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. 33-48266
    
                            -------------------

                     SECURITIES AND EXCHANGE COMMISSION
                             Washington DC 20549

                            -------------------
   
                     POST-EFFECTIVE AMENDMENT NO. 10
                               to FORM S-6
                          Registration Statement
                                   Under
                        THE SECURITIES ACT OF 1933
    
                            -------------------

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

                     FORTIS BENEFITS INSURANCE COMPANY
                 (formerly Western Life Insurance Company)
                            (Name of Depositor)

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

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

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

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

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

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

     immediately upon filing pursuant to paragraph (b) of Rule 485.
- ----
  X  On May 1, 1998 pursuant to paragraph (b) of Rule 485.
- ----
     60 days after filing pursuant to paragraph (a) of Rule 485.
- ----
     On             pursuant to paragraph (a) of Rule 485.
- ----   ------------
    

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

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

<PAGE>

   
    

                            -------------------
   
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.
96390 (5/98)
    
               FORTIS
               VUL 500 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. The
                         minimum initial Face Amount of a Policy is $500,000.
 
                         With respect to the Policy Value available for
                         investment under a Policy, the Policy owner may elect
                         to receive a rate of return based on one or more of the
                         separate investment portfolios of Fortis Series Fund,
                         Inc. There is no guaranteed minimum Policy Value with
                         respect to these portfolios, and the Policy owner bears
                         the entire investment risk that this value (or the
                         Surrender Value) may decline to zero. Alternatively, a
                         Policy owner may, with respect to all or part of the
                         Policy Value, elect to receive fixed rates of return.
 
                         The Policy may be fully surrendered at any time for its
                         Surrender Value. See "Surrender and Partial
                         Withdrawal." Generally after the first Policy year, the
                         Policy owner may make a partial withdrawal of Surrender
                         Value once a year. The Policy owner also may take out
                         Policy loans and has considerable flexibility to vary
                         the frequency and amount of premium payments. Payment
                         of Planned Periodic Premiums will not necessarily keep
                         a Policy from lapsing if the Surrender Value is
                         exhausted. However, the Policy is guaranteed to stay in
                         force if certain Minimum Premium payments are made.
                         This guarantee will generally be for the lesser of 12
                         years from the Policy Date or until Age 65 (or for a
                         shorter period of time if the insured is over Age 60 at
                         issue, or is rated other than standard and issued after
                         May 1, 1995). $10,000 is the smallest possible initial
                         annual premium.
 
                         Fortis Benefits Insurance Company may allow for
                         variations of Policy Face Amount and initial annual
                         premium minimums, charges, and credits from those
                         otherwise described in the Prospectus for purchase of
                         policies in certain business related and other
                         circumstances. (See "Variations of Policy Premiums,
                         Charges, and Credits.")
 
                         This prospectus contains detailed information about
                         these and other Policy features, including certain
                         restrictions and limitations which apply. This
                         Prospectus also discusses the way in which the return
                         earned by the Policy Value can affect a Policy's death
                         benefit and Surrender Value.
 
                         As in the case of other life insurance policies, it may
                         not be advantageous to purchase flexible premium
                         variable life insurance as a replacement for, or in
                         addition to, an existing flexible premium variable or
                         other life insurance policy.
 
                         THESE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, NOR
                         ARE THEY GUARANTEED OR ENDORSED BY, ANY BANK, CREDIT
                         UNION, BROKER-DEALER OR OTHER FINANCIAL INSTITUTION.
                         THEY ARE NOT FEDERALLY INSURED BY THE FEDERAL RESERVE
                         BOARD, OR ANY OTHER AGENCY; AND INVOLVE INVESTMENT
                         RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
 
                         THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
                         BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
                         COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
                         PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                         CRIMINAL OFFENSE. THIS PROSPECTUS IS NOT VALID UNLESS
                         PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUS FOR
                         FORTIS SERIES FUND, INC., WHICH CONTAINS ADDITIONAL
                         INFORMATION ABOUT THAT ENTITY.
 
                         THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE
                         REFERENCE.
<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.........................................    9
    - Benefit at Maturity.................................................    9
    - Policy Loans........................................................    9
    - Settlement Options..................................................    9
    - Taxes...............................................................    9
    - Right to Return a Policy............................................    9
    - How to Exercise Your Rights Under a Policy..........................    9
The Separate Account and Fortis Series Fund, Inc..........................   10
    - The Separate Account................................................   10
    - Financial and Performance Information...............................   11
    - Fortis Series Fund, Inc.............................................   13
Policy Benefits...........................................................   13
    - Death Benefit.......................................................   13
    - Death Benefit Options...............................................   13
    - Accelerated Benefit Rider...........................................   14
    - Changes in Face Amount..............................................   15
    - Change in Death Benefit Option......................................   16
    - Policy Value........................................................   16
    - Policy Value Advances and Cash Value Bonuses........................   16
    - Calculation of Separate Account Policy Value........................   17
    - Separate Account Net Investment Return..............................   18
Payment and Allocation of Premiums........................................   18
    - Issuance of a Policy................................................   18
    - Premiums............................................................   19
    - Allocation of Premiums and Policy Value.............................   20
    - Policy Lapse and Reinstatement......................................   22
Charges and Deductions....................................................   22
    - Premium Tax and Sales Charges; Other Policy Issuance Expense
       Charges............................................................   22
    - Deductions to Recover Policy Value Advances.........................   24
    - Monthly Deduction from Policy Value.................................   25
    - Charge for Mortality and Expense Risks..............................   26
    - Miscellaneous.......................................................   26
    - Guarantee of Certain Charges........................................   26
Variations of Policy Minimums, Charges and Credits........................   27
Loan Privileges...........................................................   27
    - Rate Charged on Policy Loans........................................   27
    - Credited Rate for Policy Loans......................................   27
    - Effect of a Policy Loan.............................................   28
    - Repayment of a Loan.................................................   28
Surrender and Partial Withdrawal..........................................   28
Rights Reserved by Fortis Benefits........................................   29
    - Payment and Deferment...............................................   29
Distribution of the Policies..............................................   30
Federal Tax Matters.......................................................   30
    - Tax Status of the Policy............................................   30
    - Taxation of Policy Benefits.........................................   31
    - Taxation of Fortis Benefits.........................................   32
Other Policy Provisions...................................................   33
Management................................................................   35
</TABLE>
    
<PAGE>
   
<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
Voting Privileges.........................................................   36
Reports...................................................................   36
State Regulation..........................................................   37
Legal Matters.............................................................   37
Experts...................................................................   37
Ratings and Rankings......................................................   37
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 Premium................................................  B-1
    - Policy Value Advances...............................................  B-2
Appendix C................................................................  C-1
    - The General Account.................................................  C-1
    - General Description.................................................  C-1
    - General Account Policy Value........................................  C-1
    - Transfers, Surrenders and Policy Loans..............................  C-1
Variable Universal Life Service Request Form..............................
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.
<PAGE>
INDEX OF DEFINED WORDS AND PHRASES
 
Below  are listed words and  phrases used in this  Prospectus, together with the
page or pages of this Prospectus on which each is defined or explained.
 
   
<TABLE>
<CAPTION>
                                                                                              PAGE
 
<S>                                                                                         <C>
Age.......................................................................................         33
Alternative Death Benefit.................................................................         15
Cash Value Bonuses........................................................................          7
Contingent Deferred Sales Charge..........................................................         22
Date of Receipt...........................................................................         33
Death Benefit Type A (Type "A")...........................................................         13
Death Benefit Type B (Type "B")...........................................................         13
Face Amount...............................................................................         17
Fortis Benefits...........................................................................          5
Fortis Series.............................................................................         13
General Account...........................................................................        C-1
Grace Period..............................................................................         22
Guaranteed Death Benefit..................................................................          5
Guideline Annual Premium..................................................................         20
Home Office...............................................................................          9
Minimum Premium...........................................................................         20
Monthly Deduction.........................................................................         25
Monthly Anniversary.......................................................................         18
Net Amount at Risk........................................................................         25
Net Cash Value............................................................................         21
NYSE......................................................................................         18
Planned Periodic Premium..................................................................         19
Policy Anniversary........................................................................         18
Policy Date...............................................................................         18
Policy Value..............................................................................          7
Policy Value Advance......................................................................          7
Portfolio.................................................................................         13
Pro Rata Basis............................................................................         25
Separate Account..........................................................................         10
Subaccount................................................................................         10
Surrender Charge..........................................................................         24
Surrender Value...........................................................................          7
Valuation Date............................................................................         18
Valuation Period..........................................................................         17
1940 Act..................................................................................         13
</TABLE>
    
 
                                       4
<PAGE>
SUMMARY
 
FORTIS BENEFITS/FORTIS FINANCIAL GROUP MEMBER
 
   
Fortis Benefits Insurance Company ("Fortis Benefits"), the issuer of the
Policies, was founded in 1910. At the end of 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 Planned Periodic Premium must be, on an
annualized basis, at least the greater of (1) $10,000, or (2) twelve monthly
Minimum Premiums. The Planned Periodic Premiums are assumed to be level in the
first Policy year. If the Planned Periodic Premium is paid monthly, the initial
premium must at least equal two months' Planned Periodic Premiums. Thereafter,
subject to the limitations described under "Payment and Allocation of
Premiums--Premiums," premium payments may be made at any time and in any amount.
All Policies will specify a Planned Periodic Premium, but payment of this is
optional, except to the extent described above with respect to the initial
premium payment.
 
GUARANTEED DEATH BENEFIT
 
A Policy is guaranteed to stay in force if, as of each Monthly Anniversary, (1)
the cumulative amount of premiums paid to date, less the amount of any
outstanding Policy loans and cumulative partial withdrawals at least equals (2)
the cumulative monthly Minimum Premiums, assuming regular monthly payment. This
guarantee will generally be for the lesser of 12 years from the Policy Date or
until Age 65 (or for 5 years if Age 60 to 70 at issue). After Age 70, the
guarantee is for the greater of two years or to Age 75. For Policies issued
after May 1, 1995, or as soon thereafter as available in the state where the
policy is issued, the guarantee for insureds rated other than standard is for
the lesser of the guarantee period for their Age or five years. The guarantee
period may be shorter in some states due to state limitations. Subject to these
conditions, there is in effect a "Guaranteed Death Benefit" in the amount of the
Policy's then-current Face Amount and term rider coverages. The initial monthly
Minimum Premiums are specified in each Policy, and additional Minimum Premium
payments will be necessary to keep this guarantee in effect if the Face Amount
of the Policy or rider benefits are increased. See "Guaranteed Death Benefit"
under "Payment and Allocation of Premiums--Premiums."
 
If the Guaranteed Death Benefit is not in effect, a Policy will lapse if the Net
Cash Value becomes insufficient to pay the continuing charges and deductions.
See "Payment and Allocation of Premiums--Policy Lapse and Reinstatement" and
"Charges and Deductions--Premium Tax and Sales Charges; Other Policy Issuance
Expense Charges." Premium payments in excess of the Planned Periodic Premium
payments may therefore be necessary to keep a Policy in force.
 
ALLOCATION OF PREMIUMS AMONG VARIOUS ALTERNATIVES
 
   
The owner of a Policy may allocate premiums paid under a Policy to one or more
of the Subaccounts of Variable Account C, a separate investment account of
Fortis Benefits (see "The Separate Account and Fortis Series Fund, Inc.") and/or
to Fortis Benefits' General Account. The assets in each of the current
Subaccounts are invested in a separate class (or series) of stock of Fortis
Series Fund, Inc. ("Fortis Series"), a "series" type of mutual fund. Each class
of stock represents a separate investment Portfolio within Fortis Series. The
investment Portfolios of Fortis Series which are currently available are the
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 &
    
 
                                       5
<PAGE>
   
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.
    
 
   
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%
                              ---          ---           ---       ---       ---          ---          ---
 
<CAPTION>
 
                                    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>
    
 
- ------------------------
   
(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%
 
<CAPTION>
                                                                           ANNUAL SUB-
          SERIES             SUB-ADVISER         AVERAGE NET ASSETS       ADVISORY FEE
- --------------------------  --------------  ----------------------------  -------------
<S>                         <C>             <C>                           <C>
 
Small Cap Value Series      Berger          For the first $50 million      .500%
                            Associates      For assets over $50 million    .450%
 
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
 
                                       6
<PAGE>
decreases such risk. However, the potential benefit of the General Account is
limited to the guaranteed return, plus any discretionary return declared by
Fortis Benefits.
 
TRANSFERS OF POLICY VALUE. A Policy owner may transfer amounts among the
Subaccounts at any time. Transfers may also be made at any time from a
Subaccount to the General Account. The Policy owner, under Fortis Benefits'
current rules, may transfer up to 50% of any unloaned Policy Value in the
General Account to one or more Subaccounts. This transfer may be made only once
during the Policy Year.
 
For additional conditions and limitations on transfers, see "Payment and
Allocation of Premiums--Allocation of Premiums and Policy Value" and Appendix
C--"Transfers, Surrenders and Policy Loans."
 
POLICY VALUE; POLICY VALUE ADVANCES; CASH VALUE BONUSES
 
POLICY VALUE. The "Policy Value" is the amount "at work" for the Policy owner
earning a return in the Separate Account and/or in the General Account at any
time. It is (1) the cumulative amount of premiums paid to date, (2) less any
withdrawals and less all deductions and charges imposed to date under the
Policy, (3) plus the cumulative amount of any Policy Value Advances and Cash
Value Bonuses, (4) plus the cumulative net amount of positive or negative
investment return earned to date on amounts allocated to the Separate Account
under the Policy, (5) plus the cumulative net amount of interest earned to date
on amounts held in the General Account under the Policy.
 
POLICY VALUE ADVANCES. Policy Value Advances will be paid by Fortis Benefits
starting at the end of the seventh Policy year, if the Policy owner has met
certain Minimum Premium payment requirements. If allowed in the state in which
the Policy is issued, these advances are guaranteed. Policy Value Advances are
credited to the Policy Value, but may be subject to recovery by Fortis Benefits
pursuant to subsequent monthly and daily deductions. See "Policy
Benefits--Policy Value Advances."
 
CASH VALUE BONUSES. Cash Value Bonuses will be paid by Fortis Benefits starting
at the end of the ninth Policy year if the Surrender Value is at least $50,000.
If allowed in the state in which the Policy is issued these Cash Value Bonuses
are guaranteed. See "Policy Benefits--Policy Value Advances and Cash Value
Bonuses."
 
SURRENDERS
 
A Policy may be surrendered at any time for all of its Surrender Value, and part
of the Surrender Value may be withdrawn up to once a year, generally after the
first Policy year. See "Surrender and Partial Withdrawal." The Surrender Value
is the Policy Value, less the amount of the Surrender Charge (referred to
below), less the amount of any outstanding Policy loan and plus the amount of
any policy loan interest paid for future periods (see"Loan Privileges"). If
Death Benefit Type A is in effect, a partial withdrawal will reduce the Policy's
Face Amount on a dollar-for-dollar basis.
 
