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

   
     As filed with the Securities and Exchange Commission on April 29, 1996
                         Registration No. 33-48266
    
                            -------------------

                     SECURITIES AND EXCHANGE COMMISSION
                             Washington DC 20549

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

                     POST-EFFECTIVE AMENDMENT NO. 8
                               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
                 (formerly Western Life 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, Minnesota 55164
           (Name and complete address of agent for service)

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

Securities Registered: Interests in Variable Account C pursuant to variable 
life insurance policies

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.

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

An indefinite amount of the securities being offered has been registered 
pursuant to a declaration under Rule 24f-2 under the Investment Company Act 
of 1940, set out in the Form S-6 Registration Statement contained in File No. 
33-03919. The registrant filed its Rule 24f-2 notice for the year ended 
December 31, 1995 on February 23, 1996.

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

<PAGE>
Wall St -Registered Trademark- Series
 
FORTIS VUL500
(Flexible Premium Variable Life Insurance Policies)
 
   
PROSPECTUS DATED May 1, 1996
    
 
   
FORTIS-Registered Trademark-
    
 
FORTIS BENEFITS INSURANCE COMPANY
MAILING ADDRESS:           STREET ADDRESS:            TELEPHONE:
P.O. BOX 64284             500 BIELENBERG DRIVE       1-(800) 800-2638
ST. PAUL                   WOODBURY                   EXTENSION 3028
MINNESOTA 55164            MINNESOTA 55125
 
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. The minimum  initial Face Amount of a Policy is
$500,000.
   
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
separate  investment  portfolios  of  Fortis  Series  Fund,  Inc.  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. See
"Surrender and Partial Withdrawal." Generally  after the first Policy year,  the
Policy  owner may 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  is guaranteed to  stay in  force if certain
Minimum Premium payments  are made.  This guarantee  will generally  be for  the
lesser of 12 years from the Policy Date or until Age 65 (or for a shorter period
of  time if the insured is over Age 60 at issue, or is rated other than standard
and issued after May 1, 1995).  $10,000 is the smallest possible initial  annual
premium.
    
Fortis Benefits Insurance Company may allow for variations of Policy Face Amount
and  initial annual premium minimums, charges,  and credits from those otherwise
described in the Prospectus for purchase of policies in certain business related
and other  circumstances.  (See "Variations  of  Policy Premiums,  Charges,  and
Credits.")
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.
   
96390 (5/96)
    
<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
    - Guaranteed Death Benefit............................................    5
    - Allocation of Premiums Among Various Alternatives...................    5
    - Policy Value; Policy Value Advances; Cash Value Bonuses.............    6
    - Surrenders..........................................................    7
    - Charges.............................................................    7
    - Death Benefit.......................................................    8
    - Optional Insurance Benefits.........................................    8
    - Benefit at Maturity.................................................    8
    - Policy Loans........................................................    8
    - Settlement Options..................................................    8
    - Taxes...............................................................    9
    - Right to Return a Policy............................................    9
    - How to Exercise Your Rights Under a Policy..........................    9
The Separate Account and Fortis Series Fund, Inc..........................    9
    - The Separate Account................................................    9
    - Financial and Performance Information...............................   11
    - Fortis Series Fund, Inc.............................................   13
Policy Benefits...........................................................   13
    - Death Benefit.......................................................   13
    - Death Benefit Options...............................................   13
    - Accelerated Benefit Rider...........................................   14
    - Changes in Face Amount..............................................   15
    - Change in Death Benefit Option......................................   16
    - Policy Value........................................................   16
    - Policy Value Advances and Cash Value Bonuses........................   16
    - Calculation of Separate Account Policy Value........................   18
    - Separate Account Net Investment Return..............................   18
Payment and Allocation of Premiums........................................   18
    - Issuance of a Policy................................................   18
    - Premiums............................................................   19
    - Allocation of Premiums and Policy Value.............................   21
    - Policy Lapse and Reinstatement......................................   22
Charges and Deductions....................................................   23
    - Premium Tax and Sales Charges; Other Policy Issuance Expense
       Charges............................................................   23
    - Deductions to Recover Policy Value Advances.........................   25
    - Monthly Deduction from Policy Value.................................   25
    - Charge for Mortality and Expense Risks..............................   27
    - Miscellaneous.......................................................   27
    - Guarantee of Certain Charges........................................   27
Variations of Policy Minimums, Charges and Credits........................   28
Loan Privileges...........................................................   28
    - Rate Charged on Policy Loans........................................   28
    - Credited Rate for Policy Loans......................................   28
    - Effect of a Policy Loan.............................................   28
    - Repayment of a Loan.................................................   29
Surrender and Partial Withdrawal..........................................   29
Rights Reserved by Fortis Benefits........................................   30
    - Payment and Deferment...............................................   30
Distribution of the Policies..............................................   31
</TABLE>
    
<PAGE>
   
<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
Federal Tax Matters.......................................................   31
    - Tax Status of the Policy............................................   31
    - Tax Status of Additional Insured Rider..............................   32
    - Taxation of Policy Benefits.........................................   32
    - Taxation Under Section 403(b) Plans.................................   33
    - Taxation of Fortis Benefits.........................................   34
Other Policy Provisions...................................................   34
Management................................................................   36
Voting Privileges.........................................................   37
Reports...................................................................   38
State Regulation..........................................................   38
Legal Matters.............................................................   38
Experts...................................................................   38
Ratings and Rankings......................................................   38
Financial Statements......................................................   39
Appendix A................................................................  A-1
    - Optional Income Plans...............................................  A-1
    - Optional Insurance Benefits.........................................  A-1
Appendix B................................................................  B-1
    - Illustrations of Death Benefits, Policy Values, Surrender Values and
       Accumulated Premium................................................  B-1
    - Policy Value Advances...............................................  B-2
Appendix C................................................................  C-1
    - The General Account.................................................  C-1
    - General Description.................................................  C-1
    - General Account Policy Value........................................  C-1
    - Transfers, Surrenders and Policy Loans..............................  C-1
Variable Universal Life Service Request 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.
<PAGE>
INDEX OF DEFINED WORDS AND PHRASES
 
Below  are listed 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>
                                                                                              PAGE
 
<S>                                                                                         <C>
Age.......................................................................................         34
Alternative Death Benefit.................................................................         12
Cash Value Bonuses........................................................................         16
Contingent Deferred Sales Charge..........................................................         22
Date of Receipt...........................................................................         33
Death Benefit Type A (Type "A")...........................................................         12
Death Benefit Type B (Type "B")...........................................................         12
Face Amount...............................................................................         17
Fortis Benefits...........................................................................          5
Fortis Series.............................................................................         12
General Account...........................................................................        D-1
Grace Period..............................................................................         21
Guaranteed Death Benefit..................................................................          5
Guideline Annual Premium..................................................................         23
Home Office...............................................................................          9
Minimum Premium...........................................................................         19
Monthly Deduction.........................................................................         25
Monthly Anniversary.......................................................................         18
Net Amount at Risk........................................................................         25
Net Cash Value............................................................................         21
NYSE......................................................................................         17
Planned Periodic Premium..................................................................         18
Policy Anniversary........................................................................         18
Policy Date...............................................................................         18
Policy Value..............................................................................         15
Policy Value Advance......................................................................         15
Portfolio.................................................................................         12
Pro Rata Basis............................................................................         25
Separate Account..........................................................................          9
Subaccount................................................................................         10
Surrender Charge..........................................................................         24
Surrender Value...........................................................................          7
Valuation Date............................................................................         17
Valuation Period..........................................................................         17
1940 Act..................................................................................         12
</TABLE>
 
                                       4
<PAGE>
SUMMARY
 
FORTIS BENEFITS/FORTIS FINANCIAL GROUP MEMBER
 
   
Fortis  Benefits  Insurance  Company  ("Fortis  Benefits"),  the  issuer  of the
Policies, 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 Fortis AMEV nv and 50% by Fortis 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, and life insurance products.
    
 
   
Fortis AMEV  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 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 approximately $140 billion in assets as
of year-end 1995.
    
 
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 Planned  Periodic Premium must  be, on  an
annualized  basis, at least  the greater of  (1) $10,000, or  (2) twelve monthly
Minimum Premiums. The Planned Periodic Premiums  are assumed to be level in  the
first  Policy year. The Planned Periodic Premiums are assumed to be level in the
first year. If the Planned Periodic Premium is paid monthly, the initial premium
must at least equal two  months' Planned Periodic Premiums. 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.
    
 
GUARANTEED DEATH BENEFIT
 
   
A Policy is guaranteed to stay in force if, as of each Monthly Anniversary,  (1)
the  cumulative  amount  of  premiums  paid to  date,  less  the  amount  of any
outstanding Policy loans and cumulative partial withdrawals at least equals  (2)
the  cumulative monthly Minimum Premiums, assuming regular monthly payment. This
guarantee will generally be for the lesser  of 12 years from the Policy Date  or
until  Age 65  (or for  5 years if  Age 60  to 70 at  issue). After  Age 70, the
guarantee is for  the greater of  two years or  to Age 75.  For Policies  issued
after  May 1, 1995,  or as soon thereafter  as available in  the state where the
policy is issued, the  guarantee for insureds rated  other than standard is  for
the  lesser of the guarantee  period for their Age  or five years. The guarantee
period may be shorter in some states due to state limitations. Subject to  these
conditions, there is in effect a "Guaranteed Death Benefit" in the amount of the
Policy's  then-current Face Amount and term rider coverages. The initial monthly
Minimum 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.  See "Guaranteed Death  Benefit"
under "Payment and Allocation of Premiums--Premiums."
    
 
   
If the Guaranteed Death Benefit is not in effect, a Policy will lapse if the Net
Cash  Value becomes insufficient  to pay the  continuing charges and deductions.
See "Payment and  Allocation of  Premiums--Policy Lapse  and Reinstatement"  and
"Charges  and Deductions--Premium Tax  and Sales Charges;  Other Policy Issuance
Expense Charges." Premium  payments in  excess of the  Planned Periodic  Premium
payments may therefore be necessary to keep a Policy in force.
    
 
ALLOCATION OF PREMIUMS AMONG VARIOUS ALTERNATIVES
 
   
The  owner of a Policy may allocate 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 Fund, 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  Blue  Chip  Stock  Series,  the  S&P
    
 
                                       5
<PAGE>
   
500 Index Series,  the Growth  and Income Series,  the Value  Series, the  Asset
Allocation  Series, the Global  Asset Allocation Series,  the High Yield Series,
the Global  Bond 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 at an annual  rate
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  for Growth & Income Series, .7% of
the first $100 million of average daily net assets, and .6% thereafter; 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; 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, .5% of  the first $250  million of  average daily net  assets, and  .45%
thereafter;  for Global  Bond Series,  .75% of  the first  $100 million  of such
assets, and .65% 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. The Portfolios also bear most of
their other expenses.
    
 
   
The International Stock Series,  the Blue Chip Stock  Series, the S&P 500  Index
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; 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; 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 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; 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.
    
 
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 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
Premium--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 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.
 
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.
 
   
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; POLICY VALUE ADVANCES; CASH VALUE BONUSES
 
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 (1)  the cumulative amount of  premiums paid to  date, (2) less any
withdrawals and  less all  deductions  and charges  imposed  to date  under  the
Policy,  (3) plus the  cumulative amount of  any Policy Value  Advances and Cash
Value Bonuses,  (4) plus  the  cumulative net  amount  of positive  or  negative
investment  return earned to  date on amounts allocated  to the Separate Account
under the Policy, (5) plus the cumulative net amount of interest earned to  date
on amounts held in the General Account under the Policy.
 
                                       6
<PAGE>
   
POLICY  VALUE ADVANCES.  Policy Value Advances  will be paid  by Fortis Benefits
starting at the  end of the  seventh Policy year,  if the Policy  owner has  met
certain  Minimum Premium payment requirements. If  allowed in the state in which
the Policy is issued, these advances  are guaranteed. Policy Value Advances  are
credited  to the Policy Value, but may be subject to recovery by Fortis Benefits
pursuant   to   subsequent   monthly   and   daily   deductions.   See   "Policy
Benefits--Policy Value Advances."
    
 
CASH  VALUE BONUSES. Cash Value Bonuses will be paid by Fortis Benefits starting
at the end of the ninth Policy year if the Surrender Value is at least  $50,000.
If  allowed in the state in which the  Policy is issued these Cash Value Bonuses
are guaranteed.  See  "Policy Benefits--Policy  Value  Advances and  Cash  Value
Bonuses."
 
SURRENDERS
 
A Policy may be surrendered at any time for all of its Surrender Value, and part
of  the Surrender Value may be withdrawn up  to once a year, generally after the
first Policy year. See "Surrender  and Partial Withdrawal." The Surrender  Value
is  the  Policy Value,  less the  amount  of the  Surrender Charge  (referred to
below), less the amount of  any outstanding Policy loan  and plus the amount  of
any  policy 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.
 
CHARGES
 
In addition to Fortis Series' expenses, the following charges are imposed  under
the Policies:
 
PREMIUM  TAX  CHARGE. The  current premium  tax  charge is  2.2% of  all premium
payments. Rather  than being  deducted  from premium  payments, this  charge  is
assessed  through periodic deductions from Policy  Value, and any balance of the
current premium  tax charge  may be  deducted as  part of  the Surrender  Charge
referred  to below. Periodic deductions for  the current premium tax charge will
not exceed $.91 per Policy each month, plus a daily deduction at an annual  rate
of .06124% of the Policy's net assets in the Separate Account.
 
SALES  CHARGES.  The maximum  total sales  charges  are 29.5%  of the  amount of
premiums paid in the first two Policy years that are not in excess of the sum of
twelve monthly Minimum Premiums,  plus 7.5% of  all additional premiums.  Rather
than  being deducted from premiums, sales  charges are assessed through periodic
deductions from  Policy Value,  and any  balance  of the  sales charges  may  be
deducted as a Contingent Deferred Sales Charge that would be included as part of
the  Surrender Charge. The periodic deductions for sales charges will not exceed
$3.09 per Policy each month plus a daily deduction at an annual rate of  .20876%
of the Policy's net assets in the Separate Account.
 
CHARGE  FOR OTHER  POLICY ISSUANCE EXPENSES.  This charge is  $5.00 per thousand
dollars of a Policy's initial Face Amount. It will be deducted, if at all,  only
as part of the Surrender Charge.
 
SURRENDER CHARGE. The maximum Surrender Charge is the sum of (1) any premium tax
and  sales  charges not  previously deducted  on  a monthly  or daily  basis, as
described above, and (2) the charge for other Policy issuance expenses  referred
to  above. The Surrender Charge (a) is imposed only if the Policy is surrendered
in full or lapses before the eleventh  Policy Anniversary and (b) is subject  to
certain  maximums that decrease over  time. See "Charges and Deductions--Premium
Tax and Sales Charges; Other Policy Issuance Expense Charges."
 
ADDITIONAL CHARGES AS  A RESULT OF  FACE AMOUNT INCREASES.  If the Policy  owner
requests  a  Face Amount  increase,  the Policy  will  be subject  to additional
premium tax and sales charges and a charge for issuing the Face Amount increase.
These will be  imposed at the  same rates and  in the same  manner as  described
above  for  the similar  charges  in connection  with  the original  Policy. See
"Charges and Deductions-- Premium Tax  and Sales Charges; Other Policy  Issuance
Expense Charges."
 
DEDUCTIONS  TO  RECOVER POLICY  VALUE ADVANCES.  Subject to  certain conditions,
Policy owners  will receive  credits  in the  nature  of Policy  Value  Advances
starting  at the  end of the  seventh Policy year.  See "Policy Benefits--Policy
Value Advances and Cash Value Bonuses." While it is not Fortis Benefits' current
intention to do so, Fortis Benefits  reserves the right to recover such  credits
by  imposing the  following deductions  made after  the payment  of the credits:
$4.00 a month plus a daily deduction at  an annual rate of .27% of the  Policy's
net  assets in the Separate Account. These deductions would continue until their
cumulative amount equals the cumulative amount of Policy Value Advances actually
credited to the  Policy. During  the period when  these deductions  are made  to
recover  the Policy Value Advances, there would  be no similar monthly and daily
deductions for sales expenses and premium taxes discussed above. Once the amount
of any Policy  Value Advances had  been fully recovered,  the monthly and  daily
deductions  for premium tax and sales charges  would resume. In no event would a
deduction be made to recover  Policy Value Advances if  no such credit had  been
made. See "Charges and Deductions--Deductions to Recover Policy Value Advances."
 
                                       7
<PAGE>
MONTHLY DEDUCTION. The Policy Value will be reduced by a Monthly Deduction equal
to  the sum of  (1) the monthly  deduction referred to  above under "Premium Tax
Charge" and "Sales Charges"  or "Deductions to  Recover Policy Value  Advances,"
whichever  may then be  in effect, (2)  a monthly cost  of insurance charge, (3)
while the  Guaranteed Death  Benefit is  in effect,  a monthly  charge for  such
guarantee  in the amount of $.01 per $1,000 of Face Amount in effect on the date
of the deduction, (4) the monthly cost of any optional insurance benefits  added
by  rider, and (5) an administrative  expense charge, currently $4.50 per month.
See "Charges  and  Deductions--Monthly  Deduction  From  Policy  Value."  Fortis
Benefits expects to derive no profit from the charges set forth in (5) above.
 
RISK  CHARGE. A daily charge at an annual  rate of .90% of the average daily net
assets 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--Charge for Mortality and Expense
Risks."
 
Subject to certain limitations,  the charge for cost  of insurance, the  monthly
administrative  expense charge, the  premium tax charge,  the charge for certain
optional insurance riders, and the amount  of Minimum Premiums may be  increased
in  the future. Fortis Benefits also reserves  the right to recover Policy Value
Advances and to raise the current  premium tax charge assessed through  periodic
deductions  to 2.5% and also to deduct an additional premium tax charge of up to
2.5% of each premium payment and to  impose charges for other taxes that may  be
payable  and are attributable to the policies. 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 (1) increase
or  (generally after  the first  Policy year)  decrease the  Face Amount  of the
Policy or (2) once  a year, 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  requested by  the
Policy  owner  will result  in additional  charges. See  "Premium Tax  and Sales
Charges: Other  Policy Issuance  Expense Charges"  and "Monthly  Deduction  From
Policy  Value"  under "Charges  and Deductions."  A  requested increase  in Face
Amount will also increase the  monthly Minimum Premiums, See "Minimum  Premiums"
under  "Payment and Allocation of  Premiums--Premiums." Decreases in Face Amount
may result in a decrease in the Surrender Charge and the monthly Minimum Premium
for certain purposes. See "Policy Benefits--Changes in Face Amount."
 
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-appli-
cable Surrender Charge. After the later of 12 years or the insured's Age 70, the
Policy owner  may  borrow up  to  100% of  such  difference. The  interest  rate
credited  on loaned  amounts is 4%,  and the  interest rate charged  on loans is
6.10% per year (5.66% per year in Massachusetts), payable in advance, except  to
the  extent that  certain Policy  owners may qualify  for a  lower loan interest
rate. 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."
 
                                       8
<PAGE>
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 the Policy  or 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  premiums paid. See "Policy Benefits--Changes  in
Face Amount" for a description of similar rights to cancel any increases in Face
Amount.
 
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  Benefits'
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. If the Policy owner is unable
to return the Policy because it has been lost or destroyed, Fortis Benefits will
accept  a written statement to that effect signed by the Policy owner in lieu of
return of the Policy.
 
Unless the context indicates otherwise, the foregoing Summary and the discussion
in the rest of this Prospectus assume that Net Cash 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
 
                                       9
<PAGE>
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 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.
 
                                       10
<PAGE>
FINANCIAL AND PERFORMANCE INFORMATION
 
   
The  information  presented below  reflects  the performance  of  the underlying
investment portfolios  of the  Fortis  Series Fund  through December  31,  1995.
Annual  rates of  return reflect  Fortis Series  Fund's expenses  and investment
gains and losses. They do not  reflect asset-based charges against the  Separate
Account,  consisting of the .90% mortality and  expense risk charge and the .27%
premium tax and sales charge. They also  do not reflect current policy fees  nor
the  cost of insurance or Surrender Charges  (See "Charges and Deductions" for a
full description of these charges). These charges reduce the performance quoted.
The example below shows  the effect of  all such charges that  may apply to  the
Policy based on the performance quoted.
    
 
   
                           NET ANNUAL RATES OF RETURN
    
   
<TABLE>
<CAPTION>
                                                                   CALENDAR YEAR
                                                                THROUGH DECEMBER 31
                                INCEPTION  --------------------------------------------------------------
                                  DATE      1987    1988    1989    1990    1991    1992    1993    1994
                                ---------  ------  ------  ------  ------  ------  ------  ------  ------
<S>                             <C>        <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Aggressive Growth.............      5/94     N/A     N/A      N/A    N/A      N/A     N/A     N/A  (1.89)
International Stock...........      1/95     N/A     N/A      N/A    N/A      N/A     N/A     N/A    N/A
Global Growth.................      5/92     N/A     N/A      N/A    N/A      N/A   10.88   17.92  (2.98)
Growth Stock..................     10/86   11.31    4.49    36.46  (3.10 )  53.50    2.94    8.78  (2.82)
Blue Chip Stock...............      5/96     N/A     N/A      N/A    N/A      N/A     N/A     N/A    N/A
S & P 500 Index...............      5/96     N/A     N/A      N/A    N/A      N/A     N/A     N/A    N/A
Growth & Income...............      5/94     N/A     N/A      N/A    N/A      N/A     N/A     N/A   1.74
Value.........................      5/96     N/A     N/A      N/A    N/A      N/A     N/A     N/A    N/A
Global Asset Allocation.......      1/95     N/A     N/A      N/A    N/A      N/A     N/A     N/A    N/A
Asset Allocation..............      4/87   (6.12 )  3.71    23.75   2.01    27.65    6.95    9.79   (.31)
Global Bond...................      1/95     N/A     N/A      N/A    N/A      N/A     N/A     N/A    N/A
High Yield....................      5/94     N/A     N/A      N/A    N/A      N/A     N/A     N/A   (.75)
Diversified Income............      5/88     N/A    3.90    12.30   8.87    14.68    7.08   12.76  (5.22)
U.S. Gov't Securities.........     11/86    1.60    6.36    13.14   7.93    14.36    6.14    9.45  (6.44)
Money Market..................     11/86    5.80    6.78     9.42   7.87     5.91    3.36    2.77   3.92
 
<CAPTION>
                                               THROUGH
                                          DECEMBER 31, 1995
                                        ----------------------
                                                  3       5     AVG SINCE
                                 1995   1 YEAR  YEARS   YEARS   INCEPTION
                                ------  ------  ------  ------  ---------
<S>                             <C>     <C>     <C>     <C>     <C>
Aggressive Growth.............   29.89   29.89    N/A     N/A     15.64
International Stock...........   14.35   14.35    N/A     N/A     14.35
Global Growth.................   30.49   30.49  14.29     N/A     14.73
Growth Stock..................   27.66   27.66  10.51   16.35     11.24
Blue Chip Stock...............     N/A     N/A    N/A     N/A       N/A
S & P 500 Index...............     N/A     N/A    N/A     N/A       N/A
Growth & Income...............   29.70   29.70    N/A     N/A     18.09
Value.........................     N/A     N/A    N/A     N/A       N/A
Global Asset Allocation.......   17.47   17.47    N/A     N/A     17.47
Asset Allocation..............   21.97   21.97  10.11   12.75      9.80
Global Bond...................   19.02   19.02    N/A     N/A     19.02
High Yield....................   12.73   12.73    N/A     N/A      6.97
Diversified Income............   17.26   17.26   7.81    9.00      9.14
U.S. Gov't Securities.........   18.78   18.78   6.75    8.10      7.69
Money Market..................    5.71    5.71   4.13    4.33      5.70
</TABLE>
    
 
- ------------------------------
Wall Street Series VUL500 was not offered for sale prior to September 1992.
 
