FORTIS BENEFITS INSURANCE CO VARIABLE ACCOUNT C, 485BPOS, 1998-04-29

FORTIS BENEFITS INSURANCE CO VARIABLE ACCOUNT C
485BPOS, 1998-04-29

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<PAGE>

As filed with the Securities and Exchange Commission on April 30, 1998

Registration No. 33-28551
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

POST-EFFECTIVE AMENDMENT NO. 15

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)

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

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

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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.
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X on May 1, 1998 pursuant to paragraph (b) of Rule 485.
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60 days after filing pursuant to paragraph (a) of Rule 485.
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on _______________ pursuant to paragraph (a) of Rule 485.
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This filing is made pursuant to Rules 6c-3 and 6e-3(T)
under the Investment Company Act of 1940

<PAGE>

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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, 1997 on March 20, 1998.

<PAGE>
[LOGO]
Mailing Address:
P.O. Box 64284
St. Paul
Minnesota 55164
Street Address:
500 Bielenberg Drive
Woodbury
Minnesota 55125

Telephone:
(800) 800-2000,
Ext. 3028

[LOGO]
[LOGO]
and Fortis-Registered Trademark- are registered servicemarks of Fortis AMEV and
Fortis AG.

95702 (5/98)

FORTIS
VUL 220 PROSPECTUS
(Flexible Premium Variable Life Insurance Policies)

Dated May 1, 1998

The flexible premium variable life insurance Policies
offered by this Prospectus are issued by Fortis
Benefits Insurance Company and are designed to provide
(1) lifetime insurance coverage on the insureds named
in the Policies and (2) flexibility in connection with
premium payments and death benefits. This flexibility
allows an owner of a Policy to provide for changing
insurance needs with a single insurance policy.
With respect to the Policy Value available for
investment under a Policy, the Policy owner may elect
to receive a rate of return based on one or more of the
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). $300 is the smallest possible initial
annual premium.
This prospectus contains detailed information about
these and other Policy features, including certain
restrictions and limitations which apply. This
Prospectus also discusses the way in which the return
earned by the Policy Value can affect a Policy's death
benefit and Surrender Value.
As in the case of other life insurance policies, it may
not be advantageous to purchase flexible premium
variable life insurance as a replacement for, or in
addition to, an existing flexible premium variable or
other life insurance policy.
THESE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, NOR
ARE THEY GUARANTEED OR ENDORSED BY ANY BANK, CREDIT
UNION, BROKER-DEALER OR OTHER FINANCIAL INSTITUTION.
THEY ARE NOT FEDERALLY INSURED BY THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY; AND INVOLVE INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THIS PROSPECTUS IS NOT VALID UNLESS
PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUS FOR
FORTIS SERIES FUND, INC., WHICH CONTAINS ADDITIONAL
INFORMATION ABOUT THAT ENTITY.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
<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................... 7
- Surrenders................................................................ 7
- Charges................................................................... 7
- Death Benefit............................................................. 8
- Optional Insurance Benefits............................................... 8
- Benefit at Maturity....................................................... 8
- Policy Loans.............................................................. 8
- Settlement Options........................................................ 9
- 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................................ 10
- The Separate Account...................................................... 10
- Financial and Performance Information..................................... 10
- Fortis Series Fund, Inc................................................... 11
POLICY BENEFITS................................................................. 12
- Death Benefit............................................................. 12
- Death Benefit Options..................................................... 12
- Accelerated Benefit Rider................................................. 12
- Changes in Face Amount.................................................... 13
- Change in Death Benefit Option............................................ 14
- Policy Value.............................................................. 15
- Policy Value Advances and Cash Value Bonuses.............................. 15
- Calculation of Separate Account Policy Value.............................. 16
- Separate Account Net Investment Return.................................... 17
PAYMENT AND ALLOCATION OF PREMIUMS.............................................. 17
- Issuance of a Policy...................................................... 17
- Premiums.................................................................. 18
- Allocation of Premiums and Policy Value................................... 20
- Policy Lapse and Reinstatement............................................ 21
CHARGES AND DEDUCTIONS.......................................................... 21
- Premium Tax and Sales Charges; Other Policy Issuance Expense Charges...... 21
- Deductions to Recover Policy Value Advances............................... 24
- Monthly Deduction from Policy Value....................................... 24
- Charge for Mortality and Expense Risks.................................... 25
- Miscellaneous............................................................. 26
- Guarantee of Certain Charges.............................................. 26
- Variations of Policy Charges.............................................. 26
LOAN PRIVILEGES................................................................. 26
- Credited Rate for Policy Loans............................................ 26
- Effect of a Policy Loan................................................... 27
- Repayment of a Loan....................................................... 27
SURRENDER AND PARTIAL WITHDRAWAL................................................ 27
RIGHTS RESERVED BY FORTIS BENEFITS.............................................. 28
- Payment and Deferment..................................................... 28
DISTRIBUTION OF THE POLICIES.................................................... 29
FEDERAL TAX MATTERS............................................................. 30
</TABLE>

2
<PAGE>
TABLE OF CONTENTS (CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C>
- Tax Status of the Policy.................................................. 30
- Taxation of Policy Benefits............................................... 30
- Taxation of Fortis Benefits............................................... 32
OTHER POLICY PROVISIONS......................................................... 32
MANAGEMENT...................................................................... 34
VOTING PRIVILEGES............................................................... 35
REPORTS......................................................................... 36
STATE REGULATION................................................................ 36
LEGAL MATTERS................................................................... 36
EXPERTS......................................................................... 36
RATINGS AND RANKINGS............................................................ 36
YEAR 2000 ISSUES................................................................ 38
FINANCIAL STATEMENTS............................................................ 38
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 Premiums...................................................... B-1
- Policy Value Advances..................................................... B-2
APPENDIX C...................................................................... C-1
- Oregon Policy Value Advances.............................................. C-1
- New Jersey Policy Value Advances.......................................... C-1
- New Jersey Cash Value Bonuses............................................. C-1
APPENDIX D...................................................................... D-1
- The General Account....................................................... D-1
- General Description....................................................... D-1
- General Account Policy Value.............................................. D-1
- Transfers, Surrenders and Policy Loans.................................... D-1
VARIABLE UNIVERSAL LIFE SERVICE REQUEST FORM
LIFE INSURANCE SECTION 1035 EXCHANGE FORM
</TABLE>

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

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

3
<PAGE>
INDEX OF DEFINED WORDS AND PHRASES

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

<TABLE>
<CAPTION>
PAGES

<S> <C>
Age......................................................... 32
Alternative Death Benefit................................... 12
Contingent Deferred Sales Charge............................ 22
Date of Receipt............................................. 32
Death Benefit Type A (Type "A")............................. 12
Death Benefit Type B (Type "B")............................. 12
Face Amount................................................. 17
Fortis Benefits............................................. 5
Fortis Series............................................... 11
General Account............................................. D-1
Grace Period................................................ 21
Guaranteed Death Benefit.................................... 5
Guideline Annual Premium.................................... 19
Home Office................................................. 9
Minimum Premium............................................. 19
Monthly Deduction........................................... 24
Monthly Anniversary......................................... 17
Net Amount at Risk.......................................... 24
Net Cash Value.............................................. 21
NYSE........................................................ 17
Planned Periodic Premium.................................... 18
Policy Anniversary.......................................... 17
Policy Date................................................. 17
Policy Value................................................ 15
Policy Value Advance........................................ 15
Portfolio................................................... 11
Pro Rata Basis.............................................. 24
Separate Account............................................ 10
Subaccount.................................................. 10
Surrender Charge............................................ 23
Surrender Value............................................. 7
Valuation Date.............................................. 15
Valuation Period............................................ 17
1940 Act.................................................... 10
</TABLE>

4
<PAGE>
SUMMARY

FORTIS BENEFITS/FORTIS FINANCIAL GROUP MEMBER

Fortis Benefits Insurance Company, the issuer of the Policies, was founded in
1910. At the end of 1997, Fortis Benefits had approximately $94 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 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 Fortis
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 $167 billion in assets as
of year-end 1997.

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

PAYMENT OF PREMIUMS

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

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
Money Market Series, U.S. Government Securities Series, Diversified Income
Series, Global Bond Series, High Yield Series, Global Asset Allocation Series,
Asset Allocation Series, Value Series, Growth & Income Series, S&P 500 Index
Series, Blue Chip Stock Series,

5
<PAGE>

International Stock Series, Mid Cap Stock Series, Small Cap Value Series, Global
Growth Series, Large Cap Growth Series, Growth Stock Series, and Aggressive
Growth Series.

Premiums allocated to the General Account are held as part of Fortis Benefits'
general investment assets. See Appendix D--"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. Fortis Series
Fund annual expenses, as a percentage of average net assets based on 1997
historical data, are as set out in the following table:

FORTIS SERIES ANNUAL EXPENSES (A)

<TABLE>
<CAPTION>
U.S. GLOBAL
MONEY GOVERNMENT DIVERSIFIED GLOBAL HIGH ASSET ASSET
MARKET SECURITIES INCOME BOND YIELD ALLOCATION ALLOCATION
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
-------- ----------- ------------ -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Advisory and
Management Fee.......... 0.30% 0.47% 0.47% 0.75% 0.50% 0.90% 0.48%
Other Expenses........... 0.08% 0.07% 0.08% 0.35% 0.12% 0.26% 0.05%
--- --- --- --- --- --- ---
Total Fortis Series
Operating Expenses...... 0.38% 0.54% 0.55% 1.10% 0.62% 1.16% 0.53%
--- --- --- --- --- --- ---

GROWTH &
VALUE INCOME
SERIES SERIES
-------- ---------
<S> <C> <C>
Investment Advisory and
Management Fee.......... 0.70% 0.65%
Other Expenses........... 0.13% 0.05%
--- ---
Total Fortis Series
Operating Expenses...... 0.83% 0.70%
--- ---
</TABLE>

<TABLE>
<CAPTION>
SMALL LARGE
S&P 500 BLUE CHIP MID CAP CAP GLOBAL CAP GROWTH AGGRESSIVE
INDEX STOCK INTERNATIONAL STOCK VALUE GROWTH GROWTH STOCK GROWTH
SERIES SERIES STOCK SERIES SERIES SERIES SERIES SERIES SERIES SERIES
--------- ---------- ------------- -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Advisory and
Management Fee.......... 0.40% 0.90% 0.85% 0.90% 0.90% 0.70% 0.90% 0.61% 0.69%
Other Expenses........... 0.11% 0.12% 0.23% 0.20% 0.20% 0.09% 0.20% 0.05% 0.07%
--- --- --- --- --- --- --- --- ---
Total Fortis Series
Operating Expenses...... 0.51% 1.02% 1.08% 1.10% 1.10% 0.79% 1.10% 0.66% 0.76%
--- --- --- --- --- --- --- --- ---
</TABLE>

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(a) The expenses of the Mid Cap Stock Series, Small Cap Value Series and the
Large Cap Growth Series are based on an estimate of 1998 expenses.

The Global Bond Series, the Global Asset Allocation Series, the S&P 500 Index
Series, the Blue Chip Stock Series, the International Stock Series, the Mid Cap
Stock Series, Small Cap Value Series, and the Large Cap Growth Series has each
retained a sub-adviser to provide investment research, advice and supervision
subject to the general control of Fortis Advisers, Inc. From its advisory fee,
Fortis Advisers, Inc. pays the sub-advisers a fee at an annual rate as follows:

<TABLE>
<CAPTION>
ANNUAL SUB-
SERIES SUB-ADVISER AVERAGE NET ASSETS ADVISORY FEE
- -------------------------- -------------- ---------------------------- -------------
<S> <C> <C> <C>
Global Bond Series Warburg For the first $100 million .350%
For assets over $100 million .225%
Global Asset Allocation Morgan Stanley For the first $100 million .500%
Series For assets over $100 million .400%
S&P 500 Index Series Dreyfus All levels of assets .170%
Blue Chip Stock Series T. Rowe Price For the first $100,000,000 .500%
For assets over $100,000,000 .450%
International Stock Series Lazard Freres For the first $100 million .450%
For assets over $100 million .375%
Mid Cap Stock Series Dreyfus For the first $100 million .500%
For the next $150 million .450%
For assets over $250 million .400%
Small Cap Value Series Berger For the first $50 million .500%
Associates For assets over $50 million .450%

<CAPTION>
ANNUAL SUB-
SERIES SUB-ADVISER AVERAGE NET ASSETS ADVISORY FEE
- -------------------------- -------------- ---------------------------- -------------
<S> <C> <C> <C>
Large Cap Growth Series Alliance For the first $100 million .500%
For the next $100 million .450%
For assets over $200 million .400%
</TABLE>

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

6
<PAGE>
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
D--"Transfers, Surrenders and Policy Loans."

POLICY VALUE; POLICY VALUE ADVANCES; CASH VALUE BONUSES

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.

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 and Cash Value Bonuses." See Appendix C for
Policy Value Advances in Oregon and in New Jersey.

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 $25,000.
If allowed in the state in which the Policy is issued these bonuses are
guaranteed. See "Policy Benefits--Policy Value Advances and Cash Value Bonuses."
See Appendix C for Cash Value Bonuses in New Jersey.

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 19.5% 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

7
<PAGE>
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 any
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."

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 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."

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 his 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-

8
<PAGE>
applicable 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. In Texas, the
Policy owner may also borrow up to 100% of the Policy Value in the General
Account, less a pro-rata portion of the Surrender Charge. The interest rate
credited on loaned amounts is 5%, and the interest rate charged on loans is
6.97% per year (6.54% per year in Massachusetts), payable in advance, except to
the extent that certain Policy owners may qualify for a higher credited rate for
Policy loans. See "Loan Privileges--Credited Rate for Policy Loans."

SETTLEMENT OPTIONS

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

TAXES

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

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

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,
1-800-800-2000, 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 1-800-800-2000, extension 3028. 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.

A Variable Universal Life Service Request form is attached at the end of this
Prospectus.

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

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

9
<PAGE>
THE SEPARATE ACCOUNT AND FORTIS SERIES FUND, INC.

THE SEPARATE ACCOUNT

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

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

FINANCIAL AND PERFORMANCE INFORMATION

The information presented below reflects the performance of the underlying
investment portfolios of the Fortis Series Fund through December 31, 1997.
Annual rates of return reflect Fortis Series Fund's expenses and investment
gains and losses. They also 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 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 FOR ACCUMULATION UNITS OF SUBACCOUNTS

<TABLE>
<CAPTION>
THROUGH
CALENDAR YEAR 12/31/97
THROUGH DECEMBER 31 --------------
INCEPTION ---------------------------------------------------------------------- FIVE
DATE 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 YEARS
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <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 -2.65% 28.38% 6.38% 0.24% N/A
International Stock...... 1/95 N/A N/A N/A N/A N/A N/A N/A 13.05% 12.68% 10.68% N/A
Global Growth............ N/A N/A N/A N/A N/A N/A 16.55% -4.11% 28.97% 17.71% 5.57% 12.36%
Growth Stock............. 10/86 3.23% 34.94% -4.23% 51.71% 1.78% 7.52% -3.95% 26.18% 15.05% 11.11% 10.75%
Blue Chip Stock.......... 5/96 N/A N/A N/A N/A N/A N/A N/A N/A 15.40% 25.48% N/A
S&P Index................ 5/96 N/A N/A N/A N/A N/A N/A N/A N/A 13.36% 30.78% N/A
Growth & Income.......... 5/94 N/A N/A N/A N/A N/A N/A 0.95% 28.20% 20.09% 26.21% N/A
Value.................... 5/96 N/A N/A N/A N/A N/A N/A N/A N/A 10.61% 23.78% N/A
Global Asset Allocation.. 1/95 N/A N/A N/A N/A N/A N/A N/A 16.11% 11.40% 12.18% N/A
Asset Allocation......... 4/87 2.56% 22.25% 0.82% 26.16% 5.70% 8.51% -1.47% 20.56% 11.19% 18.84% 11.24%
Global Bond.............. 1/95 N/A N/A N/A N/A N/A N/A N/A 17.64% 2.05% -0.86% N/A
High Yield............... 5/94 N/A N/A N/A N/A N/A N/A -1.54% 11.46% 9.22% 8.48% N/A
Diversified Income....... 5/88 N/A 10.98% 7.60% 13.33% 5.83% 11.44% -6.34% 15.92% 2.93% 9.16% 6.33%
U.S. Gov't Securities.... 11/86 5.17% 11.74% 6.67% 13.03% 4.90% 8.18% -7.54% 17.43% 1.00% 7.81% 5.04%
Money Market............. 11/86 5.54% 8.17% 6.61% 4.69% 2.15% 1.57% 2.70% 4.50% 3.94% 4.12% 3.36%

TEN YEARS
OR
AVG SINCE
INCEPTION
----------
<S> <C>
Aggressive Growth........ 8.14%
International Stock...... 12.15%
Global Growth............ 12.71%
Growth Stock............. 13.12%
Blue Chip Stock.......... 24.84%
S&P Index................ 26.61%
Growth & Income.......... 20.14%
Value.................... 20.72%
Global Asset Allocation.. 13.22%
Asset Allocation......... 11.12%
Global Bond.............. 5.98%
High Yield............... 7.41%
Diversified Income....... 7.47%
U.S. Gov't Securities.... 6.64%
Money Market............. 4.38%
</TABLE>

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

Wall Street Series VUL220 was not offered for sale prior to December, 1989.

