undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933
(Filed as part of the initial filing of this Registration Statement made
on March 17, 1986)

Representations and Undertakings pursuant to Rule 6e-3(T)(b)(13)(iii)(F)
under the Investment Company Act of 1940 (Filed as part of Post-Effective
Amendment No. 2 to this Registration Statement filed on April 24, 1987)

Signatures

Written Consents of the following persons:

Renee C. West, FSA, MAAA (Filed with Exhibit 6 below)

Douglas R. Lowe, Esq. (Filed with Exhibit 3 below)

Ernst & Young LLP, Independent Auditors.

The following exhibits:

1.A (1) --Resolution of Board of Directors of Fortis Benefits effecting
the establishment of Variable Account C (Filed as part of the
initial filing of this Form S-6 Registration Statement made on
March 17, 1986)

(2) --Not applicable

(3) --(a) Distribution Agreement between Fortis Benefits and Fortis
Investors, Inc. (Incorporated by reference from Exhibit No. 3(a) to
Post-Effective Amendment No. 9 to registrant's Form S-6
registration statement, File No. 33-28551, filed April 29, 1994.)

--(b) Form of Dealer Sales Agreement. (Incorporated by reference
from Post-Effective Amendment No. 12 to registrant's Form N-4
registration statement, File No. 33-19421, filed December 22,
1994.)

--(c) Schedule of sales commissions (Incorporated by reference from
"Distribution of the Policies" in the attached prospectus)

<PAGE>

(4) --Not applicable

(5) --(a) Specimen Flexible Premium Variable Life Insurance Policy
(Filed as part of Post-Effective Amendment No. 10 to this Form S-6
Registration Statement filed on March 2, 1992)

--(b) Form of Child Insurance Rider (Filed as part of Pre-Effective
Amendment No. 1 to this Registration Statement filed on November 5,
1986)

--(c) Form of Guaranteed Death Benefit rider and, for use in Texas,
revised form of Policy with guaranteed death benefit feature (Filed
as part of Post-Effective Amendment No. 5 to this Registration
Statement filed on March 1, 1989)

--(d) Form of Waiver of Monthly Deductions Rider (Incorporated by
reference from Pre-Effective Amendment No. 1 to registrant's Form
S-6 Registration Statement (File No. 33-28551) filed on August 18,
1989)

--(e) Endorsement pertaining to initial allocation to General
Account and revised limits on withdrawals and reductions in face
amount (Filed as part of Post-Effective Amendment No. 8 to this
Registration Statement filed on April 30, 1990)

--(f) Forms of Accelerated Death Benefit Rider and Extend Maturity
Date Rider. (Incorporated by reference from Exhibit No. 5(f) to
Post-Effective Amendment No. 9 to registrant's Form S-6
registration statement, File No. 33-28551, filed April 29, 1994.)

(6) --(a) Articles of Incorporation of Fortis Benefits (Filed as part
of the initial filing of this Form S-6 Registration Statement made
on March 17, 1986)

--(b) Bylaws of Fortis Benefits (Filed as part of the initial
filing of this Form S-6 Registration Statement made on March 17,
1986)

--(c) Amendment to Articles and Bylaws dated November 21, 1991
(Filed as part of Post-Effective Amendment No. 10 to this Form S-6
Registration Statement filed on March 2, 1992)

(7) --Not applicable

(8) --Not applicable

(9) --Not applicable

(10) --(a) Application Form for Flexible Premium Variable Life Insurance
Policy and Form of Temporary Insurance Agreement (Filed as part of
Post-Effective Amendment No. 10 to this Form S-6 Registration
Statement filed on March 2, 1992)

--(b) Policy Change Application, Transfer Request Form, and Change
of Premium Allocation Form (Filed as part of Post-Effective
Amendment No. 10 to this Form S-6 Registration Statement filed on
March 2, 1992)

2. --See Exhibit 1.A(5) above

<PAGE>

3. --Opinion and consent of counsel as to the legality of securities being
registered (Filed as part of Post-Effective Amendment No. 7 to this
Registration Statement filed on March 1, 1990)

4. --Not applicable

5. --Not applicable

6. --(a) Opinion and consent of actuary (Filed as part of Post-Effective
Amendment No. 8 to this Registration Statement filed on April 30, 1990)

--(b) Supplemental Opinion and Consent of Actuary.