                                       11
<PAGE>
   
Example: If a male nonsmoker insured age 45 had a Death Benefit Type A Policy in
which  he  invested  $10,650  annually, his  life  insurance  Policy  would have
provided the following benefits  as of December 31,  1995, for the time  periods
and subaccounts indicated:
    
 
   
<TABLE>
<CAPTION>
                               ONE YEAR                    THREE YEARS
                      ---------------------------  ---------------------------
                      POLICY  SURRENDER    DEATH   POLICY  SURRENDER    DEATH
                      VALUE     VALUE     BENEFIT  VALUE     VALUE     BENEFIT
                      ------  ---------   -------  ------  ---------   -------
<S>                   <C>     <C>         <C>      <C>     <C>         <C>
Aggressive Growth...  10,041    1,739     100,000     N/A      N/A         N/A
International
Stock...............   8,884      580     100,000     N/A      N/A         N/A
Growth Stock........  10,013    1,711     100,000  27,288   17,104     100,000
Global Growth.......  10,412    2,110     100,000  28,757   18,580     100,000
Blue Chip...........     N/A      N/A         N/A     N/A      N/A         N/A
S & P 500 Index.....     N/A      N/A         N/A     N/A      N/A         N/A
Growth & Income.....   9,720    1,417     100,000     N/A      N/A         N/A
Value...............     N/A      N/A         N/A     N/A      N/A         N/A
Global Asset
Allocation..........   8,934      632     100,000     N/A      N/A         N/A
Asset Allocation....   9,182      879     100,000  26,460   16,279     100,000
High Yield..........   8,417      112     100,000     N/A      N/A         N/A
Global Bond.........   8,878      575     100,000     N/A      N/A         N/A
Diversified
Income..............   8,698      394     100,000  24,444   14,258     100,000
U.S. Government.....   8,779      474     100,000  24,254   14,065     100,000
Money Market........   7,794        0     100,000  22,697   12,509     100,000
</TABLE>
    
 
   
<TABLE>
<CAPTION>
                              FIVE YEARS                 SINCE INCEPTION
                      ---------------------------  ----------------------------
                      POLICY  SURRENDER    DEATH   POLICY   SURRENDER    DEATH
                      VALUE     VALUE     BENEFIT   VALUE     VALUE     BENEFIT
                      ------  ---------   -------  -------  ---------   -------
<S>                   <C>     <C>         <C>      <C>      <C>         <C>
Aggressive Growth...     N/A      N/A         N/A   20,010    10,739    100,000
International
Stock...............     N/A      N/A         N/A    8,884       580    100,000
Growth Stock........  49,980   38,038     100,000  132,831   129,403    100,000
Global Growth.......     N/A      N/A         N/A   40,706    29,599    100,000
Blue Chip...........     N/A      N/A         N/A      N/A       N/A        N/A
S & P 500 Index.....     N/A      N/A         N/A      N/A       N/A        N/A
Growth & Income.....     N/A      N/A         N/A   19,428    10,156    100,000
Value...............     N/A      N/A         N/A      N/A       N/A        N/A
Global Asset
Allocation..........     N/A      N/A         N/A    8,934       632    100,000
Asset Allocation....  47,360   35,410     100,000  103,655    98,512    100,000
High Yield..........     N/A      N/A         N/A   16,669     7,393    100,000
Global Bond.........     N/A      N/A         N/A    8,878       575    100,000
Diversified
Income..............  42,987   31,020     100,000   79,432    72,575    100,000
U.S. Government.....  41,962   29,987     100,000  100,256    96,828    100,000
Money Market........  37,775   25,784     100,000   87,298    83,870    100,000
</TABLE>
    
 
These  benefits will  differ for other  insureds. They will  differ according to
differences in investment allocation, premium  timing and amount, death  benefit
type  and amount as well as Age  and underwriting classification of the insured.
Because the Policies are insurance policies, actual performance should always be
considered in context with the level of death benefit and cash values.
 
The performance data is historical; future performance will vary.
 
                                       12
<PAGE>
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, Blue Chip Stock, S&P 500 Index, Growth and Income,
Value, Global Asset Allocation Series, Asset Allocation, High Yield, Global Bond
Series, 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  the  Prospectus and  in  the Statement  of  Additional Information
referred to therein.  The complete  risk disclosure  in the  Prospectus for  the
Global Asset Allocation Series, Asset Allocation, the High Yield 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."
 
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 once each Policy year, 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>
 
                                       13
<PAGE>
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. See  Appendix
B--"Illustrations  of  Death  Benefits,  Policy  Values,  Surrender  Values  and
Accumulated Premiums."
 
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.
 
   
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 the  original expiry or
maturity date. 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 accelerated  death benefit payable under a Policy  and
all other policies issued by Fortis Benefits 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.  Future
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,  and (3)  a face  amount
decrease  were made  equal to  the difference  between the  accelerated eligible
amount and the face amount decrease caused by 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
 
                                       14
<PAGE>
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.
 
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 is currently $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 may require 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  reserves the right  to establish different  maximum or minimum amounts
for future Face Amount increases.
 
Following a Face Amount increase requested by the Policy owner, additional sales
and issuance charges  will be applicable.  See "Charges and  Deductions--Premium
Tax  and Sales Charges;  Other Policy Issuance Expense  Charges." An increase in
Face Amount requested by the Policy owner also will increase the monthly Minimum
Premium and the Guaranteed  Death Benefit charge.  See "Minimum Premiums"  under
"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 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 Allocations of
Premiums--Premiums." The Surrender Charge and  the monthly Minimum Premium  will
be  adjusted to the level they would have been in the absence of the Face Amount
increase.
 
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 Transfers" 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--Premium  Tax  and  Sales  Charges;  Other  Policy  Issuance  Expense
Charges" regarding the method of such attribution.
 
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 Minimum 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 $500,000. No  decrease in the  Face Amount  will be permitted  if it  would
result  in any violation  of the then current  maximum premium limitations under
Section 7702  of the  Code. If  the Policy  owner elects  to decrease  the  Face
Amount,    the   Surrender   Charge   may   be   reduced   (see   "Charges   and
Deductions--Premium  Tax  and  Sales  Charges;  Other  Policy  Issuance  Expense
Charges").  The monthly Minimum Premium, will also be reduced for purposes other
than  computing  sales  charges.  See  "Minimum  Premiums"  under  "Payment  and
Allocation of Premiums--Premiums."
 
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
 
                                       15
<PAGE>
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. (Net Amount
at Risk is the  difference in amount  between the death  benefit and the  Policy
Value.)  See "Rate Class" under  "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  once each  Policy year  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.
 
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 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, which is $500,000. 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 Deductions 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 charges from premium  tax,
sales or other issuance expenses or in the monthly Minimum 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 Minimum 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.
 
POLICY VALUE ADVANCES AND CASH VALUE BONUSES
 
POLICY VALUE ADVANCES. A Policy  may be eligible for a  credit in the form of  a
Policy  Value Advance starting on the last day of the seventh Policy year. There
are limited guarantees applicable to these credits. These credits may be subject
to recovery by Fortis Benefits pursuant to the deductions described below.
 
Eligible Policies will receive a Policy Value Advance only if, as of the date of
the credit, 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  the cumulative  monthly Minimum  Premiums.  For
purposes  of meeting the premium  payment requirement at the  end of the seventh
Policy year, premium
 
                                       16
<PAGE>
payments made during that year in excess of 36 times the monthly Minimum Premium
at that time will be disregarded. If the premium requirement is not met for  any
credit, no further Policy Value Advances will be paid.
 
   
For  eligible Policies, Fortis Benefits currently intends  to pay, at the end of
the seventh Policy year, and at the end of each subsequent Policy year prior  to
the  insured's Age  95, a  percentage (specified  below) of  the average monthly
Minimum  Premium  to  date  under  the  Policy  (calculated  without  regard  to
substandard risks or optional riders, times 12.
    
 
                    CURRENT POLICY VALUE ADVANCE PERCENTAGES
 
<TABLE>
<CAPTION>
AGE OF                                                                   POLICY YEARS
INSURED                                             POLICY    POLICY    9 AND LATER TO
AT ISSUE                                            YEAR 7    YEAR 8        AGE 95
- --------------------------------------------------  -------   -------   --------------
<S>                                                 <C>       <C>       <C>
0-60..............................................     2%        6%          10%
61-70.............................................     5%        7%          10%
71-80.............................................     6%        6%           6%
</TABLE>
 
The operation of the Policy Value Advances is further explained in Appendix B at
the end of this Prospectus and in the illustrations contained therein.
 
Subject to the guaranteed minimums set forth below, Fortis Benefits reserves the
right in its sole discretion to reduce the rate of Policy Value Advances. Policy
owners  will be given one year's notice  before any such reduction takes effect.
Fortis Benefits  guarantees  Policy  Value Advances  for  eligible  Policies  at
specified  rates. The guaranteed rates are based  on the insured's Age at Policy
issue, as follows:
 
                   GUARANTEED POLICY VALUE ADVANCE PERCENTAGE
 
<TABLE>
<CAPTION>
AGE OF                                                                   POLICY YEARS
INSURED                                             POLICY    POLICY    9 AND LATER TO
AT ISSUE                                            YEAR 7    YEAR 8        AGE 95
- --------------------------------------------------  -------   -------   --------------
<S>                                                 <C>       <C>       <C>
0-60..............................................     2%        6%          10%
61-70.............................................     2%        6%           7%
71-80.............................................     2%        5%           6%
</TABLE>
 
   
Policy Value Advances are guaranteed only to the extent allowed by the state  in
which the Policy is issued.
    
 
While  it is not  Fortis Benefit's current  intention to do  so, Fortis Benefits
reserves the  right to  recover  Policy Value  Advances  over time  pursuant  to
subsequent  monthly and  daily deductions.  Accordingly, a  Policy Value Advance
somewhat resembles an interest-free loan credited  to the Policy. The amount  of
such  deductions however, may  be less than  (and will never  exceed) the actual
amount of Policy Value Advances, irrespective  of any return that may be  earned
thereon  in the  Separate Account  or in the  General Account.  Also, during any
period when deductions  are being  made to  recover Policy  Value Advances,  the
similar  deductions  for premium  tax and  sales charges  will be  suspended, as
discussed under "Charges  and Deductions--Premium Tax  and Sales Charges;  Other
Policy  Issuance  Expense  Charges." Therefore,  Policy  Value  Advances provide
Policy owners an opportunity to accumulate a greater amount of Policy Value than
they otherwise would have.
 
Policy Value Advances are  designed to encourage Policy  owners to retain  their
Policies  and to make Minimum Premium payments for a substantial period of time,
by offering Policy owners a potential economic benefit for doing so. In general,
Fortis Benefits also  expects to derive  an economic benefit  to the extent  the
Policies remain outstanding and Minimum Premiums continue to be paid.
 
CASH VALUE BONUSES. Fortis Benefits will credit Cash Value Bonuses at the end of
the  ninth Policy year,  and at the end  of every Policy  year thereafter to the
Policy Anniversary when the insured reaches Age 95, as set forth below:
 
<TABLE>
<CAPTION>
                                                   BONUS AS A PERCENT
                            BONUS AS A PERCENT OF  OF SURRENDER VALUE
                             SURRENDER VALUE AT        AT END OF
                                   END OF             POLICY YEARS
SURRENDER VALUE ON              POLICY YEARS        20 AND LATER TO
 DATE OF BONUS                  9 THROUGH 19             AGE 95
- --------------------------  ---------------------  ------------------
<S>                         <C>                    <C>
Less than $50,000.........             .00%                  .00%
$50,000 to $299,999.......             .10%                  .10%
$300,000 to $499,999......             .55%                  .55%
$500,000 or more..........             .55%                  .80%
</TABLE>
 
Cash Value Bonuses are  guaranteed only to  the extent allowed  by the state  in
which the Policy is issued.
 
ALLOCATION  AND EFFECTS. Any Policy  Value Advance and Cash  Value Bonus will be
allocated among the General Account and the Subaccounts of the Separate  Account
on  a Pro Rata Basis. Following such  allocation, these amounts will be credited
with investment  performance and  otherwise be  treated the  same as  any  other
amounts allocated to the Subaccounts or the General Account, as the case may be.
Thus,  for example, any Policy  Value Advance or Cash  Value Bonus will increase
the Type B (but not the type A)  death benefit under the Policy. Under a Type  A
death  benefit,  Policy Value  Advances and  Cash Value  Bonuses will  result in
reduced cost of insurance charges. Conversely, if the above-mentioned deductions
to recover Policy Value Advances are made, they will reduce the Policy Value and
thus the amount of Type B death benefit.
 
Also, like any other  increase in Policy Value,  Policy Value Advances and  Cash
Value  Bonuses, if  allocated to  the Separate Account,  will be  subject to the
generally applicable  mortality  and  expense  risk  charge  and  Fortis  Series
expenses. These asset-based charges are, in effect, amounts
 
                                       17
<PAGE>
that  the Policy  owner pays for  investing assets attributable  to Policy Value
Advances and Cash Value Bonuses in  the Separate Account. There is no  assurance
that  Separate Account investment  performance earned on  Policy Value Advances,
which may be subject to recovery as described above, and Cash Value Bonuses will
be sufficient to offset these charges. This  would depend to some extent on  the
timing  of the Policy  Value Advances and  of any deductions  to recover them as
well as  the timing  of Cash  Value Bonuses,  because these  factors  indirectly
determine the amount of return that would be credited. A Policy owner who wishes
to  avoid the  risk of not  earning a  rate of return  greater than  the rate of
asset-based charges can allocate amounts  attributable to Policy Value  Advances
and  Cash Value  Bonuses to Fortis  Benefits' General Account.  The Policy owner
would also have a considerable degree of assurance in this regard by  allocating
amounts  attributable to  Policy Value  Advances and  Cash Value  Bonuses to the
Money Market Subaccount of the Separate Account.
 
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 premiums allocated to the Subaccount; plus
 
    (2) The amount of all Policy Value Advances and Cash Value Bonuses  credited
        to  the Subaccount (see "Policy Benefits--Policy Value Advances and Cash
        Value Bonuses"); plus
 
    (3) All amounts transferred  to the Subaccount from  the General Account  or
        from another Subaccount; minus
 
    (4) Any amounts transferred from the Subaccount to the General Account or to
        another Subaccount; minus
 
    (5) Any partial withdrawal from the Subaccount; minus
 
    (6)  The amount of any daily deductions for premium tax and sales charges or
        to recover Policy Value  Advances (see "Premium  Tax and Sales  Charges;
        Other Policy Issuance Expense Charges" and "Deductions to Recover Policy
        Value  Advances"  under  "Charges  and  Deductions")  allocated  to  the
        Subaccount; minus
 
    (7) The  portion  of the  cumulative  Monthly Deductions  allocated  to  the
        Subaccount  (see "Charges and Deductions--Monthly Deductions From Policy
        Value"); plus
 
    (8) 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 .90%) 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 this 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 $500,000. A Policy will generally
be issued to insureds Age 25-80 who supply evidence of insurability satisfactory
to Fortis Benefits.
 
                                       18
<PAGE>
As part of an arrangement with a group of distributors, Fortis Benefits will use
a simplified form of underwriting for policies issued to insureds who have  been
fully  underwritten for life insurance in the  previous 5 years. Under this form
of underwriting, some medical  tests can be waived.  This group of  distributors
currently  consists of  the Investment Marketing  Group. Additional distributors
may be added during the year.
 
Regardless of the underwriting procedure  used, acceptance of an application  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 the amount of temporary insurance
coverage will  not  exceed $300,000  under  all applications  for  the  proposed
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 the 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. In many cases,  a younger Age will result in a  smaller
monthly  Minimum  Premium, lower  cost of  insurance  rates and  lower Surrender
Charges. An earlier Policy  Date will also result  in a correspondingly  earlier
commencement  of  Monthly  Deductions  and  may  result  in  lower  Policy Value
Advances. If an earlier Policy Date  is requested, all monthly Minimum  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 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  the  time of  Policy  issuance, the  Planned  Periodic
Premium must be, on an annualized basis, at least the greater of (1) $10,000, or
(1)  twelve  monthly Minimum  Premiums. For  purposes  of this  requirement, the
Planned Periodic Premiums are assumed to be level in the first policy year.  The
Planned  Periodic Premiums are assumed to be level in the first Policy year. The
initial premium payment must cover all monthly Minimum Premiums from the  Policy
Date  to  the  next billing  date,  generally  after the  Policy  is  mailed for
delivery, and must  be paid before  a Policy  will take effect.  If the  Planned
Periodic Premium is paid monthly, at least two months' Planned Periodic Premiums
must be paid.
    
 
Subject  to  Fortis Benefits'  guidelines, 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 Net  Cash  Value. See
"Payment and Allocation of Premiums-- Policy Lapse and Reinstatement."
 
                                       19
<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, 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."  For  Policies  issued  pursuant  to
Section  403(b) of the Code,  there are premium limitations,  referred to in the
Policy, which if not observed, will result in tax penalties.
 
   
GUARANTEED DEATH BENEFIT. A Policy is guaranteed to stay in force if, as of each
Monthly Anniversary, the cumulative  amount of premiums paid  to date, less  the
amount  of any outstanding  Policy loans and  cumulative partial withdrawals, at
least equals the cumulative monthly  Minimum Premiums, assuming regular  monthly
payment.  This guarantee will be for the lesser of 12 years from the Policy Date
or until Age 65 (or  for 5 years if  Age 60 to 70 at  issue). After Age 70,  the
guarantee  is for  the greater of  two years or  to Age 75.  For Policies issued
after May 1, 1995,  or as soon  thereafter as available in  the state where  the
Policy  is issued, the guarantee  for insureds rated other  than standard is for
the lesser of the guarantee  period for their Age  or five years. The  guarantee
period may be shorter in some states due to state limitations.
    
 
   
If,  on any Monthly Anniversary, the Minimum Premiums have not been paid, Fortis
Benefits will send the Policy owner a  notice of the minimum amount required  to
be  paid. The Guaranteed Death Benefit will terminate if at least this amount is
not paid  prior to  the next  Monthly Anniversary.  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 Guaranteed  Death
Benefit. Once the Guaranteed Death Benefit terminates, it may not be reinstated.
    
 
The monthly charge for the Guaranteed Death Benefit is $.01 per thousand dollars
of  Face  Amount in  effect  under the  Policy  or under  any  supplemental term
insurance rider described in  "Appendix A." 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 the
Guaranteed Death Benefit. The  same is true of  the addition or cancellation  of
any  benefits under any supplemental term insurance rider described in "Appendix
A." The new charges will be set forth in the Policy schedule amendment delivered
following any change. If the Guaranteed Death Benefit terminates for any reason,
the charge for it will terminate at the same time.
 
   
MINIMUM PREMIUMS.  The monthly  Minimum  Premium with  respect  to a  Policy  or
benefit  change generally is  the estimated monthly  premium payment which would
keep the Policy (or benefit  change) in force until  the insured reaches Age  65
(or  for 5 Policy years if longer)  based on (1) the insured's then-current Age,
sex, and smoking habits  and (2) reasonable assumptions  for interest, costs  of
insurance,  and other charges. For Policies issued after May 1, 1995, or as soon
thereafter as available  in the state  where the Policy  is issued, the  Monthly
Minimum  Premium for insureds rated  other than standard will  be reduced to one
that is sufficient  to keep the  Policy in  force for five  years. The  smallest
Monthly  Minimum  Premium for  a Policy  without  substandard risks  or optional
riders is $25. Monthly Minimum Premiums  are used to determine the  availability
of the Guaranteed Death Benefit, Face Amount decreases, partial withdrawals, and
Policy  Value  Advances.  Monthly Minimum  Premiums  are used  to  determine the
anticipated amount of  Policy Value  Advances and  the amount  of certain  sales
charges.  Each  of  these  matters  is discussed  elsewhere  in  detail  in this
Prospectus. Fortis Benefits  reserves the  right to change  the monthly  Minimum
Premium,  although any such change would affect only subsequent increases in the
monthly Minimum Premium  due to  changes in benefits.  Also, the  sum of  twelve
monthly  Minimum 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--Premium  Tax  and  Sales  Charges;  Other  Policy  Issuance  Expense
Charges."
    
 
Starting with the Monthly Anniversary when any Face Amount increase requested by
the  Policy owner becomes effective, the monthly Minimum Premium will include an
additional amount attributable to  the increase above the  Face Amount on  which
the previous monthly Minimum Premium was computed.
 
                                       20
<PAGE>
Starting with the Monthly Anniversary when any Face Amount decrease requested by
the  Policy owner becomes effective, the monthly Minimum Premium will be reduced
by an amount attributable  to the decrease  below the Face  Amount on which  the
previous monthly Minimum Premium was computed. (The Monthly Minimum Premium will
not  be reduced  for any  prior periods,  however.) If  there have  been no Face
Amount increases, the decrease in any subsequent monthly Minimum Premium will be
(1) the  monthly  Minimum Premium  before  the  change, multiplied  by  (2)  the
proportion that the decrease represents of the Face Amount before the change. If
there have been any Face Amount increases, the decrease will be deemed to reduce
the most recent increase first.
 
The initial monthly Minimum Premium that must be paid to ensure the availability
of  the Guaranteed Death Benefit, and any Policy Value Advances, is set forth in
the Policy schedule included in the  Policy. Any increased or decreased  monthly
Minimum  Premium  for these  purposes will  be  set forth  in a  Policy schedule
amendment delivered  to  the  Policy  owner  following  the  change.  Except  as
otherwise  discussed below, the  monthly Minimum Premium for  the Face Amount or
any Face  Amount change  will include  an amount  necessary to  support  certain
substandard  rate class charges and any  optional insurance benefits pursuant to
Policy riders. Accordingly, in such cases  any increase or decrease in  optional
benefits  provided by  rider will  result in a  higher or  lower monthly Minimum
Premium. For  this purpose,  the amount  of additional  monthly Minimum  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, except  as
noted below, the monthly Minimum Premium 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  Minimum
Premium was based.
 
Notwithstanding  the  foregoing, the  monthly Minimum  Premiums for  purposes of
determining the  amount of  Policy  Value Advances  and  sales charges  and  the
availability  of withdrawals and Face Amount decreases do not include any amount
for substandard rate classes  or optional rider  benefits. Such monthly  Minimum
Premiums therefore will be unaffected by changes in rate class or riders.
 
ALLOCATION OF PREMIUMS AND POLICY VALUE
 
ALLOCATION  OF  PREMIUMS. In  the  application for  a  Policy, the  Policy owner
indicates the initial allocation of premiums  among the General Account and  the
Subaccounts  of the Separate Account. (As  discussed below, this allocation will
generally take  effect 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 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 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 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 after the policy is mailed for delivery. Then,
all 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  class, the
reallocation will occur on the twentieth day 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  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  where Fortis Benefits obtains  authorization
of  the Policy owner  to delay acceptance  of the premium  until permitted under
Section 7702 or Section 7702A of the Code. In such cases, the 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.
 
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
 
                                       21
<PAGE>
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.
 
Fortis Benefits will determine  all values in connection  with a transfer as  of
the  Date  of  Receipt of  the  transfer  request. 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. At least four transfers per Policy year among the
Subaccounts or to the General Account will always be permitted. Fortis  Benefits
will give Policy owners advance notice of any such restrictions.
 