CHARGES
 
In addition to Fortis Series' expenses, the following charges are imposed under
the Policies:
 
PREMIUM TAX CHARGE. The current premium tax charge is 2.2% of all premium
payments. Rather than being deducted from premium payments, this charge is
assessed through periodic deductions from Policy Value, and any balance of the
current premium tax charge may be deducted as part of the Surrender Charge
referred to below. Periodic deductions for the current premium tax charge will
not exceed $.91 per Policy each month, plus a daily deduction at an annual rate
of .06124% of the Policy's net assets in the Separate Account.
 
SALES CHARGES. The maximum total sales charges are 29.5% of the amount of
premiums paid in the first two Policy years that are not in excess of the sum of
twelve monthly Minimum Premiums, plus 7.5% of all additional premiums. Rather
than being deducted from premiums, sales charges are assessed through periodic
deductions from Policy Value, and any balance of the sales charges may be
deducted as a Contingent Deferred Sales Charge that would be included as part of
the Surrender Charge. The periodic deductions for sales charges will not exceed
$3.09 per Policy each month plus a daily deduction at an annual rate of .20876%
of the Policy's net assets in the Separate Account.
 
CHARGE FOR OTHER POLICY ISSUANCE EXPENSES. This charge is $5.00 per thousand
dollars of a Policy's initial Face Amount. It will be deducted, if at all, only
as part of the Surrender Charge.
 
SURRENDER CHARGE. The maximum Surrender Charge is the sum of (1) any premium tax
and sales charges not previously deducted on a monthly or daily basis, as
described above, and (2) the charge for other Policy issuance expenses referred
to above. The Surrender Charge (a) is imposed only if the Policy is surrendered
in full or lapses before the eleventh Policy Anniversary and (b) is subject to
certain maximums that decrease over time. See "Charges and Deductions--Premium
Tax and Sales Charges; Other Policy Issuance Expense Charges."
 
                                       7
<PAGE>
ADDITIONAL CHARGES AS A RESULT OF FACE AMOUNT INCREASES. If the Policy owner
requests a Face Amount increase, the Policy will be subject to additional
premium tax and sales charges and a charge for issuing the Face Amount increase.
These will be imposed at the same rates and in the same manner as described
above for the similar charges in connection with the original Policy. See
"Charges and Deductions-- Premium Tax and Sales Charges; Other Policy Issuance
Expense Charges."
 
DEDUCTIONS TO RECOVER POLICY VALUE ADVANCES. Subject to certain conditions,
Policy owners will receive credits in the nature of Policy Value Advances
starting at the end of the seventh Policy year. See "Policy Benefits--Policy
Value Advances and Cash Value Bonuses." While it is not Fortis Benefits' current
intention to do so, Fortis Benefits reserves the right to recover such credits
by imposing the following deductions made after the payment of the credits:
$4.00 a month plus a daily deduction at an annual rate of .27% of the Policy's
net assets in the Separate Account. These deductions would continue until their
cumulative amount equals the cumulative amount of Policy Value Advances actually
credited to the Policy. During the period when these deductions are made to
recover the Policy Value Advances, there would be no similar monthly and daily
deductions for sales expenses and premium taxes discussed above. Once the amount
of any Policy Value Advances had been fully recovered, the monthly and daily
deductions for premium tax and sales charges would resume. In no event would a
deduction be made to recover Policy Value Advances if no such credit had been
made. See "Charges and Deductions--Deductions to Recover Policy Value Advances."
 
MONTHLY DEDUCTION. The Policy Value will be reduced by a Monthly Deduction equal
to the sum of (1) the monthly deduction referred to above under "Premium Tax
Charge" and "Sales Charges" or "Deductions to Recover Policy Value Advances,"
whichever may then be in effect, (2) a monthly cost of insurance charge, (3)
while the Guaranteed Death Benefit is in effect, a monthly charge for such
guarantee in the amount of $.01 per $1,000 of Face Amount in effect on the date
of the deduction, (4) the monthly cost of any optional insurance benefits added
by rider, and (5) an administrative expense charge, currently $4.50 per month.
See "Charges and Deductions--Monthly Deduction From Policy Value."
 
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."
 
                                       8
<PAGE>
OPTIONAL INSURANCE BENEFITS
 
A Policy owner has the flexibility to add optional insurance benefits by rider,
to the extent available in the Policy owner's state. These optional benefits are
described in Appendix A-- "Optional Insurance Benefits."
 
BENEFIT AT MATURITY
 
Unless the Policy owner exercises an option to extend the maturity date of the
Policy, the Policy matures if the insured reaches Age 95. See "Other Policy
Provisions--Option to Extend the Maturity Date." When the Policy matures, the
Policy Value, less the amount of any outstanding Policy loan, will be paid to
the Policy owner, upon return of the Policy.
 
POLICY LOANS
 
A Policy owner may borrow up to 90% of the difference between the Policy Value
and the amount of any then-appli-
cable Surrender Charge. After the later of 12 years or the insured's Age 70, the
Policy owner may borrow up to 100% of such difference. 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 4%, and the interest rate charged on loans is 6.10% per year
(5.66% per year in Massachusetts), payable in advance, except to the extent that
certain Policy owners may qualify for a lower loan interest rate. See "Loan
Privileges."
 
SETTLEMENT OPTIONS
 
Any amount payable on death of the insured or other termination of a Policy may
be received in cash or pursuant to one of several "settlement" options, at the
election of the Policy owner or beneficiary. See Appendix A--"Optional Income
Plans."
 
TAXES
 
For federal income tax purposes, under current law, Fortis Benefits believes
that gains in Policy Value resulting from positive net investment returns will
not be taxed to Policy owners until such gains are distributed to them.
 
Policy loan interest generally is not deductible for federal income tax
purposes. In addition, certain Policy loans, Policy pledges, or Policy
assignments may constitute taxable distributions.
 
Also, certain changes under a Policy (such as changes in Face Amount, death
benefit option, and perhaps other changes) or payment of premiums in excess of
certain amounts may have significant tax consequences. Accordingly, Policy
owners are strongly encouraged to consult competent tax advisers in this regard.
 
For a brief discussion of these and certain other tax implications of owning a
Policy, see "Federal Tax Matters."
 
RIGHT TO RETURN A POLICY
 
The Policy owner may return the Policy by delivery or by mailing postmarked
within 10 days after receipt (except where the Policy or state law requires a
longer period), within 45 days after he or she signs Part I of the application
for insurance, or within 10 days after receipt of a Notice of Withdrawal Right,
whichever is the latest, and receive a refund within 7 days. Nevertheless, under
Fortis Benefits' current administrative practice, the Notice of Withdrawal Right
will continue to be accepted if its Date of Receipt is not more than 20 days
after Fortis Benefits releases the Policy to an active status in its processing
system, pursuant to its administrative and underwriting procedures. The amount
refunded will be the amount of premiums paid. See "Policy Benefits--Changes in
Face Amount" for a description of similar rights to cancel any increases in Face
Amount.
 
HOW TO EXERCISE YOUR RIGHTS UNDER A POLICY
 
   
To exercise rights under a Policy, the owner must follow the procedures stated
in the Policy. To request a loan, surrender, or partial withdrawal, the owner
must utilize forms prepared by Fortis Benefits for each purpose; and it is
recommended that Fortis Benefits' forms also be used for making any other change
or request. The forms are available from your sales representative or from
Fortis Benefits at its Home Office: P.O. Box 64582, St. Paul, MN 55164,
1-800-800-2000, 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
    
 
                                       9
<PAGE>
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. If the Policy owner is unable
to return the Policy because it has been lost or destroyed, Fortis Benefits will
accept a written statement to that effect signed by the Policy owner in lieu of
return of the Policy.
 
Unless the context indicates otherwise, the foregoing Summary and the discussion
in the rest of this Prospectus assume that Net Cash Values are sufficient to pay
all charges deducted on Monthly Anniversaries and that no Policy loans have been
made.
 
THE SEPARATE ACCOUNT AND FORTIS SERIES FUND, INC.
 
THE SEPARATE ACCOUNT
 
The Separate Account, which is a segregated investment account of Fortis
Benefits, was established as Variable Account C by Fortis Benefits pursuant to
the insurance laws of Minnesota as of March 13, 1986. The Separate Account is
used to fund the Policies, as well as certain other variable life insurance
policies issued by Fortis Benefits. The assets allocated to the Separate Account
are the property of Fortis Benefits. Although the Separate Account is an
integral part of Fortis Benefits, the Separate Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940 ("1940 Act"). Registration does not involve
supervision of the management or investment practices or policies of the
Separate Account or of Fortis Benefits by the Commission.
 
All income, gains and losses, whether or not realized, from assets allocated to
the Separate Account are credited to or charged against the Separate Account
without regard to other income, gains or losses of Fortis Benefits. Each Policy
provides that assets in the Separate Account representing reserves for variable
life insurance policies shall not be chargeable with liabilities arising out of
any other business of Fortis Benefits. Fortis Benefits contributed funds to
establish various Subaccounts of the Separate Account and Fortis Benefits or its
affiliated companies may accumulate in the Separate Account proceeds from
charges under the Policies and other amounts in excess of the Separate Account
assets representing Policy reserves. Fortis Benefits may from time to time
transfer to its general investment assets any Separate Account assets in excess
of amounts attributable to Policy reserves.
 
The assets in each Subaccount are invested in a distinct class (or series) of
stock issued by Fortis Series, each representing a separate investment Portfolio
within Fortis Series. New Subaccounts may be added as new Portfolios are added
to Fortis Series and made available to Policy owners. Correspondingly, if any
Portfolios are eliminated from Fortis Series, Subaccounts may be eliminated from
the Separate Account.
 
                                       10
<PAGE>
FINANCIAL AND PERFORMANCE INFORMATION
 
   
The information presented below reflects the performance of the underlying
investment portfolios of the Fortis Series Fund through December 31, 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
                                                                                                           DECEMBER 31, 1997
                                                                                                           -----------------
                                                                                                                      10
                                                                 CALENDAR YEAR                                       YEARS
                                                              THROUGH DECEMBER 31                                     OR
                           INCEPTION   ------------------------------------------------------------------    1     AVG SINCE
                             DATE      1988  1989  1990    1991   1992   1993  1994   1995   1996   1997   YEAR    INCEPTION
                           ---------   ----  ----  -----  ------  -----  ----  -----  -----  -----  -----  -----   ---------
<S>                        <C>         <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       8.14  %
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      12.15%
Global Growth............     5/92      N/A   N/A    N/A     N/A    N/A  16.55 (4.11) 28.97  17.71   5.57% 12.36%    12.71%
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%    13.12%
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      24.84%
S & P 500 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      26.61%
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      20.14%
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      20.72%
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      13.22%
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%    11.12%
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       5.98%
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       7.41%
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%      7.47%
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%      6.64%
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%      4.38%
</TABLE>
    
 
- ------------------------------
Wall Street Series VUL500 was not offered for sale prior to September 1992.
 
                                       11
<PAGE>
   
Example: If a male nonsmoker insured age 45 had a Policy with a Type A Death
Benefit of $800,000 in which he invested $15,000 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...  $15,000   $12,557   $5,308     N/A         N/A      N/A
International
Stock...............  $15,000   $14,464   $7,220     N/A         N/A      N/A
Growth Stock........  $15,000   $13,359   $6,112   $75,000  $ 87,728   $78,128
Global Growth.......  $15,000   $13,111   $5,864   $75,000  $ 88,366   $78,766
Blue Chip...........  $15,000   $15,297   $$8,053    N/A         N/A      N/A
S & P 500 Index.....  $15,000   $15,698   $8,455     N/A         N/A      N/A
Growth & Income.....  $15,000   $15,329   $8,085     N/A         N/A      N/A
Value...............  $15,000   $15,137   $7,893     N/A         N/A      N/A
Global Asset
Allocation..........  $15,000   $14,264   $7,019     N/A         N/A      N/A
Asset Allocation....  $15,000   $14,509   $7,264   $75,000  $ 89,974   $80,374
High Yield..........  $15,000   $13,486   $6,240     N/A         N/A      N/A
Global Bond.........  $15,000   $12,628   $5,380     N/A         N/A      N/A
Diversified
Income..............  $15,000   $13,635   $6,388   $75,000  $ 73,783   $64,183
U.S. Government.....  $15,000   $13,448   $6,201   $75,000  $ 71,369   $61,769
Money Market........  $15,000   $12,961   $5,713   $75,000  $ 67,486   $57,886
</TABLE>
    
 
   
<TABLE>
<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   $60,000   $ 60,568   $50,968
International
Stock...............    N/A         N/A      N/A   $45,000   $ 47,113   $37,513
Growth Stock........  $150,000  $257,842  $255,099 $180,000  $315,454   $315,454
Global Growth.......    N/A         N/A      N/A   $90,000   $111,738   $103,510
Blue Chip...........    N/A         N/A      N/A   $30,000   $ 34,238   $25,631
S & P 500 Index.....    N/A         N/A      N/A   $30,000   $ 34,610   $26,003
Growth & Income.....    N/A         N/A      N/A   $60,000   $ 79,502   $69,902
Value...............    N/A         N/A      N/A   $30,000   $ 32,793   $24,182
Global Asset
Allocation..........    N/A         N/A      N/A   $45,000   $ 47,226   $37,626
Asset Allocation....  $150,000  $239,825  $237,082 $165,000  $269,363   $267,991
High Yield..........    N/A         N/A      N/A   $60,000   $ 59,040   $49,440
Global Bond.........    N/A         N/A      N/A   $45,000   $ 38,834   $29,234
Diversified
Income..............    N/A         N/A      N/A   $150,000  $183,028   $180,285
U.S. Government.....  $150,000  $172,642  $169,900 $180,000  $213,791   $213,791
Money Market........  $150,000  $151,529  $148,786 $180,000  $186,969   $186,969
</TABLE>
    
 
These benefits will differ for other insureds. They will differ according to
differences in investment allocation, premium timing and amount, death benefit
type and amount as well as Age and underwriting classification of the insured.
Because the Policies are insurance policies, actual performance should always be
considered in context with the level of death benefit and cash values.
 
The performance data is historical; future performance will vary.
 
                                       12
<PAGE>
FORTIS SERIES FUND, INC.
 