10
<PAGE>

Example: If a male nonsmoker insured age 35 had a Policy with a Type A Death
Benefit of $150,000 in which he invested $1,500 annually, the Policy would have
provided the following benefits as of December 31, 1997, for the time periods
and subaccounts indicated:

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS
------------------------------ ------------------------------
TOTAL POLICY SURRENDER TOTAL POLICY SURRENDER
INVESTMENT VALUE VALUE INVESTMENT VALUE VALUE
---------- ------ --------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth............. $1,500 $1,156 $195 N/A N/A N/A
International Stock........... $1,500 $1,348 $388 N/A N/A N/A
Growth Stock.................. $1,500 $1,238 $277 $7,500 $8,148 $6,850
Global Growth................. $1,500 $1,215 $254 $7,500 $8,215 $6,919
Blue Chip Stock............... $1,500 $1,425 $465 N/A N/A N/A
S&P Index..................... $1,500 $1,464 $504 N/A N/A N/A
Growth & Income............... $1,500 $1,428 $467 N/A N/A N/A
Value......................... $1,500 $1,410 $449 N/A N/A N/A
Global Asset Allocation....... $1,500 $1,327 $366 N/A N/A N/A
Asset Allocation.............. $1,500 $1,349 $388 $7,500 $8,361 $7,062
High Yield.................... $1,500 $1,252 $291 N/A N/A N/A
Global Bond................... $1,500 $1,168 $207 N/A N/A N/A
Diversified Income............ $1,500 $1,264 $304 $7,500 $6,846 $5,541
U.S. Gov't Securities......... $1,500 $1,247 $286 $7,500 $6,619 $5,313
Money Market.................. $1,500 $1,201 $240 $7,500 $6,259 $4,952

<CAPTION>
TEN YEARS SINCE INCEPTION
------------------------------- -------------------------------
TOTAL POLICY SURRENDER TOTAL POLICY SURRENDER
INVESTMENT VALUE VALUE INVESTMENT VALUE VALUE
---------- ------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth............. N/A N/A N/A $ 6,000 $ 5,667 $ 4,428
International Stock........... N/A N/A N/A $ 4,500 $ 4,373 $ 3,237
Growth Stock.................. $15,000 $24,241 $23,812 $18,000 $29,578 $29,578
Global Growth................. N/A N/A N/A $ 9,000 $10,453 $ 9,187
Blue Chip Stock............... N/A N/A N/A $ 3,000 $ 3,232 $ 2,164
S&P Index..................... N/A N/A N/A $ 3,000 $ 3,266 $ 2,197
Growth & Income............... N/A N/A N/A $ 6,000 $ 7,426 $ 6,190
Value......................... N/A N/A N/A $ 3,000 $ 3,091 $ 2,023
Global Asset Allocation....... N/A N/A N/A $ 4,500 $ 4,384 $ 3,248
Asset Allocation.............. $15,000 $22,587 $22,158 $16,500 $25,411 $25,197
High Yield.................... N/A N/A N/A $ 6,000 $ 5,505 $ 4,263
Global Bond................... N/A N/A N/A $ 4,500 $ 3,592 $ 2,453
Diversified Income............ N/A N/A N/A $15,000 $17,313 $16,884
U.S. Gov't Securities......... $15,000 $16,306 $15,877 $18,000 $20,273 $20,273
Money Market.................. $15,000 $14,348 $13,920 $18,000 $17,784 $17,784
</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.

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 Money Market Series, U.S. Government
Securities Series, Diversified Income Series, Global Bond Series, High Yield
Series, Global Asset Allocation Series, Asset Allocation Series, Value Series,
Growth & Income Series, S & P 500 Index Series, Blue Chip Stock Series,
International Stock Series, Mid Cap Stock Series, Small Cap Value Series, Global
Growth Series, Large Cap Growth Series, Growth Stock Series, and Aggressive
Growth Series.

The three new portfolios, Mid Cap Stock Series, Small Cap Value Series, and
Large Cap Growth Series are available investment options for new Policies issued
after May 1, 1998. However, for existing Policies issued prior to May 1, 1998,
investment in these three subaccounts is not permitted until November 1, 1998,
due to administrative operating systems constraints. 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 Series, the High Yield Series, and the Diversified Income Series
should be read before selection of them for Policy investment.

11
<PAGE>
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, minus (4) any amount paid as an Accelerated Benefit, plus (5) 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>

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

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

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

ACCELERATED BENEFIT RIDER

The Accelerated Benefit Rider will be issued as a part of all Policies issued in
a state that has approved such rider. The Accelerated Benefit Rider allows a
Policy owner to receive benefits from the Policy that would be otherwise payable
upon the death of the insured. The 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 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 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

12
<PAGE>
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 the withdrawal.

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

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

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

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 may refuse a Face Amount increase if the effect would be to increase
Fortis Benefits' Net Amount At Risk with respect to any insured under all Fortis
Benefits insurance policies to more than $500,000, if it is unable to insure its
risk in excess of that amount on customary terms. (Net Amount at Risk is the
difference in amount between the death benefit and the Policy Value.) Fortis
Benefits reserves the right to establish different maximum or minimum amounts
for future Face Amount increases.

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.

13
<PAGE>
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 $25,000. If the insured is Age 70 or more at issuance of the Policy, the
Face Amount may not be reduced below $100,000. 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
approves the request. Nevertheless, there will be no insurance coverage under
any change in Face Amount or other change in benefits requiring evidence of
insurability, unless, at the time of delivery of a Policy schedule amendment
reflecting the change in benefits, the insured's health remains as stated in the
application for the change.

Commencing on its effective date, a change in the Face Amount generally will
also affect the Net Amount at Risk and may affect the insured's rate class, both
of which affect a Policy owner's monthly cost of insurance charge. See "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 of $25,000. Nor will a
change in death benefit option be permitted if it results in any violation of
the then current maximum premium limitations under Section 7702 of the Code. See
"Payment and Allocation of Premiums-- Premiums."

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

14
<PAGE>
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 "Loan Privileges" and Appendix D--"The General Account")
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. 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, (1) the cumulative amount of premiums paid to date, less the amount
of any outstanding Policy loans and cumulative partial withdrawals taken by the
Policy owner, at least equals (2) the cumulative monthly Minimum Premiums. For
purposes of meeting the premium payment requirement at the end of the seventh
Policy year, 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.

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 9
INSURED POLICY POLICY 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 as follows:

GUARANTEED POLICY VALUE ADVANCE PERCENTAGE

Policy Value Advances are offered or guaranteed only to the extent allowed by
the state in which the Policy is issued.

In New Jersey, and for Policies issued prior to May 15, 1996 in Oregon, state
law requirements mandate certain changes in the way Policy Value Advances are
credited to Policies which are issued in that state. Therefore, the conditions,
limitations and guarantees discussed above do not apply to such Policies. For a
description of Policy Value Advances for Policies issued in New Jersey, and for
affected Policies in Oregon, please see Appendix C.

While it is not Fortis Benefits' 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

15
<PAGE>
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 OF
BONUS AS A PERCENT OF SURRENDER VALUE AT
SURRENDER VALUE AT END OF POLICY YEARS
SURRENDER VALUE ON END OF POLICY YEARS 9 20 AND LATER TO AGE
DATE OF BONUS THROUGH 19 95
- ------------------------ --------------------- ---------------------
<S> <C> <C>
Less than $25,000....... .00% .00%
$25,000 to $99,000...... .10% .10%
$100,000 to $199,000.... .15% .15%
$200,000 or more........ .15% .25%
</TABLE>

Cash Value Bonuses are guaranteed only to the extent allowed by the state in
which the Policy is issued.

In New Jersey state law requirements mandate certain changes in the way Cash
Value Bonuses are credited to Policies which are issued in that state.
Therefore, the conditions, limitations and guarantees discussed above do not
apply to such Policies. For a description of Cash Value Bonuses for Policies
issued in New Jersey see Appendix C.

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 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

16
<PAGE>
(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 $25,000. If the insured is over
Age 70, the minimum is $100,000. The maximum Face Amount with respect to any
insured will depend on the availability of reinsurance for the Net Amount at
Risk in excess of $500,000 as applied for under the Policy and all other life
insurance policies in force with Fortis Benefits. A Policy will generally be
issued to insureds Age 80 or under who supply evidence of insurability
satisfactory to Fortis Benefits.

Fortis Benefits may use a simplified form of underwriting for employer groups or
for groups of policies underwritten within the last 5 years by standards that
meet our requirements. The group must be composed of at least 10 eligible lives.
The group must be formed for other than insurance purposes and must not present
an unusual hazard to or selection against Fortis Benefits. The group must meet
normal company guidelines for eligibility. Fortis Benefits reserves the right to
exclude any group from this program. Within the group, this underwriting form is
normally available to insureds age 55 and below and for Face Amounts up to
$100,000.

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 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

17
<PAGE>
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 least the sum of twelve monthly Minimum Premiums
specified in the Policy must be paid in advance before a Policy will take
effect; or, alternatively, at least the intial amount must be paid under a
Planned Periodic Premium payment schedule established by the Policy owner which,
if followed, will result in at least that sum being paid within the first Policy
year. The Planned Periodic Premiums are assumed to be level in the first Policy
year. The initial amount must cover all monthly Minimum Premiums from the Policy
Date to the next billing date, generally after the Policy is mailed for
delivery. If the Planned Periodic Premium is paid monthly, at least two months'
Planned Periodic Premiums must be paid.

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."

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.

Except when premiums are required to prevent lapse of the Policy, 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."

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 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.

18
<PAGE>
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.

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 and is still subject to a $25 minimum,
however.) If there have been no Face Amount increases, the decrease in any
subsequent monthly Minimum Premium will be recalculated based on the new
decreased Face Amount. 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

19
<PAGE>
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 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

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<PAGE>

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. For Policies issued prior to May 1, 1998, the Mid Cap Stock Series,
Small Cap Value Series, and Large Cap Growth Series are not available for
investment until November 1, 1998, due to operating system limitations. 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 premiums, and (b) the
balance needed to cover any due and unpaid Monthly Deductions through the end of
the Grace Period or, for Policies issued in New Jersey, the balance needed to
cover unpaid Monthly Deductions through the date of reinstatement.

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 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 5% 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.

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<PAGE>
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 12% 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 charges 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 12% 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 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.

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

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<PAGE>
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.

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
SURRENDER CHARGE
INSURED PERSON'S (PER THOUSAND
AGE AT TIME OF DOLLARS
POLICY ISSUANCE OR OF FACE AMOUNT OR
FACE AMOUNT FACE AMOUNT
INCREASE INCREASE)
- ------------------- --------------------
<S> <C>
0 - 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 may be reduced. 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

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

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

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

Cost of insurance rates are based on the Age, sex, and rate class of the insured
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

24
<PAGE>
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 (with full individualized
underwriting) 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 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.

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.

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<PAGE>
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.

VARIATIONS OF POLICY CHARGES

Fortis Benefits may reduce sales charges and/or other charges 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 total amount of premium payments expected to be received
for the Policy or Policies; (3) the nature of the association between the
individuals, and the expected persistency of the Policy or Policies; (4) the
purpose for which the Policy or Policies are purchased and whether that purpose
makes it likely that expenses will be reduced; (5) the method of sale and
whether that method makes it likely that expenses will be reduced; and (6) 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 charges 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.

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. In Texas, the Policy owner may also borrow up to
100% of the Policy Value in the General Account, less a pro-rata portion of the
Surrender Charge. Fortis Benefits will allocate a Policy loan among the General
Account and the Subaccounts of the Separate Account selected by the Policy
owner. If no selection is made, then the allocation will be on a Pro Rata Basis.

Interest on Policy loans is at a fixed rate of 6.97% per year (6.54% 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 Monthly Deductions are allocated and
transferred to the General Account.

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. Except as noted below,

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<PAGE>
this amount, plus the portion of the Policy loan allocable to Policy Value
already being held in the General Account, will be credited with interest at an
effective rate of 5% per annum.

If the Policy owner meets certain requirements Fortis Benefits will credit the
loaned Policy Value at the effective interest rate of 7.5% per year (7% per year
in Massachusetts). The amount credited is allocated to the General Account and
the Subaccounts on a Pro Rata basis.

Qualifying Policy owners may receive the higher credited 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 higher credited rate if (1) the Surrender Value is a least $10,000, or (2)
in any event, after the policy has been in force for at least 12 years. Fortis
Benefits reserves the right to further restrict such loans in the first two
Policy 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
59 1/2 or older.

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 extent of
the gain upon lapse, surrender or maturity. For Policies which are modified
endowment contracts, loans are taxable distributions when taken. See "Federal
Tax Matters--Taxation of Policy Benefits".

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

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

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

RIGHTS RESERVED BY FORTIS BENEFITS

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

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

- To take any action necessary to comply with or obtain and continue any
exemptions from the 1940 Act or otherwise to comply with laws, rules,
regulations, interpretations, holdings, 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 in which he or she may
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.

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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.

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.

The commissions and other compensation are paid by Fortis Benefits to Investors
under a distribution agreement entered into by them as of January 1, 1994 as
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); 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 ($3,741,000 in calendar year 1998 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 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. The commissions and other
compensation do not, however, represent a charge or deduction against Policy 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 totaled $37,286,906 for 1997. 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., and Fortis Worldwide 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.

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<PAGE>
FEDERAL TAX MATTERS

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

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

TAX STATUS OF THE POLICY

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

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 tax results are unclear if
the Policy is continued beyond the original maturity date. It is possible that
the Policy owner will be treated as being in constructive receipt of the Policy
surrender value after the original maturity date and subject to tax. Policy
owners should consult with their tax advisor before exercising the option to
extend the maturity date.

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.

If a Policy is part of a collateral assignment equity split dollar arrangement
with an employer, any increase in Policy Value may be taxed annually. This type
of arrangement involves

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<PAGE>

premium advances by the employer which are secured through a collateral
assignment of the Policy. A tax advisor should be consulted with respect to any
type of split dollar arrangement involving the Policy.

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 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. Prior to 1996 legislation there was
an exception to this general rule for Policies with loans of less than $50,000
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. The 1996
legislation eliminates the deductibility of interest paid even on loans of
$50,000 or under, with respect to both new and previously issued policies,
subject to certain transition rules.

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

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

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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 OF FORTIS BENEFITS

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

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

OTHER POLICY PROVISIONS

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

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

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

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

Fortis Benefits is not responsible for the validity of any assignment or release
thereof.

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

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

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

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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 Policy requires that the request must be in
writing and must be made within sixty days prior to the current maturity date.
However, by administrative practice Fortis Benefits will allow requests to be
made up to six months prior to such 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 as of the original
maturity date: 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 effective annual rate of loaned Policy Value will be
credited with interest at an effective annual rate of 7.5% per year (7% in
Massachusetts).

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. 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 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 Fortis 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
charge variations will reflect differences in Fortis Benefits' expected
commissions, sales or administrative expenses or mortality experience with
respect to the group of persons to whom such variations apply. All such
variations will be pursuant to administrative rules and procedures established
by Fortis Benefits from time to time and will be designed to be fair, reasonable
and non-discriminatory with respect to each group of Policy owners.

PURCHASES BY LIFE INSURANCE POLICY HOLDERS. When issuing a Policy or increasing
the Face Amount for an insured who is

33
<PAGE>

already covered by one of its or Fortis 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 Fortis 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.

Fortis Benefits will also not require new evidence of insurance, and will grant
a "conversion credit" as described above, when term policies issued by Old Line
Life Insurance Company are converted to a Policy issued by Fortis Benefits under
the following conditions: a) the term policy has been in force for less than
three years b) the insured is age 55 or younger at the time of conversion and 3)
the term policy was sold by a registered representative of Fortis Investors,
Inc.

The foregoing procedures are subject to Fortis Benefits' administrative rules as
in effect from time to time and may be terminated at any time. Additional
credits for certain groups and term conversion credits are not available for
Policies issued in New Jersey.