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 interest  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.  A Policy may lapse  if the Net Cash Value  on any Monthly Anniversary is
insufficient to pay the  Monthly Deduction. The "Net  Cash Value" is the  Policy
Value  less any outstanding Policy loan, plus  any loan interest paid for future
periods, less the portion of the  Surrender Charge that decreases to zero  after
11  years  regardless of  the  overall Surrender  Charge  cap. See  "Charges and
Deductions--Premium  Tax  and  Sales  Charges;  Other  Policy  Issuance  Expense
Charges."  Fortis  Benefits will  notify the  Policy owner  and any  assignee of
record of any Net Cash Value shortfall unless the Guaranteed Death Benefit is in
effect. If the Guaranteed  Death Benefit is  in effect, we  will still send  the
notification  if the Minimum  Premium payment requirement has  not been met. See
"Guaranteed Death Benefit" under "Payment and Allocation of Premiums--Premiums,"
above. The Policy owner will  have a Grace Period of  61 days to make a  premium
payment  sufficient to  cover at  least the amount  of such  shortfall, plus any
additional Monthly Deductions until the end of the Grace Period. Failure to make
a sufficient payment within the Grace  Period will result in termination of  the
Policy,  with  no  remaining Surrender  Value,  except to  the  extent otherwise
provided pursuant to the Guaranteed Death Benefit.
 
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.
 
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,  net of  any premium  tax charge  that Fortis  Benefits may  in the future
deduct from premiums, 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
any increase in the Surrender Charge  attributable to such premium, and (b)  the
balance needed to cover any due and unpaid Monthly Deductions through the end of
the Grace Period.
 
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  any  premium tax  charge deducted  from premiums,  less the  first Monthly
Deduction paid in accordance
 
                                       22
<PAGE>
with (a) above, and less the amounts paid in accordance with (b) above and  plus
the  Surrender Charge assumed  at lapse. (The  last addition to  Policy Value is
designed to  avoid  duplicate Surrender  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 4% per
annum.
 
The date of reinstatement will be the first Monthly Anniversary on or  following
approval  of the application for reinstatement. The Guaranteed Death Benefit and
eligibility  for  Policy  Value  Advances  will  not  be  reinstated.  Following
reinstatement,  the Surrender Charge  will be reinstated  and will be calculated
using the original Policy  Date and Face Amount  increase dates as  appropriate.
See  "Charges  and  Deductions--Premium  Tax  and  Sales  Charges;  Other Policy
Issuance Expense Charges."
 
CHARGES AND DEDUCTIONS
 
PREMIUM TAX AND SALES CHARGES; OTHER POLICY ISSUANCE EXPENSE CHARGES
 
PREMIUM TAX AND SALES  CHARGES. Premium tax and  sales charges are not  deducted
from  premium payments. This  allows more of  each premium payment  to be put to
work earning a return for the Policy  owner. Currently, a premium tax charge  in
the amount of 2.2% of all premium payments is assessed through monthly and daily
deductions  from Policy  Value, as described  below. Any portion  of such amount
that is  not recovered  by Fortis  Benefits pursuant  to the  monthly and  daily
deductions may be deducted as part of the Surrender Charge discussed below.
 
A  sales charge in the amount of 7 1/2% of all premium payments is also assessed
through the monthly and daily deductions  from Policy Value. Any amount of  this
sales  charge that is not recovered by Fortis Benefits through these monthly and
daily deductions may be deducted as  a Contingent Deferred Sales Charge that  is
included  as part of the Surrender Charge. It  is not possible to state how long
it would take  for the  full 7  1/2% sales charge  to be  recovered through  the
monthly  and daily deductions. First, the  cumulative sales charge will increase
with each new premium payment, and the Policy owner has considerable flexibility
to vary the  amount and timing  of premium payments.  Second, the actual  dollar
amount of the daily deduction to recover the sales charge depends on a number of
factors  that  will differ  for  each Policy,  including  the amount  of premium
payments made,  the  performance of  the  investment options  the  Policy  owner
chooses,  the amount  and timing  of any  Policy Value  Advances and  Cash Value
Bonuses or loans and loan repayments, and the insured's Age, sex and rate class.
 
   
The aggregate monthly deduction  for premium tax and  sales charges total  $4.00
per  policy (as part of the Monthly  Deduction referred to below), and the daily
deduction for these purposes is  at an annual rate of  .27% of the value of  the
Policy's net assets in the Separate Account. These monthly and daily deductions,
however,  will be refunded to the extent  that the cumulative amount of all such
deductions would exceed the current charge of 9.7% of all premium payments  made
to  date. Nor will these deductions for premium tax and sales charges be made at
any time when similar deductions to recover Policy Value Advances are being made
(which would occur  only if  Fortis Benefits decides  to exercise  its right  to
recover  such advances). Once the  amount of any Policy  Value Advances has been
fully recovered, the  monthly and  daily deductions  for premium  tax and  sales
charges  resume. The  Policy owner  is not  deemed to  have "paid"  any periodic
premium tax and sales charges that otherwise would have been deducted during the
period when deductions to recover Policy Value Advances were being made.
    
 
Any amount of premium  tax charges and sales  charges not recovered through  the
monthly  or  daily deductions  are  deducted, if  at all,  only  as part  of the
Surrender Charge discussed below.  The Surrender Charge (1)  is imposed ONLY  in
the event the Policy lapses or is surrendered in full before the eleventh Policy
Anniversary and (2) is subject to an overall upper limit or "cap" that decreases
over  time. Accordingly, Fortis Benefits' method of imposing premium tax charges
and sales charges under the Policies in many cases will result in  substantially
less than the full amount of such charges being imposed.
 
As  part  of the  Surrender Charge,  Fortis Benefits  also imposes  a Contingent
Deferred Sales Charge in  the amount of  22% of premiums paid  in the first  two
Policy  years  that are  not  in excess  of the  sum  of twelve  monthly Minimum
Premiums (calculated without regard to the  $25 limit and any charge for  riders
or substandard risks). This charge decreases at a constant rate on the fifth and
each subsequent Policy Anniversary until it is zero for surrenders and lapses as
of the eleventh Policy Anniversary and thereafter.
 
An  additional amount  of Contingent  Deferred Sales  Charge will  be payable on
certain total surrenders or Policy lapses  following an increase in Face  Amount
requested  by the Policy owner. The maximum additional Contingent Deferred Sales
Charge will  be 22%  of the  lesser of  (1) the  sum of  twelve monthly  Minimum
Premiums  (calculated without regard to the $25 limit and any charges for riders
or substandard
 
                                       23
<PAGE>
risks) for the Face Amount increase or (2) the amount of actual premium payments
deemed attributable to  the increase  which are made  not later  than two  years
after  the date of  the increase. Any such  additional Contingent Deferred Sales
Charge arising  from a  Face Amount  increase is  payable only  as part  of  the
Surrender  Charge, and will  decrease at a  constant rate on  the fifth and each
subsequent anniversary of the related Face Amount increase until it is zero  for
surrenders  and  lapses  as of  the  eleventh  anniversary of  the  increase and
thereafter.
 
For purposes of determining the amount of any 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 Age 95, assuming a net investment return of 4%  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 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.
 
A  decrease  in  Face Amount  may  result  in a  reduced  Surrender  Charge. See
"Surrender Charge," below.
 
Following any  change  in the  Surrender  Charge, a  Policy  schedule  amendment
setting forth the revised charge will be delivered to the Policy owner.
 
   
The  charge  for premium  taxes is  to  reimburse Fortis  Benefits for  taxes on
premiums and similar assessments  that are imposed by  most, but not all,  state
and  local governmental entities at various  rates. 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 current rate at
which the charge is  imposed is an average  rate that Fortis Benefits  estimates
will  be paid on premiums in all jurisdictions. In order to more fully reimburse
itself for premium taxes or similar charges that it has paid or expects to  pay,
Fortis  Benefits  reserves the  right to  raise the  current premium  tax charge
assessed through periodic deductions to 2.5% which would increase the cumulative
charge to 10%  (currently 9.7%) of  all premium payments.  Fortis Benefits  also
reserves the right to impose an additional premium tax charge of up to 2.5% that
would  be deducted from each payment, and to impose charges for other taxes that
may be payable and  are attributable to the  policies. Fortis Benefits does  not
expect to make a profit from the premium tax charge.
    
 
The  sales charges under  the Policies 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.
 
CHARGE FOR OTHER  POLICY ISSUANCE EXPENSES.  This charge is  $5.00 per  thousand
dollars of a Policy's initial Face Amount. This charge, however, is not deducted
from  premium payments or from  Policy Value while the  Policy is in force. This
allows a larger amount of  premium payments to remain  at work earning a  return
for the Policy owner.
 
This  charge is deducted  as part of  the Surrender Charge  discussed below. The
Surrender Charge (1) is deducted only if the Policy lapses or is surrendered  in
full  before  the eleventh  Policy  Anniversary and  (2)  is subject  to certain
maximums that decrease over time.
 
This charge  also will  be imposed  with respect  to any  requested Face  Amount
increase,  the additional "per thousand" charge being based on the dollar amount
of the increase.  Any such  additional charge will  be subject  to maximums  and
decrease over time to zero as set forth under "Surrender Charge" below.
 
This charge is designed primarily to compensate Fortis Benefits for underwriting
and  other start-up expenses  incurred in connection with  issuing the Policy or
Face Amount 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 does not expect its revenues from  this charge to exceed its costs  and
expenses of issuing and underwriting the Policies and Face Amount increases.
 
                                       24
<PAGE>
SURRENDER  CHARGE. A Surrender Charge may be assessed on lapse or full surrender
of a Policy before the eleventh Policy Anniversary (or the eleventh  anniversary
of  a Face Amount increase requested by  the Policy owner). The Surrender Charge
is the sum of the following components:
 
    (1) Any  portion of  the current  premium tax  charge and  the sales  charge
        referred  to above that  has not yet been  collected through the monthly
        and daily deductions therefor;
 
    (2) The other Contingent Deferred Sales Charges described above; and
 
    (3) The charge for  other Policy (or  increase) issuance expenses  described
        above.
 
The entire Surrender Charge is subject to an overall upper limit or "cap" as set
forth  in the table  below. The table below  also shows the  amount by which the
overall cap  is increased  by a  Face Amount  increase requested  by the  Policy
owner. The overall cap (and each amount of increase therein) also decreases at a
constant  rate on the fifth and  each subsequent Policy Anniversary (or increase
anniversary, as the case may  be) until it reaches  zero on the eleventh  Policy
Anniversary  (or increase anniversary). Accordingly,  there will be no Surrender
Charge on  surrenders  or  lapses  as  of  the  later  of  the  eleventh  Policy
Anniversary or the eleventh anniversary of any Face Amount increase.
 
<TABLE>
<CAPTION>
                                    OVERALL "CAP" ON
  INSURED PERSON'S                  SURRENDER CHARGE
   AGE AT TIME OF                (PER THOUSAND DOLLARS
 POLICY ISSUANCE OR                OF FACE AMOUNT OR
FACE AMOUNT INCREASE             FACE AMOUNT INCREASE)
- --------------------          ----------------------------
 
<S>                           <C>
 25 - 30 years                            $ 9
 
 31 - 40                                   10
 
 41 - 45                                   12
 
 46 - 50                                   14
 
 51 - 55                                   16
 
 56 - 60                                   21
 
 61 - 65                                   28
 
 66 - and above                            40
</TABLE>
 
No  Surrender Charge is deducted upon a  partial withdrawal of Policy Value or a
Face Amount  decrease. However,  when  a Policy  owner  requests a  Face  Amount
decrease  (or a partial  withdrawal that results  in a Face  Amount decrease), a
portion of the overall "cap"  referred to above is  reduced: the portion of  the
cap  that is attributable to the cancelled  Face Amount is reduced to the extent
that it  exceeds the  amount of  the Surrender  Charge then  in effect  that  is
attributable  to the  cancelled Face Amount.  For this purpose,  the most recent
Face Amount increases are deemed to be cancelled first.
 
It is not possible to state, as a general matter, what the Surrender Charge will
be as a  percentage of  premiums paid.  This is  because the  components of  the
Surrender  Charge vary based on factors other  than the amount of premiums paid.
For example,  the  amount of  the  premium tax  and  sales charge  that  remains
uncollected  at the time  of surrender or  lapse depends on  such factors as the
period of time the Policy has been  in force, the performance of the  investment
options  the Policy  owner chooses,  the amount and  timing of  any Policy Value
Advances, Cash Value  Bonuses or loans  and loan repayments,  and the  insured's
Age,  sex, and rate class. Also, the Surrender Charge component for other Policy
issuance expenses  is not  based on  the amount  of premiums  paid, but  on  the
Policy's  Face Amount.  Nor is  the overall  Surrender Charge  "cap" referred to
above based on the amount of premiums paid, but on the Policy's Face Amount  and
the number of years since the Policy was issued.
 
DEDUCTIONS TO RECOVER POLICY VALUE ADVANCES
 
Subject  to certain conditions, Policy owners  may receive credits in the nature
of Policy Value Advances  starting at the  end of the  seventh Policy year.  See
"Policy Benefits--Policy Value Advances and Cash Value Bonuses." While it is not
Fortis  Benefits' current intention to do so, Fortis Benefits reserves the right
to recover the amount of such advances that are actually paid by Fortis Benefits
through the following deductions made after the payment of the advances: $4.00 a
month per Policy (as part of the Monthly Deduction) plus a daily deduction at an
annual rate of  .27% of the  value of the  Policy's net assets  in the  Separate
Account.  These deductions  would continue  until the  cumulative amount  of all
Policy Value  Advances credited  to  the Policy  had  been recovered  by  Fortis
Benefits  pursuant to the  deductions. The Surrender Charge  payable on lapse or
full surrender of a  Policy will NOT  be increased to  recover any Policy  Value
Advances  that have not previously been  recovered. The amount of the deductions
to recover  Policy  Value Advances  is  not adjusted  for  the effect  that  the
resulting increase in Policy Value may have on other charges, as explained under
"Policy Benefits--Policy Value Advances."
 
MONTHLY DEDUCTION FROM POLICY VALUE
 
The  Monthly  Deduction  from  Policy Value  includes  (1)  the  monthly charges
described above  under "Premium  Tax and  Sales Charges;  Other Policy  Issuance
Expense  Charges" and "Deductions  to Recover Policy Advances,"  (2) the cost of
insurance   charge,    (3)   while    the    Guaranteed   Death    Benefit    is
 
                                       25
<PAGE>
in  effect, a monthly charge for  such guarantee (see "Guaranteed Death Benefit"
under "Payment  and  Allocation  of Premiums--Premiums"),  (4)  the  charge  for
optional  insurance benefits added by rider (see Appendix A--"Optional Insurance
Benefits"), and (5) certain monthly administrative expense charges. The cost  of
insurance  charges  and  monthly administrative  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 1.00327374, 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
and the length  of time  ("duration") since  issuance of  the Policy  or a  Face
Amount  increase  requested by  the  Policy owner.  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.  Fortis
Benefits' current cost of insurance rate schedules generally provide lower rates
for  otherwise comparable insureds of the same Age whose Policies or Face Amount
increases have  been in  effect  for specified  periods  of time.  Although  the
current cost of insurance rate schedules are not guaranteed, 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, duration 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 makes  available gender-neutral
cost of insurance rates, and affected  purchasers should inquire 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,  Minimum Premiums  also  will be  the  same as  between  otherwise
comparable Policies for males and female insureds.
 
   
RATE  CLASS. Fortis Benefits currently places  insureds into one of several rate
classes depending on  the mortality risk.  Fortis Benefits has  both smoker  and
non-smoker  rate classes. For an otherwise  identical Policy, insureds in a non-
smoker rate class will  have a lower  cost of insurance than  those in a  smoker
rate class.
    
 
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
 
                                       26
<PAGE>
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.
 
   
A Policy  owner may  request a  change in  smoking status.  The change  will  be
allowed  only if  the insured would  not otherwise  be in a  less favorable 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 EXPENSE CHARGES. A monthly administrative charge of $4.50
per  Policy will be deducted from Policy  Value as part of the Monthly Deduction
for each  Policy  Month. Fortis  Benefits  reserves  the right  to  change  this
administrative charge, but it will never exceed $7.50 per month. Fortis Benefits
also  reserves the right to impose  an additional monthly administrative expense
charge of up to $.13  per thousand dollars of Face  Amount then in force.  These
charges  compensate Fortis Benefits  for expenses incurred  in administering the
Policy.
 
Fortis Benefits does  not expect  its revenues from  the monthly  administrative
expense charges to exceed its costs and expenses in administering the Policies.
 
CHARGE FOR MORTALITY AND EXPENSE RISKS
 
A  daily  charge is  made  for mortality  and  expense risks  assumed  by Fortis
Benefits. The charge is at an annual rate of .90% 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 insureds 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.
 
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.  Neither these charges  nor any additional  charges
referred   to  above   under  "Monthly  Deduction   from  Policy  Value--Monthly
Administrative Expense Charges" will 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.
 
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.
 
GUARANTEE OF CERTAIN CHARGES
 
Fortis  Benefits guarantees, and may not increase, the monthly and daily charges
for sales expenses and  to recover Policy Value  Advances; the combined  maximum
rate  for premium tax and sales charges; the maximum Surrender Charge rates; the
Guaranteed Death  Benefit charge;  the  maximum monthly  administrative  expense
charges; the rate of the charge to cover the costs of issuing a Policy or a Face
Amount  increase;  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. Certain charges for sales expenses may increase with the amount of
the  monthly Minimum Premium. Although the rates of these charges are guaranteed
not to change, Fortis Benefits reserves the right to change the monthly  Minimum
Premium  used for this purpose,  as well as for  other purposes. Any such change
will affect only  subsequent increases  in the  monthly Minimum  Premium due  to
changes  in benefits. Fortis Benefits also  reserves the right to recover Policy
Value Advances, to increase the amount of premium tax charges assessed  pursuant
to  monthly  and  daily deductions  and  to  deduct premium  taxes  from premium
payments, subject to guaranteed maximums.
 
                                       27
<PAGE>
VARIATIONS OF POLICY MINIMUMS, CHARGES AND CREDITS
 
Fortis Benefits may  reduce the Policy  Face Amount and  initial annual  premium
minimums,  sales  charges  and/or other  charges,  or may  increase  credits, on
Policies sold to members of a class of associated individuals, or to a  trustee,
employer  or other entity representing such a  class, or to individuals where it
is expected  that such  sales will  result in  savings of  sales,  underwriting,
and/or  administrative expenses  or more favorable  mortality experience. Fortis
Benefits determines both  the eligibility for  such reductions, as  well as  the
amount  of such reductions, by considering the following factors: (1) the number
of individuals; (2) the size of the Policy or Policies; (3) the total amount  of
premium  payments expected to  be received for  the Policy or  Policies; (4) the
nature of the association between the individuals, and the expected  persistency
of  the Policy or Policies; (5) the purpose for which the Policy or Policies are
purchased and  whether  that purpose  makes  it  likely that  expenses  will  be
reduced;  (6) the method  of sale and  whether that method  makes it likely that
expenses will be reduced; and (7) any other circumstances which Fortis  Benefits
believes  to  be relevant  in determining  whether reduced  sales, underwriting,
and/or administrative expenses, or more  favorable mortality experience, may  be
expected.  Fortis  Benefits' variations  of these  Policy minimums,  charges and
credits for these sales will not be unfairly discriminatory to the interests  of
other Policy owners.
 
LOAN PRIVILEGES
 
The  Policy owner may borrow money from  Fortis Benefits using the Policy as the
only security for the loan. Policy loans are not permitted under Policies issued
pursuant to Section 403(b).
 
   
The maximum amount that  may be borrowed  at any time is  90% of the  difference
between  the Policy Value and the amount of any Surrender Charge then in effect.
After the later of 12 years or the insured's Age 70, the Policy owner may borrow
up to 100% of such difference. 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.
    
 
RATE CHARGED ON POLICY LOANS
 
Except as  noted below,  interest on  Policy loans  is charged  at an  effective
annual  rate  of  6.10% per  year  (5.66%  per year  in  Massachusetts), payable
annually in advance. If not paid when  due, loan interest at the same rate  will
be added to the loan. An amount equal to the loan interest accrued to the end of
the  year will be taken from the General Account and the Subaccounts on the same
basis that the Monthly Deductions are  allocated and transferred to the  General
Account.
 
Fortis Benefits will charge interest at a reduced effective annual rate of 3.85%
per  year, payable in  advance, if the Policy  owner meets certain requirements.
Qualifying Policy owners may be charged the reduced interest rate on one  Policy
loan  in each Policy year of up to 10%  of the Surrender Value as of the date of
the loan,  provided that  the generally  applicable limitations  on the  overall
amount  of  Policy loans  (described  above) are  not  exceeded. A  Policy owner
qualifies for this reduced interest  rate if (1) the Policy  is in the third  or
subsequent Policy year and the Surrender Value is a least $50,000, or (2) in any
event,  after  the policy  has been  in force  for  at least  12 years.  The 10%
limitation of such loans is  increased to 15% of  the Surrender Value for  loans
obtained in Policy years in which the insured is age 59 1/2 or older.
 
CREDITED RATE FOR POLICY LOANS
 
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 4% per annum.
 
NO INTEREST IN ADDITION  TO THAT REFERRED  TO ABOVE WILL  BE CREDITED TO  LOANED
POLICY  VALUES NOR WILL POLICY VALUES IN  THE GENERAL ACCOUNT PARTICIPATE IN ANY
INVESTMENT EXPERIENCE APPLICABLE TO THE SEPARATE ACCOUNT.
 
EFFECT OF A POLICY LOAN
 
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
interest 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
Guaranteed  Death Benefit  or disqualify  a Policy  from receiving  Policy Value
Advances and Cash Value Bonuses.
 
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
 
                                       28
<PAGE>
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 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 in  the same manner as the
repayment is allocated.
 
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
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  Surrender Charge  will be  deducted from the
Policy Value on any full surrender within eleven years after the Policy Date. An
additional amount of Surrender Charge may also be deducted on any full surrender
within eleven years after the date of any Face Amount increase above the  amount
on  which such  charge was previously  calculated. See  "Surrender Charge" under
"Charges and Deductions--Premium  Tax and Sales  Charges; Other Policy  Issuance
Expense  Charges."  (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 Minimum 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. The amount withdrawn will
be deducted from the General Account and the Subaccounts of the Separate Account
as 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
Minimum Premium,  but  may  result  in a  distribution  (as  a  further  partial
withdrawal)  of  any  additional amount  necessary  to comply  with  the maximum
premium limitation under Section 7702 of  the Code. See "Payment and  Allocation
of Premiums--Premiums."
 
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 Guaranteed  Death
Benefit  or disqualify  a Policy from  receiving Policy Value  Advances and Cash
Value Bonuses.
 
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 $500,000.
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.
 
Under  Policies issued pursuant to Section 403(b), no distributions of voluntary
salary reduction amounts will be permitted prior to one of the following events:
attainment of 59 1/2 by the employee or the employee's separation from  service,
death,  disability, or hardship. (Hardship distributions  will be limited to the
lesser  of  the  amount   of  hardship  or  the   amount  of  salary   reduction
contributions, exclusive of earnings
 
                                       29
<PAGE>
thereon).  This  restriction does  not apply  to another  investment alternative
permitted under Section 403(b) retirement arrangement or to amounts attributable
to premium payments  received prior to  January 1, 1989.  Also see "Federal  Tax
Matters  -- Taxation Under Section  403(b) Policies" for required distributions.
Further, in most cases, spousal consent is required for distributions other than
by a qualified joint and survivor annuity or settlement option.
 
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, order 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,  accelerated  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.
    