Fortis Series is a "series" type of mutual fund which is registered with the
Securities and Exchange Commission as a diversified open-end management
investment company under the 1940 Act. Fortis Series has served as the
investment medium for the Separate Account since the Separate Account commenced
operations. Fortis Series is also an investment medium for Variable Account D of
Fortis Benefits, through which variable annuity contracts are issued. Although
Fortis Benefits does not foresee any material conflicts between the interests of
Policy owners and variable annuity contract owners, Fortis Series' Board of
Directors will monitor to identify any material irreconcilable conflicts that
may develop and to determine what action, if any, should be taken in response.
If it becomes necessary for any separate account to replace shares of any
Portfolio with another investment, the Portfolio may have to liquidate
securities on a disadvantageous basis.
 
Fortis Benefits purchases and redeems Fortis Series shares for the Separate
Account at their net asset value without the imposition of any sales or
redemption charges. Such shares represent interests in the Portfolios of Fortis
Series, each of which corresponds to one of the Subaccounts of the Separate
Account. Any dividend or capital gain distributions received from a Portfolio
that are attributable to Policies will be reinvested in shares of that Portfolio
at net asset value as of the date paid. Such distributions will have the effect
of reducing the net asset value of each share of the Portfolio and increasing
the number of Portfolio shares outstanding. However, the total Policy Value in
the corresponding Subaccount will not change as a result of any such
distribution.
 
   
Fortis Series' Portfolios are the 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, the High Yield Series, and the
Diversified Income Series should be read before selection of them for Policy
investment.
 
POLICY BENEFITS
 
DEATH BENEFIT
 
As long as the Policy remains in force, Fortis Benefits will, upon due proof of
the insured's death and return of the Policy, pay the insurance proceeds of the
Policy to the named beneficiary. Fortis Benefits will pay interest from the date
of death to the date of commencement of any optional income plan or to the date
of distribution at a minimum of 3 1/2% per annum. See Appendix A--"Optional
Income Plans."
 
   
The insurance proceeds are: (1) the death benefit provided under Type A or Type
B, whichever is in effect on the date of death, plus (2) any additional
insurance on the insured's life that is provided by rider, minus (3) any
outstanding Policy loan and any due and unpaid charges accruing during a Grace
Period, 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.
 
                                       13
<PAGE>
Both Type A and Type B provide insurance protection, as well as possible
build-up of Policy Value. Under Type A, the insurance coverage remains level
unless the Alternative Death Benefit applies. Under Type B, the insurance
coverage varies as the Policy Value changes.
 
For any Face Amount, the death benefit under Type B will be greater than or
equal to that under Type A, since the Policy Value is added to the Face Amount
and included in the death benefit under Type B but not under Type A. However,
the cost of insurance included in the Monthly Deduction (see "Charges and
Deductions--Monthly Deduction From Policy Value") will be greater, and thus the
accumulation of Policy Value will be lower, under Type B than under Type A,
assuming the same Face Amount and otherwise identical Policies. See Appendix
B--"Illustrations of Death Benefits, Policy Values, Surrender Values and
Accumulated Premiums."
 
ACCELERATED BENEFIT RIDER
 
The Accelerated Benefit Rider will be issued as a part of all Policies issued in
a state that has approved such rider. The Accelerated Benefit Rider allows a
Policy owner to receive benefits from the Policy that would be otherwise payable
upon the death of the insured. The 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
requested may not include any part of the death benefit that was first effective
within a two year period (one year in Colorado and North Dakota) prior to such
injury.
 
All or part of the eligible amount may be accelerated under the Accelerated
Benefit Rider. If the death benefit is only partially accelerated, a Face Amount
at least equal to the minimum Face Amount required for the Policy or rider must
remain under the Policy or rider. The benefit payable must be at least
$2,500.00, or if smaller the entire eligible amount. If the entire eligible
amount is accelerated, the Policy or rider will terminate. If the entire
eligible amount is paid on the person who is insured under the base Policy, any
rider on the Policy that provides insurance on the life of any other person will
be administered according to the provisions in the rider concerning the death of
the person insured under the base Policy.
 
The maximum amount of any accelerated death benefit payable under a Policy and
all other policies issued by Fortis Benefits is $500,000.
 
If only a portion of the eligible amount is paid, the Policy and/ or rider will
remain in force. The amount of insurance, and the loan amount and Surrender
Value if the benefit is paid on the death benefit provided by the base Policy,
of the Policy or rider will be reduced as of the date of approval of the benefit
request by the percentage of the eligible amount which is accelerated. Future
monthly Minimum Premiums and cost of insurance will be adjusted as if (1) a loan
repayment were made equal to the reduction in the loan amount, (2) a withdrawal
were made equal to the reduction in Surrender Value, and (3) a face amount
decrease were made equal to the difference between the accelerated eligible
amount and the face amount decrease caused by withdrawal.
 
There is no charge for this rider provision as a part of your policy. However,
an administrative fee (not to exceed $300) will be charged at the time the
benefit is paid. The current fee is $50.
 
Fortis Benefits agrees that unless otherwise required by law, no benefit will be
paid if the Policy owner is required to elect it in order to meet the claims of
creditors or to obtain a government benefit. Receipt of payment of a benefit
under 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.
 
                                       14
<PAGE>
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 reserves the right to establish different maximum or minimum amounts
for future Face Amount increases.
 
Following a Face Amount increase requested by the Policy owner, additional sales
and issuance charges will be applicable. See "Charges and Deductions--Premium
Tax and Sales Charges; Other Policy Issuance Expense Charges." An increase in
Face Amount requested by the Policy owner also will increase the monthly Minimum
Premium and the Guaranteed Death Benefit charge. See "Minimum Premiums" under
"Payment and Allocation of Premiums--Premiums."
 
The Policy owner may cancel the Face Amount increase. The cancellation request
must be delivered or mailed to Fortis Benefits by letter postmarked (1) within
10 days after receipt of a Policy schedule amendment reflecting any requested
Face Amount increase, (2) within 45 days after the Policy change application for
such increase is signed, or (3) within 10 days after receipt of a Notice of
Withdrawal Right, whichever is latest. Upon such a cancellation, Monthly
Deductions, including rider costs, arising from the increase are credited to the
Policy Value. No premiums paid will be refunded, except that Fortis Benefits
will promptly refund premiums to the extent necessary to cure any violation of
the then current maximum premium limitations under Section 7702 of the Internal
Revenue Code of 1986, as amended (the "Code"). See "Payment and Allocations of
Premiums--Premiums." The Surrender Charge and the monthly Minimum Premium will
be adjusted to the level they would have been in the absence of the Face Amount
increase.
 
Also, during the first two years following a Face Amount increase requested by a
Policy owner, the Policy owner may transfer all or part of the Policy Value to
the General Account without charge. See "Policy Value Transfers" under "Payment
and Allocation of Premiums--Allocation of Premiums and Policy Values." Such a
transfer to the General Account could be made, for example, in the amount of any
premiums paid which are deemed attributable to the increase. See "Charges and
Deductions--Premium Tax and Sales Charges; Other Policy Issuance Expense
Charges" regarding the method of such attribution.
 
DECREASE. After the first Policy year, the Policy owner may request a decrease
in the Face Amount of the Policy. Face Amount decreases in the first two Policy
years will be allowed only if the cumulative amount of premiums paid are at
least equal to the sum of 12 monthly Minimum Premiums (computed without regard
to substandard risk class or optional policy riders). A comparable restriction
on decreases applies in the first two years following a Face Amount increase
requested by the Policy owner.
 
The Face Amount remaining in force after any requested decrease may not be less
than $500,000. No decrease in the Face Amount will be permitted if it would
result in any violation of the then current maximum premium limitations under
Section 7702 of the Code. If the Policy owner elects to decrease the Face
Amount, the Surrender Charge may be reduced (see "Charges and
Deductions--Premium Tax and Sales Charges; Other Policy Issuance Expense
Charges"). The monthly Minimum Premium, will also be reduced for purposes other
than computing sales charges. See "Minimum Premiums" under "Payment and
Allocation of Premiums--Premiums."
 
EFFECTIVE DATE. Any Face Amount increase or decrease will become effective on
the Monthly Anniversary on or next following (1) the Date of Receipt of the
request or (2) if evidence of insurability is required, the date Fortis Benefits
approves the request. Nevertheless, there will be no insurance coverage under
any change in Face Amount or other change in benefits requiring evidence of
insurability, unless, at the time of delivery of a Policy schedule amendment
reflecting the change in benefits, the insured's health remains as stated in the
application for the change.
 
Commencing on its effective date, a change in the Face Amount generally will
also affect the Net Amount at Risk and may affect the insured's rate class, both
of which affect a Policy owner's monthly cost of insurance charge. (Net Amount
at Risk is the difference in amount between the death benefit and the Policy
Value.) See "Rate Class" under "Charges and Deductions--Monthly Deduction from
Policy Value." This in turn can affect the level of subsequent Policy Values and
death benefits.
 
                                       15
<PAGE>
CHANGE IN DEATH BENEFIT OPTION
 
The  death benefit  option in  effect may  be changed  once each  Policy year by
sending a written  request in  form acceptable to  Fortis Benefits  at its  Home
Office. The effective date of any such change will be the Monthly Anniversary on
or  following (1)  the Date  of Receipt  of the  request or  (2) if  evidence of
insurability is required, approval by Fortis Benefits.
 
A change from Type A to Type B requires evidence of insurability and results  in
an  automatic reduction in the Face Amount by  the amount of Policy Value on the
effective date of the change. This change may not be made if it would result  in
a Face Amount which is less than the minimum Face Amount, which is $500,000. Nor
will  a  change  in death  benefit  option be  permitted  if it  results  in any
violation of the then current maximum premium limitations under Section 7702  of
the Code. See "Payment and Allocation of Premiums-- Premiums."
 
A  change from Type A to Type B will  not alter the death benefit at the time of
the change, but will affect the determination of the death benefit from then on.
Since, from then on, the Policy Value will be added to the new Face Amount,  the
death  benefit will vary with the Policy  Value. Moreover, under Type B, the Net
Amount at Risk will not vary unless the Alternative Death Benefit is in  effect.
Therefore,  after a  change from Type  A to Type  B, the cost  of insurance will
generally be higher if the Policy Value increases, but lower if the Policy Value
decreases. See "Charges and Deductions-- Monthly Deductions From Policy Value."
 
Although a change from  Type A to  Type B results in  an automatic reduction  in
Face  Amount, it will not result in any  change in the charges from premium tax,
sales or other issuance expenses or in the monthly Minimum Premium.
 
If the death benefit option changes from Type B to Type A, the Face Amount  will
be  increased by  the amount of  the Policy Value  on the effective  date of the
change. The  death benefit  will  not be  altered at  the  time of  the  change.
However,  the  change  in  death  benefit option  will  continue  to  affect the
determination of the death benefit from  then on, because the Policy Value  will
no  longer  be  added to  the  Face  Amount in  determining  the  death benefit.
Therefore, after a change from Type B  to Type A, the cost of insurance  charges
will  generally be lower if the Policy  Value increases but higher if the Policy
Value decreases. See  "Charges and Deductions--  Monthly Deductions From  Policy
Value."
 
Although  a change from Type B to Type A results in an automatic increase in the
Face Amount of a Policy,  no additional sales charge  or expense charge will  be
imposed  as a result of  such a change, and no  evidence of insurability will be
required. Nor will there be  any change in the  monthly Minimum Premium under  a
Policy  or any right to a refund of charges upon cancellation of the Face Amount
increase.
 
POLICY VALUE
 
The total Policy  Value at  any time  is the  sum of  the Policy  Values in  the
General  Account (see Appendix  C--"The General Account"  and "Loan Privileges")
and the Subaccounts of the Separate Account at such time.
 
The Policy  Value in  the Separate  Account  may increase  or decrease  on  each
Valuation  Date, depending on  the investment return  of the chosen Subaccounts.
See "Separate Account Net Investment  Return," below. "Valuation Dates" are  all
business days, except, with respect to any Subaccount, days on which the related
Fortis Series Portfolio does not value its shares. Valuations for any date other
than a Valuation Date will be determined as of the next Valuation Date.
 
POLICY VALUE ADVANCES AND CASH VALUE BONUSES
 
POLICY  VALUE ADVANCES. A Policy may  be eligible for a credit  in the form of a
Policy Value Advance starting on the last day of the seventh Policy year.  There
are limited guarantees applicable to these credits. These credits may be subject
to recovery by Fortis Benefits pursuant to the deductions described below.
 
Eligible Policies will receive a Policy Value Advance only if, as of the date of
the  credit, the cumulative amount of premiums  paid to date, less the amount of
any outstanding Policy  loans and  cumulative partial withdrawals  taken by  the
Policy  owner,  at least  equals the  cumulative  monthly Minimum  Premiums. For
purposes of meeting the  premium payment requirement at  the end of the  seventh
Policy  year, premium payments made  during that year in  excess of 36 times the
monthly Minimum  Premium  at that  time  will  be disregarded.  If  the  premium
requirement  is not met for any credit, no further Policy Value Advances will be
paid.
 
   
For eligible Policies, Fortis Benefits currently  intends to pay, at the end  of
the  seventh Policy year, and at the end of each subsequent Policy year prior to
the insured's Age  95, a  percentage (specified  below) of  the average  monthly
Minimum  Premium  to  date  under  the  Policy  (calculated  without  regard  to
substandard risks or optional riders) times 12.
    
 
                    CURRENT POLICY VALUE ADVANCE PERCENTAGES
 
<TABLE>
<CAPTION>
AGE OF                                                                   POLICY YEARS
INSURED                                             POLICY    POLICY    9 AND LATER TO
AT ISSUE                                            YEAR 7    YEAR 8        AGE 95
- --------------------------------------------------  -------   -------   --------------
<S>                                                 <C>       <C>       <C>
0-60..............................................     2%        6%          10%
61-70.............................................     5%        7%          10%
71-80.............................................     6%        6%           6%
</TABLE>
 
The operation of the Policy Value Advances is further explained in Appendix B at
the end of this Prospectus and in the illustrations contained therein.
 
                                       16
<PAGE>
Subject to the guaranteed minimums set forth below, Fortis Benefits reserves the
right in its sole discretion to reduce the rate of Policy Value Advances. Policy
owners will be given one year's  notice before any such reduction takes  effect.
Fortis  Benefits  guarantees  Policy  Value Advances  for  eligible  Policies at
specified rates. The guaranteed rates are  based on the insured's Age at  Policy
issue, as follows:
 
                   GUARANTEED POLICY VALUE ADVANCE PERCENTAGE
 
<TABLE>
<CAPTION>
AGE OF                                                                   POLICY YEARS
INSURED                                             POLICY    POLICY    9 AND LATER TO
AT ISSUE                                            YEAR 7    YEAR 8        AGE 95
- --------------------------------------------------  -------   -------   --------------
<S>                                                 <C>       <C>       <C>
0-60..............................................     2%        6%          10%
61-70.............................................     2%        6%           7%
71-80.............................................     2%        5%           6%
</TABLE>
 
   
Policy  Value Advances are offered  or guaranteed only to  the extent allowed by
the state in which the Policy is issued.
    