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>
<CAPTION>
OFFICER-DIRECTORS
<S> <C>
Robert Brian Pollock (4) President and Chief Executive Officer; before then Senior Vice
President--Life and Disability.
Thomas Michael Keller (5) Executive Vice President; before then Senior Vice President of
Fortis, Inc.
Dean C. Kopperud (1) Senior Vice President--; also officer of affiliated companies;
before then Senior Vice President, Integrated Resources, Inc.
OTHER DIRECTORS
Allen Royal Freedman (2) Chairman and Chief Executive Officer of Fortis, Inc.
J. Kerry Clayton (2) Executive Vice President of Fortis, Inc.
Arie Aristide Fakkert (3) Assistant General Manager of Fortis International N.V.
</TABLE>

34
<PAGE>

<TABLE>
<S> <C>
EXECUTIVE OFFICERS
Peggy Ettestad (1) Senior Vice President--Operations; before then Vice President,
General Electric Company.
Rhonda J. Schwartz (1) Senior Vice President and General Counsel--Life and Investment
Products; before then Secretary and General Counsel of Fortis,
Inc.
Michael John Peninger (4) Senior Vice President and Chief Financial Officer.
Jon H. Nicholson (1) Senior Vice President--Custom Solutions Group.
Melinda S. Urion (1) Senior Vice President--Chief Financial Officer Fortis Financial
Group; before then Senior Vice President--Finance & CFO of
American Express Financial Corporation.
Dickson W. Lewis (1) Senior Vice President--Distribution and Marketing; before then
President of Hedstrom/Blessing Marketing.
</TABLE>

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

(1) Address: Fortis Benefits Insurance Company, P. O. Box 64271, St. Paul, MN
55164. Fortis Benefits is a wholly-owned subsidiary of Fortis Insurance
Company, 501 West Michigan, Milwaukee, WI 53201, which is itself
wholly-owned by Fortis, Inc.

(2) Address: Fortis, Inc., One Chase Manhattan Plaza, New York, NY 10005.
Fortis, Inc. is wholly owned by Fortis International, N.V., which is itself
wholly owned by AMEV/VSB 1990 N.V. The latter two companies share the same
address as N.V. AMEV. AMEV/VSB 1990 N.V. is 50% owned by Fortis AMEV 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.

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

35
<PAGE>
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, Esquire, Associate General Counsel of Fortis Benefits.
Messrs. Freedman, Levy, Kroll & Simonds, Washington, D.C., have advised Fortis
Benefits on certain federal securities law matters.

EXPERTS

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

Actuarial matters included in this Prospectus have been examined by Kay M.
Doughty, ASA, MAAA, staff actuary, 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>
PORTFOLIO NAME RATING SERVICE CATEGORY
<S> <C> <C>
INTERNATIONAL STOCK SUBACCOUNT Morningstar Publications, Inc. Foreign Stock
Lipper Analytical Services, Inc. International Fund
Variable Annuity Research & Data International Stock
Service

GLOBAL GROWTH SUBACCOUNT Morningstar Publications, Inc. World Stock
Lipper Analytical Services, Inc. Global Fund
Variable Annuity Research & Data International Stock
Service
</TABLE>

36
<PAGE>

<TABLE>
<CAPTION>
PORTFOLIO NAME RATING SERVICE CATEGORY
<S> <C> <C>
GLOBAL ASSET ALLOCATION SUBACCOUNT Morningstar Publications, Inc. International Hybrid
Lipper Analytical Services, Inc. Global Flexible Portfolio
Variable Annuity Research & Data Balanced/International
Service

AGGRESSIVE GROWTH SUBACCOUNT Morningstar Publications, Inc. Small Growth
Lipper Analytical Services, Inc. Small Cap Fund
Variable Annuity Research & Data Aggressive Growth
Service

SMALL CAP VALUE SUBACCOUNT Morningstar Publications, Inc. Small Value
Lipper Analytical Services, Inc. Small Cap Fund
Variable Annuity Research & Data Small Company Funds
Service

GROWTH STOCK SUBACCOUNT Morningstar Publications, Inc. Mid Cap Growth
Lipper Analytical Services, Inc. Mid Cap Fund
Variable Annuity Research & Data Growth
Service

MID CAP STOCK SUBACCOUNT Morningstar Publications, Inc. Mid Cap Blend
Lipper Analytical Services, Inc. Mid Cap Fund
Variable Annuity Research & Data All Equity Funds
Service

LARGE CAP GROWTH SUBACCOUNT Morningstar Publications, Inc. Large Blend
Lipper Analytical Services, Inc. Growth Fund
Variable Annuity Research & Data Growth
Service

BLUE CHIP STOCK SUBACCOUNT Morningstar Publications, Inc. Large Blend
Lipper Analytical Services, Inc. Growth Fund
Variable Annuity Research & Data Growth
Service

S&P 500 INDEX SUBACCOUNT Morningstar Publications, Inc. Large Blend
Lipper Analytical Services, Inc. S&P 500 Index Fund
Variable Annuity Research & Data Growth and Income Funds
Service

GROWTH & INCOME SUBACCOUNT Morningstar Publications, Inc. Mid Cap Blend
Lipper Analytical Services, Inc. Growth & Income
Variable Annuity Research & Data Growth and Income
Service

VALUE SUBACCOUNT Morningstar Publications, Inc. Large Blend
Lipper Analytical Services, Inc. Growth & Income
Variable Annuity Research & Data Equity-Income
Service

ASSET ALLOCATION SUBACCOUNT Morningstar Publications, Inc. Domestic Hybrid
Lipper Analytical Services, Inc. Flexible Portfolio
Variable Annuity Research & Data Balanced
Service

GLOBAL BOND SUBACCOUNT Morningstar Publications, Inc. International Bond
Lipper Analytical Services, Inc. Global Income
Variable Annuity Research & Data International Bonds
Service

HIGH YIELD SUBACCOUNT Morningstar Publications, Inc. High Yield Bond
Lipper Analytical Services, Inc. High Current Yield
Variable Annuity Research & Data Corporate Bond High Yield
Service

DIVERSIFIED INCOME SUBACCOUNT Morningstar Publications, Inc. Intermediate-Term Bond
Lipper Analytical Services, Inc. Corp Debt BBB Rated
Variable Annuity Research & Data Corporate Bond General
Service Funds

U.S. GOVERNMENT SUBACCOUNT Morningstar Publications, Inc. Intermediate Government
Lipper Analytical Services, Inc. Intermediate U.S. Govt.
Variable Annuity Research & Data Government Bond General
Service Funds

MONEY MARKET SUBACCOUNT Morningstar Publications, Inc. Money Market
Lipper Analytical Services, Inc. Money Market
Variable Annuity Research & Data Money Market
Service
</TABLE>

37
<PAGE>

YEAR 2000 ISSUES

The computer systems Fortis Benefits uses to process Policy transactions and
valuations need to be adjusted to be able to continue to administer the Policies
after Year 2000. Fortis Benefits is devoting all resources necessary to make
these systems modifications and expects that the necessary changes will be
completed on time and in a way that will result in no disruption to its policy
servicing operations. However, as is the case with most system conversion
projects, risks and uncertainties exist, due in part to reliance on third party
vendors. Nonperformance by any of these entities, or other unforeseen
circumstances, could have a material adverse impact on Fortis Benefits' ability
to perform its policy servicing operations. Fortis Benefits is closely
monitoring these entities to avoid any unforeseen circumstances.

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 Note 9 to Fortis
Benefits' financial statements.

38
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors
Fortis Benefits Insurance Company

We have audited the accompanying balance sheets of Fortis Benefits Insurance
Company, an indirect, wholly-owned subsidiary of Fortis AMEV and Fortis AG, as
of December 31, 1997 and 1996, and the related statements of income, changes in
shareholder's equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

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

/s/ Ernst & Young, LLP
Minneapolis, Minnesota
February 27, 1998

F-1
<PAGE>
BALANCE SHEETS
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost 1997--$2,325,589;
1996--$2,078,438)................................................................... $2,415,915 $2,115,499
Equity securities, at fair value (cost 1997--$88,719; 1996--$84,144)................. 109,832 106,290
Mortgage loans on real estate, less allowance for possible losses (1997--$11,085;
1996--$9,697)....................................................................... 602,064 582,869
Policy loans......................................................................... 68,566 60,722
Short-term investments............................................................... 70,537 182,817
Real estate and other investments.................................................... 55,035 29,628
--------- ---------
3,321,949 3,077,825

Cash and cash equivalents.............................................................. 9,901 20,474

Receivables:
Uncollected premiums................................................................. 74,220 71,386
Reinsurance recoverable on unpaid and paid losses.................................... 13,852 12,939
Other................................................................................ 19,762 9,045
--------- ---------
107,834 93,370
Accrued investment income.............................................................. 47,376 39,519
Deferred policy acquisition costs...................................................... 291,742 268,075
Property and equipment at cost, less accumulated depreciation.......................... 42,773 52,882
Deferred federal income taxes.......................................................... 15,037 17,008
Other assets........................................................................... 4,250 8,005
Assets held in separate accounts....................................................... 2,978,622 2,374,718
--------- ---------
TOTAL ASSETS........................................................................... $6,819,484 $5,951,876
--------- ---------
--------- ---------
</TABLE>

See accompanying notes.

F-2
<PAGE>
BALANCE SHEETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1997 1996
--------- ---------
<S> <C> <C>
POLICY RESERVES, LIABILITIES AND SHAREHOLDER'S EQUITY
POLICY RESERVES AND LIABILITIES:
Future policy benefit reserves:
Traditional life insurance......................................................... $ 449,017 $ 434,378
Interest sensitive and investment products......................................... 1,264,227 1,175,480
Accident and health................................................................ 792,249 834,119
--------- ---------
2,505,493 2,443,977
Unearned revenues.................................................................... 10,653 12,622
Other policy claims and benefits payable............................................. 260,596 191,940
Policyholder dividends payable....................................................... 8,197 8,783
--------- ---------
2,784,939 2,657,322

Debt................................................................................. 26,433 --
Accrued expenses..................................................................... 49,909 42,223
Current income taxes payable......................................................... 10,549 17,424
Other liabilities.................................................................... 113,222 104,834
Due to affiliates.................................................................... 6,925 4,926
Liabilities related to separate accounts............................................. 2,947,401 2,344,474
--------- ---------
TOTAL POLICY RESERVES AND LIABILITIES.................................................. 5,939,378 5,171,203

SHAREHOLDER'S EQUITY:
Common Stock, $5 par value:
Authorized, issued and outstanding shares--1,000,000............................... 5,000 5,000
Additional paid-in capital........................................................... 468,000 468,000
Retained earnings.................................................................... 332,723 265,613
Unrealized gains on investments, net................................................. 68,981 36,290
Unrealized gains on assets held in separate accounts, net............................ 5,402 5,770
--------- ---------
TOTAL SHAREHOLDER'S EQUITY............................................................. 880,106 780,673
--------- ---------
TOTAL POLICY RESERVES, LIABILITIES AND SHAREHOLDER'S EQUITY............................ $6,819,484 $5,951,876
--------- ---------
--------- ---------
</TABLE>

See accompanying notes.

F-3
<PAGE>
FORTIS BENEFITS INSURANCE COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
REVENUES
Insurance operations:
Traditional life insurance premiums....................................... $ 269,540 $ 258,496 $ 251,353
Interest sensitive and investment product policy charges.................. 77,429 63,336 46,076
Accident and health insurance premiums.................................... 891,037 974,046 934,900
---------- --------- ---------
1,238,006 1,295,878 1,232,329

Net investment income....................................................... 228,724 206,023 203,537
Net realized gains on investments........................................... 41,101 25,731 55,080
Other income................................................................ 36,458 31,725 33,085
---------- --------- ---------
TOTAL REVENUES............................................................ 1,544,289 1,559,357 1,524,031

BENEFITS AND EXPENSES
Benefits to policyholders:
Traditional life insurance................................................ 204,497 220,227 202,911
Interest sensitive investment products.................................... 103,077 90,358 73,676
Accident and health claims................................................ 707,113 778,439 769,588
---------- --------- ---------
1,014,687 1,089,024 1,046,175

Policyholder dividends........................................................ 2,935 4,169 4,305
Amortization of deferred policy acquisition costs............................. 43,931 39,325 41,291
Insurance commissions......................................................... 107,378 94,723 95,559
General and administrative expenses........................................... 273,128 242,825 254,940
---------- --------- ---------
TOTAL BENEFITS AND EXPENSES............................................... 1,442,059 1,470,066 1,442,270
---------- --------- ---------
Income before federal income taxes............................................ 102,230 89,291 81,761
Federal income taxes.......................................................... 35,120 31,099 27,891
---------- --------- ---------
NET INCOME.................................................................... $ 67,110 $ 58,192 $ 53,870
---------- --------- ---------
---------- --------- ---------
</TABLE>

See accompanying notes.

F-4
<PAGE>
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
UNREALIZED GAINS
GAINS (LOSSES) ON
ADDITIONAL (LOSSES) ON ASSETS HELD IN
COMMON PAID-IN RETAINED INVESTMENTS, SEPARATE
STOCK CAPITAL EARNINGS NET ACCOUNTS, NET TOTAL
----------- ----------- ----------- --------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995................. $ 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 (losses) on
investments, net........................ -- -- -- 131,039 -- 131,039
Change in unrealized gains (losses) on
assets held in separate accounts, net... -- -- -- -- 1,992 1,992
----------- ----------- ----------- ------- ------ ---------
Balance, December 31, 1995............... 5,000 408,000 207,421 88,131 2,546 711,098
Net income............................... -- -- 58,192 -- -- 58,192
Additional paid-in capital............... -- 60,000 -- -- -- 60,000
Change in unrealized gains (losses) on
investments, net........................ -- -- -- (51,841) -- (51,841)
Change in unrealized gains (losses) on
assets held in separate accounts, net... -- -- -- -- 3,224 3,224
----------- ----------- ----------- ------- ------ ---------
Balance, December 31, 1996............... 5,000 468,000 265,613 36,290 5,770 780,673
Net income............................... -- -- 67,110 -- -- 67,110
Change in unrealized gains (losses) on
investments, net........................ -- -- -- 32,691 -- 32,691
Change in unrealized gains (losses) on
assets held in separate account, net.... -- -- -- -- (368) (368)
----------- ----------- ----------- ------- ------ ---------
Balance, December 31, 1997............... $ 5,000 $ 468,000 $ 332,723 $ 68,981 $ 5,402 $ 880,106
----------- ----------- ----------- ------- ------ ---------
----------- ----------- ----------- ------- ------ ---------
</TABLE>

See accompanying notes.

F-5
<PAGE>
STATEMENTS OF CASH FLOWS
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1997 1996 1995
------------ ---------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income............................................................. $ 67,110 $ 58,192 $ 53,870
Adjustments to reconcile net income to net cash provided by operating
activities:
(Decrease)/increase in future policy benefit reserves for
traditional, interest sensitive and accident and health policies.... (2,496) 26,193 80,478
Increase in other policy claims and benefits and policyholder
dividends payable................................................... 68,070 18,638 27,676
Provision for deferred federal income taxes.......................... (6,449) (1,094) (13,584)
(Decrease)/increase in income taxes payable.......................... (6,875) 12,049 1,023
Amortization of deferred policy acquisition costs.................... 43,931 39,325 41,291
Policy acquisition costs deferred.................................... (69,694) (66,515) (56,391)
Provision for mortgage loan losses................................... 1,388 1,344 924
Provision for depreciation........................................... 14,351 17,312 15,654
Write-off of investment.............................................. 3,000 -- --
Amortization of investment (discounts) premiums, net................. (466) 1,821 (239)
Change in receivables, accrued investment income, unearned premiums,
accrued expenses and other liabilities.............................. (2,720) 38,614 3,427
Net realized gains on investments.................................... (41,101) (25,731) (55,080)
Other................................................................ (12,496) (261) (2,431)
------------ ---------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES........................ 55,553 119,887 96,618

INVESTING ACTIVITIES
Purchases of fixed maturity investments................................ (3,611,770) (2,778,352) (2,151,133)
Sales or maturities of fixed maturity investments...................... 3,378,898 2,652,887 2,000,068
Decrease (increase) in short-term investments.......................... 112,280 (29,318) (35,908)
Purchases of other investments......................................... (209,771) (210,182) (240,264)
Sales of other investments............................................. 205,084 163,569 112,598
Purchases of property and equipment.................................... (4,242) (10,992) (19,975)
Other.................................................................. (617) -- 1,229
------------ ---------- -----------
NET CASH USED IN INVESTING ACTIVITIES............................ (130,138) (212,388) (333,385)

FINANCING ACTIVITIES
Activities related to investment products:
Considerations received.............................................. 200,760 128,446 187,484
Surrenders and death benefits........................................ (190,361) (125,274) (60,522)
Interest credited to policyholders................................... 53,613 49,802 48,918
Additional paid-in capital from shareholder............................ -- 60,000 50,000
------------ ---------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES........................ 64,012 112,974 225,880
------------ ---------- -----------
(Decrease) increase in cash and cash equivalents......................... (10,573) 20,473 (10,887)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR................... 20,474 1 10,888
------------ ---------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR......................... $ 9,901 $ 20,474 $ 1
------------ ---------- -----------
------------ ---------- -----------
</TABLE>

See accompanying notes.