 
   
However,  Fortis Benefits may defer the determination, application or payment of
any  death  benefit,  accelerated  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.
 
                                       30
<PAGE>
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.
 
   
Commissions  and other  compensation are  paid by  Fortis Benefits  to Investors
under a distribution agreement entered  into by them as  of January 1, 1994  and
amended September 30, 1995. As compensation for distributing the Policies Fortis
Benefits  pays Investors 110.5% of  all premiums up to  the first twelve monthly
Minimum Premiums  (and  up to  the  amount  of twelve  months'  Minimum  Premium
attributable to Face Amount increases); and 4% of all other premiums paid during
the first six years after the Policy Date and 2% of such excess premiums paid in
Policy  years seven  through ten.  Fortis Benefits  also pays  Investors .25% of
unloaned Policy Value annually as a  service fee from the eleventh Policy  year.
Fortis  Benefits also  pays a  general marketing  allowance to  Fortis Investors
equal to 20%  of the first  twelve monthly  Minimum Premiums, not  to exceed  an
amount  agreed to in advance by Fortis Benefits and Fortis Investors ($1,812,000
in calendar year 1996 for all Variable Universal Life Policies issued by  Fortis
Benefits).  The Minimum Premiums for these  purposes are generally those used to
determine availability of the  Guaranteed Death Benefit,  decreased by any  term
conversion  credit. Investors  pays a selling  allowance not in  excess of those
amounts to other  broker dealer  firms or exempt  firms who  sell the  Policies.
Fortis  Benefits  may,  under certain  flexible  compensation  arrangements, pay
Fortis Investors different selling allowances and service fees than as set forth
above, and Fortis  Investors may in  turn pay different  selling allowances  and
larger  service fees to  its registered representatives  and other broker-dealer
firms than as set forth above. However, in such case, such flexible compensation
arrangements will have actuarially equivalent  present values to the amounts  of
the  selling  allowances  and  service  fees set  forth  above.  In  many cases,
registered 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   or
mortality  experience  standards.  Commissions and  other  compensation  do not,
however, represent a charge or deduction  against Policies in addition to  those
set forth under "Charges and Deductions." Such compensation for the Policies and
for  all  other  variable  universal life  policies  issued  by  Fortis Benefits
totalled $26,084,059  for 1995.  Commissions with  respect to  premium  payments
which are refunded are returned. 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,  First Fortis  Life Insurance
Company's  Separate  Account  A  and   Variable  Account  C,  Fortis   Advantage
Portfolios,  Inc., Fortis Capital  Fund, Inc., 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
 
                                       31
<PAGE>
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. Guidance
on these requirements  is extremely  limited, but 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  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 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.
 
TAX STATUS OF ADDITIONAL INSURED RIDER
 
The coverage under either the Additional Insured Rider or the Additional Insured
Rider Plus for  a non-family  member is not  a qualified  additional benefit  as
defined  in  Section 7702  of  the Code.  As  a result,  the  Monthly Deductions
attributable to such coverage may be deemed to be distributions from the  policy
for  tax  purposes.  However, the  benefit  payable  under the  rider  should be
excludible from  the gross  income of  the beneficiary.  Before purchasing  such
coverage  you  should consult  with a  qualified tax  adviser for  more complete
information.
 
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, an accelerated  death
benefit  payment, 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 may be treated  as a modified  endowment
contract depending upon the amount of premiums paid for such Policy. The premium
limitation  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
 
                                       32
<PAGE>
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.
 
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. There
is, however,  pending  legislation that  would  eliminate the  deductibility  of
interest  paid even on loans  of $50,000 or under, with  respect to both new and
previously issued policies.
    
 
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.
 
If  there is a non-family  member insured under the  Additional Insured Rider or
the Additional Insured Rider Plus, the Investment in the Policy may be deemed to
be reduced  by the  total  amount of  Monthly  Deductions attributable  to  that
insured.
 
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.
 
TAXATION UNDER SECTION 403(B) PLANS.
 
PURCHASE PAYMENTS. Under Section  403(b) of the Code,  payments made by  certain
employers  (i.e., tax-exempt  organizations meeting the  requirements of Section
501(c)(3) of the Code, or public educational institutions) to purchase  Policies
for  their employees are  excludible from the  gross income of  employees to the
extent that such aggregate purchase  payments do not exceed certain  limitations
prescribed  by the Code.  This is the  case whether the  purchase payments are a
 
                                       33
<PAGE>
result of voluntary salary reduction  amounts or employer contributions.  Salary
reduction payments are, however, subject to FICA (social security) taxes.
 
TAXATION  OF DISTRIBUTIONS. Distributions from a Section 403(b) Policy are taxed
as ordinary income to the  recipient. Taxable distributions received before  the
employee  attains  age 59  1/2 generally  are subject  to a  10% penalty  tax in
addition to regular  income tax.  Certain distributions are  excepted from  this
penalty tax, including distributions following the employee's death, disability,
separation  from service after Age 55, separation from service at any Age if the
distribution is in the form of an  annuity for the life (or life expectancy)  of
the  employee (or the employee and  Beneficiary) and distributions not in excess
of deductible  medical  expenses. In  addition,  no distributions  of  voluntary
salary  reduction amounts made for years  after December 31, 1988 (plus earnings
thereon and earnings on Policy Values as of December 31, 1988) will be permitted
prior to one of the following events:  attainment of Age 59 1/2 by the  employee
or  the  employee's  separation  from service,  death,  disability  or hardship.
(Hardship distributions  will be  limited to  the lesser  of the  amount of  the
hardship  or the amount of salary reduction contributions, exclusive of earnings
thereon.)
 
REQUIRED DISTRIBUTION.  At  retirement  or  on April  1  of  the  calendar  year
following the calendar year in which the employee attains age 70 1/2, the Policy
must  be surrendered or one  of the settlement options  (other than the interest
option) must  be  put  into  effect.  Otherwise,  the  Surrender  Value  becomes
reportable taxable income.
 
If  the  insured dies  after  the commencement  of  payments under  a settlement
option, other than an  interest option, any remaining  portion of such  interest
will  be distributed  at least  as rapidly as  under the  method of distribution
being used on the date of such death. If the insured dies before commencement of
payments under  a  settlement option,  or  after payments  commenced  under  the
interest  option,  the entire  interest in  the Policy  will be  distributed (1)
within five years after such death, or (2) as annuity payments which will  begin
within  one year  of such  death and  which will  be made  over the  life of the
designated beneficiary (who must be a natural person under this option) or  over
a  period not extending beyond the life expectancy of that beneficiary. However,
if the beneficiary is the insured's  surviving spouse, the surviving spouse  may
elect an option with payments extending more than five years after the insured's
death  (but not to exceed the beneficiary's life or life expectancy) at any time
until the later of (1)  the end of the calender  year following the year of  the
insured's  death, or (2) the end of the calender year in which the insured would
have attained 70 1/2.
 
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. If
the Policy is part of a program under Section 403(b), it may be transferred only
in limited circumstances referred to in the Policy.
 
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.  If  the
Policy  is part of  a program under Section  403(b), it may  be assigned only in
limited circumstances referred to in the Policy. 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,
 
                                       34
<PAGE>
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 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) The Guaranteed Death
Benefit lapses and the Death Benefit becomes the Alternative Death Benefit  (see
"Death  Benefit Options--Alternative Death Benefit")  2) No further Policy Value
Advances or Cash Value  Bonuses are credited 3)  All supplemental riders  except
the  Accelerated Benefit Rider terminate and 4)  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 Age  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. The minimum
initial Face Amount and  minimum initial annual premium  for policies issued  to
these  categories of persons  is as follows,  respectively: $250,000 and $5,000.
Additionally, in  Fortis  Benefits'  discretion, certain  charges  may  also  be
reduced or waived for these categories of persons.
 
Fortis  Benefits will credit 40%  of the sum of  twelve monthly Minimum 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 Minimum Premiums  then in effect  in the second  Policy year. The  first
credit, after deduction of any premium tax that
 
                                       35
<PAGE>
Fortis  Benefits may determine in the future to impose on premium payments, 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.  The
premium  returned upon exercise of  the Policy owner's right  to cancel a Policy
will not include the amount of any credit.
 
Additionally, for a Face Amount increase, Fortis Benefits will credit 40% of the
sum of twelve  monthly Minimum Premiums  (calculated without regard  to the  $25
limit  and any optional  riders or substandard  risks) on the  effective date of
such Face Amount increase if  the Policy owner is at  that time a member of  the
above  described group. On  the first anniversary of  such Face Amount increase,
25% of the sum of such monthly Minimum Premiums attributable to the Face  Amount
increase  still in  effect will  be credited  to the  Policy. These  credits are
granted only if the Face Amount increase is at least $25,000 and the  annualized
planned  periodic premium  is equal to  twelve monthly Minimum  Premiums for the
entire Policy. The  credit is granted  only on  the portion of  the Face  Amount
increase that equals the excess of the current face amount over the largest face
amount that has ever been in force on the Policy.
 
If  a Policy is issued in exchange  for another policy issued by Fortis Benefits
or Time Insurance Company within the last 5 years and Fortis Benefits relies  on
the  evidence of insurability  previously provided, no credits  will be paid for
the transferred Face Amount. If such exchange is made after 5 years, the  credit
is  50% of the amount above for the transferred coverage. The full credit amount
will be paid on any increase in Face Amount above the transferred coverage.
 
The foregoing program is subject to termination at any time without notice.  All
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 or Time
Insurance Company's 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.
    
 
   
If the value of  an existing life  insurance policy which  was issued by  Fortis
Benefits  Insurance Company is transferred to a Policy, then neither the premium
tax charge of 2.2%  nor the sales  charge of 7.5% will  be assessed against  the
amount transferred.
    
 
Also,  for its or Time Insurance Company's 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
Minimum  Premiums  for  the amount  of  Policy  Face Amount  established  by the
conversion, without  regard to  any  optional benefits  provided by  rider.  The
conversion credit 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). No premium tax  charges will be assessed  against
the conversion credit. 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.
 
MANAGEMENT
 
The  directors and  executive officers, to  the extent  responsible for variable
life insurance operations, 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.
</TABLE>
 
                                       36
<PAGE>
   
<TABLE>
<S>                               <C>
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.
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                    Senior   Vice   President--Sales;  before   then   Senior  Vice
                                  President--Western Divisional Officer, Colonial Group, Inc.
Anthony J. Rotondi (1)            Senior   Vice    President--Manufacturing    and    Information
                                  Technology, also officer of affiliated companies.
Rhonda J. Schwartz (1)            Senior  Vice President and General Counsel--Life and Investment
                                  Products; before then Secretary and General Counsel of  Fortis,
                                  Inc.; before then Norris, McLaughlin, Marcus--attorneys.
Michael John Peninger (4)         Senior Vice President and Chief Financial Officer
Jon H. Nicholson (1)              Senior 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,   501  West  Michigan,   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 Fortis AMEV N.V. AMEV/VSB  1990 N.V. is 50% owned by  Fortis
    AMEV N.V. and 50% owned by Fortis AG, Boulevard Emile Jacqmain 53, Brussels,
    Belgium.
 
(3) Address: Fortis AMEV, Archimedeslaan 10, 3584 BA Utrecht, The Netherlands.
 
(4) Address: 2323 Grand Avenue, Kansas City, MO 64108.
 
   
(5) Address: 501 West Michigan, Milwaukee WI 53201.
    
 
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 the 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 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.
 
                                       37
<PAGE>
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  as noted below) 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, any Policy
Value Advances and Cash Value Bonuses credited during that period and the status
of the death benefit, Policy Value (both total and net of any Surrender Charge),
amounts in  the  Subaccounts  and  General Account,  and  any  Policy  loan.  In
addition,  an  owner  will  be  sent  semiannual  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, 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.
 
RATINGS AND RANKINGS
 
Fortis  Benefits may advertise  its relative performance  as compiled by outside
organizations. Following is a list of ratings services which may be referred  to
in advertisements, along with the category in which the applicable Subaccount is
included:
 
<TABLE>
<CAPTION>
            RATING SERVICE                       CATEGORY
- --------------------------------------  --------------------------
<S>                                     <C>
AGGRESSIVE GROWTH SUBACCOUNT
Morningstar Publications, Inc.              aggressive growth
Lipper Analytical Services, Inc.           small company growth
 INTERNATIONAL STOCK SUBACCOUNT
Morningstar Publications, Inc.             international stock
Lipper Analytical Services, Inc.           international equity
 GLOBAL GROWTH SUBACCOUNT
Morningstar Publications, Inc.             international stock
Lipper Analytical Services, Inc.                  global
 GROWTH STOCK SUBACCOUNT
Morningstar Publications, Inc.                    growth
Lipper Analytical Services, Inc.           capital appreciation
</TABLE>
 
                                       38
<PAGE>
<TABLE>
<CAPTION>
            RATING SERVICE                       CATEGORY
- --------------------------------------  --------------------------
 GLOBAL ASSET ALLOCATION SUBACCOUNT
<S>                                     <C>
Morningstar Publications, Inc.                   balanced
Lipper Analytical Services, Inc.             global flexible
 GROWTH AND INCOME SUBACCOUNT
Morningstar Publications, Inc.              growth and income
Lipper Analytical Services, Inc.            growth and income
 ASSET ALLOCATION SUBACCOUNT
Morningstar Publications, Inc.                   balanced
Lipper Analytical Services, Inc.           flexible portfolios
 HIGH YIELD SUBACCOUNT
Morningstar Publications, Inc.                  high yield
Lipper Analytical Services, Inc.            high current yield
 GLOBAL BOND SUBACCOUNT
Morningstar Publications, Inc.              international bond
Lipper Analytical Services, Inc.               world income
 DIVERSIFIED INCOME SUBACCOUNT
Morningstar Publications, Inc.                corporate bond
Lipper Analytical Services, Inc.               general bond
 U.S. GOVERNMENT SUBACCOUNT
Morningstar Publications, Inc.             U.S. government bond
Lipper Analytical Services, Inc.             U.S. government
 MONEY MARKET SUBACCOUNT
Morningstar Publications, Inc.                 money market
Lipper Analytical Services, Inc.               money market
</TABLE>
 
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, 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
    
 
                                       40
<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.
    
 
                                       41
<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.
    
 
                                       42
<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.
    
 
                                       43
<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>
    
 
                                       44
<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.
    
 
                                       45
<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.
    
 
                                       46
<PAGE>
   
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    
   
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.
    
 
   
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.
    
 
                                       47
<PAGE>
   
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.
    
 
                                       48
<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.
    
 
                                       49
<PAGE>
   
4.  INVESTMENTS (CONTINUED)
    
   
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>
    
 
   
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.
    
 
                                       50
<PAGE>
   
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.
    
 
   
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>
    
 
                                       51
<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
                                                               -------------------------------
                                                                 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.
    
 
                                       52
<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>
    
 
                                       53
<PAGE>
   
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>
    
 
   
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>
    
 
                                       54
<PAGE>
   
11. REINSURANCE (CONTINUED)
    
   
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.
    
 
   
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.
    
 
                                       55
<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
                                         ---------------------------------------------------------
                                                    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.
    
 
                                       56
<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]
/s/ Ernst & Young LLP
March 22, 1996
 
                                       57
<PAGE>
STATEMENT OF NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
DECEMBER 31, 1995
 
<TABLE>
<CAPTION>
                                                                                                                NET ASSET VALUE FOR
                                                             ATTRIBUTABLE TO   ATTRIBUTABLE TO                     VARIABLE LIFE
                                                             FORTIS BENEFITS    VARIABLE LIFE    ACCUMULATION   INSURANCE POLICIES
                                                                INSURANCE         INSURANCE         UNITS        PER ACCUMULATION
                                                NET ASSETS       COMPANY          POLICIES       OUTSTANDING           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.
 
                                       58
<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
                                                                                         -------------  ------------  ------------
                                                                                         -------------  ------------  ------------
 
<CAPTION>
 
                                                                                                  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.
 
                                       59
<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
                                                                                           ------------  ------------  ------------
                                                                                           ------------  ------------  ------------
 
<CAPTION>
 
                                                                                                    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.
 
                                       60
<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
                                                                                           ------------  ------------  ------------
                                                                                           ------------  ------------  ------------
 
<CAPTION>
 
                                                                                                    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.
 
                                       61
<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
                                                                                           ------------  ------------
                                                                                           ------------  ------------
 
<CAPTION>
 
                                                                                             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.
 
                                       62
<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.
 
                                       63
<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
                                                                                     ------------
                                                                                     ------------
 
<CAPTION>
 
                                                                                      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.
 
                                       64
<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.
 
                                       65
<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 $140 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.
 
                                       66
<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.
 
                                       67
<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>
 
                                       68
<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
 
<CAPTION>
 
                                                                     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>
 
                                       69
<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.
 
                                       70
<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.
 
                                       71
<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. A tax
advisor should be  consulted as  to the differing  tax consequences  of each  of
these  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.
 
For  Policies  issued pursuant  to Section  403(b),  the guarantee  period under
Option 3 and  the percentage of  payments to the  insured after the  death of  a
beneficiary  under Option 4 may be limited according to that section and Section
401(a) of the Code. Spousal consent may be required for an annuity option  other
than a qualified joint and survivor option.
 
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.
 
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 this
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.
 
                                      A-1
<PAGE>
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 preexisting 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.
 
WAIVER  OF SELECTED AMOUNT RIDER. If the primary insured is totally disabled for
more than six months while this rider is in effect, Fortis Benefits will apply a
premium payment to the Policy on  each subsequent Monthly Anniversary and  while
the primary insured remains totally disabled until Age 95.
 
The  amount of the premium payment is equal to the Selected Amount chosen by the
applicant at the  time of  application, and shown  in the  Policy schedule.  The
minimum  Selected Amount that can be chosen  is $25. The maximum Selected Amount
that can be chosen is the greater of $300 or the monthly Minimum Premium. If the
Policy's Face Amount is greater than  $2,000,000, the Selected Amount is  capped
at  the monthly Minimum  Premium for $2,000,000.  The annualized Selected Amount
cannot be greater than the guideline annual  premium. If the Face Amount of  the
Policy is decreased so that the annualized benefit is greater than the guideline
annual premium, the benefit will be reduced.
 
The  rider does not cover preexisting conditions and terminates when the primary
insured reaches Age  60, except as  to any disability  commencing prior to  that
time.  Monthly Deductions  will be  increased to include  the cost  of the rider
which is a  specified percentage  of the Selected  Amount based  on the  primary
insured's  Age. In most states, the current  charges will be shown in the Policy
schedule. The charges increase from year to year. Fortis Benefits may change the
rates, up to the guaranteed maximum rates set forth in the rider.
 
The Policy owner cannot elect  to have both this rider  and a Waiver of  Monthly
Deductions Rider attached as supplementary benefits with the same Policy.
 
   
ADDITIONAL  INSURED RIDER PLUS.  This rider provides  fixed amounts of insurance
until Age 95 on the life of the primary insured, one or more insured persons who
are members of the  primary insured's immediate family,  or individuals in  whom
the owner has an insurable interest. In the event an insured under this rider is
not  a  family  member,  certain  special tax  rules  will  apply.  For  a brief
description of these tax rules see "Federal Tax Matters." The number of insureds
that may  be  covered by  this  rider is  limited  to five.  Subject  to  Fortis
Benefits' underwriting requirements, coverage on persons not already insured may
be  added on a Policy Anniversary. Coverage  under this rider may not exceed six
times the  base  Policy's Face  Amount.  Coverage on  additional  insureds  will
automatically  be reduced pro-rata, to the  extent necessary to ensure that this
limit is not exceeded. Coverage on the primary insured under this and all  other
term riders cannot exceed six times the base Policy's Face Amount.
    
 
The  charges increase from year to year. Fortis Benefits may change the rates at
which the charges  for this rider  are imposed, although  the resulting  charges
will  not exceed the guaranteed maximum charges  for this rider set forth in the
Policy schedule.
 
The Policy owner may  convert the coverage on  an additional insured (except  if
the additional insured is also the primary insured) to a variable universal life
insurance  policy offered by us at  any time before the later  of the end of the
fifth Policy year or the additional  insured's 65th birthday. The conversion  is
not  available more than 31 days after  the death of the primary insured. Fortis
Benefits permits conversion  of less  than the  full coverage  on an  additional
insured.  However, partial conversions are subject  to a $25,000 minimum and may
be elected only on the Policy Anniversary, and only if remaining coverage on the
additional insured under the Rider will  be at least $25,000. If the  additional
insured  is also the primary insured, the Policy owner may exchange the coverage
under this rider for a  Face Amount Increase under  the base Policy, subject  to
the same limitations.
 
                                      A-2
<PAGE>
   
Fortis  Benefits will waive  its usual requirement  for evidence of insurability
with respect to an amount of the new Policy's Face Amount that is not in  excess
of the amount of rider coverage cancelled, and the new coverage will be based on
the  same rate class as under the  rider. The suicide and contestability periods
will run from the original date of the transferred coverage. The coverage  under
the  rider will terminate  when the new coverage  becomes effective. Any amounts
deducted for the rider coverage for  periods beyond such time will be  refunded.
Except  as noted above, the  customary procedures and charges  for issuing a new
Policy or a Face Amount increase will apply to a conversion from the  Additional
Insured Rider Plus.
    
 
PRIMARY  INSURED  RIDER PLUS.  This rider  is  in most  respects similar  to the
Additional Insured  Rider Plus  described immediately  above, except  that  this
rider is available only at the time the Policy is first issued.
 
As  discussed further below,  coverage obtained under  the Primary Insured Rider
Plus is less costly  initially than a comparable  amount of additional  coverage
obtained  under the base Policy. However, for Policy owners who intend to retain
their Policies and meet the Minimum Premium requirements in order to obtain  the
full  benefit of Policy  Value Advances and additionally  qualify for Cash Value
Bonuses, coverage under the  base Policy will probably  be more economical  over
the long term.
 
The  other  significant  difference  from  the  Additional  Insured  Rider  Plus
described above is that, under the Primary Insured Rider Plus, the Policy  owner
does  not have  a right to  convert to  a new variable  universal life insurance
policy. Instead, at any  time before the  later of the end  of the fifth  Policy
year  or the insured's 65th birthday, the Policy owner may exchange the coverage
under the Primary  Insured Rider Plus  for a  Face Amount increase  in the  same
amount under the base Policy. Fortis Benefits permits exchanges of less than the
full  coverage  under  the Primary  Insured  Rider  Plus, subject  to  a $25,000
minimum. Such partial exchanges may be elected only once each Policy year, as of
the Policy Anniversary, and  only if remaining coverage  on the primary  insured
under the rider will be at least $25,000.
 
Fortis  Benefits will waive its usual  requirements for evidence of insurability
with respect to the Face Amount increase, and the increase will be based on  the
same  rate class as the  rider. The suicide and  contestability periods will run
from the original date of the transferred coverage. The coverage under the rider
will terminate when the Face Amount increase becomes effective.
 
Except as noted above, a Face Amount increase implemented upon an exchange  from
the primary insured rider will be subject to the same procedures and charges and
in all respects have the same effect as any other Face Amount increase.
 
The  rates of  charges for  coverage under  the Primary  Insured Rider  Plus are
expected to be  lower than  the rates  of the cost  of insurance  charges for  a
comparable  amount of coverage under the base Policy, for at least several years
after the Policy is issued. However the rates for the Primary Insured Rider Plus
increase more  rapidly  as the  insured's  Age increases  than  do the  cost  of
insurance  rates for a comparable amount of  coverage under the base Policy, and
may eventually  be higher.  Also, the  maximum guaranteed  charges for  coverage
under  the  Primary Insured  Rider Plus  are  at higher  rates than  the maximum
guaranteed cost of  insurance rates under  the base Policy.  Although it may  be
necessary  for Fortis Benefits to obtain an order of the Securities and Exchange
Commission in order to assess charges  at the maximum rates permitted under  the
Primary  Insured Rider Plus, Fortis Benefits  specifically reserves the right to
seek such an order. Fortis Benefits cannot predict whether the Commission  would
issue any requested order.
 