 
While it is  not Fortis Benefit's  current intention to  do so, Fortis  Benefits
reserves  the  right to  recover  Policy Value  Advances  over time  pursuant to
subsequent monthly and  daily deductions.  Accordingly, a  Policy Value  Advance
somewhat  resembles an interest-free loan credited  to the Policy. The amount of
such deductions however,  may be less  than (and will  never exceed) the  actual
amount  of Policy Value Advances, irrespective of  any return that may be earned
thereon in the  Separate Account  or in the  General Account.  Also, during  any
period  when deductions  are being  made to  recover Policy  Value Advances, the
similar deductions  for premium  tax and  sales charges  will be  suspended,  as
discussed  under "Charges and  Deductions--Premium Tax and  Sales Charges; Other
Policy Issuance  Expense  Charges."  Therefore, Policy  Value  Advances  provide
Policy owners an opportunity to accumulate a greater amount of Policy Value than
they otherwise would have.
 
Policy  Value Advances are  designed to encourage Policy  owners to retain their
Policies and to make Minimum Premium payments for a substantial period of  time,
by offering Policy owners a potential economic benefit for doing so. In general,
Fortis  Benefits also expects  to derive an  economic benefit to  the extent the
Policies remain outstanding and Minimum Premiums continue to be paid.
 
CASH VALUE BONUSES. Fortis Benefits will credit Cash Value Bonuses at the end of
the ninth Policy year,  and at the  end of every Policy  year thereafter to  the
Policy Anniversary when the insured reaches Age 95, as set forth below:
 
<TABLE>
<CAPTION>
                                                   BONUS AS A PERCENT
                            BONUS AS A PERCENT OF  OF SURRENDER VALUE
                             SURRENDER VALUE AT        AT END OF
                                   END OF             POLICY YEARS
SURRENDER VALUE ON              POLICY YEARS        20 AND LATER TO
 DATE OF BONUS                  9 THROUGH 19             AGE 95
- --------------------------  ---------------------  ------------------
<S>                         <C>                    <C>
Less than $50,000.........             .00%                  .00%
$50,000 to $299,999.......             .10%                  .10%
$300,000 to $499,999......             .55%                  .55%
$500,000 or more..........             .55%                  .80%
</TABLE>
 
   
Cash  Value Bonuses are offered or guaranteed  only to the extent allowed by the
state in which the Policy is issued.
    
 
ALLOCATION AND EFFECTS. Any  Policy Value Advance and  Cash Value Bonus will  be
allocated  among the General Account and the Subaccounts of the Separate Account
on a Pro Rata Basis. Following  such allocation, these amounts will be  credited
with  investment  performance and  otherwise be  treated the  same as  any other
amounts allocated to the Subaccounts or the General Account, as the case may be.
Thus, for example, any  Policy Value Advance or  Cash Value Bonus will  increase
the  Type B (but not the type A) death  benefit under the Policy. Under a Type A
death benefit,  Policy Value  Advances and  Cash Value  Bonuses will  result  in
reduced cost of insurance charges. Conversely, if the above-mentioned deductions
to recover Policy Value Advances are made, they will reduce the Policy Value and
thus the amount of Type B death benefit.
 
Also,  like any other increase  in Policy Value, Policy  Value Advances and Cash
Value Bonuses, if  allocated to  the Separate Account,  will be  subject to  the
generally  applicable  mortality  and  expense  risk  charge  and  Fortis Series
expenses. These  asset-based charges  are, in  effect, amounts  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
 
                                       17
<PAGE>
    (3)  All amounts transferred  to the Subaccount from  the General Account or
        from another Subaccount; minus
 
    (4) Any amounts transferred from the Subaccount to the General Account or to
        another Subaccount; minus
 
    (5) Any partial withdrawal from the Subaccount; minus
 
    (6) The amount of any daily deductions for premium tax and sales charges  or
        to  recover Policy Value  Advances (see "Premium  Tax and Sales Charges;
        Other Policy Issuance Expense Charges" and "Deductions to Recover Policy
        Value  Advances"  under  "Charges  and  Deductions")  allocated  to  the
        Subaccount; minus
 
    (7)  The  portion  of the  cumulative  Monthly Deductions  allocated  to the
        Subaccount (see "Charges and Deductions--Monthly Deductions From  Policy
        Value"); plus
 
    (8)  The cumulative net investment return (discussed below) on the amount of
        Policy Value in the Subaccount from time to time.
 
The Policy's total Policy Value in the Separate Account is the sum of the Policy
Values in each Subaccount, which have no guaranteed minimum.
 
SEPARATE ACCOUNT NET INVESTMENT RETURN
 
The net asset value  for each Fortis  Series Portfolio is  determined as of  the
close  of  regular trading  on the  New  York Stock  Exchange ("NYSE"),  on each
Valuation  Date.  The  net  investment  return  for  each  Subaccount  and   all
transactions  and calculations with respect to  the Policies as of any Valuation
Date are determined as of that time.
 
Each Subaccount is credited with  a rate of net  investment return equal to  its
gross  rate  of  investment return  during  each  Valuation Period  less  (1) an
adjustment for the Separate Account's charge for mortality and expense risks (at
an annual rate of .90%) and (2)  a charge for Fortis Benefits' income taxes,  if
any  such  tax  charge  becomes  necessary  in  the  future  (see  "Federal  Tax
Matters--Taxation  of  Fortis  Benefits").  Each  Subaccount's  gross  rate   of
investment  return during a Valuation Period is the rate of increase or decrease
in the per share net asset value of the underlying Fortis Series Portfolio  over
the  Valuation  Period,  adjusted  upward to  take  appropriate  account  of any
dividends or distributions paid by the Portfolio during this period.
 
A "Valuation  Period" is  the  period between  two successive  Valuation  Dates,
commencing  at the close of  regular trading on the  NYSE on each Valuation Date
and ending at the close  of regular trading on the  NYSE on the next  succeeding
Valuation  Date.  Depending  primarily  on  the  investment  experience  of  the
underlying Portfolio, a Separate Account Subaccount's net investment return  may
be  either positive or negative during a Valuation Period. Subject to applicable
legal requirements, Fortis Benefits  reserves the right to  change the times  of
day when values under a Policy are determined.
 
PAYMENT AND ALLOCATION OF PREMIUMS
 
ISSUANCE OF A POLICY
 
Individuals wishing to purchase a Policy must complete an application which will
be  sent to Fortis Benefits'  Home Office. Currently the  minimum Face Amount of
insurance for which a Policy may be issued is $500,000. A Policy will  generally
be issued to insureds Age 25-80 who supply evidence of insurability satisfactory
to Fortis Benefits.
 
   
Acceptance  of  an  application  is  subject  to  Fortis  Benefits  underwriting
guidelines and Policy  approval procedures.  Any premium payments  for a  Policy
that  never goes into effect, or that  is subsequently revoked, will be returned
without interest.
    
 
If the proposed insured meets certain health requirements, Fortis Benefits  will
issue  temporary term life insurance to cover  the period before the Policy goes
into effect. Temporary  insurance will  be issued  only if  the initial  premium
payment has been paid with the application and the amount of temporary insurance
coverage  will  not  exceed $300,000  under  all applications  for  the proposed
insured pending with  Fortis Benefits  and any  other insurers.  If a  temporary
insurance  benefit is paid, a premium for  the amount of temporary coverage from
the date of its issue to the  date of death will be charged. Temporary  coverage
is  subject to certain other conditions,  including special limits for temporary
coverage of certain optional benefits provided by rider, and is for a maximum of
ninety days. Except as otherwise provided in any temporary insurance  agreement,
there will be no insurance coverage under a Policy unless at the time the Policy
is delivered the insured's health is the same as stated in the application.
 
The  Policy Date is the date used  to determine Policy Anniversaries and Monthly
Anniversaries, regardless of when  the Policy is delivered.  The Policy Date  is
also  when  Monthly  Deductions  commence.  When  temporary  insurance  has been
provided, the  Policy  Date  will ordinarily  be  the  date of  part  I  of  the
application, except that if that date is the 29th through the 31st of any month,
the Policy Date will be the first of the next month. When no temporary insurance
has  been provided,  the Policy  Date will  ordinarily be  three days  after the
 
                                       18
<PAGE>
date the application is approved, except that  if that date is the 29th  through
31st  of any month, the Policy Date will be the first of the next month. A later
Policy Date  will  result  in  monthly deductions  being  taken  out  later  and
investment  performance on any  premium payment being  reflected in the Separate
Account later. A prospective purchaser may request a Policy Date later than that
which otherwise would apply, subject to Fortis Benefits' current  administrative
policies. No interest or other return on premium payments will be credited prior
to the Policy Date, however.
 
Notwithstanding  the  general  procedures  outlined  above,  the  purchaser may,
subject to Fortis Benefits' current administrative policies and state  insurance
law  requirements, request a Policy Date up to  six months prior to the date the
Policy is issued, for  the purpose of  preserving a younger  Age of the  insured
person  under the Policy. In many cases, a  younger Age will result in a smaller
monthly Minimum  Premium, lower  cost  of insurance  rates and  lower  Surrender
Charges.  An earlier Policy  Date will also result  in a correspondingly earlier
commencement of  Monthly  Deductions  and  may  result  in  lower  Policy  Value
Advances.  If an earlier Policy Date  is requested, all monthly Minimum Premiums
commencing with  that date,  plus the  amount of  initial premium  payment  that
otherwise would be required, must be paid before the Policy will be issued.
 
In  other  cases, unless  otherwise requested,  if  the person's  birthday falls
between the date  of an application  and the  date the Policy  is approved,  the
Policy Date will generally be set early enough to preserve the younger Age.
 
PREMIUMS
 
   
PAYMENT  OF  PREMIUMS. At  the  time of  Policy  issuance, the  Planned Periodic
Premium must be, on an annualized basis, at least the greater of (1) $10,000, or
(1) twelve  monthly Minimum  Premiums.  For purposes  of this  requirement,  the
Planned  Periodic Premiums are assumed to be level in the first policy year. The
initial premium payment must cover all monthly Minimum Premiums from the  Policy
Date  to  the  next billing  date,  generally  after the  Policy  is  mailed for
delivery, and must  be paid before  a Policy  will take effect.  If the  Planned
Periodic Premium is paid monthly, at least two months' Planned Periodic Premiums
must be paid.
    
 
Subject  to  Fortis Benefits'  guidelines, each  Policy  owner will  determine a
Planned Periodic  Premium  schedule  that  provides for  the  payment  of  level
premiums  at specified intervals for the life  of the Policy. (If desired, these
may be paid by means of automatic monthly drafts on the Policy owner's  checking
account.)  The  Policy  owner,  however,  is not  required  to  pay  premiums in
accordance with  the Planned  Periodic Premium  schedule, except  to the  extent
described  above with  respect to  the initial  premium payment.  THE PAYMENT OF
PLANNED PERIODIC PREMIUMS WILL NOT GUARANTEE  THAT THE POLICY REMAINS IN  FORCE.
Instead,  the  duration of  the  Policy depends  upon  the Net  Cash  Value. See
"Payment and Allocation of Premiums-- Policy Lapse and Reinstatement."
 
Subject to the limitations described below,  a Policy owner may make  additional
premium payments at any time in any amount.
 
The total of all premiums paid may never exceed the then current maximum premium
limitations  under Section 7702  of the Code. If  at any time  a premium is paid
that would  result  in  any  violation  of  the  then  current  maximum  premium
limitations,  Fortis Benefits will accept only  that portion of the premium that
will make  total premiums  equal to  the limit.  Fortis Benefits  will  promptly
refund any such excess, unless the Policy owner directs otherwise. Any amount so
refunded  will include any  positive net investment  performance attributable to
such amount  prior  to  refund.  The  amount  of  any  positive  net  investment
performance  refunded will  constitute ordinary income  to the  Policy owner for
federal income tax purposes.
 
   
Fortis Benefits reserves the right to impose additional limits on the number  or
amount  of  premium  payments. Fortis  Benefits  currently has  no  intention of
imposing such limits except when the Alternative Death Benefit is in effect. See
"Policy Benefits--Death Benefit Options."
    
 
GUARANTEED DEATH BENEFIT. A Policy is guaranteed to stay in force if, as of each
Monthly Anniversary, the cumulative  amount of premiums paid  to date, less  the
amount  of any outstanding  Policy loans and  cumulative partial withdrawals, at
least equals the cumulative monthly  Minimum Premiums, assuming regular  monthly
payment.  This guarantee will be for the lesser of 12 years from the Policy Date
or until Age 65 (or  for 5 years if  Age 60 to 70 at  issue). After Age 70,  the
guarantee  is for  the greater of  two years or  to Age 75.  For Policies issued
after May 1, 1995,  or as soon  thereafter as available in  the state where  the
Policy  is issued, the guarantee  for insureds rated other  than standard is for
the lesser of the guarantee  period for their Age  or five years. The  guarantee
period may be shorter in some states due to state limitations.
 
If,  on any Monthly Anniversary, the Minimum Premiums have not been paid, Fortis
Benefits will send the Policy owner a  notice of the minimum amount required  to
be  paid. The Guaranteed Death Benefit will terminate if at least this amount is
not paid  prior to  the next  Monthly Anniversary.  Any Grace  Period under  the
Policy will end on the date
 
                                       19
<PAGE>
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,  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
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
 
                                       20
<PAGE>
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
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
    
 
                                       21
<PAGE>
   
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 premium, and (b)  the
balance needed to cover any due and unpaid Monthly Deductions through the end of
the Grace Period.
 
Any  Policy  loan on  the date  of termination  will be  automatically cancelled
(except in jurisdictions where such cancellation  is not permitted) and in  that
case  need not otherwise be repaid or  reinstated. The amount of Policy Value on
the date of reinstatement  will be equal to  the premium paid at  reinstatement,
less  any  premium tax  charge deducted  from premiums,  less the  first Monthly
Deduction paid  in accordance  with (a)  above,  and less  the amounts  paid  in
accordance  with (b) above and plus the  Surrender Charge assumed at lapse. (The
last addition to Policy Value is designed to avoid duplicate Surrender Charges.)
This Policy Value  will be allocated  as the  Policy owner requests  or, in  the
absence  of  a request,  to  the General  Account. If  the  Policy loan  must be
reinstated, the Policy Value will  be increased by the  amount of the loan,  and
that  portion  of the  Policy  Value will  be held  in  the General  Account and
credited with interest at a rate of 4% per annum.
 