F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FORTIS BENEFITS INSURANCE COMPANY

DECEMBER 31, 1997

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS

Fortis Benefits Insurance Company (the Company) is an indirect, wholly-owned
subsidiary of Fortis AMEV and Fortis AG. 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 preparation of financial statements in conformity with 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.

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:

REVENUE RECOGNITION AND FUTURE POLICY BENEFIT RESERVES

Premiums for traditional life insurance are recognized as revenues when due over
the premium-paying period. Reserves for future policy benefits 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 interest sensitive 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. 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
crediting rates for universal life and investment products ranged from 2.5% to
8.75% in 1997 and 1996.

Premiums for accident and health insurance products, including medical, long and
short-term disability and dental insurance products, are recognized as revenues
ratably over the contract period in proportion to the risk insured. Reserves for
future disability benefits are based on the 1964 Commissioners Disability Table
at 6% interest. Calculated reserves are modified based on the Company's actual
experience.

CLAIMS AND BENEFITS PAYABLE

Other policy claims and benefits payable for reported and incurred but not
reported claims and related claims 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 income currently.

DEFERRED POLICY ACQUISITION COSTS

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 and
amortized. For traditional life insurance products, such costs are amortized
over the premium paying period. For interest sensitive and investment products,
such costs are amortized in relation to expected future gross profits. For
accident and health and group life insurance products, these costs represent the
present value at the acquisition of these lines in the October 1, 1991 purchase
(see Note 2) of future profits which are amortized against the expected premium
revenues of the lines acquired. Estimation of future gross profits requires
significant management judgment and are reviewed periodically. As excess amounts
of deferred costs over future premiums or gross profits are identified, such
excess amounts are expensed.

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.

All fixed maturity investments and all marketable equity securities are
classified as available-for-sale and carried at fair value.

Changes in fair values of available-for-sale securities, after related deferred
income taxes and after adjustment for the changes in pattern of amortization of
deferred policy acquisition costs and participating policyholder dividends are
reported directly in shareholder's equity as unrealized gains (losses) on
investments and, accordingly, have no effect on net income. The unrealized
appreciation or depreciation is net of deferred policy acquisition cost
amortization and taxes that would have been required as a charge or credit to
income 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 balance, 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 their unpaid balance. Short term investments are at
cost which approximates fair value.

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.

F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

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

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

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

Revenues and expenses related to the separate account assets and liabilities, to
the extent of benefits paid, are provided to the separate account policyholders
and are excluded from the amounts reported in the accompanying statements of
operations.

Assets and liabilities associated with the separate accounts relate to deposits
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

There are a number of insurance companies that are currently under regulatory
supervision. This may result in future assessments by state guaranty fund
associations to cover losses to policyholders of insolvent or rehabilitated
companies. These assessments can be partially recovered through a reduction in
future premium taxes in some states. The Company believes it has adequately
provided for the impact of future assessments.

STATEMENTS OF CASH FLOWS

The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost which approximates fair value.

NEW FINANCIAL ACCOUNTING STANDARDS

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 defines the financial statement presentation for all changes in a
company's equity during a period except those resulting from investments by
owners and distributions to owners. SFAS No. 130 will be adopted by the Company
in the first quarter of 1998. Because the statement is merely a change in
presentation, the Company does not expect the adoption of this statement to have
a significant impact on the financial statements.

RECLASSIFICATIONS

Certain amounts in the 1996 and 1995 financial statements have been reclassified
to conform to the 1997 presentation.

2. ACQUIRED BUSINESS
In 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 original
purchase price of the acquisition was $318,000,000. Subsequent additional
payments of $20,850,000 were made ending in 1994. These additional payments, as
well as $126,515,000 of the original purchase price represent the estimated
present value of future profits on the lines of business acquired at the date of
acquisition and have been accounted for as deferred policy acquisition costs
(see Note 4).

F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

3. 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, 1997:
Fixed maturities:
Governments.................................. $ 228,856 $ 8,698 $ 30 $ 237,524
Public utilities............................. 121,128 4,217 13 125,332
Industrial and miscellaneous................. 1,932,894 77,442 1,625 2,008,711
Other........................................ 42,711 1,637 -- 44,348
---------- -------- -------- ----------
Total fixed maturities....................... 2,325,589 91,994 1,668 2,415,915
Equity securities............................ 88,719 24,769 3,656 109,832
---------- -------- -------- ----------
Total...................................... $2,414,308 $116,763 $ 5,324 $2,525,747
---------- -------- -------- ----------
---------- -------- -------- ----------
December 31, 1996:
Fixed maturities:
Governments.................................. $ 321,574 $ 3,418 $ 1,323 $ 323,669
Public utilities............................. 92,116 2,758 403 94,471
Industrial and miscellaneous................. 1,656,420 38,413 6,527 1,688,306
Other........................................ 8,328 750 25 9,053
---------- -------- -------- ----------
Total fixed maturities....................... 2,078,438 45,339 8,278 2,115,499
Equity securities............................ 84,144 23,340 1,194 106,290
---------- -------- -------- ----------
Total...................................... $2,162,582 $68,679 $ 9,472 $2,221,789
---------- -------- -------- ----------
---------- -------- -------- ----------
</TABLE>

The amortized cost and fair value of available-for-sale investments in fixed
maturities at December 31, 1997, by contractual maturity, are shown below (in
thousands).

<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
---------- ----------
<S> <C> <C>
Due in one year or less............................................... $ 75,748 $ 76,109
Due after one year through five years................................. 849,193 865,006
Due after five years through ten years................................ 543,847 562,900
Due after ten years................................................... 856,801 911,900
---------- ----------
Total................................................................. $2,325,589 $2,415,915
---------- ----------
---------- ----------
</TABLE>

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.

MORTGAGE LOANS

The Company has issued commercial mortgage loans on properties located
throughout the United States. Approximately 37% of outstanding principal is
concentrated in the states of New York, California and Florida, at December 31,
1997 as compared to concentrated interests in California, Texas and New York of
36% at December 31, 1996. Loan commitments outstanding totaled $34,235,000 at
December 31, 1997.

INVESTMENTS ON DEPOSIT

The Company had fixed maturities carried at $2,548,000 and $2,537,000 at
December 31, 1997 and 1996, respectively, on deposit with various governmental
authorities as required by law.

INVESTMENT IN MANAGED DENTAL INITIATIVE

In 1997, the Company acquired a 99% ownership in a managed dental initiative
called Dental Health Alliance, Inc. (DHA). Based on an analysis of future DHA
profitability, the entire investment was written-off at December 31, 1997. The
income statement reflects $13,561,000 of general and administrative expenses
related to 1997 DHA losses and ownership write-off.

F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

3. INVESTMENTS (CONTINUED)
NET UNREALIZED GAINS (LOSSES)

The adjusted net unrealized gains (losses) recorded in shareholder's equity for
the year ended December 31 were as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Change in unrealized gains (losses) before adjustments............. $ 53,239 $ (83,065) $ 214,452
Adjustments:
Increase) decrease in amortization of deferred policy acquisition
costs............................................................. (2,096) 3,376 (9,789)
Deferred income taxes (expense) benefit............................ (18,820) 31,072 (71,632)
--------- --------- ---------
Change in net unrealized gains (losses)............................ 32,323 (48,617) 133,031
Net unrealized gains (losses), beginning of year................... 42,060 90,677 (42,354)
--------- --------- ---------
Net unrealized gains, end of year.................................. $ 74,383 $ 42,060 $ 90,677
--------- --------- ---------
--------- --------- ---------
</TABLE>

NET INVESTMENT INCOME AND NET REALIZED GAINS ON INVESTMENTS

Major categories of net investment income and realized gains on investments for
each year were as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
NET INVESTMENT INCOME
Fixed maturities................................................... $ 160,444 $ 141,973 $ 139,062
Equity securities.................................................. 9,306 6,682 2,026
Mortgage loans on real estate...................................... 54,662 52,949 49,227
Policy loans....................................................... 4,144 3,195 2,797
Short-term investments............................................. 2,851 5,175 11,863
Real estate and other investments.................................. 4,635 5,358 4,750
--------- --------- ---------
236,042 215,332 209,725
Expenses........................................................... (7,318) (9,309) (6,188)
--------- --------- ---------
$ 228,724 $ 206,023 $ 203,537
--------- --------- ---------
--------- --------- ---------
NET REALIZED GAINS ON INVESTMENTS
Fixed maturities................................................... $ 13,827 $ 3,334 $ 50,393
Equity securities.................................................. 26,760 18,281 2,830
Mortgage loans on real estate...................................... 301 (144) (242)
Short-term investments............................................. -- 57 (3)
Real estate and other investments.................................. 213 4,203 2,102
--------- --------- ---------
$ 41,101 $ 25,731 $ 55,080
--------- --------- ---------
--------- --------- ---------
</TABLE>

Proceeds from sales of investments in fixed maturities were $3,360,682,000,
$2,652,887,000, and $2,000,068,000 in 1997, 1996 and 1995, respectively. Gross
gains of $30,860,000, $28,606,000 and $61,070,000 and gross losses of
$17,033,000, $25,272,000, and $10,677,000 were realized on the sales in 1997,
1996 and 1995, respectively.

4. 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
LIFE PRODUCTS AND HEALTH TOTAL
----------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Balance, January 1, 1996....................... $ 38,532 $ 170,840 $ 28,137 $ 237,509
Acquisition costs deferred..................... -- 66,515 -- 66,515
Acquisition costs amortized.................... (5,375) (19,695) (14,255) (39,325)
Reduced amortization of deferred acquisition
costs from unrealized losses on
available-for-sale securities................. -- 3,376 -- 3,376
----------- --------------- ----------- ---------
Balance, January 1, 1997....................... 33,157 221,036 13,882 268,075
Acquisition costs deferred..................... 37,857 31,837 -- 69,694
Acquisition costs amortized.................... (20,738) (14,501) (8,692) (43,931)
Increased amortization of deferred acquisition
costs from unrealized gains on
available-for-sale securities................. -- (2,096) -- (2,096)
----------- --------------- ----------- ---------
Balance, December 31, 1997..................... $ 50,276 $ 236,276 $ 5,190 $ 291,742
----------- --------------- ----------- ---------
----------- --------------- ----------- ---------
</TABLE>

F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

4. DEFERRED POLICY ACQUISITION COSTS (CONTINUED)
Included within total deferred policy acquisition costs at December 31, 1997 is
$10,434,000 of present value of future profits (PVP) resulting from acquisitions
accounted for as a purchase. All remaining PVP will be amortized in 1998.

During 1997, 1996 and 1995, the Company sold portions of its investment
portfolio and in accordance with FASB Statement 97, the recognition of the
realized net capital gains resulted in additional amortization of deferred
acquisition costs of $732,000, $1,894,000 and $4,825,000, respectively. In
addition, the Company recorded policyholder dividends payable of $1,095,000 in
1995.

5. PROPERTY AND EQUIPMENT
A summary of property and equipment at December 31 for each year follows (in
thousands):

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Land........................................................................ $ 1,900 $ 1,900
Building and improvements................................................... 24,148 25,133
Furniture and equipment..................................................... 87,537 95,370
--------- ---------
113,585 122,403
Less accumulated depreciation............................................... (70,812) (69,521)
--------- ---------
Net property and equipment.................................................. $ 42,773 $ 52,882
--------- ---------
--------- ---------
</TABLE>

6. ACCIDENT AND HEALTH RESERVES
Activity for the liability for unpaid accident and health claims and claims
adjustment expenses is summarized as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Balance as of January 1, net of reinsurance recoverables........... $ 947,711 $ 928,832 $ 838,810
Add: Incurred losses related to:
Current year..................................................... 773,316 865,907 827,261
Prior years...................................................... (59,634) (64,094) (28,520)
--------- --------- ---------
Total incurred losses.......................................... 713,682 801,813 798,741
Deduct: Paid losses related to:
Current year..................................................... 437,405 549,144 492,460
Prior years...................................................... 235,952 233,790 216,259
--------- --------- ---------
Total paid losses.............................................. 673,357 782,934 708,719
--------- --------- ---------
Balance as of December 31, net of reinsurance recoverables......... $ 988,036 $ 947,711 $ 928,832
--------- --------- ---------
--------- --------- ---------
</TABLE>

The table above compares to the amounts reported on the balance sheet in the
following respects: (1) the table above is presented net of ceded reinsurance
and the accident and health reserves reported on the balance sheet are gross of
ceded reinsurance; (2) the table above includes claims adjustment expense
liabilities that are included in accrued expenses on the balance sheet; and (3)
the table above includes accident and health benefits payable which are included
with other policy claims and benefits payable reported on the balance sheet.

In each of the years presented above, the accident and health insurance line of
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 and a
reduction of loss reserves due to lower than anticipated inflation in medical
costs.

Management has incorporated the favorable reserve development into its current
estimates of reserve levels. Accordingly, future development on December 31,
1997 reserves is not expected to be as favorable as that experienced in the past
two years.

7. 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.

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.

F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

7. FEDERAL INCOME TAXES (CONTINUED)
The significant components of the Company's deferred tax liabilities and assets
as of December 31, 1997 and 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Deferred tax assets:
Separate account assets/liabilities....................................... $ 56,620 $ 40,989
Reserves.................................................................. 43,143 51,271
Claims and benefits payable............................................... 15,238 7,764
Accrued liabilities....................................................... 8,785 8,439
Investments............................................................... 4,795 2,648
Other..................................................................... 3,042 1,549
--------- ---------
Total deferred tax assets............................................... 131,623 112,660

Deferred tax liabilities:
Deferred policy acquisition costs......................................... 72,369 67,850
Unrealized gains.......................................................... 39,015 20,402
Fixed assets.............................................................. 3,914 3,110
Investments............................................................... 1,220 1,942
Other..................................................................... 68 2,348
--------- ---------
Total deferred tax liabilities.......................................... 116,586 95,652
--------- ---------
Net deferred tax asset.................................................. $ 15,037 $ 17,008
--------- ---------
--------- ---------
</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 (benefit) for the year ended December 31 is shown as
follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Current.............................................................. $ 41,569 $ 32,193 $ 39,660
Deferred............................................................. (6,449) (1,094) (11,769)
--------- --------- ---------
$ 35,120 $ 31,099 $ 27,891
--------- --------- ---------
--------- --------- ---------
</TABLE>

Federal income tax payments and refunds resulted in net payments of $58,859,000,
$16,434,000, and $40,453,000 in 1997, 1996 and 1995, respectively.

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

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Statutory income tax rate............................................ 35.0% 35.0% 35.0%
Other, net........................................................... (.6) (.2) (0.9)
--------- --------- ---------
34.4% 34.8% 34.1%
--------- --------- ---------
--------- --------- ---------
</TABLE>

8. ASSETS HELD IN SEPARATE ACCOUNTS
Separate account assets at December 31 were as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Premium and annuity considerations for the variable annuity products and
variable universal life products for which the contract holder, rather
than the Company, bears the investment risk.............................. $2,947,401 $2,344,474
Assets of the separate accounts owned by the Company, at fair value....... 31,221 30,244
---------- ----------
$2,978,622 $2,374,718
---------- ----------
---------- ----------
</TABLE>

9. REINSURANCE
In the second quarter of 1996, First Fortis Life Insurance Company (First
Fortis), an affiliate, received approval from the New York State Insurance
Department for a reinsurance agreement with the Company. The agreement, which
became effective as of January 1, 1996, decreased First Fortis' long-term
disability reinsurance retention from a $10,000 net monthly benefit to a $2,000
net monthly benefit for claims incurred on and after January 1, 1996. The
Company has assumed $5,742,000 and $6,144,000 of premium from First Fortis in
1997 and 1996, respectively. The Company has assumed $5,452,000 and $3,599,000
of reserves in 1997 and 1996, respectively, from First Fortis.

F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

9. REINSURANCE (CONTINUED)
The maximum amount that the Company retains on any one life is $500,000 of life
insurance including accidental death. Amounts in excess of $500,000 are
reinsured with other life insurance companies on a yearly renewable term basis.

Ceded reinsurance premiums for the year ended December 31 were as follows (in
thousands):

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Life insurance........................................................ $ 8,159 $ 8,680 $ 4,661
Accident and health insurance......................................... 13,712 6,793 3,410
--------- --------- ---------
$ 21,871 $ 15,473 $ 8,071
--------- --------- ---------
--------- --------- ---------
</TABLE>

Recoveries under reinsurance contracts for the year ended December 31 were as
follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Life insurance........................................................ $ 2,973 $ 7,225 $ 2,489
Accident and health insurance......................................... 14,781 5,993 8,807
--------- --------- ---------
$ 17,754 $ 13,218 $ 11,296
--------- --------- ---------
--------- --------- ---------
</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
agreement. 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.