   
If  coverage on  the Policy's  insured person is  taken pursuant  to the Primary
Insured Rider Plus, the monthly Minimum Premium will be lower (unless and  until
such  coverage is exchanged for a Face  Amount increase as described above) than
if the same amount  of Face Amount  were purchased under  the base Policy.  This
means  that  any Surrender  Charge would  also  be lower,  and that  initially a
smaller amount of premiums will be required to maintain the Policy's  Guaranteed
Death  Benefit and to  ensure the receipt  of Policy Value  Advances and certain
other  benefits.  See  "Minimum  Premiums"  under  "Payment  and  Allocation  of
Premiums--Premiums." Reduced premium payments, of course, will tend to result in
lower amounts of charges that are based on premium payments or Policy Value. See
"Charges  and Deductions." However, the amount of any Policy Value Advances will
be less if coverage on  the primary insured is  taken under the Primary  Insured
Rider Plus, rather than under the base Policy. In most cases this makes coverage
under  the base Policy more advantageous, in the long run, for Policy owners who
plan to  retain their  Policies and  meet the  Minimum Premium  requirements  to
obtain the full benefit of the Policy Value Advances.
    
 
Finally,  under death benefit  Type A, lower premium  payments will increase the
Net Amount at Risk, which will increase the amount of cost of insurance charges.
Accordingly, Policy owners who  are interested in making  the maximum amount  of
premium payments and maintaining the maximum amount of Policy Value, relative to
the  amount of insurance coverage,  may be well advised  to elect coverage under
the base Policy, rather than under the Primary Insured Rider Plus.
 
                                      A-3
<PAGE>
ADDITIONAL INSURED RIDER  AND PRIMARY INSURED  RIDER. These riders  are in  most
respects  similar to the corresponding Additional Insured Rider Plus and Primary
Insured Rider Plus described above.
 
The primary difference is that these  riders provide 12 year annually  renewable
term  insurance while the "Plus" riders provide  for such coverage until Age 95.
Also, the Additional Insured Rider does not  allow the primary insured to be  an
additional insured while the Additional Insured Rider Plus does so allow.
 
Finally,  these riders  will continue to  be offered  in a state  only until the
corresponding "Plus" riders are available in that state, at which time they will
be withdrawn from sale.
 
CHILD INSURANCE RIDER. This rider provides fixed insurance in limited amounts 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.
 
EXCHANGE OF POLICY RIDER.  This rider is available  to corporate owned  Policies
issued  in a state  that has approved  such rider. This  rider allows the Policy
owner to exchange a Policy covering a current insured to another Policy on a new
insured who  is less  than  Age 71.  The  exchange date  must  be on  a  monthly
anniversary   date.  Such  exchange   is  treated  as   a  taxable  transaction.
Accordingly, a Policy owner should consult  a tax adviser before effecting  such
an exchange.
 
There  is no charge for this rider. However, an administrative fee is charged on
exercise of the exchange, currently at $100. This fee cannot exceed $300.
 
The Policy  Date on  the new  policy is  the same  as the  original Policy.  The
unloaned Policy Value of the original policy will become the Policy Value of the
new  policy, unless the transfer would require a Face Amount increase to prevent
the Policy  from  becoming a  modified  endowment contract.  (See  "Federal  Tax
Matters--Modified  Endowment  Contracts").  If  so,  Fortis  Benefits  will only
require the transfer of the portion of  the unloaned Policy Value that will  not
cause  the increase in Face Amount.  The transferred Policy Value is immediately
allocated to the subaccounts  or general account  in the same  manner as it  was
allocated  in  the  old  Policy.  Any  new  premiums  are  immediately allocated
according to the Policy owner's requested allocation. There is no initial period
where such amounts are allocated to the General Account.
 
The owner  can cancel  the exchange  within the  normal period  for returning  a
Policy  (see "Right to Return Policy").  Upon cancellation, Fortis Benefits will
pay the Surrender Value of the old Policy  on the date of exchange plus any  new
premiums.
 
The  suicide  and  contestability  periods  runs  from  the  exchange  date. The
Surrender Value of the old Policy on the date of exchange plus any new premiums,
less any loans and withdrawals, will be paid if the new insured commits  suicide
or Fortis Benefits has a legal basis to contest a claim within this period.
 
The  Minimum Premium  and the  cost of  insurance charges  are based  on the new
insured's Age, sex, and rate class as of the most recent Policy anniversary. The
duration of the cost of insurance charges is also measured from that date. If  a
full  surrender occurs, the greater of the  Surrender Charges on the old and new
Policies is assessed. The maximum rate of surrender charges are based on the new
insured's age as of the most recent Policy Anniversary.
 
The Minimum  Premiums to  determine eligibility  for Policy  Value Advances  are
based  on the sum of  Minimum Premiums from the old  Policy to the exchange date
plus the sum of Minimum Premiums from the new Policy from such date.  Similarly,
the Policy Value Advance amount is based on this history of Minimum Premiums.
 
   
If  the Guaranteed Death Benefit has lapsed under the old Policy, it is not made
available on the  new Policy. Otherwise  the premium requirement  is met if  the
transferred  Policy Value plus new premiums,  less any withdrawals and loans, is
at least equal to the  sum of Minimum Premiums on  the new Policy from the  most
recent Policy Anniversary.
    
 
                                      A-4
<PAGE>
APPENDIX B
 
ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES,
SURRENDER VALUES AND ACCUMULATED PREMIUMS
 
The  tables on  pages B-3 to  B-6 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  $1,000,000 for  males Age  45. Each
illustration assumes that  the insured  is in the  non-smoker underwriting  risk
classification.  Illustrations for  an insured  in the  smoker 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.  An otherwise  comparable  Policy using
gender-neutral cost of  insurance rates  may also  show higher  values than  the
Policies illustrated in the tables that follow.
 
   
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 deductions  from the Separate Account  for premium tax, sales
expenses and for Policy Value Advances equivalent to an annual rate of .27%, for
mortality and expense risks equivalent to an  annual rate of .90% of the  Policy
Value  in the Separate  Account, for assumed  Portfolio investment advisory fees
equivalent to an annual rate of .62% and for other Portfolio operating  expenses
equivalent to an annual rate of .08% 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 .08%  is the actual  amount of other
expenses that those Portfolios incurred in 1995).
    
 
   
Taking account  of the  daily deductions  for premium  tax and  sales  expenses,
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: -1.87%, 2.13%, 6.13% and 10.13%, 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 sum of twelve monthly Minimum Premiums were invested
to earn interest, after taxes, at 5% compounded annually. The difference between
Policy Values and  Surrender Values  during the  first eleven  Policy years,  as
shown in the tables, is the amount of Surrender 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 and any available rider requested.
 
   
TABLE OF CONTENTS FOR ILLUSTRATIONS
OF DEATH BENEFITS, POLICY VALUES,
SURRENDER VALUES AND
ACCUMULATED PREMIUMS
    
 
   
<TABLE>
<CAPTION>
                                             PAGE
<S>                                       <C>
Illustrations Based on CURRENT Charge
 and Policy Value Advance Schedules:
  Death Benefit Type A..................         B-3
  Death Benefit Type B..................         B-4
 
Illustrations Based on GUARANTEED Charge
 and Policy Value Advance Schedules:
  Death Benefit Type A..................         B-5
  Death Benefit Type B..................         B-6
</TABLE>
    
 
                                      B-1
<PAGE>
POLICY VALUE ADVANCES
 
Set forth below is supplemental information pertaining to the Policy illustrated
on  page B-5 below, assuming  a 0% hypothetical gross  annual investment rate of
return. The purpose of the following example is to show the way the Policy Value
Advances and  deductions  therefor  would  operate and  the  way  in  which  the
deductions  for  Policy Value  Advances would  affect  the deductions  for sales
charges under the Policies in the event Fortis Benefits decides to recoup Policy
Value Advances. Actual amounts would vary significantly based on such factors as
the size  of  the Policy,  the  death benefit  option  selected, the  amount  of
premiums  paid, the investment options selected  under the Policy and the actual
return earned thereon, the Cash Value Bonuses paid, the receipt and repayment of
any Policy loans, and any partial withdrawals.
 
   
EXAMPLE
SUPPLEMENTAL INFORMATION PERTAINING TO
THE ILLUSTRATION ON PAGE B-5
    
 
   
<TABLE>
<CAPTION>
                                                                    CONTINGENT DEFERRED
                                                                       SALES CHARGES
                                            CUMULATIVE MONTHLY         PAYABLE UPON
                                             AND DAILY SALES           SURRENDER AT        CUMULATIVE
                                            CHARGE DEDUCTIONS           END OF YEAR          SALES
                 POLICY VALUE ADVANCES   ------------------------  ---------------------  CHARGES AS %
    END OF       ----------------------    DOLLAR     % OF TOTAL    DOLLAR    % OF TOTAL    OF TOTAL
  POLICY YEAR     CREDITS   DEDUCTIONS     AMOUNT       PREMIUM     AMOUNT     PREMIUM      PREMIUM
- ---------------  ---------  -----------  -----------  -----------  ---------  ----------  ------------
<S>              <C>        <C>          <C>          <C>          <C>        <C>         <C>
           1          0.00        0.00        51.11       0.4799%   3,090.64     0.2902%      0.2950%
           3          0.00        0.00       181.86       0.5692%   4,557.39     0.1426%      0.1483%
           6          0.00        0.00       437.89       0.6853%   5,001.82     0.0783%      0.0851%
           7        213.00        0.00       535.80       0.7187%   4,168.48     0.0559%      0.0631%
           8        639.00      137.22       535.80       0.6289%   3,334.55     0.0391%      0.0454%
           9      1,065.00      143.45       535.80       0.5590%   2,501.20     0.0261%      0.0317%
          10      1,065.00      149.05       535.80       0.5031%   1,667.27     0.0157%      0.0207%
          11      1,065.00      152.68       535.80       0.4574%     833.93     0.0071%      0.0117%
          12      1,065.00      154.17       535.80       0.4192%       0.00     0.0000%      0.0042%
          13      1,065.00      153.60       535.80       0.3870%       0.00     0.0000%      0.0039%
          14      1,065.00      150.70       535.80       0.3594%       0.00     0.0000%      0.0036%
          15      1,065.00      145.08       535.80       0.3354%       0.00     0.0000%      0.0034%
          16      1,065.00      136.39       535.80       0.3144%       0.00     0.0000%      0.0031%
          17      1,065.00      124.27       535.80       0.2959%       0.00     0.0000%      0.0030%
          18      1,065.00      108.32       535.80       0.2795%       0.00     0.0000%      0.0028%
          19      1,065.00       87.84       535.80       0.2648%       0.00     0.0000%      0.0026%
</TABLE>
    
 
   
The second and third columns of the above example show, respectively, the amount
of Policy Value Advance credited and the amount deducted to recover Policy Value
Advances in each Policy year. The fourth column shows how the monthly and  daily
deductions  for  sales charges  are deferred  beginning in  the 8th  Policy year
(during the time  when deductions  to recover  Policy Value  Advances are  being
made).
    
 
                                      B-2
<PAGE>
                               MALE ISSUE AGE 45
                          NONSMOKER UNDERWRITING RISK
                 FACE AMOUNT: $1,000,000--DEATH BENEFIT TYPE A
               CURRENT CHARGE AND POLICY VALUE ADVANCE SCHEDULES
 
   
<TABLE>
<CAPTION>
                                   VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF
       PREMIUMS   -----------------------------------------------------------------------------------------------------------------
      ACCUMULATED
         AT 5%          0% (1)(2)(3)(4)             4% (1)(2)(3)(4)             8% (1)(2)(3)(4)             12% (1)(2)(3)(4)
END OF  INTEREST  --------------------------- --------------------------- --------------------------- -----------------------------
POLICY  PER YEAR    DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER   DEATH    POLICY   SURRENDER
 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   $   11,182  1,000,000   7,204        0  1,000,000   7,560        0  1,000,000   7,916        0  1,000,000     8,274        0
  2       22,924  1,000,000  13,841    4,594  1,000,000  14,840    5,596  1,000,000  15,870    6,628  1,000,000    16,930    7,690
  3       35,253  1,000,000  20,141    9,968  1,000,000  22,061   11,895  1,000,000  24,095   13,936  1,000,000    26,247   16,095
  4       48,198  1,000,000  26,092   15,011  1,000,000  29,205   18,137  1,000,000  32,595   21,541  1,000,000    36,278   25,240
  5       61,790  1,000,000  31,999   20,025  1,000,000  36,575   24,625  1,000,000  41,697   29,773  1,000,000    47,417   35,521
  6       76,062  1,000,000  37.864   27,579  1,000,000  44,178   33,893  1,000,000  51,442   41,157  1,000,000    59,780   49,495
  7       91,048  1,000,000  43,874   35,302  1,000,000  52,205   43,634  1,000,000  62,058   53,486  1,000,000    73,682   65,110
  8      106,783  1,000,000  50,063   43,206  1,000,000  60,703   53,846  1,000,000  73,634   66,777  1,000,000    89,317   82,460
  9      123,305  1,000,000  56,311   51,167  1,000,000  69,577   64,434  1,000,000  86,145   81,002  1,000,000   106,802  101,659
 10      140,652  1,000,000  61,833   58,405  1,000,000  78,044   74,616  1,000,000  98,850   95,422  1,000,000   125,522  122,094
 15      241,302  1,000,000  80,766   80,766  1,000,000 116,053  116,053  1,000,000 168,367  168,367  1,000,000   246,026  246,026
 20      369,760  1,000,000  79,402   79,402  1,000,000 139,943  139,943  1,000,000 245,738  245,738  1,000,000   438,502  438,502
 25      533,708  1,000,000  47,080   47,080  1,000,000 136,894  136,894  1,000,000 330,994  330,994  1,000,000   768,693  768,693
 40    1,350,843          0       0        0          0       0        0  1,000,000 660,354  660,354  4,246,087 4,043,893 4,043,893
</TABLE>
    
 
(1)Assumes  annual premium  of $10,650  paid in  full at  the beginning  of each
   Policy year. The values vary from those  shown if the amount or frequency  of
   payments vary.
(2)Assumes  that  no Policy  loan or  partial  withdrawal has  been made  and no
   optional insurance  riders  have been  selected.  Zero values  in  the  Death
   Benefit  column indicate Policy lapse in the absence of sufficient additional
   premium payments.
(3)Reflects Policy Value Advances and  Cash Value Bonuses credited according  to
   the following schedule:
 
<TABLE>
<CAPTION>
   POLICY VALUE ADVANCES                                   CASH VALUE BONUSES
- ----------------------------   ---------------------------------------------------------------------------
               CREDIT AS A                                                         BONUS AS A PERCENT OF
              PERCENT OF 12                            BONUS AS A PERCENT OF          SURRENDER VALUE
                  TIMES                                   SURRENDER VALUE          AT THE END OF POLICY
  END OF       THE AVERAGE       SURRENDER VALUE       AT THE END OF POLICY              YEARS 20
POLICY YEAR  MINIMUM PREMIUM     ON DATE OF BONUS           YEARS 9-19              AND LATER TO AGE 95
- -----------  ---------------   --------------------  -------------------------   -------------------------
<S>          <C>               <C>                   <C>                         <C>
7                   2%         Less than $ 50,000              .00%                        .00%
8                   6%         $ 50,000 to $299,999            .10%                        .10%
9 to Age 95        10%         $300,000 to $499,999            .55%                        .55%
                               $500,000 or more                .55%                        .80%
</TABLE>
 
(4)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 AVERAGES 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-3
<PAGE>
                               MALE ISSUE AGE 45
                      STANDARD NONSMOKER UNDERWRITING RISK
                 FACE AMOUNT: $1,000,000--DEATH BENEFIT TYPE B
               CURRENT CHARGE AND POLICY VALUE ADVANCE SCHEDULES
 
   
<TABLE>
<CAPTION>
                                   VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF
       PREMIUMS   -----------------------------------------------------------------------------------------------------------------
      ACCUMULATED
         AT 5%          0% (1)(2)(3)(4)             4% (1)(2)(3)(4)             8% (1)(2)(3)(4)             12% (1)(2)(3)(4)
END OF  INTEREST  --------------------------- --------------------------- --------------------------- -----------------------------
POLICY  PER YEAR    DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER   DEATH    POLICY   SURRENDER
 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   $   11,182  1,007,177   7,177        0  1,007,531   7,531        0  1,007,886   7,886        0  1,008,242     8,242        0
  2       22,924  1,013,758  13,758    4,510  1,014,751  14,751    5,506  1,015,774  15,774    6,532  1,016,828    16,828    7,588
  3       35,253  1,019,974  19,974    9,801  1,021,878  21,878   11,712  1,023,894  23,894   13,735  1,026,027    26,027   15,874
  4       48,198  1,025,814  25,814   14,731  1,028,890  28,890   17,821  1,032,240  32,240   21,185  1,035,879    35,879   24,839
  5       61,790  1,031,589  31,589   19,613  1,036,098  36,098   24,146  1,041,143  41,143   29,217  1,046,778    46,778   34,879
  6       76,062  1,037,303  37,303   27,018  1,043,507  43,507   33,222  1,050,642  50,642   40,357  1,058,831    58,831   48,545
  7       91,048  1,043,142  43,142   34,571  1,051,306  51,306   42,734  1,060,956  60,956   52,384  1,072,337    72,337   63,766
  8      106,783  1,049,133  49,133   42,276  1,059,528  59,528   52,671  1,072,155  72,155   65,298  1,087,462    87,462   80,606
  9      123,305  1,055,089  55,089   49,946  1,068,059  68,059   62,916  1,084,183  84,183   79,040  1,104,274   104,274   99,131
 10      140,652  1,060,306  60,306   56,878  1,076,081  76,081   72,653  1,096,247  96,247   92,819  1,122,079   122,079  118,651
 15      241,302  1,076,753  76,753   76,753  1,110,060 110,060  110,060  1,159,280 159,280  159,280  1,232,228   232,228  232,228
 20      369,760  1,070,989  70,989   70,989  1,125,168 125,168  125,168  1,219,526 219,526  219,526  1,389,334   389,334  389,334
 25      533,708  1,033,245  33,245   33,245  1,106,419 106,419  106,419  1,261,921 261,921  261,921  1,615,567   615,567  615,567
 40    1,350,843          0       0        0          0       0        0          0       0        0  3,006,680 2,006,680 2,006,680
</TABLE>
    
 
(1)Assumes annual  premium of  $10,650 paid  in full  at the  beginning of  each
   Policy  year. The values vary from those  shown if the amount or frequency of
   payments vary.
(2)Assumes that  no Policy  loan or  partial  withdrawal has  been made  and  no
   optional  insurance  riders  have been  selected.  Zero values  in  the Death
   Benefit column indicate Policy lapse in the absence of sufficient  additional
   premium payments.
(3)Reflects  Policy Value Advances and Cash  Value Bonuses credited according to
   the following schedule:
 
<TABLE>
<CAPTION>
   POLICY VALUE ADVANCES                                   CASH VALUE BONUSES
- ----------------------------   ---------------------------------------------------------------------------
               CREDIT AS A                                                         BONUS AS A PERCENT OF
              PERCENT OF 12                            BONUS AS A PERCENT OF          SURRENDER VALUE
                  TIMES                                   SURRENDER VALUE          AT THE END OF POLICY
  END OF       THE AVERAGE       SURRENDER VALUE       AT THE END OF POLICY              YEARS 20
POLICY YEAR  MINIMUM PREMIUM     ON DATE OF BONUS           YEARS 9-19              AND LATER TO AGE 95
- -----------  ---------------   --------------------  -------------------------   -------------------------
<S>          <C>               <C>                   <C>                         <C>
7                   2%         Less than $ 50,000              .00%                        .00%
8                   6%         $ 50,000 to $299,999            .10%                        .10%
9 to Age 95        10%         $300,000 to $499,999            .55%                        .55%
                               $500,000 or more                .55%                        .80%
</TABLE>
 
(4)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 AVERAGES 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-4
<PAGE>
                               MALE ISSUE AGE 45
                      STANDARD NONSMOKER UNDERWRITING RISK
                 FACE AMOUNT: $1,000,000--DEATH BENEFIT TYPE A
              GUARANTEED CHARGE AND POLICY VALUE ADVANCE SCHEDULES
 
   
<TABLE>
<CAPTION>
                                   VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF
        PREMIUMS   ---------------------------------------------------------------------------------------------------------------
       ACCUMULATED
          AT 5%          0% (1)(2)(3)(4)             4% (1)(2)(3)(4)             8% (1)(2)(3)(4)            12% (1)(2)(3)(4)
END OF  INTEREST   --------------------------- --------------------------- --------------------------- ---------------------------
POLICY  PER YEAR     DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER
 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        11,182  1,000,000   5,003        0  1,000,000   5,306        0  1,000,000   5,610        0  1,000,000   5,915        0
  2        22,924  1,000,000   9,657      333  1,000,000  10,465    1,143  1,000,000  11,299    1,980  1,000,000  12,161    2,844
  3        35,253  1,000,000  13,949    3,654  1,000,000  15,455    5,165  1,000,000  17,057    6,772  1,000,000  18,757    8,478
  4        48,198  1,000,000  17,859    6,603  1,000,000  20,248    9,002  1,000,000  22,860   11,626  1,000,000  25,712   14,490
  5        61,790  1,000,000  21,366    9,366  1,000,000  24,810   12,810  1,000,000  28,687   16,687  1,000,000  33,040   21,040
  6        76,062  1,000,000  24,430   14,145  1,000,000  29,091   18,806  1,000,000  34,492   24,207  1,000,000  40,734   30,449
  7        91,048  1,000,000  27,205   18,633  1,000,000  33,231   24,660  1,000,000  40,425   31,853  1,000,000  48,985   40,414
  8       106,783  1,000,000  29,853   22,996  1,000,000  37,386   30,529  1,000,000  46,652   39,795  1,000,000  58,014   51,157
  9       123,305  1,000,000  32,303   27,160  1,000,000  41,482   36,339  1,000,000  53,122   47,979  1,000,000  67,898   62,755
 10       140,652  1,000,000  34,057   30,629  1,000,000  45,021   41,592  1,000,000  59,414   55,985  1,000,000  78,189   74,761
 15       241,302  1,000,000  30,600   30,600  1,000,000  51,929   51,929  1,000,000  84,979   84,979  1,000,000 135,868  135,868
 20       369,760          0       0        0  1,000,000  26,797   26,797  1,000,000  86,823   86,823  1,000,000 200,104  200,104
 25       533,708          0       0        0          0       0        0  1,000,000  26,718   26,718  1,000,000 257,019  257,019
 40     1,350,843          0       0        0          0       0        0          0       0        0          0       0        0
</TABLE>
    
 
(1)Assumes annual  premium of  $10,650 paid  in full  at the  beginning of  each
   Policy  year. The values vary from those  shown if the amount or frequency of
   payments vary.
 
(2)Assumes that  no Policy  loan or  partial  withdrawal has  been made  and  no
   optional  insurance  riders  have been  selected.  Zero values  in  the Death
   Benefit column indicate Policy lapse in the absence of sufficient  additional
   premium payments.
 