The date of reinstatement will be the first Monthly Anniversary on or  following
approval  of the application for reinstatement. The Guaranteed Death Benefit and
eligibility  for  Policy  Value  Advances  will  not  be  reinstated.  Following
reinstatement,  the Surrender Charge  will be reinstated  and will be calculated
using the original Policy  Date and Face Amount  increase dates as  appropriate.
See  "Charges  and  Deductions--Premium  Tax  and  Sales  Charges;  Other Policy
Issuance Expense Charges."
 
CHARGES AND DEDUCTIONS
 
PREMIUM TAX AND SALES CHARGES; OTHER POLICY ISSUANCE EXPENSE CHARGES
 
PREMIUM TAX AND SALES  CHARGES. Premium tax and  sales charges are not  deducted
from  premium payments. This  allows more of  each premium payment  to be put to
work earning a return for the Policy  owner. Currently, a premium tax charge  in
the amount of 2.2% of all premium payments is assessed through monthly and daily
deductions  from Policy  Value, as described  below. Any portion  of such amount
that is  not recovered  by Fortis  Benefits pursuant  to the  monthly and  daily
deductions may be deducted as part of the Surrender Charge discussed below.
 
A  sales charge in the amount of 7 1/2% of all premium payments is also assessed
through the monthly and daily deductions  from Policy Value. Any amount of  this
sales  charge that is not recovered by Fortis Benefits through these monthly and
daily deductions may be deducted as  a Contingent Deferred Sales Charge that  is
included  as part of the Surrender Charge. It  is not possible to state how long
it would take  for the  full 7  1/2% sales charge  to be  recovered through  the
monthly  and daily deductions. First, the  cumulative sales charge will increase
with each new premium payment, and the Policy owner has considerable flexibility
to vary the  amount and timing  of premium payments.  Second, the actual  dollar
amount of the daily deduction to recover the sales charge depends on a number of
factors that will differ for
 
                                       22
<PAGE>
each  Policy, including the amount of  premium payments made, the performance of
the investment options the  Policy owner chooses, the  amount and timing of  any
Policy  Value Advances and Cash Value Bonuses  or loans and loan repayments, and
the insured's Age, sex and rate class.
 
The aggregate monthly deduction  for premium tax and  sales charges total  $4.00
per  policy (as part of the Monthly  Deduction referred to below), and the daily
deduction for these purposes is  at an annual rate of  .27% of the value of  the
Policy's net assets in the Separate Account. These monthly and daily deductions,
however,  will be refunded to the extent  that the cumulative amount of all such
deductions would exceed the current charge of 9.7% of all premium payments  made
to  date. Nor will these deductions for premium tax and sales charges be made at
any time when similar deductions to recover Policy Value Advances are being made
(which would occur  only if  Fortis Benefits decides  to exercise  its right  to
recover  such advances). Once the  amount of any Policy  Value Advances has been
fully recovered, the  monthly and  daily deductions  for premium  tax and  sales
charges  resume. The  Policy owner  is not  deemed to  have "paid"  any periodic
premium tax and sales charges that otherwise would have been deducted during the
period when deductions to recover Policy Value Advances were being made.
 
Any amount of premium  tax charges and sales  charges not recovered through  the
monthly  or  daily deductions  are  deducted, if  at all,  only  as part  of the
Surrender Charge discussed below.  The Surrender Charge (1)  is imposed ONLY  in
the event the Policy lapses or is surrendered in full before the eleventh Policy
Anniversary and (2) is subject to an overall upper limit or "cap" that decreases
over  time. Accordingly, Fortis Benefits' method of imposing premium tax charges
and sales charges under the Policies in many cases will result in  substantially
less than the full amount of such charges being imposed.
 
As  part  of the  Surrender Charge,  Fortis Benefits  also imposes  a Contingent
Deferred Sales Charge in  the amount of  22% of premiums paid  in the first  two
Policy  years  that are  not  in excess  of the  sum  of twelve  monthly Minimum
Premiums (calculated without regard to the  $25 limit and any charge for  riders
or substandard risks). This charge decreases at a constant rate on the fifth and
each subsequent Policy Anniversary until it is zero for surrenders and lapses as
of the eleventh Policy Anniversary and thereafter.
 
   
An  additional amount  of Contingent  Deferred Sales  Charge will  be payable on
certain total surrenders or Policy lapses  following an increase in Face  Amount
requested  by the Policy owner. The maximum additional Contingent Deferred Sales
Charge will  be 22%  of the  lesser of  (1) the  sum of  twelve monthly  Minimum
Premiums  (calculated without regard to the $25 limit and any charges for riders
or substandard 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 other taxes that
may be payable and are attributable to the policies.
 
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.
 
                                       23
<PAGE>
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).
 
SURRENDER CHARGE. A Surrender Charge may be assessed on lapse or full  surrender
of  a Policy before the eleventh Policy Anniversary (or the eleventh anniversary
of a Face Amount increase requested  by the Policy owner). The Surrender  Charge
is the sum of the following components:
 
    (1)  Any portion  of the  current premium  tax charge  and the  sales charge
        referred to above that  has not yet been  collected through the  monthly
        and daily deductions therefor;
 
    (2) The other Contingent Deferred Sales Charges described above; and
 
    (3)  The charge for  other Policy (or  increase) issuance expenses described
        above.
 
The entire Surrender Charge is subject to an overall upper limit or "cap" as set
forth in the table  below. The table  below also shows the  amount by which  the
overall  cap is  increased by  a Face  Amount increase  requested by  the Policy
owner. The overall cap (and each amount of increase therein) also decreases at a
constant rate on the fifth and  each subsequent Policy Anniversary (or  increase
anniversary,  as the case may  be) until it reaches  zero on the eleventh Policy
Anniversary (or increase anniversary). Accordingly,  there will be no  Surrender
Charge  on  surrenders  or  lapses  as  of  the  later  of  the  eleventh Policy
Anniversary or the eleventh anniversary of any Face Amount increase.
 
<TABLE>
<CAPTION>
                                    OVERALL "CAP" ON
  INSURED PERSON'S                  SURRENDER CHARGE
   AGE AT TIME OF                (PER THOUSAND DOLLARS
 POLICY ISSUANCE OR                OF FACE AMOUNT OR
FACE AMOUNT INCREASE             FACE AMOUNT INCREASE)
- --------------------          ----------------------------
 
<S>                           <C>
 25 - 30 years                            $ 9
 
 31 - 40                                   10
 
 41 - 45                                   12
 
 46 - 50                                   14
 
 51 - 55                                   16
 
 56 - 60                                   21
 
 61 - 65                                   28
 
 66 - and above                            40
</TABLE>
 
   
No Surrender Charge is deducted upon a  partial withdrawal of Policy Value or  a
Face  Amount  decrease. However,  when  a Policy  owner  requests a  Face Amount
decrease (or a  partial withdrawal that  results in a  Face Amount decrease),  a
portion of the overall "cap" referred to above 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  charge  that remains
uncollected at the time  of surrender or  lapse depends on  such factors as  the
period  of time the Policy has been  in force, the performance of the investment
options the Policy  owner chooses,  the amount and  timing of  any Policy  Value
Advances,  Cash Value  Bonuses or loans  and loan repayments,  and the insured's
Age, sex, and rate class. Also, the Surrender Charge component for other  Policy
issuance  expenses  is not  based on  the amount  of premiums  paid, but  on the
Policy's Face Amount.  Nor is  the overall  Surrender Charge  "cap" referred  to
above  based on the amount of premiums paid, but on the Policy's Face Amount and
the number of years since the Policy was issued.
 
DEDUCTIONS TO RECOVER POLICY VALUE ADVANCES
 
Subject to certain conditions, Policy owners  may receive credits in the  nature
of  Policy Value Advances  starting at the  end of the  seventh Policy year. See
"Policy Benefits--Policy Value Advances and Cash Value Bonuses." While it is not
Fortis Benefits' current intention to do so, Fortis Benefits reserves the  right
to recover the amount of such advances that are actually paid by Fortis Benefits
through the following deductions made after the payment of the advances: $4.00 a
month per Policy (as part of the Monthly Deduction)
 
                                       24
<PAGE>
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 1.00327374, at  the
beginning of the Policy month, less (2) the Policy Value at the beginning of the
Policy  month. Additional amounts may be charged  if the insured's rate class is
less favorable than standard.
 
If two Policies are otherwise identical, a Type A Policy will have a lower death
benefit, higher Policy Value, and lower cost of insurance charges than a Type  B
Policy.  Since the death benefit payable under Type A remains constant while the
death benefit payable under  Type B varies with  the Policy Value, Policy  Value
increases  will generally  reduce the Net  Amount at  Risk under Type  A but not
under Type B. If the Net Amount at  Risk is greater, the cost of insurance  will
be  greater.  If  the  Alternative  Death  Benefit  is  in  effect  (see "Policy
Benefits--Death Benefit Options"), the cost of insurance will vary directly with
the Policy Value under both death benefit options.
 
Cost of insurance rates are based on the Age, sex, and rate class of the insured
and the length  of time  ("duration") since  issuance of  the Policy  or a  Face
Amount  increase  requested by  the  Policy owner.  The  actual monthly  cost of
insurance deductions will be based on Fortis Benefits' expectations as to future
experience, and may increase  each year as the  insured's Age increases.  Fortis
Benefits' current cost of insurance rate schedules generally provide lower rates
for  otherwise comparable insureds of the same Age whose Policies or Face Amount
increases have  been in  effect  for specified  periods  of time.  Although  the
current cost of insurance rate schedules are not guaranteed, the maximum cost of
insurance rates for standard risk insureds will not exceed the rates provided by
certain  of the  1980 Commissioners Standard  Ordinary Mortality  Tables and the
insured's sex,  Age  and  smoking  status.  These  tables  set  forth  different
mortality  estimates for males and females  and for smokers and non-smokers. The
maximum cost of  insurance rates  for a  table-rated substandard  insured are  a
multiple  (shown on  the Policy  schedule page)  of the  above rates. Additional
level amounts per thousand dollars of  Face Amount are charged if a  substandard
insured is assigned a flat extra rating.
 
Any  change in the cost of insurance rates or charges will apply to all insureds
of the same Age, sex, duration and rate class.
 
Cost of insurance rates that differ as between male and female insureds are  not
permitted  under  current  law  in  Montana,  and  perhaps  other  states  or in
connection  with  certain  employee   benefit  arrangements.  Employers   should
therefore seek legal advice as to any questions they may have in this regard. To
the  extent legally  necessary, Fortis  Benefits makes  available gender-neutral
cost of insurance rates, and
 
                                       25
<PAGE>
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.
 
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
 
                                       26
<PAGE>
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 MINIMUMS, CHARGES AND CREDITS
 
Fortis Benefits may  reduce the Policy  Face Amount and  initial annual  premium
minimums,  sales  charges  and/or other  charges,  or may  increase  credits, on
Policies sold to members of a class of associated individuals, or to a  trustee,
employer  or other entity representing such a  class, or to individuals where it
is expected  that such  sales will  result in  savings of  sales,  underwriting,
and/or  administrative expenses  or more favorable  mortality experience. Fortis
Benefits determines both  the eligibility for  such reductions, as  well as  the
amount  of such reductions, by considering the following factors: (1) the number
of individuals; (2) the size of the Policy or Policies; (3) the total amount  of
premium  payments expected to  be received for  the Policy or  Policies; (4) the
nature of the association between the individuals, and the expected  persistency
of  the Policy or Policies; (5) the purpose for which the Policy or Policies are
purchased and  whether  that purpose  makes  it  likely that  expenses  will  be
reduced;  (6) the method  of sale and  whether that method  makes it likely that
expenses will be reduced; and (7) any other circumstances which Fortis  Benefits
believes  to  be relevant  in determining  whether reduced  sales, underwriting,
and/or administrative expenses, or more  favorable mortality experience, may  be
expected.  Fortis  Benefits' variations  of these  Policy minimums,  charges and
credits for these sales will not be unfairly discriminatory to the interests  of
other Policy owners.
 
LOAN PRIVILEGES
 
   
The  Policy owner may borrow money from  Fortis Benefits using the Policy as the
only security for the loan.
    
 
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.
 
RATE CHARGED ON POLICY LOANS
 
Except as  noted below,  interest on  Policy loans  is charged  at an  effective
annual  rate  of  6.10% per  year  (5.66%  per year  in  Massachusetts), payable
annually in advance. If not paid when  due, loan interest at the same rate  will
be added to the loan. An amount equal to the loan interest accrued to the end of
the  year will be taken from the General Account and the Subaccounts on the same
basis that the Monthly Deductions are  allocated and transferred to the  General
Account.
 
Fortis Benefits will charge interest at a reduced effective annual rate of 3.85%
per  year, payable in  advance, if the Policy  owner meets certain requirements.
Qualifying Policy owners may be charged the reduced interest rate on one  Policy
loan  in each Policy year of up to 10%  of the Surrender Value as of the date of
the loan,  provided that  the generally  applicable limitations  on the  overall
amount  of  Policy loans  (described  above) are  not  exceeded. A  Policy owner
qualifies for this reduced interest  rate if (1) the Policy  is in the third  or
subsequent Policy year and the Surrender Value is a least $50,000, or (2) in any
event,  after  the policy  has been  in force  for  at least  12 years.  The 10%
limitation of such loans is  increased to 15% of  the Surrender Value for  loans
obtained in Policy years in which the insured is age 59 1/2 or older.
 
CREDITED RATE FOR POLICY LOANS
 
As  of the Date of  Receipt at Fortis Benefits' Home  Office of the loan request
form and  assignment of  the Policy  for  security, Policy  Value equal  to  the
portion of the Policy loan allocated to each Subaccount will be transferred from
such  Subaccount to the  General Account. This  amount, plus the  portion of the
Policy loan allocable to Policy Value already being held in the General Account,
will be credited with interest at an effective rate of 4% per annum.
 
NO INTEREST IN ADDITION  TO THAT REFERRED  TO ABOVE WILL  BE CREDITED TO  LOANED
POLICY  VALUES NOR WILL POLICY VALUES IN  THE GENERAL ACCOUNT PARTICIPATE IN ANY
INVESTMENT EXPERIENCE APPLICABLE TO THE SEPARATE ACCOUNT.
 
                                       27
<PAGE>
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 be reallocated upon each Policy Anniversary on the
same basis that  the Monthly  Deductions are allocated.  Interest credited  will
also  be reallocated upon full  repayment of the loan in  the same manner as the
repayment is allocated.
 
REPAYMENT OF A LOAN
 
Indebtedness may be repaid in whole or in part any time before the Maturity Date
while the insured is living. As of the Date of Receipt of the repayment,  unless
the Policy owner specifies otherwise, loaned Policy Value equal to the amount of
the  repayment will  be reallocated  among the  unloaned portion  of the General
Account and the Subaccounts  of the Separate Account  in the same proportion  as
premiums  are  then being  allocated to  those accounts.  The Policy  owner must
designate whether  a payment  is intended  as a  loan payment  or as  a  premium
payment.  Any payment  for which  no designation  is made  will be  treated as a
premium payment.
 