10. DIVIDEND RESTRICTIONS
Dividend distributions to parent are restricted as to amount by state
regulatory requirements. The Company had $52,367,000 free from such restrictions
at December 31, 1997. Distributions in excess of this amount would require
regulatory approval.

11. REGULATORY ACCOUNTING REQUIREMENTS
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 not expected to be completed before 1999, 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. The
Company exceeds the minimum RBC requirements.

F-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

11. REGULATORY ACCOUNTING REQUIREMENTS (CONTINUED)
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>
NET INCOME SHAREHOLDER'S EQUITY
------------------------------- --------------------
1997 1996 1995 1997 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Based on statutory accounting practices........ $ 62,593 $ 55,046 $ 30,576 $ 528,671 $ 482,507
Deferred policy acquisition costs.............. 25,763 27,190 15,100 291,742 268,075
Investment valuation differences............... (497) (2,219) 330 80,245 31,326
Deferred and uncollected premiums.............. (107,194) (4,096) -- -- --
Policy reserves................................ 89,895 (19,873) (29,238) (150,649) (131,159)
Commissions.................................... (3,171) (1,639)
Current income taxes payable................... 6,450 2,386 (1,294) 3,712 (7,895)
Deferred income taxes.......................... 6,449 (1,094) 11,769 (520) 17,008
Realized gains on investments.................. 251 2,599 1,938 -- --
Realized gains transferred to the Interest
Maintenance Reserve (IMR), net of tax......... 9,644 2,335 31,711 -- --
Amortization of IMR, net of tax................ (6,315) (6,130) (5,261) -- --
Write-off of investment........................ (11,705) -- -- -- --
Pension expense................................ (4,153) -- --
Guaranty Funds................................. -- 3,023 --
Property and equipment......................... -- -- -- 15,520 20,481
Interest maintenance reserve................... -- -- -- 53,348 50,019
Asset valuation reserve........................ -- -- -- 75,939 62,961
Other, net..................................... (900) 664 (1,761) (17,902) (12,650)
--------- --------- --------- --------- ---------
As reported herein............................. $ 67,110 $ 58,192 $ 53,870 $ 880,106 $ 780,673
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

12. TRANSACTIONS WITH AFFILIATED COMPANIES
The Company receives various services from Fortis, Inc. and its affiliates.
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 years ended
December 31, 1997, 1996 and 1995, were $12,015,000, $13,319,000 and $10,074,00,
respectively.

In conjunction with the marketing of its variable annuity products, the Company
paid $72,105,000, $68,616,000 and $59,308,000 in commissions to its affiliate,
Fortis Investors, Inc., for the years ended December 31, 1997, 1996 and 1995,
respectively.

Administrative expenses allocated for the Company may be greater or less than
the expenses that would be incurred if the Company were operating on a separate
company basis.

Fortis Information Technology (Fortis IT) is a business unit within the Company
and is managed by Fortis, Inc. Based upon an agreement established with Fortis
Inc., over/under charges are transferred annually to Fortis, Inc. The amounts
transferred were $5,149,000 in 1997; $476,000 in 1996 and $0 in 1995. Effective
January 1, 1998, Fortis IT operations have been transferred to Fortis, Inc.

13. FAIR VALUE DISCLOSURES

VALUATION METHODS AND ASSUMPTIONS

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. Mortgage loans with
similar characteristics are aggregated for purposes of the calculations. It is
not practicable to estimate the fair value of policy loans as repayment terms
are at the discretion of the policyholder. For short-term investments, the
carrying amount is a reasonable estimate of fair value. The fair values for the
Company's policy reserves under the investment products are determined using
cash surrender value. As the debt was underwritten in the current year, the
outstanding balance is a reasonable estimate of fair value.

F-14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

13. 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>
(IN THOUSANDS)
DECEMBER 31
----------------------------------------------
1997 1996
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturities...................................... $2,415,915 $2,415,915 $2,115,499 $2,115,499
Equity securities..................................... 109,832 109,832 106,290 106,290
Mortgage loans on real estate............................. 602,064 661,055 582,869 614,555
Policy loans.............................................. 68,566 68,566 60,722 60,722
Short-term investments.................................... 70,537 70,537 182,817 182,817
Assets held in separate accounts.......................... 2,978,622 2,978,622 2,374,718 2,371,601
Liabilities:
Individual and group annuities (subject to discretionary
withdrawal).............................................. $ 977,495 $ 945,558 $ 916,754 $ 886,110
Debt...................................................... 26,433 26,433 -- --
</TABLE>

14. 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.

15. RETIREMENT AND OTHER EMPLOYEE BENEFITS
The Company is an indirect wholly-owned subsidiary of Fortis, Inc., which
sponsors a defined benefit pension plan covering employees and certain agents
who meet eligibility requirements as to age and length of service. The benefits
are based on years of service and career compensation. Fortis, Inc.'s funding
policy is to contribute annually the maximum amount that can be deducted for
federal income tax purposes, and to charge each subsidiary an allocable amount
based on its employee census. Pension cost allocated to the Company amounted to
approximately $1,594,000, $1,354,000 and $1,179,000 for 1997, 1996 and 1995,
respectively. As of January 1, 1997, the Plan's total accumulated benefit
obligation determined in accordance with ERISA was approximately $56,838,000.
This amount was based on an assumed interest rate of 8.00% and included vested
benefits of approximately $54,831,000. The fair market value of the Plan assets
as of January 1, 1997 was approximately $60,004,000.

The Company participates in a contributory profit sharing plan, sponsored by
Fortis, Inc., covering employees and certain agents who meet eligibility
requirements as to age and length of service. Benefits are payable to
participants on retirement or disability and to the beneficiaries of
participants in the event of death. The first three percent of an employee's
contribution is matched 200% by the Company. The amount expensed was
approximately $3,926,000, $3,913,000 and 3,765,000 for 1997, 1996 and 1995,
respectively.

In addition to retirement benefits, the Company participates in other health
care and life insurance benefit plans ("postretirement benefits") for retired
employees, sponsored by Fortis, Inc. Health care benefits, either through a
Fortis Inc.-sponsored retiree plan for retirees under age 65 or through a cost
offset for individually purchased Medigap policies for retirees over age 65, are
available to employees who retire on or after January 1, 1993, at age 55 or
older, with 15 years or more service. Life insurance, on a retiree pay all
basis, is available to those who retire on or after January 1, 1993.

Net postretirement benefit costs allocated to the Company for the years ended
December 31, 1997, 1996 and 1995 were $304,000, $290,000 and $287,000,
respectively, and includes the expected cost of such benefits for newly eligible
or vested employees, interest cost, gains and losses arising from differences
between actuarial assumptions and actual experience, and amortization of the
transition obligation. The Company made contributions to the plans of
approximately $20,000, $8,000 and $0 in 1997, 1996 and 1995, respectively, as
claims were incurred.

At December 31, 1997 and 1996, the unfunded postretirement benefit obligation
for retirees and other fully eligible or vested plan participants was $1,148,000
and $844,000, respectively. The discount rate used in determining the
accumulated postretirement benefit obligation was 7.5%. The health care cost
trend rate for those under age 65 was 12.8%, graded to 5.5% over 26 years. The
health care cost trend rate for those over age 65 was 12.0%, graded to 6.2% over
26 years.

F-15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

16. DEBT
The following is a summary of the debt at December 31, 1997 (in thousands):

<TABLE>
<S> <C>
Mortgage note bearing a floating interest rate of 200 basis points over LIBOR, (5.84%
at December 31, 1997) adjustable every six months, principal and interest due
monthly, matures July 2001........................................................... $ 3,150
Mortgage note bearing a floating interest rate of 225 basis points over LIBOR (5.84%
at December 31, 1997) adjustable every six months, principal and interest due
monthly, balloon payment due July 1998............................................... 18,100
Mortgage note bearing interest at 7.60%, principal and interest due monthly, matures
October 2002......................................................................... 5,183
---------
$ 26,433
---------
---------
</TABLE>

Maturities of the debt as of December 31, 1997 are as follows (in thousands):

These mortgage notes are collateralized by certain real estate investments
included in real estate and other investments in the balance sheet.

Interest expense paid by the Company during 1997 on this debt was approximately
$1,075,000.

17. YEAR 2000 ISSUES (UNAUDITED)
The Year 2000 issue is the result of computer programs having been written
using two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Company and any of
its businesses or subsidiaries. All of the Company's major businesses are
heavily dependent upon internal computer systems, and many have significant
interaction with systems of third parties.

A comprehensive review of the Company's computer systems and business processes
has been conducted to identify the major systems that could be affected by the
Year 2000 issue. Steps are being taken to resolve any potential problems
including modification to existing software and the purchase of new software.
These measures are scheduled to be completed and tested on a timely basis. The
Company's goal is to complete internal remediation and testing of each system by
early 1999.

Factors that could influence the total costs to be incurred by the Company in
connection with the Year 2000 issue include the ability of the Company to
successfully identify systems containing two-digit year codes, the nature and
amount of programming required to fix the affected programs, the related labor
and consulting costs for such remediation, and the ability of third parties that
interface with the Company to successfully address their Year 2000 issues.

The Company is evaluating the Year 2000 readiness of advisors and other third
parties whose system failures could have an impact on the Company's operations.
The potential materiality of any such impact is not entirely known at this time.
The Company is closely monitoring these entities to avoid any unforeseen
circumstances.

F-16
<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, International Stock,
Value, S & P 500 and Blue Chip Stock Subaccounts) as of December 31, 1997, and
the related statements of changes in net assets for each of the two years in the
period then ended, except for the Fortis Series Fund, Inc.'s Value, S & P 500
and Blue Chip Stock Subaccounts which are for the year ended December 31, 1997
and the period from May 1, 1996 to December 31, 1996 and the Norwest Select
Fund's Small Company Stock Subaccount which is for the year ended December 31,
1996. 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, 1997 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the portfolio
subaccounts constituting Fortis Benefits Insurance Company Variable Account C at
December 31, 1997, and the changes in its net assets for the periods described
in the first paragraph, in conformity with generally accepted accounting
principles.

[/S/ ERNST & YOUNG LLP]
Minneapolis, Minnesota
March 27, 1998

F-17
<PAGE>
STATEMENT OF NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ATTRIBUTABLE
ATTRIBUTABLE TO
NET ASSETS TO FORTIS VARIABLE
AT BENEFITS LIFE
MARKET INSURANCE INSURANCE
SHARES COST VALUE COMPANY POLICIES
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS IN FORTIS SERIES FUND, INC.:
Growth Stock............................... 4,918,108 $119,092,149 $180,195,553 $ -- $180,195,553
U.S. Government Securities................. 823,885 8,891,928 8,799,419 -- 8,799,419
Money Market............................... 733,054 8,104,069 8,085,513 -- 8,085,513
Asset Allocation........................... 2,349,224 36,589,322 41,390,510 -- 41,390,510
Diversified Income......................... 564,799 6,654,121 6,768,217 -- 6,768,217
Global Growth.............................. 3,841,625 59,792,325 77,949,647 -- 77,949,647
Aggressive Growth.......................... 2,537,895 32,490,597 35,057,717 -- 35,057,717
Growth & Income............................ 1,451,003 21,902,297 27,213,567 -- 27,213,567
High Yield................................. 433,243 4,487,534 4,665,766 -- 4,665,766
Global Asset Allocation.................... 455,963 5,582,318 6,058,197 -- 6,058,197
Global Bond................................ 167,156 1,861,683 1,779,806 -- 1,779,806
International Stock........................ 1,170,134 14,441,484 15,633,462 -- 15,633,462
Value...................................... 506,169 6,339,301 6,793,044 404,356 6,388,688
S & P 500.................................. 1,280,717 16,817,704 19,120,860 2,167,008 16,953,852
Blue Chip Stock............................ 852,010 10,723,752 12,567,153 2,123,894 10,443,259
----------- ----------- ------------ -----------
Total........................................ $353,770,584 $452,078,431 $ 4,695,258 $447,383,173
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------

<CAPTION>
NET ASSET
VALUE FOR
VARIABLE
LIFE
INSURANCE
POLICIES
ACCUMULATION PER
UNITS ACCUMULATION
OUTSTANDING UNIT
------------- -----------
<S> <C> <C>
INVESTMENTS IN FORTIS SERIES FUND, INC.:
Growth Stock............................... 7,118,261 $ 25.31
U.S. Government Securities................. 530,809 16.58
Money Market............................... 578,967 13.97
Asset Allocation........................... 1,796,661 23.04
Diversified Income......................... 388,218 17.43
Global Growth.............................. 3,971,604 19.63
Aggressive Growth.......................... 2,637,215 13.29
Growth & Income............................ 1,391,380 19.56
High Yield................................. 359,601 12.97
Global Asset Allocation.................... 419,526 14.44
Global Bond................................ 149,590 11.90
International Stock........................ 1,110,100 14.08
Value...................................... 466,071 13.71
S & P 500.................................. 1,147,368 14.78
Blue Chip Stock............................ 717,913 14.55
-------------
Total........................................ 22,783,284
-------------
-------------
</TABLE>

See accompanying notes.

F-18
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FORTIS U.S. FORTIS FORTIS
FORTIS GOVERNMENT MONEY FORTIS ASSET DIVERSIFIED
GROWTH STOCK SECURITIES MARKET ALLOCATION INCOME
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Dividend income.............................. $ 16,536 $ 600,561 $ 318,907 $ 5,630,084 $ 458,290
Mortality and expense and policy advance
charges..................................... (1,928,584) (91,178) (89,913) (435,946) (71,161)
Net realized gain (loss) on investments...... 3,421,669 173,173 (22,812) 526,622 56,634
Net unrealized appreciation (depreciation) of
investments................................. 16,067,592 (74,889) 117,253 496,493 101,815
------------ ----------- ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations................... 17,577,213 607,667 323,435 6,217,253 545,578

CAPITAL TRANSACTIONS
Purchase of variable account units........... 18,101,571 2,337,630 11,107,675 5,874,956 1,770,902
Redemption of variable account units......... (10,430,951) (2,340,875) (10,678,593) (2,133,574) (1,053,700)
Mortality and expense charges redeemed....... 1,928,584 91,178 89,913 435,946 71,161
Funding of subaccount by Fortis Benefits
Insurance Company........................... -- -- -- -- --
Redemption of Fortis Benefits Insurance
Company investment in subaccount............ -- -- -- -- --
Dividend income distribution to Fortis
Benefits Insurance Company.................. -- -- -- -- --
------------ ----------- ----------- ------------ -----------
Increase from capital transactions........... 9,599,204 87,933 518,995 4,177,328 788,363
Net assets at beginning of year.............. 153,019,136 8,103,819 7,243,083 30,995,929 5,434,276
------------ ----------- ----------- ------------ -----------
Net assets at end of year.................... $180,195,553 $8,799,419 $ 8,085,513 $41,390,510 $6,768,217
------------ ----------- ----------- ------------ -----------
------------ ----------- ----------- ------------ -----------

<CAPTION>
FORTIS FORTIS
FORTIS GLOBAL AGGRESSIVE GROWTH &
GROWTH GROWTH INCOME
------------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS
Dividend income.............................. $ -- $ 473 $ 836,584
Mortality and expense and policy advance
charges..................................... (840,959) (325,707) (219,629)
Net realized gain (loss) on investments...... 1,027,708 28,215 145,502
Net unrealized appreciation (depreciation) of
investments................................. 3,834,048 1,389,881 3,656,481
------------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................... 4,020,797 1,092,862 4,418,938
CAPITAL TRANSACTIONS
Purchase of variable account units........... 15,303,244 12,628,674 11,389,955
Redemption of variable account units......... (4,139,111) (1,470,664) (743,822)
Mortality and expense charges redeemed....... 840,959 325,707 219,629
Funding of subaccount by Fortis Benefits
Insurance Company........................... -- -- --
Redemption of Fortis Benefits Insurance
Company investment in subaccount............ -- -- --
Dividend income distribution to Fortis
Benefits Insurance Company.................. -- -- --
------------- ----------- -----------
Increase from capital transactions........... 12,005,092 11,483,717 10,865,762
Net assets at beginning of year.............. 61,923,758 22,481,138 11,928,867
------------- ----------- -----------
Net assets at end of year.................... $ 77,949,647 $35,057,717 $27,213,567
------------- ----------- -----------
------------- ----------- -----------
</TABLE>

See accompanying notes.