(3)Reflects  Policy Value Advances and Cash  Value Bonuses credited according to
   the following schedule:
 
<TABLE>
<CAPTION>
   POLICY VALUE ADVANCES                                   CASH VALUE BONUSES
- ----------------------------   ---------------------------------------------------------------------------
               CREDIT AS A                                                         BONUS AS A PERCENT OF
              PERCENT OF 12                            BONUS AS A PERCENT OF          SURRENDER VALUE
                  TIMES                                   SURRENDER VALUE        AT THE END OF POLICY YEAR
  END OF       THE AVERAGE       SURRENDER VALUE       AT THE END OF POLICY                 20
POLICY YEAR  MINIMUM PREMIUM     ON DATE OF BONUS           YEARS 9-19              AND LATER TO AGE 95
- -----------  ---------------   --------------------  -------------------------   -------------------------
<S>          <C>               <C>                   <C>                         <C>
7                   2%         Less than $ 50,000              .00%                        .00%
8                   6%         $ 50,000 to $299,999            .10%                        .10%
9 to Age 95        10%         $300,000 to $499,999            .55%                        .55%
                               $500,000 or more                .55%                        .80%
</TABLE>
 
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 AVERAGES 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-5
<PAGE>
                               MALE ISSUE AGE 45
                          NONSMOKER UNDERWRITING RISK
                 FACE AMOUNT: $1,000,000--DEATH BENEFIT TYPE B
              GUARANTEED CHARGE AND POLICY VALUE ADVANCE SCHEDULES
 
   
<TABLE>
<CAPTION>
                                    VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF
         PREMIUMS   ---------------------------------------------------------------------------------------------------------------
        ACCUMULATED
           AT 5%          0% (1)(2)(3)(4)             4% (1)(2)(3)(4)             8% (1)(2)(3)(4)            12% (1)(2)(3)(4)
END OF   INTEREST   --------------------------- --------------------------- --------------------------- ---------------------------
POLICY   PER YEAR     DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER   DEATH   POLICY  SURRENDER
 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     $   11,182  1,004,977   4,977        0  1,005,278   5,278        0  1,005,580   5,580        0  1,005,884   5,884        0
  2         22,924  1,009,584   9,584      260  1,010,386  10,386    1,064  1,011,215  11,215    1,895  1,012,071  12,071    2,753
  3         35,253  1,013,809  13,809    3,513  1,015,300  15,300    5,009  1,016,885  16,885    6,600  1,018,568  18,568    8,289
  4         48,198  1,017,629  17,629    6,372  1,019,986  19,986    8,740  1,022,564  22,564   11,329  1,025,378  25,378   14,154
  5         61,790  1,021,023  21,023    9,023  1,024,410  24,410   12,410  1,028,221  28,221   16,221  1,032,499  32,499   20,499
  6         76,062  1,023,950  23,950   13,664  1,028,514  28,514   18,229  1,033,802  33,802   23,517  1,039,911  39,911   29,626
  7         91,048  1,026,561  26,561   17,989  1,032,435  32,435   23,863  1,039,444  39,444   30,873  1,047,783  47,783   39,211
  8        106,783  1,029,016  29,016   22,159  1,036,321  36,321   29,464  1,045,303  45,303   38,446  1,056,311  56,311   49,454
  9        123,305  1,031,240  31,240   26,097  1,040,091  40,091   34,948  1,051,308  51,308   46,165  1,065,538  65,538   60,395
 10        140,652  1,032,732  32,732   29,304  1,043,236  43,236   39,808  1,057,015  57,015   53,587  1,074,977  74,977   71,548
 15        241,302  1,027,511  27,511   27,511  1,046,801  46,801   46,801  1,077,158  77,158   77,158  1,123,553 123,553  123,553
 20        369,760          0       0        0  1,016,895  16,895   16,895  1,067,212  67,212   67,212  1,161,914 161,914  161,914
 25        533,708          0       0        0          0       0        0          0       0        0  1,153,537 153,537  153,537
 40      1,350,843          0       0        0          0       0        0          0       0        0          0       0        0
</TABLE>
    
 
(1)Assumes annual  premium of  $10,650 paid  in full  at the  beginning of  each
   Policy  year. The values vary from those  shown if the amount or frequency of
   payments vary.
 
(2)Assumes that  no Policy  loan or  partial  withdrawal has  been made  and  no
   optional  insurance  riders  have been  selected.  Zero values  in  the Death
   Benefit column indicate Policy lapse in the absence of sufficient  additional
   premium payments.
 
(3)Reflects  Policy Value Advances and Cash  Value Bonuses credited according to
   the following schedule:
 
<TABLE>
<CAPTION>
   POLICY VALUE ADVANCES
- ----------------------------                                   CASH VALUE BONUSES
               CREDIT AS A     -----------------------------------------------------------------------------------
              PERCENT OF 12                              BONUS AS A PERCENT OF           BONUS AS A PERCENT OF
                  TIMES                                     SURRENDER VALUE                 SURRENDER VALUE
  END OF       THE AVERAGE       SURRENDER VALUE      AT THE END OF POLICY YEARS     AT THE END OF POLICY YEAR 20
POLICY YEAR  MINIMUM PREMIUM     ON DATE OF BONUS                9-19                     AND LATER TO AGE 95
- -----------  ---------------   --------------------  -----------------------------   -----------------------------
<S>          <C>               <C>                   <C>                             <C>
7                   2%         Less than $ 50,000              .00%                            .00%
8                   6%         $ 50,000 to $299,999            .10%                            .10%
9 to Age 95        10%         $300,000 to $499,999            .55%                            .55%
                               $500,000 or more                .55%                            .80%
</TABLE>
 
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 AVERAGES 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-6
<PAGE>
   
APPENDIX C
    
 
THE GENERAL ACCOUNT
 
A  POLICY OWNER MAY  ALLOCATE 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 4%, 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, in
its sole discretion, may do so. 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 and
any Policy Value  Advances and  Cash Value Bonuses  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 daily  charges
for  mortality and  expense risk  or premium  tax and  sales expenses,  or daily
deductions to  recover any  Policy Value  Advances, are  imposed on  amounts  of
Policy Value in the General Account. See "Charges and Deductions."
 
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-1
<PAGE>
   
PROSPECTUS
MAY 1, 1996
    
 
   
FORTIS
SERIES FUND, INC.
    
 
   
FORTIS
VUL500
    
 
FORTIS -Registered Trademark-
   
FORTIS FINANCIAL GROUP
P.O. BOX 64284
ST. PAUL, MN 55164
    
 
   
     BULK RATE
    U.S. POSTAGE
        PAID
  PERMIT NO. 3794
  MINNEAPOLIS, MN
 
    
<PAGE>
                 (This page has been left blank intentionally.)
<PAGE>

                VARIABLE UNIVERSAL LIFE SERVICE REQUEST


*  The Policy owner(s) may use this form to request services for a NEW or 
   EXISTING policy.

*  CONTRACT INFORMATION and SIGNATURES must be completed to allow us to 
   complete the service request.

1. TELEPHONE TRANSFER AUTHORIZATION

   / /  Check this box to authorize telephone transfer by owner(s) or 
        registered representative.

   / /  Check this box to authorize telephone transfer by owner(s) only.

   The owner(s) and/or registered representative may transfer by telephone 
   amount investment choices. I have read the telephone transfer authorization
   terms in the prospectus and elect telephone transfers.

2. TRANSFER REQUEST

   Move all or part of your existing asset balances from one subaccount to 
   another.

   *  Specify dollar amounts OR whole percentages

   *  Transfers from the General Account to the Separate Account ONLY are 
      subject to the following:

      1.  Maximum transfer is 50% of your unloaned General Account value once
          per policy year.

      2.  If unloaned General Account value is less than $1,000, you may 
          transfer the entire unloaned balance.

TRANSFER FROM                                 TRANSFER TO
                    BOND INVESTMENTS
$_________________  General Account           $_____________%
$_________________  Money Market              $_____________%
$_________________  U.S. Government           $_____________%
$_________________  Diversified Income        $_____________%
$_________________  Global Bond               $_____________%
$_________________  High Yield                $_____________%

                    STOCK INVESTMENTS
$_________________  Asset Allocation          $_____________%
$_________________  Global Asset Allocation   $_____________%
$_________________  Value                     $_____________%
$_________________  Growth & Income           $_____________%
$_________________  S&P 500 Index             $_____________%
$_________________  Blue Chip Stock           $_____________%
$_________________  Global Growth             $_____________%
$_________________  Growth Stock              $_____________%
$_________________  International Stock       $_____________%
$_________________  Aggressive Growth         $_____________%


CONTRACT INFORMATION:

Policy Number _______________________________________________
/ / New Policy    / / Existing

_____________________________________________________________
Name of Policy Owner

_____________________________________________________________
Name of Joint Owner (if applicable)

_____________________________________________________________
Social Security Number of Owner

_____________________________________________________________
Address

_____________________________________________________________
City                              State       Zip Code

Telephone Number (_______) __________________________________

/ /  Citizen of U.S.    / / Resident Alien of U.S.
/ /  Other __________________________________________________

3. SYSTEMATIC TRANSFER (DOLLAR COST AVERAGING):

   Automatically move assets among investment choices.

   *  Specify dollar amounts only

   *  $5,000 minimum beginning balance, minimum transfer: $50

   * General Account: Monthly amount must be less than or equal to 1/36 of the
     principal.

   * Frequency: Monthly

   TRANSFER $___________________ on the 1st day of each month from the 
   ____________________________ account to the following accounts:


                          BOND INVESTMENTS          
      $_________________  General Account           
      $_________________  Money Market              
      $_________________  U.S. Government           
      $_________________  Diversified Income        
      $_________________  Global Bond               
      $_________________  High Yield                
                                              
                          STOCK INVESTMENTS         
      $_________________  Asset Allocation          
      $_________________  Global Asset Allocation   
      $_________________  Value                     
      $_________________  Growth & Income           
      $_________________  S&P 500 Index             
      $_________________  Blue Chip Stock           
      $_________________  Global Growth             
      $_________________  Growth Stock              
      $_________________  International Stock       
      $_________________  Aggressive Growth         


<PAGE>

             VARIABLE UNIVERSAL LIFE SERVICE REQUEST, CONTINUED

INSTRUCTIONS FOR SECTIONS 4, 5 & 6:

   A. Use whole percentages
   B. Must equal 100%

4. CHANGE OF PREMIUM ALLOCATION:

   Indicate which subaccount(s) incoming premium dollars should be allocated 
   to future payments.

   *  Specify future premium allocations.

   BOND INVESTMENTS
   ____% General Account
   ____% Money Market
   ____% U.S. Government
   ____% Diversified Income
   ____% Global Bond
   ____% High Yield

   STOCK INVESTMENTS
   ____% Asset Allocation
   ____% Global Asset Allocation
   ____% Value
   ____% Growth & Income
   ____% S&P 500 Index
   ____% Blue Chip Stock
   ____% Global Growth
   ____% Growth Stock
   ____% International Stock
   ____% Aggressive Growth
   100 % TOTAL


5. PRIVILEGED ACCOUNT SERVICE:

   Automatically rebalances the assets within your policy.
   Note: This does not change future Premium Allocations.

   * $2,000 minimum policy value.

   FREQUENCY
   / / Quarterly (3/31, 6/30, 9/30, 12/31)
   / / Semi-Annual (6/30, 12/31)
   / / Annual (12/31)

   BOND INVESTMENTS
   ____% General Account
   ____% Money Market
   ____% U.S. Government
   ____% Diversified Income
   ____% Global Bond
   ____% High Yield

   STOCK INVESTMENTS
   ____% Asset Allocation
   ____% Global Asset Allocation
   ____% Value
   ____% Growth & Income
   ____% S&P 500 Index
   ____% Blue Chip Stock
   ____% Global Growth
   ____% Growth Stock
   ____% International Stock
   ____% Aggressive Growth
   100 % TOTAL

6. SPECIFY MONTHLY DEDUCTIONS

   Indicate which subaccount you want the monthly deductions from.

   * Loans and withdrawals will also follow this unless otherwise stated.

   * If the subaccount chosen does not have sufficient amount to cover 
     monthly charges, pro rata allocation will be automatically used.

   BOND INVESTMENTS
   ____% General Account
   ____% Money Market
   ____% U.S. Government
   ____% Diversified Income
   ____% Global Bond
   ____% High Yield

   STOCK INVESTMENTS
   ____% Asset Allocation
   ____% Global Asset Allocation
   ____% Value
   ____% Growth & Income
   ____% S&P 500 Index
   ____% Blue Chip Stock
   ____% Global Growth
   ____% Growth Stock
   ____% International Stock
   ____% Aggressive Growth
   100 % TOTAL

_____________________________________________________________________________

SIGNATURES:

___________________________________________ _________ 
Policy Owner's Signature                      Date

___________________________________________ _________ 
Joint Owner's Signature                        Date

(______) ____________________________________________
Daytime Telephone Number


REPRESENTATIVE INFORMATION (IF KNOWN):

___________________________________________ _________ 
Registered Representative's Signature       Date


_____________________________________________________ 
Registered Representative's Name (please print)

_____________________________________________________ 
Representative's Contract Number


(______) ____________________________________________
Registered Representative's Telephone Number



FORTIS-Registered Trademark-

FORTIS BENEFITS INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE
P.O. BOX 64582
ST. PAUL, MN 55164
(800) 800-2638                                              98009 (4/96)


<PAGE>

                      CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

     Facing Sheet.

     Cross-Reference Table. (Filed as a part of the initial filing of this 
     Form S-6 Registration Statement filed on June 5, 1992.)
   
     Prospectus, consisting of 83 pages.
    
     Undertaking to File Reports. (Filed as a part of the initial filing of 
     this Form S-6 Registration Statement filed on June 5, 1992.)

     Undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933. 
     (Filed as a part of the initial filing of this Form S-6 Registration 
     Statement filed on June 5, 1992.)

     Representations and Undertakings pursuant to Rule 6e-3(T)(b)(13) (iii)(F) 
     under the Investment Company Act of 1940. (Filed as a part of the initial 
     filing of this Form S-6 Registration Statement filed on June 5, 1992.)

     Signatures.

     Written Consents of the following persons:

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

          David A. Peterson, Esq. (Filed with Exhibit 3 below).

          Ernst & Young LLP, Independent Auditors

     The following exhibits:

     1A.  (1)  --Resolution of Board of Directors of Fortis Benefits (under 
               its prior name, Western Life Insurance Company) effecting the 
               establishment of Variable Account C (Incorporated by reference 
               from Exhibit 1.A(1) to registrant's Form S-6 Registration 
               Statement, File No. 33-28551, filed on May 5, 1989).

          (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.

               --(b) Form of Child Insurance Rider (Incorporated by reference 
               from Exhibit 1.A(5) to Pre-Effective Amendment No. 1 to 
               registrant's Form S-6 Registration Statement, File No. 33-03919, 
               filed on November 5, 1986).

               --(c) Forms of Waiver of Monthly Deductions Rider, Additional 
               Insured Rider and Primary Insured Rider (Incorporated by 
               reference from Exhibit 1.A(5)(c) to Pre-Effective Amendment No. 1
               to registrant's Form S-6 Registration Statement, File No. 
               33-28551, filed on August 18, 1989).

               --(d) Forms of Waiver of Selected Amount Rider, Exchange of 
               Policy Rider, Extend Maturity Date Rider and Accelerated Death 
               Benefit Rider. (Incorporated by reference from Exhibit 5(d) to 
               Post-Effective Amendment No. 33-28551, filed April 29, 1994.)

               --(e) Forms of Additional Insured Rider Plus and Primary 
               Insured Rider Plus. (Filed as part of Post-Effective Amendment 
               No. 7 to this Form S-6 registration statement filed on April 28, 
               1995.)

          (6)  --(a) Articles of Incorporation of Fortis Benefits (Incorporated 
               by reference from Exhibit 1.A(6)(a) to the initial filing of 
               registrant's Form S-6 Registration Statement, File No. 33-03919, 
               filed on March 17, 1986).

               --(b) Bylaws of Fortis Benefits (Incorporated by reference from 
               Exhibit 1.A(6)(b) to the initial filing of registrant's Form 
               S-6 Registration Statement, File No. 33-03919, filed on March 17,
               1986).

               --(c) Amendment to Articles of Incorporation and Bylaws dated 
               November 21, 1991 (Incorporated by reference from Exhibit 
               1.A(6)(c) to registrant's Post-Effective Amendment No. 4 to 
               Form S-6 Registration Statement, File No. 33-28551, 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. 
               (Incorporated by reference from Exhibit No. 10(a) to 
               Post-Effective Amendment No. 9 to registrant's Form S-6 
               registration statement, File No. 33-28551, filed April 29, 1994.)

               --(b) Policy Change Application, Transfer Request Form, and 
               Change of Premium Allocation Form (Incorporated by reference 
               from Exhibit 1.A(10)(b) to registrant's Post-Effective Amendment 
               No. 4 to Form S-6 Registration Statement, File 33-28851, 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 a part of the initial filing of this 
               Form S-6 Registration Statement filed on June 5, 1992.)

          4.   --Not applicable.

          5.   --Not applicable.

          6.   --(a) Opinion and consent of actuary. (Filed as a part of the 
               initial filing of this Form S-6 Registration Statement filed on 
               June 5, 1992.)

               --(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 a part of the initial 
               filing of this Form S-6 Registration Statement filed on June 5, 
               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) (Incorporated by reference from Exhibit 10 to 
               Post-Effective Amendment No. 6 to registrant's Form S-6 
               Registration Statement, File No. 33-03919, filed on April 28, 
               1989).

               --(b) Supplemental Memorandum in connection with Exhibit 10(a) 
               (Incorporated by reference from Exhibit 10(b) to Post-Effective 
               Amendment No. 1 to registrant's Form S-6 Registration, File No. 
               33-28551, on April 30, 1990).

               --(c) Second Supplemental Memorandum in connection with 
               Exhibit 10(a). (Filed as part of Post-Effective Amendment No. 2 
               to this Form S-6 Registration Statement filed April 29, 1993).

               --(d) Third Supplemental Memorandum in connection with Exhibit 
               10(a). (Filed as part of Post-Effective Amendment No. 3 to this 
               Form S-6 Registration Statement filed February 28, 1994.)

          11.  --Power of Attorney for Messrs, Freedman, Gaddy, Mackin, Keller, 
               Clayton, Mahoney, Clancy, Meler and Greiter (Incorporated by 
               reference from Exhibit 11 to registrant's Form S-6 Registration 
               Statement, File No. 33-73138, filed on 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 on the financial statements 
of Fortis Benefits Insurance Company and our report dated March 22, 
1996 on the financial statements of Fortis Benefits Insurance Company 
Variable Account C (Account C) in Post-Effective Amendment No. 8 to the 
Registration Statement (Form S-6 No. 33-48266) 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


  1A.(5)(a)   Specimen Flexible Premium Variable Life Insurance Policy

  6(b)        Supplemental Opinion and Consent of Actuary

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



<PAGE>




                                        EXHIBIT 1A.(5)(a)
<PAGE>

                                 FORTIS BENEFITS

                                INSURANCE COMPANY

                               St. Paul, Minnesota
                                 A Stock Company
                            WALL STREET SERIES VUL 500



We will pay the proceeds if we receive due proof that the insured died while 
this policy was in force. THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY 
INCREASE OR DECREASE DEPENDING ON INVESTMENT RESULTS OF THE SUBACCOUNTS OF 
THE SEPARATE ACCOUNT AND ON THE DEATH BENEFIT OPTION SELECTED AS DESCRIBED IN 
THE DEATH BENEFIT SECTION.  SEE THE POLICY VALUES PROVISION FOR THE DETAILS 
OF YOUR VARIABLE BENEFITS.

THE SURRENDER VALUE UNDER THIS POLICY INCREASES OR DECREASES DEPENDING ON 
INVESTMENT RESULTS OF THE SUBACCOUNTS OF THE SEPARATE ACCOUNT. THERE IS NO 
GUARANTEED MINIMUM SURRENDER VALUE IN THE SEPARATE ACCOUNT. THE GENERAL 
ACCOUNT DOES HAVE GUARANTEED MINIMUM SURRENDER VALUES.

THIS POLICY IS GUARANTEED NOT TO LAPSE IF MONTHLY MINIMUM PREMIUMS ARE PAID 
WHEN DUE AS DEFINED IN THE GUARANTEED DEATH BENEFIT PROVISION OF THIS POLICY. 
THIS GUARANTEE WILL BE FOR THE LESSER OF 12 YEARS FROM THE POLICY DATE OR TO 
THE POLICY ANNIVERSARY FOLLOWING THE INSURED'S AGE 65 (OR FOR 5 YEARS IF AGE 
60 TO 70 AT ISSUE). AFTER AGE 70, THE GUARANTEE IS FOR THE GREATER OF 2 
YEARS OR TO AGE 75. THE GUARANTEE FOR INSUREDS RATED FOR HIGHER MORTALITY 
RISK AT ISSUE IS FOR THE LESSER OF THE GUARANTEE PERIOD FOR THEIR AGE OR 5 
YEARS.

                              RIGHT TO RETURN POLICY

This policy may be returned to us any time prior to the latest of: (a) 10 
days after its delivery to you; or (b) 10 days after delivery of a Notice of 
Withdrawal Right. The policy may be returned by delivery or mail, to our Home 
Office along with a written notice to cancel it.  We will refund the premium 
paid.

Signed for Fortis Benefits Insurance Company, St. Paul, Minnesota, to take 
effect on the policy date.

     /s/ Dean C. Kopperud                          /s/ Anthony Rotondi

     SENIOR VICE PRESIDENT                         SENIOR VICE PRESIDENT


FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 95 POLICY.  FLEXIBLE PREMIUMS PAYABLE 
DURING THE LIFETIME OF THE INSURED UNTIL THE MATURITY DATE. DEATH BENEFIT 
PAYABLE AT DEATH PRIOR TO MATURITY DATE. ADJUSTABLE DEATH BENEFIT. SURRENDER 
VALUE PAYABLE ON MATURITY DATE. NONPARTICIPATING. SOME BENEFITS REFLECT 
INVESTMENT RESULTS.

L24(Rev.5/95)                                                            56682


<PAGE>

                        READ YOUR POLICY CAREFULLY

       This policy is a legal contract between the owner and
                  Fortis Benefits Insurance Company


                             TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                         Page #
<S>                                                                      <C>
Annual Report...........................................................    4
Assignments.............................................................    3
Beneficiary.............................................................    3
Cost of Insurance.......................................................    7
Death Benefit...........................................................    6
Deductions..............................................................    7
Grace Period............................................................    4
Guaranteed Death Benefit................................................    5
Incontestable...........................................................    3
Maturity Date...........................................................   12
Policy Value Advances...................................................    9
Policy Loans............................................................   10
Policy Owner............................................................    3
Policy Values...........................................................    8
Premiums................................................................    4
Reinstatement...........................................................    4
Rights Reserved by Us...................................................    6
Separate Account........................................................    5
Settlement Options......................................................   11
Suicide.................................................................    3
Surrenders..............................................................    9
Transfers...............................................................    6
Valuation Date and Period...............................................    2
Withdrawals.............................................................   10
</TABLE>

Any policy amendments or endorsement follow the policy schedule. Additional 
benefits added by rider follow the Settlement Options. The application is the 
last page of this policy.

You, Your
   The owner of this policy.

We, Us, Our
   Fortis Benefits Insurance Company.