7. --Forms of Notice of Cancellation Right and Request for Cancellation
pursuant to Rule 6e-3(T)(b)(13)(viii) under the Investment Company Act
of 1940. (Filed as part of Post-Effective Amendment No. 10 to this
Form S-6 Registration Statement filed on March 2, 1992)

8. --Method of Computing Exchange pursuant to Rule 6e-3(T)(b)(13)(v)(B) under
the Investment Company Act of 1940 (not required because there will be no
cash value adjustments in connection with the right to transfer Policy
Value to the General Account, which Registrant intends to satisfy the
requirements of said provision)

9. --Undertaking of Fortis Benefits required by Rule 27d-2 under the
Investment Company Act of 1940 (part of Exhibit 1.A(3)(a))

10. --(a) Memorandum of Certain Procedures with Respect to Pricing and
Processing of Transactions Pursuant to Rule 6e-3(T)(b)(12)(iii) (Filed as
part of Post-Effective Amendment No. 6 to this Registration Statement
filed on April 28, 1989)

--(b) Supplemental Memorandum in connection with Exhibit 10(a) (Filed as
part of Post-Effective Amendment No. 7 to this Registration Statement
filed on March 1, 1990)

11. -- Power of Attorney for Messrs. Freedman, Gaddy, Mackin, Keller, Clayton,
Mahoney, Clancy, Meler, and Greiter (Incorporated by reference from
Exhibit No. 11 to registrant's Form S-6 Registration Statement, File
No. 33-73138, filed December 17, 1993.

12. --Statement of Fortis Benefits Insurance Company pursuant to Rule 27d-2
under the Investment Company Act of 1940.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, FORTIS BENEFITS
INSURANCE COMPANY has duly caused this amended Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested all in the City of St. Paul,
Minnesota this 25th day of April, 1996. Fortis Benefits Insurance Company
hereby makes the representation required by Rule 485(b)(4) under the
Securities Act of 1933, and further represents that the amended registration
statement contains no information that would render Rule 485(b) unavailable.

FORTIS BENEFITS INSURANCE COMPANY

By: /s/ Robert Brian Pollock
---------------------------------
Robert Brian Pollock, President

Attest: /s/ Douglas R. Lowe
-----------------------------------
Douglas R. Lowe
Associate General Counsel --
Life and Investment Products

Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in the
capacities indicated on April 25, 1996.

/s/ Robert Brian Pollock
- --------------------------------------------
Robert Brian Pollock, President and Director
(Chief Executive Officer)

/s/ Michael John Peninger
- --------------------------------------------
Michael John Peninger, Senior Vice President
Chief Financial Officer
(Principal Financial and Accounting Officer)

/s/ Dean Conrad Kopperud
- --------------------------------------------
Dean Conrad Kopperud, Director

*
- --------------------------------------------
Allen Royal Freedman, Chairman of the Board

*
- --------------------------------------------
Thomas Michael Keller, Director

*By: /s/ Robert Brian Pollock
---------------------------------------
Robert Brian Pollock, Attorney-in-Fact

<PAGE>

Pursuant to the requirements of the Securities Act of 1933, the registrant,
VARIABLE ACCOUNT C of Fortis Benefits Insurance Company, has duly caused this
amended Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and attested,
all in the City of St. Paul, State of Minnesota this 25th day of April, 1996.