SURRENDER AND PARTIAL WITHDRAWAL
 
Full surrender of the  Policy for the  Surrender Value may be  made at any  time
during  the insured's  lifetime. A  Surrender Charge  will be  deducted from the
Policy Value on any full surrender within eleven years after the Policy Date. An
additional amount of Surrender Charge may also be deducted on any full surrender
within eleven years after the date of any Face Amount increase above the  amount
on  which such  charge was previously  calculated. See  "Surrender Charge" under
"Charges and Deductions--Premium  Tax and Sales  Charges; Other Policy  Issuance
Expense  Charges."  (This does  not apply  to a  Face Amount  increase occurring
automatically upon a change from a Type B to a Type A death benefit.)
 
Partial withdrawals of Surrender Value may  be made once each Policy year  after
the  first Policy year during the insured's lifetime. Partial withdrawals in the
first two Policy years will be allowed only if cumulative premiums paid to  date
are at least equal to the sum of 12 monthly Minimum Premiums (calculated without
regard  to any  charges for  riders or substandard  risks) for  the initial Face
Amount. A comparable restriction  applies in the first  two years following  any
Face  Amount increases requested by the  Policy owner. The amount withdrawn will
be deducted from the General Account and the Subaccounts of the Separate Account
as selected by the Policy owner. If no selection is made then the amount will be
withdrawn on a Pro Rata  Basis. Fortis Benefits reserves  the right to deduct  a
withdrawal  charge from the proceeds of  partial withdrawals, although it has no
current plans  to  do so.  Any  such  charge would  not  be imposed  on  a  full
surrender, would not be designed to yield a profit to Fortis Benefits, and would
not exceed $25 per withdrawal (or, if less, 2% of the amount withdrawn).
 
When  Death Benefit Type A is in  effect, any partial withdrawal will reduce the
Face Amount  and  thus the  death  benefit, by  the  amount withdrawn.  Such  an
automatic  reduction in Face Amount does not result in any change in the monthly
Minimum Premium,  but  may  result  in a  distribution  (as  a  further  partial
withdrawal)  of  any  additional amount  necessary  to comply  with  the maximum
premium limitation under Section 7702 of  the Code. See "Payment and  Allocation
of Premiums--Premiums."
 
When Death Benefit Type B is in effect, the amount withdrawn will not reduce the
Face Amount. However, the death benefit will be reduced by the amount withdrawn,
because  Policy Value is reduced by the amount withdrawn. Under either Type A or
Type B, when the  Alternative Death Benefit is  in effect, a partial  withdrawal
will  reduce the death benefit  by a greater amount  than otherwise would be the
case.
 
A partial withdrawal  may also  cause the  termination of  the Guaranteed  Death
Benefit  or disqualify  a Policy from  receiving Policy Value  Advances and Cash
Value Bonuses.
 
                                       28
<PAGE>
   
A Policy owner will not be permitted  to make any partial withdrawal that  would
reduce the Face Amount of the Policy below a minimum Face Amount of $400,000. 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.
 
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.
 
                                       29
<PAGE>
DISTRIBUTION OF THE POLICIES
 
The  Policies will be sold by individuals  who, in addition to being licensed by
state insurance authorities to  sell the policies of  Fortis Benefits, are  also
registered   representatives  of  Fortis   Investors,  Inc.  ("Investors"),  the
principal underwriter of  the Policies, or  registered representatives of  other
broker-dealer   firms  or  representatives   of  firms  that   are  exempt  from
broker-dealer regulation. Investors and any  such other broker-dealer firms  are
registered  with  the Securities  and Exchange  Commission under  the Securities
Exchange Act  of  1934  as  broker-dealers  and  are  members  of  the  National
Association of Securities Dealers, Inc.
 
   
Commissions  and other  compensation are  paid by  Fortis Benefits  to Investors
under a distribution agreement entered  into by them as  of January 1, 1994  and
amended September 30, 1995. As compensation for distributing the Policies Fortis
Benefits  pays Investors 110.5% of  all premiums up to  the first twelve monthly
Minimum Premiums  (and  up to  the  amount  of twelve  months'  Minimum  Premium
attributable to Face Amount increases); and 4% of all other premiums paid during
the first six years after the Policy Date and 2% of such excess premiums paid in
Policy  years seven  through ten.  Fortis Benefits  also pays  Investors .25% of
unloaned Policy Value annually as a  service fee from the eleventh Policy  year.
Fortis  Benefits also  pays a  general marketing  allowance to  Fortis Investors
equal to 20%  of the first  twelve monthly  Minimum Premiums, not  to exceed  an
amount  agreed to in advance by Fortis Benefits and Fortis Investors ($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
larger  service fees to  its registered representatives  and other broker-dealer
firms than as set forth above. However, in such case, such flexible compensation
arrangements will have actuarially equivalent  present values to the amounts  of
the  selling  allowances  and  service  fees set  forth  above.  In  many cases,
registered representatives,  broker-dealers or  exempt  firms are  eligible  for
additional  compensation, and  general agents  and managing  general agents also
receive  additional  compensation,  based  on  meeting  certain  production   or
mortality  experience  standards.  Commissions and  other  compensation  do not,
however, represent a charge or deduction  against Policies in addition to  those
set forth under "Charges and Deductions." Such compensation for the Policies and
for  all  other  variable  universal life  policies  issued  by  Fortis Benefits
totalled $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., Fortis  Worldwide Portfolios, Inc., and  Special
Portfolios,   Inc.  Investors'  address  is   500  Bielenberg  Drive,  Woodbury,
Minnesota, 55125.
 
Officers, directors, and  employees of Fortis  Benefits and Investors,  together
with  those of Fortis, Inc. and its other subsidiaries, are bonded pursuant to a
joint fidelity bond,  in the amount  of $5,000,000 per  occurrence, in favor  of
such companies.
 
FEDERAL TAX MATTERS
 
The following description is a brief summary of the tax rules, primarily related
to  federal income and estate taxes, which in the opinion of Fortis Benefits are
currently in effect.
 
The following discussion  is intended to  provide a general  description of  the
federal  income  tax  considerations associated  with  the Policy.  It  does not
purport either to be complete or to cover all situations; this discussion is not
intended to be taken  as tax advice.  Consult a qualified  tax adviser for  more
complete   information.  This   discussion  is   based  upon   Fortis  Benefits'
understanding of  the present  federal income  tax laws  as they  are  currently
interpreted by the Internal Revenue Service. No representation is made as to the
likelihood  of continuation  of the  present federal income  tax laws  or of the
current interpretation by the Internal Revenue Service.
 
TAX STATUS OF THE POLICY
 
Section 7702 of  the Internal  Revenue Code of  1986, as  amended, (the  "Code")
includes  a definition of  life insurance for federal  income tax purposes. This
definition can be satisfied by complying with  either of two tests set forth  in
Section  7702. Although the secretary of the Treasury is authorized to prescribe
regulations interpreting the manner in which the tests under Section 7702 are to
be applied, such
 
                                       30
<PAGE>
regulations have not been issued.  In addition, the Technical and  Miscellaneous
Revenue  Act of 1988 (TAMRA) provides certain requirements under Section 7702 of
the Code for mortality  and other expense charges  of life insurance  contracts.
The  Treasury issued proposed regulations on mortality charges in 1991. Guidance
on these requirements  is extremely  limited, but Fortis  Benefits believes  the
Policies qualify as life insurance under the proposed regulations.
 
If  it is subsequently determined  that a Policy does  not satisfy Section 7702,
Fortis Benefits reserves the right to  modify the Policy as appropriate, and  to
the  extent possible, to qualify  it as a life  insurance contract under Section
7702. If  a Policy  were determined  not to  be a  life insurance  contract  for
Section  7702 purposes, such Policy would not  provide any of the tax advantages
normally provided by a life policy.
 
Section 817(h) of the  Code also authorizes the  Secretary of the Treasury  (the
"Treasury")  to set standards by regulation  or otherwise for investments of the
Separate Account to be  "adequately diversified" in order  for the Policy to  be
treated  as  life  insurance for  federal  tax purposes.  The  Separate Account,
through Fortis Series, intends to  comply with the diversification  requirements
prescribed in Regulations Section 1.817-5, which affect how the assets of Fortis
Series  may be  invested. Fortis  Benefits believes  that Fortis  Series will be
operated in compliance with the requirements prescribed by the Treasury.
 
In connection with the issuance of the temporary regulations on  diversification
requirements,  the  Treasury  announced  that such  regulations  do  not provide
guidance  concerning  the  extent  to  which  Policy  owners  may  direct  their
investments  to  particular  Subaccounts  of  the  Separate  Account. Additional
guidance may come from the  Treasury in the future.  In that case, the  Treasury
might  treat a Policy owner as the owner  of assets of the Separate Account if a
Fortis Series Portfolio is too narrow in its investment strategy, even though it
technically meets  the diversification  requirements. It  is not  clear  whether
Treasury's  position, if  promulgated, would be  applied on  a prospective basis
only. While  Fortis Benefits  believes  that the  investment strategies  of  the
Policy's  Portfolios are sufficiently broad, it reserves the right to modify the
Policy as necessary to prevent the Policy owner from being considered the  owner
of the assets of the Separate Account.
 
   
The  following  discussion  assumes  that  the Policy  will  qualify  as  a life
insurance contract for federal income tax purposes.
    
 
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 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
 
                                       31
<PAGE>
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.
 
   
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,
 
                                       32
<PAGE>
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 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
 
                                       33
<PAGE>
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 Policy loan will be charged interest at an effective annual
rate of 3.85% per year payable in advance.
 
DIVIDENDS.  The  Policies are  nonparticipating. This  means  that they  are not
eligible for dividends and they do not participate in any distribution of Fortis
Benefits' surplus.
 
ADDITIONAL CREDITS FOR CERTAIN GROUPS. The credits described below will be  made
under  Policies owned by  Fortis, Inc., its subsidiaries,  any individual who at
the time  of  purchase is  an  officer,  director, employee,  retiree  or  sales
representative  of any such company, any Fortis Series director, any director of
any of the other mutual funds managed  by Fortis Advisers, Inc., or a spouse  or
child  under Age  21 of any  such person, or  a representative or  employee of a
broker-dealer that has a selling agreement with Fortis Investors, Inc. No credit
will be made for any  Policy for which sales  compensation is paid. The  minimum
initial  Face Amount and  minimum initial annual premium  for policies issued to
these categories of persons  is as follows,  respectively: $250,000 and  $5,000.
Additionally,  in  Fortis  Benefits'  discretion, certain  charges  may  also be
reduced or waived for these categories of persons.
 
Fortis Benefits will credit  40% of the sum  of twelve monthly Minimum  Premiums
(calculated  without  regard  to  the  $25  limit  and  any  optional  riders or
substandard risks) in the first  Policy year and 25% of  the sum of twelve  such
monthly  Minimum Premiums then  in effect in  the second Policy  year. The first
credit, after deduction of any premium tax that 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
variations will reflect  differences in Fortis  Benefits' expected  commissions,
sales  or administrative  expenses or mortality  experience with  respect to the
group of persons  to whom  such variations apply.  All such  variations will  be
pursuant  to administrative rules and  procedures established by Fortis Benefits
from  time  to  time   and  will  be  designed   to  be  fair,  reasonable   and
non-discriminatory with respect to each group of Policy owners.
 
   
PURCHASES  BY LIFE INSURANCE POLICY HOLDERS. When issuing a Policy or increasing
the Face Amount for an  insured who is already covered  by one of its or  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
    
 
                                       34
<PAGE>
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 c)
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.
 
MANAGEMENT
 
The  directors and  executive officers, to  the extent  responsible for variable
life insurance operations, of  Fortis Benefits are  listed below, together  with
their principal occupations and business experience for the past five years:
 
   
<TABLE>
<S>                               <C>
OFFICER-DIRECTORS
Robert Brian Pollock (4)          President  and Chief Executive Officer; before then Senior Vice
                                  President--Life and Disability.
Thomas Michael Keller (5)         Executive Vice President; before then Senior Vice President  of
                                  Fortis, Inc.
Dean C. Kopperud (1)              Senior Vice President--also officer of affiliated companies.
OTHER DIRECTORS
Allen Royal Freedman (2)          Chairman and Chief Executive Officer of Fortis, Inc.
J. Kerry Clayton (2)              Executive Vice President of Fortis, Inc.
Arie Aristide Fakkert (3)         Assistant General Manager of Fortis International N.V.
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.; before then Norris, McLaughlin, Marcus--attorneys.
Michael John Peninger (4)         Senior Vice President and Chief Financial Officer
Jon H. Nicholson (1)              Senior Vice President--Product Development and Marketing
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.
    
 
                                       35
<PAGE>
   
(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 Fortis AMEV N.V. AMEV/VSB 1990  N.V. is 50% owned by Fortis  AMEV
    N.V.  and 50%  owned by  Fortis AG,  Boulevard Emile  Jacqmain 53, Brussels,
    Belgium.
    
 
(3) Address: Fortis AMEV, Archimedeslaan 10, 3584 BA Utrecht, The Netherlands.
 
(4) Address: 2323 Grand Avenue, Kansas City, MO 64108.
 
(5) Address: 501 West Michigan, Milwaukee WI 53201.
 
VOTING PRIVILEGES
 
In accordance with  its view of  current applicable law,  Fortis Benefits  will,
with   respect  to  certain  matters,  vote  each  Subaccount's  shares  in  the
corresponding Portfolio at regular and  special meetings of the shareholders  of
Fortis  Series in  proportion to instructions  received from  persons having the
voting interest  in  the  corresponding  Subaccount  of  the  Separate  Account.
However,  if the 1940  Act or any rules  thereunder should be  amended or if the
present interpretation thereof should  change, and as  a result Fortis  Benefits
determines that it is permitted to vote such shares of the Portfolios in its own
right, it may elect to do so.
 
Each  Policy owner participating  in a Subaccount  will be entitled  to cast one
vote with respect  to that  Subaccount for  each $100  of Policy  Value in  that
Subaccount  as of the  date stock ownership is  determined for the corresponding
Fortis Series  shareholder  meeting. (Fractional  votes  will be  counted.)  All
shares  of the Portfolio held by that  Subaccount will be voted in proportion to
the votes of Policy owners participating in the Subaccount. Shares held in other
separate accounts will in  general be voted in  accordance with instructions  of
the  participants therein. This tends to  diminish the relative voting influence
of the Policies.  Any shares  of a  Portfolio owned  by Fortis  Benefits in  its
General  Account or by affiliated companies of  Fortis Benefits will be voted in
the same proportion as instructions for  that Portfolio which are received  from
persons  having the voting interest in all separate accounts investing in Fortis
Series.
 