<PAGE>

                            POLICY SCHEDULE

L24          FLEXIBLE PREMIUM VARIABLE LIFE






INSURED:       JOHN DOE                      AGE:   35      SEX: MALE

OWNER:         JOHN DOE                      POLICY NUMBER:   WMH00000

PAYOR:         JOHN DOE                      PREMIUM CLASS:   NON-SMOKER

POLICY  DATE:         MAY 1, 1995

MATURITY DATE:        MAY 1, 2055

INITIAL DEATH BENEFIT OPTION: A

INITIAL FACE AMOUNT:     $500,000








MATURITY DATE IS THE POLICY ANNIVERSARY FOLLOWING THE INSURED'S 95TH 
BIRTHDAY. IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE DATE SHOWN IF 
EITHER: PREMIUMS PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM, OR INVESTMENT 
RESULTS ON THE DESIGNATED SUBACCOUNTS, AND INTEREST CREDITED ON THE GENERAL 
ACCOUNT ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE.


<PAGE>


VUL500                                                                WMH00000

INSURED: JOHN DOE
ISSUE AGE: 35
PREMIUM CLASS: NON-SMOKER
INITIAL FACE AMOUNT:          $500,000
INITIAL DEATH BENEFIT OPTION:      A
POLICY NUMBER: WMH00000
POLICY DATE:            MAY      1,1995
INITIAL PREMIUM:              $264.59
PLANNED PERIODIC PREMIUM:     $264.59     PREMIUM FREQUENCY:       MONTHLY

MINIMUM FACE AMOUNT: $500,000
MINIMUM FACE AMOUNT INCREASE: $5,000

INITIAL MONTHLY MINIMUM PREMIUM:          $264.59
BASE POLICY:         $264.59            RIDERS:            $0.00
USED FOR DETERMINING ELIGIBILITY FOR THE GUARANTEED DEATH BENEFIT
PROVISION, POLICY VALUE ADVANCES AND HIGHER CREDITED INTEREST RATE ON
CERTAIN LOANED VALUES.



INITIAL NET MONTHLY MINIMUM PREMIUM:      $264.59 USED FOR DETERMINING THE
AMOUNT OF POLICY VALUE ADVANCES. THIS AMOUNT WILL CHANGE WHEN FACE AMOUNT
IS CHANGED.
<TABLE>
<CAPTION>
POLICY VALUE ADVANCES:          PERCENTAGE OF AVERAGE           DOLLAR AMOUNT OF
                             NET MONTHLY MINIMUM PREMIUM             CREDIT
                                CURRENT     GUARANTEED       CURRENT     GUARANTEED
<S>                             <C>         <C>             <C>          <C>
         END OF YEAR 7:           2.00%       2.00%          $63.50         $63.50
         END OF YEAR 8:           6.00%       6.00%         $190.50        $190.50
END OF YEAR 9 - AGE 95:          10.00%      10.00%         $317.51        $317.51
</TABLE>


POLICY LOAN INTEREST RATE: 6.10% PAYABLE IN ADVANCE.
LOWER RATE ON CERTAIN LOANS: 3.85% PAYABLE IN ADVANCE.

<TABLE>
<CAPTION>
CASH VALUE BONUSES:           Bonus as a Percent           Bonus as a Percent
                              of Surrender Value           of Surrender Value
  Surrender Value              on Anniversaries          Starting in Anniversary
  on Anniversary                 9 through 19                 20 to Age 95
<S>                           <C>                        <C>
   LESS THAN $50,000                0.00%                         0.00%
 $50,000 TO $299,999                0.10%                         0.10%
$300,000 TO $499,999                0.55%                         0.55%
       OVER $500,000                0.55%                         0.80%
</TABLE>

A Cash Value Bonus amount will be credited to the Policy Value beginning on 
the ninth policy anniversary and on each policy anniversary thereafter.


<PAGE>

INITIAL PREMIUM ALLOCATIONS

     INTERNATIONAL STOCK SUBACCOUNT                         50%

     GLOBAL ASSET ALLOCATION SUBACCOUNT                     25%

     GLOBAL BOND SUBACCOUNT                                 25%



INFORMATION ON THIS POLICY SCHEDULE APPLIES TO THE INITIAL FACE AMOUNT AND 
RIDER COVERAGE AMOUNTS. IF YOU MAKE A POLICY CHANGE THAT AFFECTS THESE 
BENEFITS, WE WILL SEND YOU AN AMENDED POLICY SCHEDULE.


<PAGE>


VUL500                        POLICY CHARGES                          WMHOOOO0

<TABLE>
<CAPTION>
                                                        CURRENT      GUARANTEED
                                                         CHARGE       MAXIMUM
                                                                       CHARGE
<S>                                                     <C>          <C>
PREMIUM EXPENSE CHARGE:                                     0.0%          2.5%

MONTHLY DEDUCTIONS: ADMINISTRATIVE CHARGES                $4.50         $7.50
           ADMINISTRATIVE CHARGES                         $0.00        $65.00*
           SALES AND PREMIUM TAX OR POLICY
                VALUE ADVANCE CHARGES                     $4.00         $4.00@
           GUARANTEED DEATH BENEFIT CHARGE                $5.00         $5.00**
</TABLE>
 *CHARGE IS CALCULATED AS $0.13 PER $1000 OF FACE AMOUNT. WHEN FACE AMOUNT
  CHANGES, THIS CHARGE IS RECALCULATED.
**CHARGE IS CALCULATED AS $0.01 PER $1000 OF FACE AMOUNT OF THE BASE POLICY
  AND ANY TERM RIDERS. WHEN FACE AMOUNT OF THE POLICY OR RIDERS CHANGE, THIS
  CHARGE IS RECALCULATED.
 @SALES AND PREMIUM TAX MONTHLY AND DAILY DEDUCTIONS ARE WAIVED WHEN THEY
  EXCEED 9.7% OF PREMIUMS PAID. THIS PERCENTAGE MAY BE INCREASED BY THE
  COMPANY, BUT IN NO EVENT WILL IT EXCEED 10%.  DAILY DEDUCTIONS WILL NOT
  EXCEED .0024658% (.90% PER YEAR) OF THE SEPARATE ACCOUNT VALUE FOR MORTALITY
  AND EXPENSE RISKS, AND .0007397% (.27% PER YEAR) FOR SALES AND PREMIUM
  TAX OR POLICY VALUE ADVANCES.

OTHER: TRANSFER CHARGES                                $0.00        $25.00
       WITHDRAWAL CHARGES                              $0.00        $25.00

<TABLE>
<CAPTION>
SURRENDER CHARGES:
POLICY YEAR     MAXIMUM TOTAL #         PART 1 #                PART 2 #
              SURRENDER CHARGES
<S>           <C>                       <C>                 <C>
1 - 5             $5,000.00             $3,198.50           = TO THE GREATER OF
  6               $4,285.50             $2,741.43           ZERO OR A MAXIMUM OF
  7               $3,571.50             $2,284.69           10% OF ALL PREMIUMS
  8               $2,857.00             $1,827.62           PAID LESS MONTHLY AND
  9               $2,143.00             $1,370.88           DAILY DEDUCTIONS
 10               $1,428.50               $913.81           FOR SALES AND
 11                 $714.50               $457.07           PREMIUM TAX
 12                   $0.00                 $0.00           CHARGES @
</TABLE>
#THE SURRENDER CHARGE AT ANY TIME IS THE LESSER OF (1) THE CHARGE SHOWN
 AS THE MAXIMUM SURRENDER CHARGE AND (2) THE CHARGE SHOWN IN PART 1 PLUS
 PART 2. PART 1 SURRENDER CHARGES ASSUME THAT AT $3,175.00 IS PAID IN THE
 FIRST YEAR, WHICH IS 12 MONTHLY MINIMUM PREMIUMS USED TO QUALIFY THE POLICY
 FOR FACE DECREASES OR PARTIAL WITHDRAWALS.

THE TABLE ABOVE APPLIES TO THE INITIAL FACE AMOUNT FOR THE FIRST 12 YEARS. 
ADDITIONAL CHARGES WILL APPLY TO EACH INCREASE IN THE FACE AMOUNT FOR 12 
YEARS AFTER THE EFFECTIVE DATE OF THE INCREASE. AFTER YEAR 5, SURRENDER 
CHARGES DECREASE ANNUALLY.

A DECREASE IN FACE AMOUNT DECREASES THE AMOUNT OF THE MAXIMUM SURRENDER 
CHARGE BY THE DIFFERENCE BETWEEN THE ACTUAL SURRENDER CHARGE AND THE MAXIMUM 
SURRENDER CHARGE, THE RESULT MULTIPLIED BY THE PROPORTION OF THE AMOUNT OF 
DECREASE TO THE ORIGINAL FACE AMOUNT.

INFORMATION ON THIS POLICY SCHEDULE APPLIES TO THE INITIAL FACE AMOUNT AND 
RIDER COVERAGE AMOUNTS. IF YOU MAKE A POLICY CHANGE THAT AFFECTS THESE 
CHARGES, WE WILL SEND YOU AN AMENDED POLICY SCHEDULE.

<PAGE>


                             DEFINITIONS


AGE
     The insured's age as of his or her last birthday.

FUND
     Each fund is a separate investment portfolio of Fortis Series 
     Funds, Inc., a "series" type management investment company 
     registered under the Investment Company Act of 1940.

GENERAL ACCOUNT
     Amounts allocated to the General Account will be invested with 
     all of our assets, which are not allocated to a segregated 
     investment account.

HOME OFFICE
     Our Office at 500 Bielenberg Drive, Woodbury, Minnesota 55125 
     (mailing address: P.O. Box 64582, St. Paul, MN 55164).  
     Payments and other communications received at the Home Office 
     after the end of a valuation date will be deemed to have been 
     received on the next valuation date.

LAPSE
     Condition that exists when the insured's life is no longer 
     insured under this policy.

NET PREMIUM
     The net premium is the premium paid less the premium expense 
     charges shown on your policy schedule.

POLICY DATE
     The date shown on the policy schedule which is used to 
     determine policy anniversaries, monthly anniversaries, and 
     policy years.

PRO-RATA BASIS
     Allocation among the general account and the subaccounts in 
     the same proportion that the unloaned policy value in the 
     general account and the policy value in each subaccount bears 
     to the total unloaned policy value.

MINIMUM PREMIUMS
     The sum of the monthly minimum premiums including the premium 
     due on the current monthly anniversary.  The monthly minimum 
     premium is shown on the policy schedule.

REALLOCATION DATE
     The reallocation date is 20 days after we release the policy 
     to an active status in our processing system.

SEPARATE ACCOUNT
     A segregated investment account entitled Variable Account C. 
     This account was established by us pursuant to applicable law.

SUBACCOUNT
     The subaccounts of the separate account to which policy value 
     may be allocated and may earn a return. Each subaccount invests 
     all of its assets in a portfolio having the same investment 
     policies and objectives as that subaccount.

VALUATION DATE
     Each Fortis Benefits business day that the New York Stock 
     Exchange is open for trading.

VALUATION PERIOD
     The period commencing at the close of the New York Stock 
     Exchange on one valuation date and continuing to the close of 
     the New York Stock Exchange on the next succeeding valuation 
     date.

56680                                  Page 2



<PAGE>

THE CONTRACT

THE CONTRACT
This policy, the attached application, amendments, endorsements, and riders 
make up the entire contract. Any statements made by you or the insured in the 
application will be considered representations and not warranties. No 
statement made by you or the insured will be used by us to defend against a 
claim under this policy unless it is contained in the application.            

POLICY CHANGES
Any change or waiver of this policy or its provisions must be made in writing 
and signed by our President and Secretary. No agent has the right to change 
or waive any provision of this policy.

POLICY OWNER
The owner is as shown on the policy schedule, unless later changed as 
provided in this policy. As owner, you have all rights, privileges and 
benefits under this policy while the insured is living. If you have not named 
a successor owner and you die while the insured is alive, your estate will 
become the owner. All notices will be sent to you at the address of record. 
Please notify us of any change of address.

SUCCESSOR OWNER
You may name a successor owner who will take over your rights under this 
policy at your death.

BENEFICIARY
When the insured dies, we will pay the proceeds of this policy to the 
beneficiary. The beneficiary will be as shown in the application unless you 
have changed the beneficiary. Benefits added by rider are subject to the 
beneficiary provisions of that rider.

The proceeds will be paid to you or your estate if the insured dies and 
(1) no beneficiary survives the insured; or (2) no beneficiary was ever named.

CHANGE OF BENEFICIARY OR SUCCESSOR OWNER
While the insured is living, you may change or revoke the beneficiary or 
successor owner. You must make the change in writing in a form satisfactory 
to us. The change won't take effect unless we receive and record it at our 
Home Office.

When we record it, the change will take effect as of the date you sign it, 
whether or not the insured is living. The change will be subject to any 
action we take before we record the change.

ASSIGNMENTS
You may assign this policy while the insured is alive. No assignment will 
take effect unless it is in writing and a copy is sent to our Home Office.

When we record it, the assignment will take effect as of the date you sign 
it, whether or not you are living. The assignment will be subject to any 
action we take before we record it.

We are not responsible for the validity of any assignment. Any unpaid loans 
and interest due against this policy will be paid before we pay any claim 
made by the person to whom you have assigned this policy.

If you want the beneficiary or successor owner changed when you assign this 
policy, you must make the change in writing with the assignment.

MISSTATEMENTS OF AGE OR SEX
If the insured's age or sex is misstated, the amount we will pay will be the 
amount that the last cost of insurance deductions would have purchased using 
the most recent cost of insurance rates at the correct attained age and sex.

CLAIMS ON PROCEEDS
To the extent permitted by law, no payment we make will be subject to claims 
against any payee. No payee has any ownership rights to the payments before 
they are received.

PAYMENTS BY US
All benefits under this policy are payable at our Home Office.

INCONTESTABLE
This policy will be incontestable after it has been in force for two years 
from the policy date during the lifetime of the insured. 

Any increase in face amount or any reinstatement will be incontestable after 
that increase or reinstatement has been in force two years from its effective 
date during the lifetime of the insured. Any contest will then be based only 
on the application for the increase or reinstatement

SUICIDE
If the insured commits suicide, while sane or insane, within two years of the 
policy date (one year in Colorado and North Dakota), our total liability 
under this policy will be the premiums paid, minus any policy loan, plus any 
unearned loan interest, minus any prior withdrawals.

56651                                  Page 3
<PAGE>

If the insured commits suicide, while sane or insane, within two years (one 
year in Colorado and North Dakota), from the effective date of any increase 
in face amount or reinstatement, our total liability with respect to such 
increases or reinstatement will be the cost of insurance for the increase or 
reinstatement.

ANNUAL REPORT
Once a year we will send you an annual report free of charge. This report 
will show your policy status as of a date no more than 60 days earlier than 
the date of mailing. It will include: (1) your policy value, surrender value, 
and death benefit as of the date of the report; and (2) the premiums paid, 
performance of your subaccounts, interest credited to the general account, 
policy value advances, cash value bonuses and the loans, withdrawals, 
transfers, and charges since the last report.

PREMIUMS, GRACE PERIOD AND REINSTATEMENT

PAYMENT OF PREMIUMS
The first monthly premium is due on the policy date. The amount and frequency 
of planned periodic premium payments are shown on the policy schedule. You 
may make changes in frequency and you may increase or decrease the amount of 
planned periodic premium payments subject to our guidelines.

This policy will not take effect until it has been delivered and the first 
premium has been paid prior to the insured's death and prior to any change in 
health as shown in the application. All premiums are payable at the Home 
Office. Receipts will be furnished upon request. We will send you premium 
payment reminder notices.

Additional premium payments may be made at any time prior to the maturity 
date of this policy. We reserve the right to limit the number and amount of 
additional premium payments.

Premiums will be credited on the valuation date they are received at our Home 
Office. All net premiums credited to this policy prior to the reallocation 
date will be allocated to the general account.

On the reallocation date, the value in the general account will be allocated 
to the various subaccounts or the general account according to your requested 
premium allocation. If we do not receive a premium allocation request, the 
money will stay in the general account until we receive other instructions.

Section 101(a) of the Code of 1986, (hereinafter referred to as "The Code") 
as amended, provides for the exclusion of death benefits from gross income 
for life insurance contracts. Section 7702 of the Code defines the term "life 
insurance contract." It provides a maximum limitation on premiums which may 
not be exceeded if this policy is to qualify for the exclusion. Any portion 
of a premium payment received by us in excess of that limitation will be 
refunded with any interest or applied as otherwise agreed to. However, 
premium is always accepted to avoid policy lapse.

GRACE PERIOD
If the net cash value on a monthly anniversary is not enough to cover the 
monthly deductions for the following month, a grace period of 61 days after 
the date of the notice will be allowed for the payment of a premium 
sufficient to cover the monthly deductions until the end of the grace period.

We will notify you when a premium payment is necessary to cover the monthly 
deductions. The notice will be mailed to your last known address on any 
monthly anniversary day there is not enough net cash value to pay the monthly 
deductions. If such premium is not paid within the grace period, all coverage 
under this policy will lapse with no value. If a death claim becomes payable 
under this policy during the grace period, any overdue monthly deductions 
will be subtracted from the proceeds. If the guaranteed death benefit 
provision is in effect, the policy will not lapse if all monthly minimum 
premiums are paid.

REINSTATEMENT
If this policy lapses, we will reinstate it while the insured is living 
within five years after the date of lapse. The reinstatement is subject to:

1.  Receipt of proof of insurability satisfactory to us; and

2.  Payment of a premium large enough to cover:

    a.  an amount sufficient to keep the policy in force for at least two 
        months from the reinstatement date;

    b.  the balance needed for the monthly deductions on the monthly 
        anniversary date immediately before the start of the grace period, 
        and for the monthly deduction on any monthly anniversary date 
        occurring during the grace period.

If this policy is reinstated, the Incontestable and Suicide Exclusion 
provisions will go into effect. The contestable period and the suicide 
exclusion will begin on the date this policy is reinstated and will be based 
on the application taken at that time.

                                       Page 4
<PAGE>

The guaranteed death benefit and qualification for policy value advances will 
not be reinstated when the policy is reinstated.

The effective date of a reinstatement will be the first monthly anniversary 
following the day we approve the application for reinstatement. Policy value 
after reinstatement will be allocated according to your instructions or to 
the general account if no instructions are received.

GUARANTEED DEATH BENEFIT

DEDUCTION
A death benefit guarantee charge is included in the monthly deduction while 
this benefit is in force. The charge will not be taken if the guaranteed 
death benefit is no longer in effect.  The initial death benefit guarantee 
charge is shown in your policy schedule. It will change if: 1) the face 
amount is increased or decreased; or 2) riders are added, changed, or 
terminated.

GUARANTEED DEATH BENEFIT
If you meet the premium requirement described below, the policy will not 
lapse even if your net cash value is not sufficient to cover the monthly 
deduction on a monthly anniversary day.

PREMIUM REQUIREMENT
The premium requirement on each monthly anniversary is met if (a) is equal to 
or greater than (b) where:

(a)   is the sum of all premiums paid less any cash withdrawals and less any 
      loans;

(b)   is the sum of the monthly minimum premiums including the premium-due on 
      the current monthly anniversary.

The initial monthly minimum premium is based on the insured's issue age and 
risk class, and is shown in your policy schedule.

Minimum premiums may be paid on a mode of payment other than monthly as long 
as the sum of premiums paid equals the total monthly minimum premiums to date 
at any time.

CHANGES THAT AFFECT THE PREMIUM REQUIREMENT The monthly minimum 
premium will change if: (1) the face amount is increased or 
decreased but not if the change in face amount is due to a partial 
withdrawal or a change in death benefit types, (2) riders are 
added, deleted, or changed, or (3) rating classifications change.

As stated above, the premium requirement is affected by any cash withdrawals 
or loans on your policy. If the monthly minimum premium changes, will will 
send you an amended policy schedule. Also, additional premiums may be 
required on the date of change in order to meet the new premium requirement.

NOTICE
If on any monthly anniversary day the premium requirement is not met, we will 
send you a notice of the premium required. If the premium is not received by 
us at our Home Office prior to the next monthly anniversary day, the 
guaranteed death benefit will terminate. On a guaranteed basis, the policy 
value at the end of the guarantee period may be insufficient to keep the 
policy in force unless an additional payment is made at that time.

REINSTATEMENT
If this benefit terminates, it may not be reinstated.

TERMINATION
This benefit will terminate on the earliest of the following dates:

1.   the monthly anniversary day following our notice to you that the 
     premium requirement was not met;

2.   the earlier of 12 years after the policy date or to the policy anniversary
     following the insured's age 65 (or five years after the policy date if the
     insured is age 60 to age 70 at issue). After age 70, the guarantee is for
     the greater of 2 years or to age 75. The guarantee for insureds rated for
     higher mortality risk at issue is for the lesser of the guarantee period
     for their age or 5 years.

SEPARATE ACCOUNT

SEPARATE ACCOUNT
The separate account (referred to as "the account") was established under and 
is subject to the insurance laws of Minnesota. The assets of the account are 
owned by us, but are kept separate from our general investment assets.

SUBACCOUNTS
The account has several subaccounts, each investing in one of the 
corresponding funds. The subaccounts initially selected by you are listed on 
the policy schedule. Premium amounts after certain deductions will be 
allocated among the subaccounts and the general account according to the 
percentages selected by you. Any allocation must be in whole percents. We 
reserve the right to impose limitations on the amount that may be allocated 
to any subaccount.

The allocation of future invested premium amounts may be changed at any time 
if the policy is not in the grace period. The request for change must be in 
writing on a form suitable to us. The change will take effect on the date the 
request is received in our Home Office.

The value of the assets in each subaccount will be determined on the 
valuation date. If the value of the assets is needed on a day that the 
subaccount has not been valued, the value on the next valuation date will be 
used.

56655                                  Page 5

<PAGE>

SEPARATE ACCOUNT ASSETS
The value of the assets in the separate account will always be at least equal 
to the sum of all policy values under policies allocating values to the 
account. To the extent those assets do not exceed this amount, they are used 
to support those policies; those assets are not chargeable with liabilities 
arising out of and are not used to support any other business conducted by 
us. The excess of this amount may be used in any other way.

CHANGE OF INVESTMENT ADVISER OR INVESTMENT POLICY
Unless otherwise required by law or regulation, the investment adviser or any 
investment policy may not be changed without our consent. Any investment 
policy will not be changed unless a statement of the change is filed with and 
approved by the Commerce Commissioner of the State of Minnesota. If required, 
approval of or change of any investment objective will be filed with the 
Insurance Department of the state where this policy is delivered.

You will be notified of any material investment policy change which has been 
approved. Notification of an investment policy change will be given in 
advance if you have the right to comment on or vote on such changes.

Any substitution of the underlying investments of any subaccount will comply 
with all applicable requirements of the Investment Company Act of 1940 and 
rules thereunder.

RIGHTS RESERVED BY US
When required by law, we will obtain your approval of changes and we will 
gain approval from any appropriate regulatory authority. Such approval may 
not be required in all cases, however. Examples of the changes we may make 
include:

1.  To operate the separate account in any form permitted under the 
    Investment Company Act of 1940 or in any other form permitted by law.

2.  To take any action necessary to keep this policy in compliance with all 
    applicable laws, rules, regulations, interpretations, holdings or orders.

3.  To transfer or limit any assets in any subaccount to another subaccount, 
    or to one or more separate accounts, or to the general account.

4.  To add, combine or remove subaccounts in the separate account.

5.  To substitute for the fund shares held in any subaccount, the shares of 
    another fund of Fortis Series or the shares of another investment company 
    or any other investment permitted by law.

6.  To make any other necessary technical changes in the policy in order to 
    conform with any action the above provisions permit us to take.

TRANSFERS

You may transfer amounts among the subaccounts or to and from the general 
account if the policy is not in the grace period. The request to transfer 
amounts must be in a form suitable to us. The transfer will take effect on 
the day we receive the notice at our Home Office provided such notice is 
received before the New York Stock Exchange closes. We may also permit 
continuing automatic periodic transfers. The maximum transfer charge is shown 
on the policy schedule. We reserve the right to limit the number and amount 
of transfers, or to impose charges upon transfers. If we limit transfers, the 
limit will never be less than 4 transfers per policy year.