F-19
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FORTIS
GLOBAL FORTIS FORTIS
FORTIS HIGH ASSET FORTIS INTERNATIONAL VALUE
YIELD ALLOCATION GLOBAL BOND STOCK FORTIS
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Dividend income.............................. $ 6,334 $ 308,250 $ 74,264 $ 625,067 $ 374,828
Mortality and expense and policy advance
charges..................................... (43,646) (55,228) (19,097) (139,293) (37,738)
Net realized gain (loss) on investments...... 84,353 47,142 (1,793) 134,574 56,719
Net unrealized appreciation (depreciation) of
investments................................. 260,719 259,453 (62,340) 524,447 361,973
------------ ----------- ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations................... 307,760 559,617 (8,966) 1,144,795 755,782
CAPITAL TRANSACTIONS
Purchase of variable account units........... 2,950,385 2,349,695 752,268 6,913,720 5,531,019
Redemption of variable account units......... (1,371,034) (472,728) (623,679) (1,225,184) (734,522)
Mortality and expense charges redeemed....... 43,646 55,228 19,097 139,293 37,738
Funding of subaccount by Fortis Benefits
Insurance Company........................... -- -- -- -- --
Redemption of Fortis Benefits Insurance
Company investment in subaccount............ -- -- -- -- --
Dividend income distribution to Fortis
Benefits Insurance Company.................. -- -- -- -- (8,848)
------------ ----------- ----------- ------------ -----------
Increase from capital transactions........... 1,622,997 1,932,195 147,686 5,827,829 4,825,387
Net assets at beginning of year.............. 2,735,009 3,566,385 1,641,086 8,660,838 1,211,875
------------ ----------- ----------- ------------ -----------
Net assets at end of year.................... $ 4,665,766 $6,058,197 $ 1,779,806 $15,633,462 $ 6,793,044
------------ ----------- ----------- ------------ -----------
------------ ----------- ----------- ------------ -----------

COMBINED
FORTIS S & P FORTIS BLUE VARIABLE
500 CHIP STOCK ACCOUNT
------------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS
Dividend income.............................. $ 294,610 $ 52,416 $ 9,597,204
Mortality and expense and policy advance
charges..................................... (100,810) (57,714) (4,456,603)
Net realized gain (loss) on investments...... 200,711 16,021 5,894,438
Net unrealized appreciation (depreciation) of
investments................................. 1,996,353 1,516,126 30,445,405
------------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................... 2,390,864 1,526,849 41,480,444
CAPITAL TRANSACTIONS
Purchase of variable account units........... 16,661,529 8,266,243 121,939,466
Redemption of variable account units......... (3,472,986) (109,173) (41,000,596)
Mortality and expense charges redeemed....... 100,810 57,714 4,456,603
Funding of subaccount by Fortis Benefits
Insurance Company........................... -- -- --
Redemption of Fortis Benefits Insurance
Company investment in subaccount............ -- -- --
Dividend income distribution to Fortis
Benefits Insurance Company.................. (32,520) (23,901) (65,269)
------------- ----------- -----------
Increase from capital transactions........... 13,256,833 8,190,883 85,330,204
Net assets at beginning of year.............. 3,473,163 2,849,421 325,267,783
------------- ----------- -----------
Net assets at end of year.................... $ 19,120,860 $12,567,153 $452,078,431
------------- ----------- -----------
------------- ----------- -----------
</TABLE>

See accompanying notes.

F-20
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
FORTIS U.S. FORTIS FORTIS
FORTIS GOVERNMENT MONEY FORTIS ASSET DIVERSIFIED
GROWTH STOCK SECURITIES MARKET ALLOCATION INCOME
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Dividend income.............................. $ 527,085 $ 605,366 $ 247,490 $ 1,554,337 $ 400,689
Mortality and expense and policy advance
charges..................................... (1,560,953) (93,233) (65,386) (304,540) (58,622)
Net realized gain (loss) on investments...... 3,093,713 5,038 169,300 865,889 57,483
Net unrealized appreciation (depreciation) of
investments................................. 16,535,918 (438,794) (117,129) 840,429 (242,246)
------------ ----------- ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations................... 18,595,763 78,377 234,275 2,956,115 157,304

CAPITAL TRANSACTIONS
Purchase of variable account units........... 27,173,798 1,636,966 9,335,749 6,373,151 1,861,420
Redemption of variable account units......... (6,937,039) (2,341,998) (7,246,239) (1,972,178) (1,629,694)
Mortality and expense charges redeemed....... 1,560,953 93,233 65,386 304,540 58,622
Funding of subaccount by Fortis Benefits
Insurance Company........................... -- -- -- -- --
Redemption of Fortis Benefits Insurance
Company investment in subaccount............ (1,710,453) -- -- (795,833) --
Dividend income distribution to Fortis
Benefits Insurance Company.................. -- -- -- -- --
------------ ----------- ----------- ------------ -----------
Net increase (decrease) from capital
transactions................................ 20,087,259 (611,799) 2,154,896 3,909,680 290,348
Net assets at beginning of year.............. 114,336,114 8,637,241 4,853,912 24,130,134 4,986,624
------------ ----------- ----------- ------------ -----------
Net assets at end of year.................... $153,019,136 $8,103,819 $ 7,243,083 $30,995,929 $5,434,276
------------ ----------- ----------- ------------ -----------
------------ ----------- ----------- ------------ -----------

<CAPTION>
FORTIS FORTIS FORTIS
GLOBAL AGGRESSIVE GROWTH & FORTIS HIGH
GROWTH GROWTH INCOME YIELD
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS
Dividend income.............................. $ 83,808 $ 39,056 $ 325,645 $ 234,012
Mortality and expense and policy advance
charges..................................... (587,181) (185,010) (85,797) (23,877)
Net realized gain (loss) on investments...... 993,919 357,189 274,926 21,357
Net unrealized appreciation (depreciation) of
investments................................. 6,922,496 (12,181) 1,035,468 (5,315)
------------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................... 7,413,042 199,054 1,550,242 226,177
CAPITAL TRANSACTIONS
Purchase of variable account units........... 19,313,887 14,849,914 6,716,429 1,521,655
Redemption of variable account units......... (1,849,063) (1,128,224) (582,392) (513,751)
Mortality and expense charges redeemed....... 587,181 185,010 85,797 23,877
Funding of subaccount by Fortis Benefits
Insurance Company........................... -- -- -- --
Redemption of Fortis Benefits Insurance
Company investment in subaccount............ (691,667) (813,949) (817,093) (1,306,472)
Dividend income distribution to Fortis
Benefits Insurance Company.................. -- -- -- --
------------- ----------- ----------- -----------
Net increase (decrease) from capital
transactions................................ 17,360,338 13,092,751 5,402,741 (274,691)
Net assets at beginning of year.............. 37,150,378 9,189,333 4,975,884 2,783,523
------------- ----------- ----------- -----------
Net assets at end of year.................... $ 61,923,758 $22,481,138 $11,928,867 $2,735,009
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
</TABLE>

See accompanying notes

F-21
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
FORTIS
GLOBAL FORTIS FORTIS
ASSET GLOBAL INTERNATIONAL FORTIS FORTIS
ALLOCATION BOND STOCK VALUE* S & P 500*
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Dividend income.............................. $ 141,406 $ 80,570 $ 259,053 $ 6,679 $ 19,549
Mortality and expense and policy advance
charges..................................... (27,914) (16,020) (61,578) (2,299) (4,259)
Net realized gain on investments............. 367,644 1,414 368,588 365 5,170
Net unrealized appreciation (depreciation) of
investments................................. (17,628) (161,532) 384,582 91,771 306,803
------------ ----------- ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations................... 463,508 (95,568) 950,645 96,516 327,263

CAPITAL TRANSACTIONS
Purchase of variable account units........... 1,974,410 1,203,711 5,472,129 868,724 1,805,644
Redemption of variable account units......... (178,317) (495,016) (271,603) (43,808) (104,433)
Mortality and expense charges redeemed....... 27,914 16,020 61,578 2,299 4,259
Funding of subaccount by Fortis Benefits
Insurance Company........................... -- -- -- 290,000 1,450,000
Redemption of Fortis Benefits Insurance
Company investment in subaccount............ (5,888,424) (5,496,965) (5,860,743) -- --
Dividend income distribution to Fortis
Benefits Insurance Company.................. -- -- -- (1,856) (9,570)
------------ ----------- ----------- ------------ -----------
Net increase (decrease) from capital
transactions................................ (4,064,417) (4,772,250) (598,639) 1,115,359 3,145,900
Net assets at beginning of year.............. 7,167,294 6,508,904 8,308,832 -- --
------------ ----------- ----------- ------------ -----------
Net assets at end of year.................... $ 3,566,385 $ 1,641,086 $8,660,838 $ 1,211,875 $3,473,163
------------ ----------- ----------- ------------ -----------
------------ ----------- ----------- ------------ -----------

<CAPTION>
NORWEST
SMALL COMBINED
FORTIS BLUE COMPANY VARIABLE
CHIP STOCK* STOCK ACCOUNT
------------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS
Dividend income.............................. $ 9,822 $ -- $ 4,534,567
Mortality and expense and policy advance
charges..................................... (3,294) -- (3,079,963)
Net realized gain on investments............. 5,823 -- 6,587,818
Net unrealized appreciation (depreciation) of
investments................................. 327,274 88,953 25,538,869
------------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................... 339,625 88,953 33,581,291
CAPITAL TRANSACTIONS
Purchase of variable account units........... 1,156,736 -- 101,264,323
Redemption of variable account units......... (94,289) -- (25,388,044)
Mortality and expense charges redeemed....... 3,294 -- 3,079,963
Funding of subaccount by Fortis Benefits
Insurance Company........................... 1,450,000 -- 3,190,000
Redemption of Fortis Benefits Insurance
Company investment in subaccount............ -- (1,248,440) (24,630,039)
Dividend income distribution to Fortis
Benefits Insurance Company.................. (5,945) -- (17,371)
------------- ----------- -----------
Net increase (decrease) from capital
transactions................................ 2,509,796 (1,248,440) 57,498,832
Net assets at beginning of year.............. -- 1,159,487 234,187,660
------------- ----------- -----------
Net assets at end of year.................... $ 2,849,421 $ -- $325,267,783
------------- ----------- -----------
------------- ----------- -----------
</TABLE>

*For the period from May 1, 1996 to December 31, 1996.

See accompanying notes.

F-22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FORTIS BENEFITS INSURANCE COMPANY
VARIABLE ACCOUNT C
DECEMBER 31, 1997

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 1997, Fortis Benefits had
approximately $94 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 in excess of $167
billion assets at the end of 1997.

There are fifteen subaccounts within the Account, each of which invests only in
a corresponding portfolio of Fortis Series Fund, Inc. (the Fund). The investment
objectives and policies of each subaccount 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 level 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 growth of capital through long-term
capital appreciation, through ownership of equity securities, 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.

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

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

F-23
<PAGE>
1. GENERAL (CONTINUED)
- 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.

- VALUE SUBACCOUNT--seeks growth of capital through short- and long-term
capital appreciation. Investing in equity securities based on the "Value"
philosophy.

- S&P 500 SUBACCOUNT--seeks growth of capital by replicating the total
return of the Standard & Poor's 500 Composite Stock Price Index.

- BLUE CHIP STOCK SUBACCOUNT--seeks capital appreciation by investing
primarily in large and medium-sized blue chip companies.

Certain 1995 and 1996 amounts have been reclassified to conform to the 1997
presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The assets of the Account are segregated from Fortis Benefits' other assets.
The operations of the Account are part of Fortis Benefits. The following is a
summary of significant accounting policies consistently followed by the Account
in the preparation of its financial statements.

INVESTMENT TRANSACTIONS

Capital gain distributions from subaccounts are recorded on the ex-dividend date
and reinvested upon receipt.

INVESTMENT INCOME

Dividend income from subaccounts is recorded on the ex-dividend date and
reinvested upon receipt.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of net assets at the date of the financial
statements and the reported amounts of net increase and decrease in net assets
from operations during the reporting period. Actual results could differ from
these estimates.

3. INVESTMENTS
Investments in shares of Fortis Series Fund, Inc. 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 these Series. The Series' net asset value
is based on market quotations of the securities held in the portfolio.

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 subaccount's undistributed net investment income,
undistributed realized gains and losses and unrealized appreciation or
depreciation.

Purchases and sales of shares of the Funds are recorded on the trade date. The
number of shares and aggregate cost of purchases, including reinvested dividends
and realized capital gains, and average cost of investments sold or redeemed
were as follows:

YEAR ENDED DECEMBER 31, 1997:

F-24
<PAGE>
3. INVESTMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1997: (CONTINUED)
<TABLE>
<CAPTION>
SHARES COST OF
---------------------- COST OF SALES/
PURCHASED SOLD PURCHASES REDEMPTIONS
----------- --------- --------- ------------
<S> <C> <C> <C> <C>
Diversified Income................ 189,118 88,862 $2,229,192 $ 997,065
Global Growth..................... 787,179 205,436 5,303,244 3,111,402
Aggressive Growth................. 1,000,432 113,159 12,629,147 1,442,450
Growth & Income................... 706,056 41,743 12,226,539 598,320
High Yield........................ 286,488 131,597 2,956,719 1,286,680
Global Asset Allocation........... 203,227 36,183 2,657,945 425,586
Global Bond....................... 76,577 57,378 826,532 625,473
International Stock............... 564,562 90,535 7,538,787 1,090,609
Value............................. 453,158 55,272 5,905,847 686,651
S&P 500........................... 1,245,489 270,028 16,956,139 3,304,795
Blue Chip Stock................... 617,149 9,949 8,318,659 117,053
</TABLE>

YEAR ENDED DECEMBER 31, 1996:

<TABLE>
<CAPTION>
SHARES COST OF
---------------------- COST OF SALES/
PURCHASED SOLD PURCHASES REDEMPTIONS
----------- --------- --------- ------------
<S> <C> <C> <C> <C>
Fortis Series Fund, Inc.:
Growth Stock...................... 906,356 281,510 $27,700,883 $5,553,779
U.S. Government Securities........ 211,013 218,096 2,242,332 2,336,960
Money Market...................... 874,778 661,265 9,583,239 7,076,939
Asset Allocation.................. 472,772 166,417 7,927,488 1,902,122
Diversified Income................ 192,647 136,953 2,262,109 1,572,211
Global Growth..................... 1,077,280 143,512 19,397,695 1,546,811
Aggressive Growth................. 1,069,037 143,413 14,888,970 1,584,984
Growth & Income................... 502,212 103,219 7,042,074 1,124,559
High Yield........................ 172,702 180,194 1,755,667 1,798,866
Global Asset Allocation........... 177,204 515,514 2,115,816 5,699,097
Global Bond....................... 115,216 543,796 1,284,281 5,990,567
International Stock............... 481,809 522,628 5,731,182 5,763,758
Value............................. 110,704 4,219 875,403 45,299
S & P 500......................... 312,562 9,660 1,825,193 108,833
Blue Chip Stock................... 252,865 8,703 1,166,558 94,411
Norwest Select Fund:
Small Company Stock Fund.......... -- 103,433 -- 1,248,440
</TABLE>

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, 1997:

<TABLE>
<CAPTION>
NUMBER OF COST OF
SHARES SHARES
----------- ---------
<S> <C> <C>
Fortis Series Fund, Inc.:
Value............................................. 30,129 $ 307,354
S & P 500......................................... 145,146 1,463,960
Blue Chip Stock................................... 143,994 1,443,643
</TABLE>

4. ORGANIZATIONAL EXPENSES AND OTHER CHARGES

ORGANIZATIONAL EXPENSES

Fortis Benefits assumed all organizational expenses of the Account.

F-25
<PAGE>
4. ORGANIZATIONAL EXPENSES AND OTHER CHARGES (CONTINUED)
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. For Wall Street Series Survivor, Fortis Benefits
reserves the right to impose a charge up to 3.0% 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 amount of insurance 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 amount of insurance expense charge of $0.06 per
month for insureds age 29 or less and $0.20 per month for insureds age 30
and over during the first twelve policy months.

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

- For Wall Street Series VUL 100, VUL 220 and VUL 500 a monthly
administrative charge of $4.50 per policy. For Wall Street Series
Survivor a monthly administrative charge of $6.00 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.

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 0.75% of the net assets of Harmony Investment Life
policyholders and 0.90% of the net assets of Wall Street Series VUL 100, VUL 220
and VUL 500 policyholders. 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 0.27% of net assets of Wall Street Series VUL 220
and VUL 500 policyholders, and 0.35% of net assets of Wall Street Series
Survivor policyholders.

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 amount
increases.

F-26
<PAGE>
4. ORGANIZATIONAL EXPENSES AND OTHER CHARGES (CONTINUED)
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 $4,221,397 and $3,159,110 in
1997 and 1996, respectively.

5. 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.