VARIABLE ACCOUNT C
OF FORTIS BENEFITS INSURANCE COMPANY

By: FORTIS BENEFITS INSURANCE COMPANY
(Depositor)

By: /s/ Robert Brian Pollock
---------------------------------
Robert Brian Pollock, President

Attest: /s/ Douglas R. Lowe
---------------------------------
Douglas R. Lowe,
Associate General Counsel --
Life and Investment Products

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our reports dated February 14, 1996 and February 15, 1995 on the
financial statements of Fortis Benefits Insurance Company and our report dated
March 22, 1996 and March 24, 1995 on the financial statements of Fortis
Benefits Insurance Company Variable Account C (Account C) in Post- Effective
Amendment No. 18 to the Registration Statement (Form S-6 No. 33-03919) and the
related Prospectus being filed under the Securities Act of 1933 for the
registration of an indefinite amount of interests in Account C pursuant to
variable life insurance policies.

/s/ Ernst & Young

Minneapolis, Minnesota
April 25, 1996

<PAGE>

INDEX TO EXHIBITS

6(b) Supplemental Opinion and Consent of Actuary

12 Statement of Fortis Benefits Insurance Company
Pursuant to Rule 27d-2

<PAGE>

EXHIBIT 6(b)

<PAGE>

February 8, 1996

Fortis Benefits Insurance Company
P.O. Box 64271
St. Paul, Minnesota 55164

Gentlemen:

This opinion is furnished in connection with the offering by Fortis Benefits
Insurance Company of a Flexible Premium Variable Life Insurance Policy
("Policy"), under the Securities Act of 1933. The prospectus included in
our registration statement on Form S-6 describes the Policy. I have reviewed
the Policy Form and I am familiar with the amended registration statement,
and the exhibits thereto, as proposed to be filed.

1. The hypothetical illustrations of the Policy values, cash surrender
values, and death benefits included in Appendix B to the prospectus
are based on assumptions stated in the illustrations and are
consistent with the provisions of the Policy.

2. The Policy has not been designed so as to make the relationship
between premiums and benefits, as shown in the illustrations, appear
disproportionately more favorable to a prospective purchaser of a
Policy for a standard risk non-smoker male age 35, than to a
prospective purchaser of Policies for males of other ages or
underwriting classes, or for females. Nor have the particular
examples set forth in the illustrations been selected for the
purpose of making this relationship appear more favorable.

I hereby consent to the use of this opinion as an exhibit to the amended
registration statement and to the use of my name under the heading of
"Experts" in the prospectus.

Sincerely,

/s/ Renee C. West

Renee C. West, FSA, MAAA
Actuarial Officer
Fortis Benefits Insurance Company

/cln
HIL

<PAGE>

EXHIBIT 12

<PAGE>

Statement of Fortis Benefits Insurance Company
Pursuant to Rule 27d-2 Under the
Investment Company Act of 1940

The undersigned hereby states that on a monthly basis throughout its fiscal
year ended December 31, 1995, it has met the requirements of Rule 27d-2(2)(1)
under the Investment Company Act of 1940 in that it has a combined capital
paid-up, gross paid-in and contributed surplus and unassigned surplus at
least equal to $1,000,000. Such capitalization was larger than 200 percent of
the amount of the total refund obligations of Fortis Investors, Inc. pursuant
to Sections 27(d) and 27(f) under the Investment Company Act of 1940, less
any liability reserve established by Fortis Benefits Insurance Company to
meet such obligations.

FORTIS BENEFITS INSURANCE COMPANY

By: /s/ John V. Egan
--------------------------------
Name: John V. Egan
Title: Vice President - Finance,
Life Products

April 25, 1996

<PAGE>
<ARTICLE> 7
<CIK> 0000790531
<NAME> FORTIS BENEFITS INSURANCE COMPANY - VARIABLE LIFE FUND C
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 234,188
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 234,188
<CASH> 0
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 234,188
<POLICY-LOSSES> 210,582
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 0
<OTHER-SE> 23,606
<TOTAL-LIABILITY-AND-EQUITY> 234,188
91,097
<INVESTMENT-INCOME> 40,343
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 163
<BENEFITS> 45,833
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 85,770
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0

</TABLE>