The Policy owners may give instructions  regarding the election of the Board  of
Directors  of Fortis  Series, ratification of  the selection  of its independent
auditors, the approval  of the  investment adviser  of a  Portfolio, changes  in
fundamental  investment policies of a Portfolio,  and all other matters that are
put to a vote by Fortis Series shareholders.
 
Notwithstanding contrary Policy owner  voting instructions, Fortis Benefits  may
vote  Portfolio shares in  any manner necessary  to enable any  Portfolio to (1)
make or refrain from making any change in the investments or investment policies
of any Portfolio, if required by any insurance regulatory authority; (2) refrain
from making any change in the  investment policies or any investment adviser  or
principal  underwriter of any Portfolio which  may be initiated by Policy owners
or the  Fortis  Series  Board  of  Directors,  provided  that  Fortis  Benefits'
disapproval  of  the  change is  reasonable  and, in  the  case of  a  change in
investment policies or investment adviser,  based on a good faith  determination
that  such change would be  contrary to state law  or otherwise inappropriate in
light of the Portfolio's  objective and purposes; or  (3) enter into or  refrain
from  entering into any advisory agreement or underwriting contract, if required
by any insurance regulatory authority. If Fortis Benefits does disregard  Policy
owner  voting instructions, an explanation of this action and the reasons for it
will be included in the next semi-annual report to Policy owners.
 
REPORTS
 
Policy owners will receive promptly statements of significant transactions  such
as  changes in  Face Amount,  changes in  death benefit  option, transfers among
Subaccounts, partial withdrawals, Policy loans, loan repayments, termination for
any reason, reinstatement, premium payments  (except as noted below) and  unpaid
loan  interest  added  to  loan  principal.  These  transactions  will  also  be
summarized in an annual statement sent to the Policy owner. The annual statement
will be as  of a date  not more  than 60 days  prior to mailing,  and will  also
summarize  the following other items: premiums paid by use of a plan selected by
the Policy owner  authorizing monthly  withdrawals of premiums  from the  Policy
owner's  checking  account, paycheck  or  government payment  during  the annual
period, deductions of charges  occurring during that  annual period, any  Policy
Value Advances and Cash Value Bonuses credited during that period and the status
of the death benefit, Policy Value (both total and net of any Surrender Charge),
amounts  in  the  Subaccounts  and  General Account,  and  any  Policy  loan. In
addition,  an  owner  will  be  sent  semiannual  reports  containing  financial
statements  for Fortis  Series, as  required by  the 1940  Act. Fortis Benefits'
current policy is  to honor requests  for statements of  Policy values during  a
Policy  year, although Fortis Benefits  reserves the right at  any time to cease
offering or to charge for this service. Such statements may be requested through
the phone number on the cover of this Prospectus.
 
                                       36
<PAGE>
STATE REGULATION
 
Fortis Benefits  is  subject  to  regulation and  supervision  by  the  Commerce
Department  of the State of Minnesota,  which periodically examines its affairs.
It is also subject  to the insurance laws  and regulations of all  jurisdictions
where  it is authorized to  do business. Fortis Benefits  intends to satisfy the
necessary requirements to sell the policies in all states, other than New  York,
as soon as possible.
 
LEGAL MATTERS
 
The  legality of the Policies described in  this Prospectus has been passed upon
by Douglas  R.  Lowe, Associate  General  Counsel of  Fortis  Benefits.  Messrs.
Freedman,  Levy, Kroll & Simonds, Washington, D.C., have advised Fortis Benefits
on certain federal securities law matters.
 
EXPERTS
 
The financial  statements  of  Fortis  Benefits  Insurance  Company  and  Fortis
Benefits  Insurance Company Variable Account C appearing in this Prospectus have
been audited by Ernst & Young LLP,  independent auditors, as set forth in  their
reports  thereon appearing elsewhere  herein, and are  included in reliance upon
such reports given upon the authority of such firm as experts in accounting  and
auditing.
 
   
Actuarial  matters  included in  this Prospectus  have been  examined by  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
 
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
</TABLE>
    
 
                                       37
<PAGE>
   
<TABLE>
<CAPTION>
             PORTFOLIO NAME                        RATING SERVICE                     CATEGORY
<S>                                       <C>                                <C>
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>
    
 
   
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):
 
<TABLE>
<S>                                                                                     <C>
1998..................................................................................  $  18,222
1999..................................................................................        126
2000..................................................................................        136
2001..................................................................................      3,119
2002..................................................................................      4,830
                                                                                        ---------
                                                                                           26,433
                                                                                        ---------
                                                                                        ---------
</TABLE>
 
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
                                               ------------   -----------   -----------   ------------   -----------
                                               ------------   -----------   -----------   ------------   -----------
 
<CAPTION>
 
                                                                              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:
 
<TABLE>
<CAPTION>
                                              SHARES                       COST OF
                                      ----------------------   COST OF      SALES/
                                       PURCHASED     SOLD     PURCHASES  REDEMPTIONS
                                      -----------  ---------  ---------  ------------
<S>                                   <C>          <C>        <C>        <C>
Fortis Series Fund, Inc.:
  Growth Stock......................     523,134     299,772  $18,118,107  $7,009,282
  U.S. Government Securities........     276,469     218,751  2,938,191    2,167,703
  Money Market......................   1,034,680     963,476  11,426,582  10,701,404
  Asset Allocation..................     649,160     113,966  11,505,040   1,606,952
</TABLE>
 
                                      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 RIDER. If the primary insured is totally disabled for
more than six months while this rider is in effect, Fortis Benefits will apply a
premium payment to the Policy on  each subsequent Monthly Anniversary and  while
the primary insured remains totally disabled until Age 95.
 
The  amount of the premium payment is equal to the Selected Amount chosen by the
applicant at the  time of  application, and shown  in the  Policy schedule.  The
minimum  Selected Amount that can be chosen  is $25. The maximum Selected Amount
that can be chosen is the greater of $300 or the monthly Minimum Premium. If the
Policy's Face Amount is greater than  $2,000,000, the Selected Amount is  capped
at  the monthly Minimum  Premium for $2,000,000.  The annualized Selected Amount
cannot be greater than the guideline annual  premium. If the Face Amount of  the
Policy is decreased so that the annualized benefit is greater than the guideline
annual premium, the benefit will be reduced.
 
The  rider does not cover preexisting conditions and terminates when the primary
insured reaches Age  60, except as  to any disability  commencing prior to  that
time.  Monthly Deductions  will be  increased to include  the cost  of the rider
which is a  specified percentage  of the Selected  Amount based  on the  primary
insured's  Age. In most states, the current  charges will be shown in the Policy
schedule. The charges increase from year to year. Fortis Benefits may change the
rates, up to the guaranteed maximum rates set forth in the rider.
 
The Policy owner cannot elect  to have both this rider  and a Waiver of  Monthly
Deductions Rider attached as supplementary benefits with the same Policy.
 
   
ADDITIONAL  INSURED RIDER PLUS.  This rider provides  fixed amounts of insurance
until Age 95 on the life of the primary insured, one or more insured persons who
are members of the  primary insured's immediate family.  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 Face Amount that is not in excess
of the amount of rider coverage cancelled, and the new coverage will be based on
 
                                      A-2
<PAGE>
the same rate class as under  the rider. The suicide and contestability  periods
will  run from the original date of the transferred coverage. The coverage under
the rider will terminate  when the new coverage  becomes effective. Any  amounts
deducted  for the rider coverage for periods  beyond such time will be refunded.
Except as noted above,  the customary procedures and  charges for issuing a  new
Policy  or a Face Amount increase will apply to a conversion from the Additional
Insured Rider Plus.
 
PRIMARY INSURED  RIDER PLUS.  This rider  is  in most  respects similar  to  the
Additional  Insured  Rider Plus  described immediately  above, except  that this
rider is available only at the time the Policy is first issued.
 
As discussed further below,  coverage obtained under  the Primary Insured  Rider
Plus  is less costly  initially than a comparable  amount of additional coverage
obtained under the base Policy. However, for Policy owners who intend to  retain
their  Policies and meet the Minimum Premium requirements in order to obtain the
full benefit of Policy  Value Advances and additionally  qualify for Cash  Value
Bonuses,  coverage under the  base Policy will probably  be more economical over
the long term.
 
The  other  significant  difference  from  the  Additional  Insured  Rider  Plus
described  above is that, under the Primary Insured Rider Plus, the Policy owner
does not have  a right to  convert to  a new variable  universal life  insurance
policy.  Instead, at any  time before the later  of the end  of the fifth Policy
year or the insured's 65th birthday, the Policy owner may exchange the  coverage
under  the Primary  Insured Rider Plus  for a  Face Amount increase  in the same
amount under the base Policy. Fortis Benefits permits exchanges of less than the
full coverage  under  the Primary  Insured  Rider  Plus, subject  to  a  $25,000
minimum. Such partial exchanges may be elected only once each Policy year, as of
the  Policy Anniversary, and  only if remaining coverage  on the primary insured
under the rider will be at least $25,000.
 
Fortis Benefits will waive its  usual requirements for evidence of  insurability
with  respect to the Face Amount increase, and the increase will be based on the
same rate class as  the rider. The suicide  and contestability periods will  run
from the original date of the transferred coverage. The coverage under the rider
will terminate when the Face Amount increase becomes effective.
 
Except  as noted above, a Face Amount increase implemented upon an exchange from
the primary insured rider will be subject to the same procedures and charges and
in all respects have the same effect as any other Face Amount increase.
 
The rates  of charges  for coverage  under the  Primary Insured  Rider Plus  are
expected  to be  lower than  the rates of  the cost  of insurance  charges for a
comparable amount of coverage under the base Policy, for at least several  years
after the Policy is issued. However the rates for the Primary Insured Rider Plus
increase  more  rapidly as  the  insured's Age  increases  than do  the  cost of
insurance rates for a comparable amount  of coverage under the base Policy,  and
may  eventually be  higher. Also,  the maximum  guaranteed charges  for coverage
under the  Primary Insured  Rider Plus  are  at higher  rates than  the  maximum
guaranteed  cost of insurance  rates under the  base Policy. Although  it may be
necessary for Fortis Benefits to obtain an order of the Securities and  Exchange
Commission  in order to assess charges at  the maximum rates permitted under the
Primary Insured Rider Plus, Fortis  Benefits specifically reserves the right  to
seek  such an order. Fortis Benefits cannot predict whether the Commission would
issue any requested order.
 
If coverage on  the Policy's  insured person is  taken pursuant  to the  Primary
Insured  Rider Plus, the monthly Minimum Premium will be lower (unless and until
such coverage is exchanged for a  Face Amount increase as described above)  than
if  the same amount  of Face Amount  were purchased under  the base Policy. This
means that  any Surrender  Charge would  also  be lower,  and that  initially  a
smaller  amount of premiums will be required to maintain the Policy's Guaranteed
Death Benefit and  to ensure the  receipt of Policy  Value Advances and  certain
other  benefits.  See  "Minimum  Premiums"  under  "Payment  and  Allocation  of
Premiums--Premiums." Reduced premium payments, of course, will tend to result in
lower amounts of charges that are based on premium payments or Policy Value. See
"Charges and Deductions." However, the amount of any Policy Value Advances  will
be  less if coverage on  the primary insured is  taken under the Primary Insured
Rider Plus, rather than under the base Policy. In most cases this makes coverage
under the base Policy more advantageous, in the long run, for Policy owners  who
plan  to  retain their  Policies and  meet the  Minimum Premium  requirements to
obtain the full benefit of the Policy Value Advances.
 
Finally, under death benefit  Type A, lower premium  payments will increase  the
Net Amount at Risk, which will increase the amount of cost of insurance charges.
Accordingly,  Policy owners who  are interested in making  the maximum amount of
premium payments and maintaining the maximum amount of Policy Value, relative to
the amount of insurance  coverage, may be well  advised to elect coverage  under
the base Policy, rather than under the Primary Insured Rider Plus.
 
                                      A-3
<PAGE>
ADDITIONAL  INSURED RIDER  AND PRIMARY INSURED  RIDER. These riders  are in most
respects similar to the corresponding Additional Insured Rider Plus and  Primary
Insured Rider Plus described above.
 
The  primary difference is that these  riders provide 12 year annually renewable
term insurance while the "Plus" riders  provide for such coverage until Age  95.
Also,  the Additional Insured Rider does not  allow the primary insured to be an
additional insured while the Additional Insured Rider Plus does so allow.
 
Finally, these riders  will continue to  be offered  in a state  only until  the
corresponding "Plus" riders are available in that state, at which time they will
be withdrawn from sale.
 
CHILD INSURANCE RIDER. This rider provides fixed insurance in limited amounts on
the  life of  each child  of the  primary insured  named in  the application and
accepted by Fortis Benefits, and any subsequent child acquired after the date of
the application. This coverage, however, will not apply for any child who is age
15 or more at  the time the  coverage on that  child is to  take effect. Nor  is
there any insurance coverage for a child until 15 days after that child's birth,
or after the first Policy Anniversary on or after that child's 25th birthday.
 
   
The  charge for this rider is shown on  the Policy schedule and is paid in level
amounts. The insurance under  this rider becomes fully  paid-up upon receipt  by
Fortis  Benefits of due proof of the  primary insured's death while the rider is
in force.  This rider  terminates when  the Policy  terminates or  on the  first
Policy Anniversary on or after the primary insured's 65th birthday.
    
 
                                      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  $800,000  for males  Age  45. Each
illustration assumes that  the insured  is in the  non-smoker underwriting  risk
classification.  Illustrations for  an insured  in the  smoker or  a substandard
underwriting risk  classification  would show,  for  the same  Age  and  premium
payments,  lower Policy Values  and, therefore, lower  Surrender Values and, for
the Alternative Death Benefit  and Death Benefit Type  B, lower death  benefits.
These values would be higher, however, for an otherwise comparable Policy on the
life  of  a  non-smoker female  insured.  An otherwise  comparable  Policy using
gender-neutral cost of  insurance rates  may also  show higher  values than  the
Policies illustrated in the tables that follow.
 