6. RELATED PARTY TRANSACTIONS
Fortis Advisers, Inc. (a wholly-owned subsidiary of Fortis, Inc.) provides
investment management services to Fortis Series Fund, Inc. 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
$14,415,172 and $11,076,174 in 1997 and 1996, respectively.

7. YEAR 2000 ISSUE (UNAUDITED)
The Year 2000 issue is the result of computer programs having been written
using two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Account. The Account
has no computer systems of its own but is dependent upon the systems of Fortis
Benefits, Fortis Advisers and certain other third parties.

A comprehensive review of Fortis Benefits' and Fortis Advisers' computer systems
and business processes has been conducted to identify the major systems that
could be affected by the Year 2000 issue. Steps are being taken to resolve any
potential problems including modification to existing software and the purchase
of new software. These measures are scheduled to be completed and tested on a
timely basis. Fortis Benefits' and Fortis Advisers' goal is to complete internal
remediation and testing of each system by early 1999. The Year 2000 readiness of
third parties whose system failures could have an impact on the Account's
operations is currently being evaluated. The potential materiality of any such
impact is not known at this time.

F-27
<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.

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.

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

A-1
<PAGE>
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 primary 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 BENEFIT 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 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, at which
charges for this rider are imposed.

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. 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.

Fortis Benefits will waive its usual requirement for evidence of insurability
with respect to an amount of the new Policy's

A-2
<PAGE>
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 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, 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 a 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

A-3
<PAGE>
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.

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.

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 $150,000 for males Age 35. Each
illustration assumes that the insured is in the standard non-smoker underwriting
risk classification. Illustrations for an insured in the standard 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 standard 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, if any, 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 .67% 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. (.67% 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 1997).

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: -1.92%, 2.08%, 6.08% and 10.08%, 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(1)

<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>

- ------------------------
(1) See Appendix C for Policy Value Advances in Oregon
and in New Jersey.

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(1)

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
CUMULATIVE MONTHLY AND SALES CHARGES PAYABLE
DAILY SALES CHARGE UPON SURRENDER AT END CUMULATIVE
POLICY VALUE DEDUCTIONS OF YEAR SALES
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 38.23 2.5487% 190.91 12.7273% 15.2760%
2 0.00 0.00 78.03 2.6010% 263.60 8.7867% 11.3877%
3 0.00 0.00 119.36 2.6524% 334.78 7.4396% 10.0920%
4 0.00 0.00 162.15 2.7025% 404.50 6.7417% 9.4442%
5 0.00 0.00 206.32 2.7509% 472.82 6.3043% 9.0552%
6 0.00 0.00 251.82 2.7980% 507.11 5.6346% 8.4326%
7 19.44 0.00 298.58 2.8436% 422.62 4.0250% 6.8686%
8 58.32 19.44 331.97 2.7664% 338.08 2.8173% 5.5837%
9 97.20 58.32 337.41 2.4993% 253.59 1.8784% 4.3777%
10 97.20 67.18 337.41 2.2494% 169.04 1.1269% 3.3763%
11 97.20 68.67 337.41 2.0449% 84.55 0.5124% 2.5573%
12 97.20 70.08 337.41 1.8745% 0.00 0.0000% 1.8745%
13 97.20 71.30 337.41 1.7303% 0.00 0.0000% 1.7303%
14 97.20 72.44 337.41 1.6067% 0.00 0.0000% 1.6067%
15 97.20 73.44 337.41 1.4996% 0.00 0.0000% 1.4996%
16 97.20 74.28 337.41 1.4059% 0.00 0.0000% 1.4059%
17 97.20 74.94 337.41 1.3232% 0.00 0.0000% 1.3232%
18 97.20 75.40 337.41 1.2497% 0.00 0.0000% 1.2497%
19 97.20 75.62 337.41 1.1839% 0.00 0.0000% 1.1839%
</TABLE>

- ------------------------
(1) See Appendix C for Policy Value Advances in Oregon and in New Jersey.

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 35
STANDARD NONSMOKER UNDERWRITING RISK
FACE AMOUNT: $150,000--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 0% (1)(2)(3) 4% (1)(2)(3) 8% (1)(2)(3)(4) 12% (1)(2)(3)(4)
END OF ACCUMULATED ------------------------- ------------------------- ------------------------- -------------------------
POLICY AT 5% INTEREST DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER
YEAR PER YEAR (1) BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- ------ -------------- ------- ------- --------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,575 150,000 1,119 159 150,000 1,172 211 150,000 1,224 264 150,000 1,277 316
2 3,229 150,000 2,186 1,134 150,000 2,336 1,284 150,000 2,490 1,439 150,000 2,649 1,598
3 4,965 150,000 3,216 2,076 150,000 3,508 2,369 150,000 3,817 2,679 150,000 4,144 3,007
4 6,788 150,000 4,217 2,992 150,000 4,696 3,473 150,000 5,216 3,995 150,000 5,780 4,561
5 8,703 150,000 5,222 3,914 150,000 5,932 4,628 150,000 6,725 5,425 150,000 7,608 6,312
6 10,713 150,000 6,236 4,971 150,000 7,223 5,964 150,000 8,355 7,103 150,000 9,650 8,405
7 12,824 150,000 7,270 6,199 150,000 8,582 7,510 150,000 10,127 9,055 150,000 11,942 10,870
8 15,040 150,000 8,329 7,472 150,000 10,014 9,157 150,000 12,052 11,195 150,000 14,512 13,654
9 17,367 150,000 9,389 8,747 150,000 11,498 10,855 150,000 14,117 13,474 150,000 17,364 16,721
10 19,810 150,000 10,376 9,947 150,000 12,960 12,532 150,000 16,255 15,827 150,000 20,454 20,026
15 33,986 150,000 14,646 14,646 150,000 20,360 20,360 150,000 28,768 28,768 150,000 41,117 41,117
20 52,079 150,000 17,520 17,520 150,000 27,642 27,642 150,000 44,898 44,898 150,000 74,223 74,223
25 75,170 150,000 18,381 18,381 150,000 34,224 34,224 150,000 65,601 65,601 172,478 128,715 128,715
40 190,260 0 0 0 150,000 34,733 34,733 198,280 185,308 185,308 649,581 607,085 607,085
</TABLE>

(1)Assumes annual premium payments of $1,500 paid in full at beginning of each
Policy year. The values would vary from those shown if the amount or
frequency of payments varies.

(2)Assumes that no Policy loan or partial withdrawal has been made and no
optional insurance riders have been selected. Zero values 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>
CASH VALUE BONUSES
POLICY VALUE ADVANCES ---------------------------------------------------------------------------
- ---------------------------------------- BONUS AS A PERCENT OF SURRENDER VALUE
CREDIT AS A ------------------------------------------------------
END OF PERCENT OF 12 TIMES SURRENDER VALUE AT THE END OF AT THE END OF
POLICY YEAR THE AVERAGE MINIMUM PREMIUM ON DATE OF BONUS POLICY YEARS 9 - 19 POLICY YEAR 20 & LATER TO AGE 95
- ----------- --------------------------- ------------------- ------------------- --------------------------------
<S> <C> <C> <C> <C>
7 2% Less than $25,000 .00% .00%
8 6% $25,000 to $99,000 .10% .10%
9 to Age 95 10% $99,000 to $199,999 .15% .15%
$200,000 or more .15% .25%
</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 35
STANDARD NONSMOKER UNDERWRITING RISK
FACE AMOUNT: $150,000--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 0% (1)(2)(3) 4% (1)(2)(3) 8% (1)(2)(3) 12% (1)(2)(3)
END OF ACCUMULATED ------------------------- ------------------------- ------------------------- -------------------------
POLICY AT 5% INTEREST DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER
YEAR PER YEAR (1) BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- ------ -------------- ------- ------- --------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,575 151,117 1,117 157 151,170 1,170 209 151,222 1,222 262 151,274 1,274 314
2 3,229 152,179 2,179 1,128 152,329 2,329 1,278 152,483 2,483 1,432 152,641 2,641 1,591
3 4,965 153,203 3,203 2,063 153,494 3,494 2,355 153,802 3,802 2,664 154,127 4,127 2,990
4 6,788 154,196 4,196 2,970 154,672 4,672 3,448 155,189 5,189 3,967 155,750 5,750 4,530
5 8,703 155,191 5,191 3,883 155,896 5,896 4,591 156,683 6,683 5,382 157,559 7,559 6,263
6 10,713 156,194 6,194 4,929 157,173 7,173 5,915 158,296 8,296 7,044 159,580 9,580 8,335
7 12,824 157,218 7,218 6,146 158,518 8,518 7,446 160,048 10,048 8,977 161,846 11,846 10,775
8 15,040 158,265 8,265 7,408 159,934 9,934 9,077 161,950 11,950 11,093 164,384 14,384 13,527
9 17,367 159,311 9,311 8,668 161,397 11,397 10,754 163,985 13,985 13,342 167,195 17,195 16,552
10 19,810 160,277 10,277 9,849 162,830 12,830 12,401 166,082 16,082 15,654 170,226 20,226 19,797
15 33,986 164,379 14,379 14,379 169,960 19,960 19,960 178,167 28,167 28,167 190,212 40,212 40,212
20 52,079 166,913 16,913 16,913 176,613 26,613 26,613 193,123 43,123 43,123 221,144 71,144 71,144
25 75,190 167,167 17,167 17,167 181,847 31,847 31,847 210,849 60,849 60,849 269,064 119,064 119,064
40 190,260 0 0 0 167,383 17,383 17,383 271,023 121,023 121,023 650,549 500,549 500,549
</TABLE>

(1)Assumes annual premium payments of $1,500 paid in full at beginning of each
Policy year. The values would vary from those shown if the amount or
frequency of payments varies.

(3)Reflects Policy Value Advances and Cash Value Bonuses credited according to
the following schedule:

B-4
<PAGE>
MALE ISSUE AGE 35
STANDARD NONSMOKER UNDERWRITING RISK
FACE AMOUNT: $150,000--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 0% (1)(2)(3) 4% (1)(2)(3) 8% (1)(2)(3) 12% (1)(2)(3)(4)
END OF ACCUMULATED ------------------------- ------------------------- ------------------------- -------------------------
POLICY AT 5% INTEREST DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER
YEAR PER YEAR (1) BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- ------ -------------- ------- ------- --------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,575 150,000 795 0 150,000 839 0 150,000 884 0 150,000 929 0
2 3,229 150,000 1,562 500 150,000 1,684 622 150,000 1,810 748 150,000 1,939 877
3 4,965 150,000 2,299 1,142 150,000 2,530 1,373 150,000 2,775 1,619 150,000 3,035 1,880
4 6,788 150,000 3,005 1,754 150,000 3,376 2,128 150,000 3,782 2,535 150,000 4,223 2,978
5 8,703 150,000 3,678 2,336 150,000 4,221 2,883 150,000 4,831 3,496 150,000 5,513 4,181
6 10,713 150,000 4,315 3,029 150,000 5,061 3,776 150,000 5,921 4,636 150,000 6,910 5,625
7 12,824 150,000 4,935 3,864 150,000 5,914 4,843 150,000 7,074 6,002 150,000 8,445 7,373
8 15,040 150,000 5,557 4,700 150,000 6,798 5,941 150,000 8,310 7,453 150,000 10,149 9,292
9 17,367 150,000 6,178 5,535 150,000 7,712 7,069 150,000 9,635 8,992 150,000 12,039 11,396
10 19,810 150,000 6,754 6,326 150,000 8,613 8,185 150,000 11,009 10,580 150,000 14,091 13,663
15 33,986 150,000 8,963 8,963 150,000 12,890 12,890 150,000 18,735 18,735 150,000 27,473 27,473
20 52,079 150,000 9,586 9,586 150,000 16,232 16,232 150,000 27,852 27,852 150,000 48,272 48,272
25 75,170 150,000 7,546 7,546 150,000 17,341 17,341 150,000 38,003 38,003 150,000 80,996 80,996
40 190,260 0 0 0 0 0 0 150,000 60,129 60,129 392,763 367,069 367,069
</TABLE>

(1)Assumes annual premium payments of $1,500 paid in full at beginning of each
Policy year. The values would vary from those shown if the amount or
frequency of payments varies.

(3)Reflects Policy Value Advances and Cash Value Bonuses credited according to
the following schdule:

(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-5
<PAGE>
MALE ISSUE AGE 35
STANDARD NONSMOKER UNDERWRITING RISK
FACE AMOUNT: $150,000--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 0% (1)(2)(3) 4% (1)(2)(3) 8% (1)(2)(3) 12% (1)(2)(3)
END OF ACCUMULATED ------------------------- ------------------------- ------------------------- -------------------------
POLICY AT 5% INTEREST DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER DEATH POLICY SURRENDER
YEAR PER YEAR (1) BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- ------ -------------- ------- ------- --------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,575 150,793 793 0 150,837 837 0 150,882 882 0 150,927 927 0
2 3,229 151,557 1,557 494 151,678 1,678 616 151,803 1,803 741 151,932 1,932 871
3 4,965 152,289 2,289 1,131 152,519 2,519 1,362 152,762 2,762 1,606 153,021 3,021 1,866
4 6,788 152,987 2,987 1,737 153,357 3,357 2,108 153,760 3,760 2,512 154,198 4,198 2,953
5 8,703 153,652 3,652 2,310 154,191 4,191 2,852 154,796 4,796 3,460 155,472 5,472 4,140
6 10,713 154,278 4,278 2,993 155,018 5,018 3,732 155,869 5,869 4,584 156,848 6,848 5,563
7 12,824 154,886 4,886 3,814 155,853 5,853 4,782 156,999 6,999 5,928 158,354 8,354 7,283
8 15,040 155,492 5,492 4,635 156,717 6,717 5,859 158,208 8,208 7,351 160,021 10,021 9,164
9 17,367 156,095 6,095 5,452 157,605 7,605 6,962 159,496 9,496 8,853 161,861 11,861 11,218
10 19,810 156,651 6,651 6,222 158,476 8,476 8,047 160,826 10,826 10,397 163,849 13,849 13,421
15 33,986 158,700 8,700 8,700 162,491 12,491 12,491 168,127 18,127 18,127 176,545 26,545 26,545
20 52,079 159,044 9,044 9,044 165,283 15,283 15,283 176,146 26,146 26,146 195,281 45,281 45,281
25 75,170 156,697 6,597 6,597 165,349 15,349 15,349 183,743 33,743 33,743 222,066 72,066 72,066
40 190,260 0 0 0 0 0 0 164,120 14,120 14,120 375,644 225,644 225,644
</TABLE>

(1)Assumes annual premium payments of $1,500 paid in full at beginning of each
Policy year. The values would vary from those shown if the amount or
frequency of payments varies.

(3)Reflects Policy Value Advances and Cash Value Bonuses credited according to
the following schedule:

(4)Alternative Death Benefit applies: See "Policy Benefits--Death Benefit
Options" for further details.

B-6
<PAGE>
APPENDIX C

OREGON POLICY VALUE ADVANCES

For Policies issued in Oregon prior to May 15, 1996, Policy Value Advances are
credited starting on the last day of the 10th Policy year. The Policy Value
Advance credited at the end of that, and each subsequent Policy year prior to
the insured's Age 95, will be a percentage (specified below) of the average
monthly Minimum Premium (calculated without regard to substandard risks or
optional riders), times 12. The average monthly Minimum Premium is the sum of
the monthly Minimum Premiums from issue to the end of the year in which the
credit is to be made, divided by the number of months over the same period. The
Minimum Premium for any month in which the policy is not in force is deemed to
be zero.

These Policy Value Advances are guaranteed only to the extent allowed by Oregon.
POLICY VALUE ADVANCE PERCENTAGES

<TABLE>
<CAPTION>
AGE OF POLICY YEAR 12
INSURED POLICY POLICY AND LATER TO
AT ISSUE YEAR 10 YEAR 11 AGE 95
- --------- ----------- ----------- -----------------
<S> <C> <C> <C>
0-70 2% 4% 7%
71-80 1% 3% 4%
</TABLE>

The Policy must be in force as of the time the Policy Value Advance is credited.
If the Policy lapses and is reinstated, future Policy Value Advances will only
be credited if the policy has been in force for 1 year from the date of
reinstatement. There are no premium payment or other requirements in order to be
eligible for the Policy Value Advances.

In all other respects Policy Value Advances for Policies issued in Oregon prior
to May 15, 1996 are the same as for Policies issued in other states.

In view of the above described differences in the Policy Value Advances in
Oregon, the tables in Appendix B that demonstrate the effect of Policy Value
Advances would show somewhat less favorable results with respect to a Policy
issued in Oregon.

NEW JERSEY POLICY VALUE ADVANCES

For Policies issued in the state of New Jersey, Fortis Benefits intends to pay,
beginning on the first Monthly Anniversary in the tenth Policy year, and on each
subsequent Monthly Anniversary prior to the insured's Age 95, a percentage of
the average monthly Minimum Premium to date under the Policy (calculated without
regard to substandard risks or optional riders).