You may transfer all your policy value to the general account once without 
charge within 2 years of the policy date or the date of any increase, or 
within 60 days of of any change in investment policy.

TRANSFERS FROM THE GENERAL ACCOUNT
Transfers from the general account to the separate account are subject to the 
following: (1) the maximum amount per account transfer is 50% of your 
unloaned general account value, and (2) the transfer may only take place once 
each policy year. If your unloaned general account value is less than $1,000, 
you may transfer the entire unloaned balance to the separate account.

DEATH BENEFIT

The proceeds payable at the death of the insured will be the death benefit in 
force on the date of the insured's death plus any premiums received after the 
date of death, minus any policy loans.

TYPE A (LEVEL AMOUNT)
The death benefit will be the larger of (a) the face amount or (b) the 
percentage of policy value from the table following.

                                       Page 6
<PAGE>


TYPE B (ADDITIONAL AMOUNT) 
The death benefit will be the larger of (a) the face amount plus the policy 
value or (b) the percentage of policy value from the table below.

                      PERCENTAGE OF POLICY VALUE 
<TABLE>
<CAPTION>
If attained age of                 Then the percent 
insured at the                     will decrease by
beginning of the                   equal steps for 
contract year is:                  each year: 
                 But not 
More than       more than          From              To 
<S>             <C>                <C>               <C>
   24               40             250               250
   40               45             250               215
   45               50             215               185
   50               55             185               150
   55               60             150               130
   60               65             130               120
   65               70             120               115
   70               75             115               105
   75               90             105               105
   90               95             105               100
</TABLE>

The initial death benefit type is found on the policy schedule. 

CHANGES IN TYPE OF DEATH BENEFIT 
You may change the type of death benefit once each policy year.  The change 
will take effect on the first monthly anniversary following the day we 
approve your written request at the Home Office. We will need evidence of 
insurability if you are changing from Type A to Type B death benefit. No 
change in the type of death benefit will be allowed (1) if the resulting face 
amount would be less than the minimum face amount shown on the policy 
schedule, or (2) if the change will cause the policy to fail to qualify as 
life insurance under Section 7702 of the Code.

If the change is from Type A to Type B, the face amount will be reduced by 
the amount of the policy value on the effective date of the change. If the 
change is 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. 

CHANGES IN FACE AMOUNT 
The face amount may be increased at any time. It may be decreased at any time 
after the first policy year. A decrease will be allowed only if premiums paid 
are at least equal to the sum of 12 monthly minimum premiums for the initial 
face amount. A comparable restriction applies after any face amount increase. 
You must request a change in writing. Any increase or decrease will take 
effect on the first monthly anniversary following the day we approve the 
request. Changes are subject to the following:

1.  The decrease will be applied to the initial face amount, and any increase 
    in face amount in reverse order in which the increases became effective.
    The face amount after any requested decrease may not be less than the 
    minimum face amount shown on the policy schedule. It will not be allowed 
    if it would cause the policy to fail to qualify as life insurance under 
    Section 7702 of the Code. 

2.  Any request for an increase will require proof of insurability 
    satisfactory to us. An increase will also require sufficient surrender 
    value to cover the first new monthly deduction. The minimum increase is 
    shown on your policy schedule and is subject to our issue rules and limits 
    at the time of increase. Increases will not be allowed if any disability 
    benefit is paid under the terms of a rider. 

DEDUCTIONS 

MONTHLY DEDUCTION 
Unless indicated otherwise, the monthly deduction for a policy month will be 
allocated on a pro-rata basis.

The monthly deduction for a policy month will be equal to the sum of:

1.  The cost of insurance (as described below) and the cost of additional 
    benefits provided by rider for the policy month; 

2.  A monthly administrative charge shown in the policy schedule; 

3.  A monthly charge shown on the policy schedule for sales and premium tax 
    charges or for policy value advances; 

4.  A guaranteed death benefit charge shown in the policy schedule. 

COST OF INSURANCE 
We determine the cost of insurance on a monthly basis. The cost of insurance 
is determined separately for the initial face amount and any increases made 
later. The policy value is considered a pro-rata portion of the initial face 
amount and any subsequent face amount increases. 

The cost of insurance is equal to: 

a.  the death benefit on the monthly anniversary divided by 1.00327374; 
    minus the policy value (or zero, if greater) on the monthly anniversary; 
    MULTIPLIED BY 

b.  the cost of insurance rate as described below; THE RESULT PLUS 

c.  any amount of flat extra insurance charges shown in the policy schedule. 


56656                                  Page 7
<PAGE>

COST OF INSURANCE RATES
The monthly cost of insurance rate is based on the sex, issue age, duration 
and risk class of the insured. Monthly cost of insurance rates may be changed 
by us from time to time. A change in the cost of insurance rates will apply 
to all persons of the same issue age, duration and risk class. For insureds 
without extra mortality charges, the cost of insurance rates will not exceed 
the rates found in the Commissioner's 1980 Standard Ordinary Mortality Table 
including the Smoker or Nonsmoker Mortality Table shown in the table of 
guaranteed cost of insurance rates.

POLICY VALUES

POLICY VALUE
Your policy is equal to the sum of your separate account value and your 
general account value.

SEPARATE ACCOUNT VALUE
The value in each subaccount as of the reallocation date is equal to the 
amount of all policy values transferred from the general account to the 
subaccount.

At the end of each valuation period after the reallocation date, the value in 
a subaccount is equal to THE SUM OF:

1.  your value in the subaccount at the last valuation;

2.  your value in the subaccount at the last valuation multiplied by the net 
    investment factor;

3.  any net premium received during the current valuation period which is 
    allocated to the subaccount;

4.  all values transferred to the subaccount;

5.  any policy value advance or cash value bonus paid to the subaccount;

MINUS THE FOLLOWING:

6.  all values transferred to another subaccount or the general account, and 
    values transferred to secure a policy loan during the current valuation 
    period; and

7.  all partial withdrawals from the subaccount during the current valuation 
    period.

In addition, whenever a valuation period includes the monthly anniversary 
day, the subaccount value at the end of such period is reduced by the portion 
of the monthly deduction allocated to the subaccount.

NET INVESTMENT RETURN
The net investment return for each subaccount for the valuation period is 
calculated as:

1.  the investment income and capital gains, realized and unrealized, 
    credited to the subaccount assets since the last valuation;

MINUS THE FOLLOWING:

2.  the capital losses, realized and unrealized, charged to the subaccount 
    assets since the last valuation;

3.  the amount charged each subaccount for taxes attributable to the 
    operation of the subaccount; and

4.  investment management service fees paid to the investment adviser.

NET INVESTMENT FACTOR
The net investment factor measures the net investment return of a subaccount 
during a valuation period. The net investment factor is calculated as follows:

1.  The net investment return for the subaccount for the valuation period;

DIVIDED BY

2.  the value of the subaccount assets at the last valuation; THE RESULT MINUS

3.  a charge assessed for mortality and expense risks for each day of the 
    valuation period, not to exceed the percentage shown in the policy 
    schedule page; and

4.  a charge assessed for sales and premium tax charges or policy value 
    advances for each day of the valuation period, not to exceed the 
    percentage shown in the policy schedule page.

GENERAL ACCOUNT VALUE
Your value in the general account on the policy date is equal to the net 
premium less the initial monthly deduction allocated to the general account. 
On each monthly anniversary day, the value in the general account is equal to 
THE SUM OF:

1.  the value in the general account on the last monthly anniversary day plus 
    interest from the last monthly anniversary day;

2.  any net premium received since the last monthly anniversary day which is 
    allocated to the general account plus interest from the date the net 
    premium is received to the monthly anniversary day;

3.  all values transferred to the general account from a subaccount since the 
    last monthly anniversary day plus interest from the date the value is 
    transferred to the monthly anniversary day; and

                                       Page 8
<PAGE>


4.  any policy value advance or cash value bonus paid to the general account 
    on the monthly anniversary; 

MINUS the following:

5.  all values transferred from the general account to a subaccount since 
    the last monthly anniversary day plus interest from the date the value is 
    transferred to the monthly anniversary day; 

6.  all partial withdrawals from the general account since the last monthly 
    anniversary day plus interest from the date of the partial withdrawal to 
    the monthly anniversary day; and 

7.  the portion of the monthly deduction allocated to the value in the general 
    account, to cover the policy month following the monthly anniversary day. 

On any date other than a monthly anniversary day, your value will be 
calculated on the same basis as on the monthly anniversary day. 

GENERAL ACCOUNT INTEREST RATE 
Value held in the general account will earn interest daily at an effective 
annual guaranteed rate of 4%. Interest in excess of the guaranteed rate may 
be applied in the calculation of the value at such increased rates as we may 
determine. 

No interest in excess of the guaranteed rate will be applied to any portion 
of your policy value in the general account which equals any loan. 

POLICY VALUE ADVANCES 
On certain policy anniversaries, we will credit the policy value with a 
percentage of 12 times the average net monthly minimum premium. This average 
premium is found by adding the net monthly minimum premiums shown in your 
policy schedule, from the policy date to the end of the current policy year, 
and dividing by the number of months the policy has been in force. The 
applicable durations, percentage rates, and dollar amounts credited are shown 
on your policy schedule. These credits are applied to your policy value on a 
pro-rata basis unless other options become available. A charge for this 
benefit is included in the net investment factor and the monthly deductions. 

PREMIUM REQUIREMENT 
Payment of the credit is subject to the following:

1.  the total premium paid less loans and withdrawals must not be less than 
    the sum of monthly minimum premiums from the policy date to the end of 
    the current policy year. 

2.  for purposes of meeting this premium payment requirement at the end of 
    the first year we pay a policy value advance, premium payments made during 
    that year in excess of 36 times the monthly minimum premium at that time 
    will be disregarded. 

If the premium requirement is not met for any credit, no further policy value 
advances will be paid. 

If your policy lapses and is later reinstated, you will no longer qualify for 
this credit. 

CASH VALUE BONUS 
We will credit a cash value bonus to your policy value on certain policy 
anniversaries. The amount of the bonus is expressed as a percentage of your 
surrender value. It will vary with the size of your surrender value as well 
as the duration of your policy. The percentages, sizes, and durations are 
shown on your policy schedule. These credits are applied to your policy value 
on a pro-rata basis unless other options become available. 

BASIS OF COMPUTATIONS 
Minimum surrender values in the general account are based on the 
Commissioner's 1980 Standard Ordinary Smoker or Nonsmoker Mortality Table, 
age last birthday, with interest at 4% per year. 

The method used in computing surrender values in the Separate Account is in 
accordance with actuarial procedures that recognize the variable nature of 
the Separate Account. The method used is such that if the Net Investment 
Factor, for all subaccounts at all times from the policy date, is equal to an 
effective annual interest rate of 4%, and if the cost of insurance rates are 
based on the Commissioner's 1980 Standard Ordinary Smoker or Nonsmoker 
Mortality Table, age last birthday, then the surrender values in the separate 
account will be at least equal to the minimum surrender values which would 
have been required by the law of the state in which this policy is delivered 
of an equivalent policy in which all net premiums have been allocated to the 
general account.

Reserves are not less than the surrender value. Interest on reserves will not 
exceed the guaranteed rate of 4%. Reserves are based on the Commissioner's 
1980 Standard Ordinary Smoke/Non-smoker Mortality Table, Age Last Birthday. 

All values under this policy are not less than the values required by the 
state in which this policy was delivered. A detailed statement of the method 
of computation of surrender values and reserves under this policy has been 
filed with the insurance department of the state in which the policy was 
delivered. 

SURRENDERS, LOANS AND WITHDRAWALS 

SURRENDER CHARGE 
The surrender charge is the sum of parts (1) and (2) shown on your policy 
schedule.  The surrender 

56657                                  Page 9

<PAGE>

charge will not exceed the maximum shown on your policy schedule.

CASH VALUE
The cash value as of any date is equal to the policy value less part (1) of 
the surrender charge.

NET CASH VALUE
The net cash value as of any date is equal to:

1.  the cash value; minus

2.  any unpaid policy loan; plus

3.  any unearned loan interest.

SURRENDER VALUE
The surrender value is the net cash value less part (2) of the surrender 
charge.

SURRENDER
Upon written request, you may surrender this policy for the surrender value. 
It may be surrendered at any time during the lifetime of the insured. The 
surrender value will be determined as of the date we receive the request at 
our Home Office.

POLICY LOANS
During continuance of this policy, we will grant a loan against this policy 
provided (1) we have received a signed loan agreement; and (2) this policy is 
assigned to us.

You may borrow up to 90% of the difference between the policy value and the 
total surrender charge. This policy will be the sole security for the loan.

An amount equal to the loan will be withdrawn from the subaccounts and the 
unloaned portion of the general account and held in the general account until 
the loan is repaid. Unless you specify otherwise, the loan amount will be 
withdrawn on a pro-rata basis.

The loan amount held in the general account will be credited interest at an 
effective annual rate of 4%.

INTEREST ON POLICY LOANS
Interest on loans will be at the policy loan rate shown on the policy 
schedule, payable annually in advance. Interest not paid when due will be 
added to the loan and bear interest at the same rate.

If this policy (a) has been in force for 2 years from the policy date and has 
at least $50,000 of surrender value, or (b) has been inforce for 12 years, 
you may borrow up to 10% of your surrender value once each year at the lower 
policy loan interest rate shown in the policy schedule.

Also, after the insured's age 59-1/2, you may borrow up to 15% of the 
surrender value at that lower interest rate once each year. The remaining 
surrender value is available at the regular interest rate shown on the policy 
schedule, subject to the overall loan limit as stated above.

LOAN REPAYMENT
While the policy is in force before the death of the insured or before 
surrender, any indebtedness may be repaid. Any amounts received on this policy 
will be considered premiums unless they are clearly marked as loan 
repayments. As the loan is repaid, the amount repaid will be transferred from 
the loaned portion of the general account to the subaccounts and the unloaned 
portion of the general account in the same manner as premiums are allocated, 
unless you direct otherwise.

WITHDRAWALS
Cash withdrawals may not be made during the first policy year. Thereafter, 
cash withdrawals will only be allowed if premiums paid are at least equal to 
the sum of 12 monthly minimum premiums for the initial face amount. A 
comparable restriction applies after any face amount increase. Only one 
withdrawal is allowed during a policy year. You must request a withdrawal in 
writing. The request will be effective on the date we receive it at our Home 
Office.

A withdrawal charge may be deducted from each withdrawal amount and the 
balance will be paid to you. This withdrawal charge will not exceed the 
charge shown on your policy schedule.

When a withdrawal is made, the policy value shall be reduced by the amount of 
the withdrawal. If the death benefit is Type A, the insured's face amount 
will also be reduced by the amount of the withdrawal. No withdrawal will be 
allowed if the resulting face amount would be less than the minimum face 
amount shown on the policy schedule. Unless otherwise specified, withdrawals 
will be taken on a pro-rata basis.

DEFERRAL OF PAYMENTS
The payment of variable death benefits in excess of any minimum death 
benefit, surrender value, policy loan, or partial withdrawal (except when 
used to pay the premiums), may be deferred:

1.  for up to two months for death benefit payments or six months for all 
    other payments from the date of request, if such payments are based on 
    policy values which do not depend on the investment performances of the 
    separate accounts; or 

2.  for any period during which the New York Stock Exchange is closed for 
    trading (except for customary weekend and holiday closings) and for any 
    period during which a state of emergency exists which may make such 
    payment impractical or for such other periods as the Securities and 
    Exchange Commission may by order permit, for the protection of investors.

                                       Page 10
<PAGE>


SETTLEMENT OPTIONS


CHOICE OF OPTIONS

We will pay the proceeds of this policy in a single sum unless you choose one 
of the settlement options described below. You may also choose any other 
option that is agreeable to both you and us. You may change your choice of 
option later. If you do not choose an option before the insured dies, the 
beneficiary will have the right to choose an option.

We will pay interest on proceeds paid in a single sum from the date of the 
insured's death until the date of payment. The interest rate on these 
payments and any proceeds we hold under options 1, 2, 3 and 4 below will be 
at least at an effective rate of 3.5% per year.

SETTLEMENT DATE 

The settlement date of this policy is the date of the insured's death or the 
date of any other termination of this policy. 

OPTION 1. INTEREST PAYMENTS 

You may leave the proceeds with us for a period of time you select when you 
choose this option. Interest begins to accrue on the settlement date. We will 
pay the interest at 12, 6, 3, or 1 month intervals, as you choose. At the end 
of the selected period, we will pay the proceeds in a single sum or under any 
other option selected when you choose this option. 

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

You may leave the proceeds with us and we will make payments in one of the 
ways shown below. You may request us to make these payments at 12, 6, 3, or 1 
month intervals. 

1.  We will make payments in an amount you select when you choose this option; 
    or

2.  We will make equal payments over any period of from 1 to 30 years, as you 
    select when you choose this option. Table 1 shows minimum payments for each 
    $1,000 of proceeds held under this option. Payments for any period not 
    shown will be furnished at your request. 

                  TABLE 1. Payments for each 
                 $1,000 of Proceeds under Option 2

<TABLE>
<CAPTION>
              No. of Years          Annual                Monthly 
                 Payable           Payments               Payments 
- -------------------------------------------------------------------------------
<S>                                <C>                    <C>
                    5              $213.99                 $18.12
                   10               116.18                   9.83
                   15                83.89                   7.10
                   20                67.98                   5.75
                   25                58.62                   4.96
</TABLE>

OPTION 3. LIFE INCOME PAYMENTS

We will pay the proceeds in one of the following ways: 

1.  Life Annuity: A monthly income during the life of the payee; or

2.  Life Annuity with a Guaranteed Period: A monthly income with payments 
    guaranteed for either 10 or 20 years, as you choose, 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.

The payee is the person who will receive the income payments under Options 3 
and 4. The amount of the monthly payments depends on the type of income you 
select and the age of the payee on the settlement date and the amount of the 
proceeds.

Table 2 shows monthly minimum payments for each $1,000 of proceeds held under 
this option. Monthly payments not shown will be furnished at your request.

                  TABLE 2. Monthly Payments for each 
                   $1,000 of Proceeds under Option 3 

                                 MALE
<TABLE>
<CAPTION>
                    Refund           Life  Annuity 
        Age of       Life             Certain for             Life 
        Payee       Annuity        10 Yr       20 Yr         Annuity 
- -----------------------------------------------------------------------------
<S>                 <C>           <C>         <C>            <C>
          50         $4.54         $4.71       $4.50          $4.79
          55          4.92          5.14        4.79           5.27 
          60          5.39          5.68        5.10           5.91
          65          6.01          6.35        5.38           6.77 
          70          6.83          7.17        5.63           8.00
</TABLE>


                                FEMALE

<TABLE>
<CAPTION>
                    Refund           Life  Annuity 
        Age of       Life             Certain for             Life 
        Payee       Annuity        10 Yr       20 Yr         Annuity 
- -----------------------------------------------------------------------------
<S>                 <C>           <C>         <C>            <C>
          50         $4.23         $4.33       $4.23          $4.35
          55          4.56          4.70        4.53           4.75
          60          4.99          5.17        4.87           5.27
          65          5.55          5.80        5.22           5.98
          70          6.32          6.63        5.51           7.04
</TABLE>


56659                                  Page 11

<PAGE>

OPTION 4. JOINT LIFE INCOME PAYMENTS
You may name two payees to whom we will pay a joint monthly income during 
their joint lifetime. After either payee's death, we will make monthly 
payments equal to 2/3 of the joint monthly payment during the survivor's 
lifetime. The amount of the monthly payment depends on the age of each payee 
on the settlement date, and the amount of the proceeds.

Table 3 shows monthly minimum payments for each $1,000 of proceeds held under 
this option. Amounts not shown will be furnished at your request.

                       TABLE 3. Monthly Payments for each
                       $1,000 of Proceeds under Option 4

<TABLE>
<CAPTION>
                                      Age of Male Payee
        Age of         ------------------------------------------
        Female          5 Years           Same           5 Years
        Payee           Younger            Age            Older
- -----------------------------------------------------------------------------
<S>                     <C>               <C>            <C>
         50              $4.19            $4.36           $4.55
         55               4.52             4.75            4.99
         60               4.96             5.25            5.59
         65               5.53             5.94            6.43
         70               6.33             6.94            7.66
</TABLE>

If you choose Options 2, 3, or 4 and the monthly payments are less than those 
provided by our then current settlement rates, we will pay the larger amount.

MINIMUM AMOUNT
We have 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 you 
have chosen would be less than $50.

SUPPLEMENTARY CONTRACT
If you request a settlement option, we will prepare an agreement stating the 
terms under which payment will be made. This agreement will replace this 
policy when proceeds become payable. You must surrender this policy to us at 
our Home Office at that time.

PROOF OF AGE
We will require proof of any payee's age under Options 3 and 4.

EXCESS INTEREST
The interest rates stated in this section of the policy are the guaranteed 
minimum rates we will pay on proceeds we hold. We have the option to pay 
excess interest.

COMMUTATION
No payee has the right to change the settlement option chosen before the 
insured's death, unless we provide that right in this policy. Payments may 
not be assigned or commuted.

DEATH OF PAYEE
If the payee dies before receiving all proceeds payable, we will pay the 
amount still due to the payee's estate, unless we approve other arrangements.

                              MATURITY DATE

The maturity date is the last date insurance coverage can remain in force and 
the date on which any remaining surrender value will be paid to you. The date 
is shown on the policy schedule. Coverage will end prior to the maturity 
date if the net cash value isn't sufficient to continue coverage to such date.

OPTIONAL EXTENSION
You can extend the Maturity Date by submitting a written request to us within 
60 days prior to the existing Maturity Date. This option is available only if 
your policy value is at least $2,000.

During the extension beyond the insured's Age 95, the Monthly Minimum Premium 
will be zero. No premium payments may be made except to keep the policy in 
force. The Death Benefit will be equal to the Policy Value multiplied by the 
Percentage stated in the Death Benefit provision of the policy. No face 
amount increase or decrease, or death benefit option change will be allowed. 
New and existing loans will be charged at the reduced rate specified in the 
Policy Schedule. Partial withdrawals of the Surrender Value are permitted as 
long as the Policy Value remains above $2,000. No cash value bonuses will be 
paid and no policy value advances will be allowed. All term life or other 
insurance riders under the policy will terminate on the original policy 
maturity date. Rider references to the policy maturity date mean the original 
policy maturity date.

Expiration of this extension will be the earlier of: 1) the date specified by 
you; 2) the date of any written request by you to surrender the policy; or 
3) the date of the death of the insured.

We will pay you the Surrender Value as of the new Maturity Date specified in 
the amended Policy Schedule.

                                       Page 12
<PAGE>


     FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 95 POLICY. FLEXIBLE PREMIUMS 
     PAYABLE DURING THE LIFETIME OF THE INSURED UNTIL THE MATURITY DATE. 
     DEATH BENEFIT PAYABLE AT DEATH PRIOR TO MATURITY DATE. ADJUSTABLE 
     DEATH BENEFIT. SURRENDER VALUE PAYABLE ON MATURITY DATE. 
     NONPARTICIPATING. SOME BENEFITS REFLECT INVESTMENT RESULTS.








                                 FORTIS BENEFITS

                                INSURANCE COMPANY

                  P.O. BOX 64582, ST. PAUL, MINNESOTA 55164
                                 1-800-800-2638


<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 45, 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


<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
    


<TABLE> <S> <C>

<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>


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