POLICY VALUE ADVANCE PERCENTAGE RATE

<TABLE>
<CAPTION>
IN
AGE OF IN IN POLICY YEARS 12
INSURED POLICY POLICY AND LATER TO
AT ISSUE YEAR 10 YEAR 11 AGE 95
- --------- ----------- ----------- -----------------
<S> <C> <C> <C>
0-70 2% 4% 7%
71-80 1% 3% 4%
</TABLE>

There are no prior premium payment requirements which must be met in order for a
Policy to be eligible. These Policy Value Advances are not guaranteed and may be
discontinued at any time at the discretion of Fortis Benefits.

NEW JERSEY CASH VALUE BONUSES

For Policies issued in the state of New Jersey, Fortis Benefits intends to
credit, beginning on the first Monthly Anniversary in the ninth Policy year, and
on each subsequent Monthly Anniversary prior to the insured's Age 95, a
percentage of the Policy Value on that date at an annual percentage rate of .05%
in Policy years 9 through 19 and .15% thereafter until Age 95 of the insured.
The Cash Value Bonuses may be discontinued at any time at the discretion of
Fortis Benefits.

C-1
<PAGE>
APPENDIX D

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 5%, independent of
the actual investment experience of the General Account. Fortis Benefits is not
obligated to credit interest at any higher rate, although Fortis Benefits, 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.

D-1
<PAGE>

VARIABLE UNIVERSAL LIFE SERVICE REQUEST [LOGO]

- - 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.

/2/ TRANSFER REQUEST

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.
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
$___________ Lazard Freres -
International Stock $____________%
$___________ Fortis - Global Growth $____________%
$___________ Morgan Stanley -
Global Asset Allocation $____________%
$___________ Fortis - Aggressive Growth $____________%
$___________ Berger - Small-Cap Value $____________%
$___________ Fortis - Growth Stock $____________%
$___________ Dreyfus - Mid-Cap Stock $____________%
$___________ Alliance - Premier Growth $____________%
$___________ T. Rowe Price - Blue Chip $____________%
$___________ Dreyfus - S&P 500 Index $____________%
$___________ Fortis - Growth & Income $____________%
$___________ Fortis - Value $____________%
$___________ Fortis - Asset Allocation $____________%
$___________ Mercury - Global Bond $____________%
$___________ Fortis - High Yield $____________%
$___________ Fortis - Diversified Income $____________%
$___________ Fortis - U.S. Government
Securities $____________%
$___________ Fortis - Money Market $____________%

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:

$____________ Lazard Freres -
International Stock
$____________ Fortis - Global Growth
$____________ Morgan Stanley -
Global Asset Allocation
$____________ Fortis - Aggressive Growth
$____________ Berger - Small-Cap Value
$____________ Fortis - Growth Stock
$____________ Dreyfus - Mid-Cap Stock
$____________ Alliance - Premier Growth
$____________ T. Rowe Price - Blue Chip
$____________ Dreyfus - S&P 500 Index
$____________ Fortis - Growth & Income
$____________ Fortis - Value
$____________ Fortis - Asset Allocation
$____________ Mercury - Global Bond
$____________ Fortis - High Yield
$____________ Fortis - Diversified Income
$____________ Fortis - U.S. Government Securities
$____________ Fortis - Money Market

98009 -C-Fortis 4/98

<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.

$___________ Lazard Freres -
International Stock
$___________ Fortis - Global Growth
$___________ Morgan Stanley -
Global Asset Allocation
$___________ Fortis - Aggressive Growth
$___________ Berger - Small-Cap Value
$___________ Fortis - Growth Stock
$___________ Dreyfus - Mid-Cap Stock
$___________ Alliance - Premier Growth
$___________ T. Rowe Price - Blue Chip
$___________ Dreyfus - S&P 500 Index
$___________ Fortis - Growth & Income
$___________ Fortis - Value
$___________ Fortis - Asset Allocation
$___________ Mercury - Global Bond
$___________ Fortis - High Yield
$___________ Fortis - Diversified Income
$___________ Fortis - U.S. Government
Securities
$___________ Fortis - Money Market

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)

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.

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

[LOGO]

Fortis Benefits Insurance Company
Variable Universal Life
P.O. Box 64284 - St. Paul, MN 55164 - (800) 800-2000

98009 -C-Fortis 4/98

The Fortis logo and Fortis-SM- are servicemarks of Fortis AMEV and Fortis AG.

<PAGE>

VARIABLE UNIVERSAL LIFE
LIFE INSURANCE SECTION
1035 EXCHANGE

Internal Revenue Code Section 1035 permits a nontaxable transfer of Life
Insurance policies between Insurance Companies. When circumstances warrant
replacing one policy with another, a 1035 EXCHANGE allows policyholders to
retain the cost basis in the initial policy and to defer taxation on any gain in
the policy.

You may use a 1035 Exchange to make a nontaxable transfer from a life insurance
policy to a life insurance policy, provided that the insured on the new policy
is the same as the insured on the original policy.

If the original policy is a MEC, the owner of the new policy must be the same or
the exchange will be taxable. In all cases, if the owner of the new policy is
different than the owner of the old policy, the change of ownership must be
due to a gift, not a sale to the new owner, or the exchange will be taxable.

You may not use a 1035 exchange to make a nontaxable transfer from an endowment
policy or an annuity contract to a life insurance policy.

A 1035 exchange of a policy with an outstanding loan may produce unfavorable tax
consequences. The original carrier must generally report the amount of the
outstanding loan as taxable income to the extent of gain on the original
contract.

The effect of the Technical and Miscellaneous Revenue Act of 1988 (TAMRA) on
1035 exchanges is not entirely clear. However if a new policy is issued in
exchange for a MEC policy, the new policy will also be a MEC. Reduction in face
amount from the old policy to the new policy is generally not recommended.

INSTRUCTIONS FOR REQUESTING A SECTION 1035 EXCHANGE

/ / 1) A completed LIFE APPLICATION

/ / 2) Indicate on the app that this is A "1035 EXCHANGE."

/ / 3) Complete any necessary REPLACEMENT FORMS.

/ / 4) Complete a T.O.M. (if on monthly mode) Automatic
Bank Draft Authorization Form (95765) and collect
a voided check from your client.

/ / 5) Include any necessary life insurance ledger
illustrations.

/ / 6) Have your client complete the attached
1035 EXCHANGE LETTER OF INTENT/
ABSOLUTE ASSIGNMENT.

/ / 7) Collect the OLD POLICY from the insured.

/ / 8) Collect a COMPLETED SURRENDER FORM
OF THE OTHER INSURER.

SEND THE ABOVE ITEMS TO THE HOME OFFICE.

The processing of the exchange will be coordinated by the VUL New Business/1035
Unit. When the surrender value is received in the Home Office, we will allocate
all monies to the new policy.

You and your client will be notified when we receive payment. A confirmation
notice will be sent to the client.

The Company agrees to and accepts the terms of this exchange agreement
and the accompanying directions to issuer of original contract/policy.

ALLOW 2 TO 3 MONTHS FOR PROCESSING OF THE EXCHANGE.

[LOGO]

FORTIS FINANCIAL GROUP
Fortis Advisers, Inc. (fund management since 1949)
Fortis Investors, Inc. (principal underwriter; member NASD, SIPC)
Fortis Benefits Insurance Company & Fortis Insurance Company (issuers of FFG's
insurance products)
P.O. Box 64284 - St. Paul, MN 55164 - (800) 800-2000
http://www.ffg.us.fortis.com

95757 -C-Fortis 4/98

The Fortis logo and Fortis-SM- are servicemarks of Fortis AMEV and Fortis AG.

<PAGE>

1035 EXCHANGE - LETTER OF INTENT/ABSOLUTE ASSIGNMENT

Fortis Policy #____________________________________________
Insured Policy Owner ______________________________________
Social Security # _________________________________________
(TAXPAYER I.D.)
Previous Company Information ______________________________
Old Contract # ____________________________________________
Company Name ______________________________________________
Company Address ___________________________________________
City, State, Zip __________________________________________
Telephone # _______________________________________________
Estimated Contract Value __________________________________

In accordance with Internal Revenue Code #1035, I wish to transfer the funds
standing to my credit on the listed policy directly to Fortis Benefits Insurance
Company. It is my wish to avoid constructive or actual receipt of my funds. I
understand that should verification of this exchange be required by the IRS, it
will be my responsibility to provide such documentation. Therefore, I absolutely
assign my policy to Fortis Benefits Insurance Company. I understand that
completion of this form is to effect an assignment of my policy and does not
guarantee a 1035 exchange. I further request that this policy be exchanged in a
timely manner and that no cash value is to be depleted as a non-forfeiture
option for additional premium payments.

ABSOLUTE ASSIGNMENT/CASH SURRENDER

I, (owner) ____________________________________, absolutely assign and transfer
all rights, titles and interest in policy number ______________________ from
____________________________________ to Fortis Benefits Insurance Company, St.
Paul, Minnesota, its successors or assigns to effect a Section 1035 Exchange.
Executed this ______________________ day of _______________________________.
I ask that you send the surrender check, payable to Fortis Benefits Insurance
Company, to:

VUL New Business Department; Fortis Benefits Insurance Company; P.O. Box 64582,
St. Paul MN 55164-0582.

Total of all premiums paid, less any dividends and any other supplemental
insurance coverage charges: $

/ / IF NO CASH VALUE OR IF A TERM PRODUCT, PLEASE CHECK THE BOX AND PROVIDE
COST BASIS ABOVE. ______________

Please answer the following questions:

1. Is the policy a modified endowment contract within the meaning of
section 7702A of the Internal Revenue Code (TAMRA)? / / Yes / / No

2. What is the face amount of the policy? $_____________

3. Is there an outstanding loan on this policy? / / Yes / / No
If yes, indicate amount $_____________

4. Was there a loan on this policy during the last 2 years (24 months)?
/ / Yes / / No
If yes, indicate amount. $_____________

5. Was there a withdrawal from this policy within the last 2 years (24
months)? / / Yes / / No
If yes, indicate amount. $_____________

6. I certify the policy which I plan to replace is lost.
/ / Yes / / No

NOTE: YOU MAY PROVIDE ALL THIS INFORMATION ON A COPY OF THIS LETTER OR ON
THE CHECK STUB.

_______________________________________________________________________________
Name of Policy Owner (please print)

_______________________________________________________________________________
Signature of Policy Owner Date

_______________________________________________________________________________
Policy Owner address

_______________________________________________________________________________
Signature if other than policy owner (spouse, collateral assignee, etc.)

_______________________________________________________________________________
Agent's Name and Number (please print)

_______________________________________________________________________________
Signature of Agent Date

_______________________________________________________________________________
Officer of Fortis Benefits Signature Date

95757 -C-Fortis 4/98 [LOGO}

<PAGE>
[LOGO]
FORTIS FINANCIAL GROUP
P.O. BOX 64284
ST. PAUL, MN 55164

BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 3794
MINNEAPOLIS, MN

PROSPECTUS
MAY 1, 1998

FORTIS
SERIES FUND, INC.

FORTIS
WALL STREET
VUL220

<PAGE>

PART II

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

Facing Sheet
Cross-Reference Table (Filed as part of the initial filing of this Form
S-6 Registration Statement made on May 5, 1989)

Prospectus, consisting of pages

Undertaking to File Reports (Filed as part of the initial filing of this
Form S-6 Registration Statement made on May 5, 1989)

Undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933
(Filed as part of the initial filing of this Form S-6 Registration
Statement on May 5, 1989)

Reasonableness Representation. Fortis Benefits Insurance Company
represents that the fees and charges deducted under the Policies
described in this Registration Statement, in the aggregate, are
reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by Fortis Benefits under
the Policies. Fortis Benefits bases its representation on its assessment
of all of the facts and circumstances, including such relevant factors
as: the nature and extent of such services, expenses and risks; the need
for Fortis Benefits to make a profit; the degree to which the Policies
include innovative features; and the regulatory standards for exemptive
relief under the Investment Company Act of 1940 used prior to October
1996, including the range of industry practice.

Signatures

Written Consents of the following persons:

Kay M. Doughty, ASA, MAAA (See Exhibit 6 below)

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

Ernst & Young LLP, Independent Auditors

The following exhibits:

1A. (1) --Resolution of Board of Directors of Fortis Benefits
effecting the establishment of Variable Account C (Filed
as part of the initial filing of this Form S-6 Registration
Statement made on May 5, 1989)

(2) --Not applicable

(3) --(a) Distribution Agreement between Fortis Benefits and Fortis
Investors, Inc. (Filed as part of Post-Effective Amendment No. 9
to this Form S-6 Registration Statement filed on April 29, 1994).

--(b) Form of Dealer Sales Agreement. (Incorporated by reference
from Post-Effective Amendment No. 12 to this Form N-4
Registration Statement, File No. 33-19421 filed on December 22,
1994).

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

(4) --Not applicable

<PAGE>

(5) --(a) Specimen Flexible Premium Variable Life Insurance Policy.
(Filed as part of Post-Effective Amendment No. 13 to this Form
S-6 Registration Statement filed April 29, 1996).

--(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 (Filed as part of
Pre-Effective Amendment No. 1 to this Form S-6 Registration
Statement on August 18, 1989)

--(d) Forms of Waiver of Selected Amount Rider, Exchange of
Policy Rider, Extend Maturity Date Rider, Term Conversion Rider
and Accelerated Death Benefit Rider. (Filed as part of
Post-Effective Amendment No. 9 to this Form S-6 Registration
Statement filed on April 29, 1994)

--(e) Forms of Additional Insured Rider Plus and Primary
Insured Rider Plus. (Filed as part of Post-Effective Amendment
No. 12 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)
made 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) made on March 17,
1986)

--(c) Amendment to Articles of Incorporation and Bylaws dated
November 21, 1991 (Filed as part of Post-Effective Amendment
No. 4 to this Form S-6 Registration Statement filed on March 2,
1992)

(7) --Not applicable

(8) --Not applicable

(9) --Not applicable

(10) --(a) Application Form for Flexible Premium Variable Life
Insurance Policy and Form of Temporary Insurance Agreement.
(Filed as part of Post-Effective Amendment No. 9 to this Form
S-6 Registration Statement filed on April 29, 1994).

--(b) Policy Change Application, Transfer Request Form, and
Change of Premium Allocation Form (Filed as part of
Post-Effective Amendment No. 4 to this Form S-6 Registration
Statement filed on March 2, 1992)

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

3. --Opinion and consent of counsel as to the legality of
Securities being registered (Filed as part of Pre-Effective
Amendment No. 1 to this Form S-6 Registration Statement on
August 18, 1989)

4. --Not applicable

5. --Not applicable

<PAGE>

6. --(a) Opinion and consent of actuary (Filed as part of
Pre-Effective Amendment No. 5 to this Form S-6 Registration
Statement on November 29, 1989)

--(b) Supplemental Opinion and Consent of Actuary

7. --Forms of Notice of Cancellation Right and Request for
Cancellation pursuant to Rule 6e-3(T)(b)(13)(viii) under the
Investment Company Act of 1940 (Filed as part of Pre-Effective
Amendment No. 1 to this Form S-6 Registration Statement on
August 18, 1989)

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. --Not applicable

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)
(Filed as Exhibit 10(b) to Post-Effective Amendment No. 1 to this
registration statement filed April 30, 1990)

--(c) Second Supplemental Memorandum in connection with
Exhibit 10(a) (Incorporated by reference from Exhibit 10(c) to
Post-Effective Amendment No. 2 to registrant's Form S-6
Registration Statement, File No. 33-48266, Filed on April 29,
1993).

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 December 17, 1993).

12. --Not applicable

<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 27th day of April, 1998. 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 27, 1998.

/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

*
- --------------------------------------------
J Kerry Clayton, 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
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to the hereunto affixed and attested,
all in the City of St. Paul, State of Minnesota this 27th day of April, 1998.

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 report dated February 27, 1998 on the financial statements of
Fortis Benefits Insurance Company and our report dated March 27, 1998 on the
financial statements of Fortis Benefits Insurance Company Variable Account C
(Account C) in Post-Effective Amendment No. 15 to the Registration Statement
(Form S-6 No. 33-28551) and the related Prospectus of Fortis Benefits
Insurance Company for the registration of an indefinite amount of interests in
Account C pursuant to variable life insurance policies.

/s/ ERNST & YOUNG, LLP

Minneapolis, Minnesota
April 28, 1998

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INDEX TO EXHIBITS

6(b) Supplemental Opinion and
Consent of Actuary

<PAGE>

April 1, 1998

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

Gentlemen:

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

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

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

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

Sincerely,

/s/ Kay M. Doughty

Kay M. Doughty, ASA, MAAA
Staff Actuary
Fortis Benefits Insurance Company