   
The  amounts shown  for the death  benefits, Policy Values  and Surrender Values
take into account  the deductions from  premiums and the  Monthly Deduction,  as
well  as the daily deductions  from the Separate Account  for premium tax, sales
expenses and for Policy Value Advances equivalent to an annual rate of .27%, for
mortality and expense risks equivalent to an  annual rate of .90% of the  Policy
Value  in the Separate  Account, for assumed  Portfolio investment advisory fees
equivalent to an annual rate of .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
 
<TABLE>
<CAPTION>
                                             PAGE
<S>                                       <C>
Illustrations Based on CURRENT Charge
 and Policy Value Advance Schedules:
  Death Benefit Type A..................         B-3
  Death Benefit Type B..................         B-4
 
Illustrations Based on GUARANTEED Charge
 and Policy Value Advance Schedules:
  Death Benefit Type A..................         B-5
  Death Benefit Type B..................         B-6
</TABLE>
 
                                      B-1
<PAGE>
POLICY VALUE ADVANCES
 
Set forth below is supplemental information pertaining to the Policy illustrated
on  page B-5 below, assuming  a 0% hypothetical gross  annual investment rate of
return. The purpose of the following example is to show the way the Policy Value
Advances and  deductions  therefor  would  operate and  the  way  in  which  the
deductions  for  Policy Value  Advances would  affect  the deductions  for sales
charges under the Policies in the event Fortis Benefits decides to recoup Policy
Value Advances. Actual amounts would vary significantly based on such factors as
the size  of  the Policy,  the  death benefit  option  selected, the  amount  of
premiums  paid, the investment options selected  under the Policy and the actual
return earned thereon, the Cash Value Bonuses paid, the receipt and repayment of
any Policy loans, and any partial withdrawals.
 
EXAMPLE
SUPPLEMENTAL INFORMATION PERTAINING TO
THE ILLUSTRATION ON PAGE B-5
 
   
<TABLE>
<CAPTION>
                                                                    CONTINGENT DEFERRED
                                                                       SALES CHARGES
                                            CUMULATIVE MONTHLY          PAYABLE UPON
                                             AND DAILY SALES            SURRENDER AT
                                            CHARGE DEDUCTIONS           END OF YEAR         CUMULATIVE
                 POLICY VALUE ADVANCES   ------------------------  ----------------------  SALES CHARGES
    END OF       ----------------------    DOLLAR     % OF TOTAL    DOLLAR    % OF TOTAL   AS % OF TOTAL
  POLICY YEAR     CREDITS   DEDUCTIONS     AMOUNT       PREMIUM     AMOUNT      PREMIUM       PREMIUM
- ---------------  ---------  -----------  -----------  -----------  ---------  -----------  -------------
<S>              <C>        <C>          <C>          <C>          <C>        <C>          <C>
           1          0.00        0.00        60.74       0.4049    2,938.66     19.5911       19.9960
           2          0.00        0.00       141.73       0.4723    3,982.70     13.2757       13.7480
           3          0.00        0.00       242.12       0.5380    4,668.60     10.3747       10.9127
           4          0.00        0.00       361.22       0.6020    4,668.60      7.7810        8.3830
           5          0.00        0.00       498.18       0.6642    4,668.60      6.2248        6.8890
           6          0.00        0.00       652.18       0.7246    4,001.46      4.4461        5.1707
           7        170.40        0.00       822.31       0.7832    3,334.78      3.1760        3.9592
           8        511.20      170.40       880.14       0.7335    2,667.64      2.2230        2.9565
           9        852.00      267.68       880.14       0.6520    2,000.96      1.4822        2.1342
          10        852.00      287.44       880.14       0.5868    1,333.82      0.8892        1.4760
          11        852.00      305.61       880.14       0.5334      667.14      0.4043        0.9377
          12        852.00      322.04       880.14       0.4890        0.00      0.0000        0.4890
          13        852.00      336.84       880.14       0.4514        0.00      0.0000        0.4514
          14        852.00      349.87       880.14       0.4191        0.00      0.0000        0.4191
          15        852.00      360.84       880.14       0.3912        0.00      0.0000        0.3912
          16        852.00      369.54       880.14       0.3667        0.00      0.0000        0.3667
          17        852.00      375.78       880.14       0.3452        0.00      0.0000        0.3452
          18        852.00      379.24       880.14       0.3260        0.00      0.0000        0.3260
          19        852.00      379.55       880.14       0.3088        0.00      0.0000        0.3088
</TABLE>
    
 
The second and third columns of the above example show, respectively, the amount
of Policy Value Advance credited and the amount deducted to recover Policy Value
Advances in each Policy year. The fourth column shows how the monthly and  daily
deductions  for  sales charges  are deferred  beginning in  the 8th  Policy year
(during the time  when deductions  to recover  Policy Value  Advances are  being
made).
 
                                      B-2
<PAGE>
   
                               MALE ISSUE AGE 45
                      STANDARD NONSMOKER UNDERWRITING RISK
                  FACE AMOUNT: $800,000--DEATH BENEFIT TYPE A
               CURRENT CHARGE AND POLICY VALUE ADVANCE SCHEDULES
    
   
<TABLE>
<CAPTION>
                   VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES
                                              OF RETURN OF
        PREMIUMS   -------------------------------------------------------------------
       ACCUMULATED
          AT 5%              0% (1)(2)(3)                      4% (1)(2)(3)
END OF  INTEREST   --------------------------------- ---------------------------------
POLICY  PER YEAR      DEATH     POLICY    SURRENDER     DEATH     POLICY    SURRENDER
 YEAR      (1)       BENEFIT     VALUE      VALUE      BENEFIT     VALUE      VALUE
- ------ ----------- ----------- --------- ----------- ----------- --------- -----------
<S>    <C>         <C>         <C>       <C>         <C>         <C>       <C>
  1    $   15,750      800,000    12,115      4,870      800,000    12,659      5,415
  2        32,288      800,000    23,676     15,092      800,000    25,256     16,676
  3        49,652      800,000    34,872     25,272      800,000    37,973     28,373
  4        67,884      800,000    45,698     36,098      800,000    50,805     41,205
  5        87,029      800,000    56,392     46,792      800,000    63,990     54,390
  6       107,130      800,000    66,958     58,730      800,000    77,539     69,311
  7       128,237      800,000    77,546     70,689      800,000    91,609     84,751
  8       150,398      800,000    88,196     82,710      800,000   106,251    100,766
  9       173,668      800,000    98,876     94,761      800,000   121,477    117,362
 10       198,102      800,000   108,936    106,194      800,000   136,639    133,896
 15       339,862      800,000   151,884    151,884      800,000   213,482    213,482
 20       520,789      800,000   179,301    179,301      800,000   289,683    289,683
 25       751,702      800,000   185,569    185,569      800,000   370,739    370,739
 40     1,902,596            0         0          0      800,000   622,416    622,416
 
<CAPTION>
 
                 8% (1)(2)(3)(4)                      12% (1)(2)(3)(4)
END OF ------------------------------------ -------------------------------------
POLICY    DEATH      POLICY     SURRENDER      DEATH                  SURRENDER
 YEAR    BENEFIT      VALUE       VALUE       BENEFIT   POLICY VALUE    VALUE
- ------ ----------- ----------- ------------ ----------- ------------ ------------
<S>    <C>         <C>         <C>          <C>         <C>          <C>
  1        800,000      13,204       5,960      800,000       13,749       6,506
  2        800,000      26,881      18,305      800,000       28,551      19,979
  3        800,000      41,251      31,651      800,000       44,709      35,109
  4        800,000      56,349      46,749      800,000       62,358      52,758
  5        800,000      72,465      62,865      800,000       81,899      72,299
  6        800,000      89,665      81,437      800,000      103,532      95,304
  7        800,000     108,167     101,310      800,000      127,625     120,768
  8        800,000     128,096     122,610      800,000      154,477     148,992
  9        800,000     149,572     145,458      800,000      184,448     180,333
 10        800,000     172,028     169,285      800,000      217,188     214,445
 15        800,000     305,404     305,404      800,000      443,246     443,246
 20        800,000     490,922     490,922    1,012,269      829,729     829,729
 25        884,934     762,874     762,874    1,717,319    1,480,447   1,480,447
 40      2,554,489   2,432,847   2,432,847    7,935,683    7,557,793   7,557,793
</TABLE>
    
 
(1)Assumes  annual premium  of $15,000  paid in  full at  the beginning  of each
   Policy year. The values vary from those  shown if the amount or frequency  of
   payments vary.
(2)Assumes  that  no Policy  loan or  partial  withdrawal has  been made  and no
   optional insurance  riders  have been  selected.  Zero values  in  the  Death
   Benefit  column indicate Policy lapse in the absence of sufficient additional
   premium payments.
(3)Reflects Policy Value Advances and  Cash Value Bonuses credited according  to
   the following schedule:
 
<TABLE>
<CAPTION>
   POLICY VALUE ADVANCES                                CASH VALUE BONUSES
- ---------------------------  -------------------------------------------------------------------------
              CREDIT AS A                                                      BONUS AS A PERCENT OF
             PERCENT OF 12                          BONUS AS A PERCENT OF         SURRENDER VALUE
                 TIMES                                 SURRENDER VALUE         AT THE END OF POLICY
  END OF      THE AVERAGE      SURRENDER VALUE      AT THE END OF POLICY             YEARS 20
POLICY YEAR MINIMUM PREMIUM    ON DATE OF BONUS          YEARS 9-19             AND LATER TO AGE 95
- ----------- ---------------  -------------------- -------------------------  -------------------------
<S>         <C>              <C>                  <C>                        <C>
7                  2%        Less than $ 50,000             .00%                       .00%
8                  6%        $ 50,000 to $299,999           .10%                       .10%
9 to Age 95       10%        $300,000 to $499,999           .55%                       .55%
                             $500,000 or more               .55%                       .80%
</TABLE>
 
(4)Alternative  Death  Benefit  applies:  See  "Policy  Benefits--Death  Benefit
   Options" for further details.
 
    IT IS  EMPHASIZED THAT  THE HYPOTHETICAL  INVESTMENT RATES  OF RETURN  SHOWN
    ABOVE  ARE ILLUSTRATIVE  ONLY AND SHOULD  NOT BE DEEMED  A REPRESENTATION OF
    PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
    MAY BE  MORE OR  LESS THAN  THOSE SHOWN  AND WILL  DEPEND UPON  A NUMBER  OF
    FACTORS  INCLUDING THE PREMIUM AND POLICY VALUE ALLOCATIONS MADE BY AN OWNER
    AND THE DIFFERENT  RATES OF  RETURN OF  THE PORTFOLIOS.  THE DEATH  BENEFIT,
    POLICY  VALUE AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
    SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGES 0%, 4%, 8%, AND  12%
    OVER  A PERIOD OF  YEARS, BUT FLUCTUATED  ABOVE OR BELOW  THOSE AVERAGES FOR
    INDIVIDUAL POLICY YEARS OR  IF ANY PREMIUMS WERE  ALLOCATED OR POLICY  VALUE
    TRANSFERRED TO THE GENERAL ACCOUNT. NO REPRESENTATIONS CAN BE MADE BY FORTIS
    BENEFITS  OR FORTIS  SERIES THAT THESE  HYPOTHETICAL RATES OF  RETURN CAN BE
    ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
 
                                      B-3
<PAGE>
                               MALE ISSUE AGE 45
                      STANDARD NONSMOKER UNDERWRITING RISK
                  FACE AMOUNT: $800,000--DEATH BENEFIT TYPE B
               CURRENT CHARGE AND POLICY VALUE ADVANCE SCHEDULES
   
<TABLE>
<CAPTION>
                   VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES
                                              OF RETURN OF
        PREMIUMS   ------------------------------------------------------------------
       ACCUMULATED
          AT 5%             0% (1)(2)(3)                      4% (1)(2)(3)
END OF  INTEREST   ------------------------------- ----------------------------------
POLICY  PER YEAR     DEATH    POLICY    SURRENDER     DEATH      POLICY    SURRENDER
 YEAR      (1)      BENEFIT    VALUE      VALUE      BENEFIT     VALUE       VALUE
- ------ ----------- --------- --------- ----------- ----------- ---------- -----------
<S>    <C>         <C>       <C>       <C>         <C>         <C>        <C>
  1    $   15,750   812,073     12,073      4,828      812,616     12,616      5,371
  2        32,288   823,546     23,546     14,961      825,116     25,116     16,536
  3        49,652   834,605     34,605     25,005      837,680     37,680     28,080
  4        67,884   845,243     45,243     35,643      850,292     50,292     40,692
  5        87,029   855,713     55,713     46,113      863,203     63,203     53,603
  6       107,130   866,020     66,020     57,792      876,421     76,421     68,193
  7       128,237   876,314     76,314     69,457      890,100     90,100     83,243
  8       150,398   886,620     86,620     81,134      904,269    104,269     98,784
  9       173,668   896,883     96,883     92,768      918,905    118,905    114,790
 10       198,102   906,411    106,411    103,669      933,300    133,300    130,558
 15       339,862   944,897    144,897    144,897    1,003,024    203,024    203,024
 20       520,789   963,387    163,387    163,387    1,062,461    262,461    262,461
 25       751,702   954,384    154,384    154,384    1,100,243    303,243    300,243
 40     1,902,596         0          0          0      879,699     79,699     79,699
 
<CAPTION>
 
                   8% (1)(2)(3)                        12% (1)(2)(3)
END OF ------------------------------------ ------------------------------------
POLICY    DEATH      POLICY     SURRENDER      DEATH      POLICY     SURRENDER
 YEAR    BENEFIT      VALUE       VALUE       BENEFIT      VALUE       VALUE
- ------ ----------- ----------- ------------ ----------- ----------- ------------
<S>    <C>         <C>         <C>          <C>         <C>         <C>
  1        813,158      13,158       5,915      813,702      13,702       6,459
  2        826,732      26,732      18,155      828,392      28,392      19,819
  3        840,929      40,929      31,329      844,358      44,358      34,758
  4        855,772      55,772      46,172      861,711      61,711      52,111
  5        871,555      71,555      61,955      880,851      80,851      71,251
  6        888,337      88,337      80,109      901,961     101,961      93,733
  7        906,326     106,326      99,469      925,386     125,386     118,529
  8        925,611     125,611     120,126      951,372     151,372     145,887
  9        946,262     146,262     142,147      980,199     180,199     176,084
 10        967,619     167,619     164,877    1,011,381     211,381     208,638
 15      1,088,307     288,307     288,307    1,219,214     419,214     419,214
 20      1,240,716     440,716     440,716    1,547,540     747,540     747,540
 25      1,425,708     625,708     625,708    2,072,193   1,272,193   1,272,193
 40      2,074,376   1,274,376   1,274,376    6,488,271   5,688,271   5,688,271
</TABLE>
    
 
(1)Assumes annual  premium of  $15,000 paid  in full  at the  beginning of  each
   Policy  year. The values vary from those  shown if the amount or frequency of
   payments vary.
(2)Assumes that  no Policy  loan or  partial  withdrawal has  been made  and  no
   optional  insurance  riders  have been  selected.  Zero values  in  the Death
   Benefit column indicate Policy lapse in the absence of sufficient  additional
   premium payments.
(3)Reflects  Policy Value Advances and Cash  Value Bonuses credited according to
   the following schedule:
 
<TABLE>
<CAPTION>
   POLICY VALUE ADVANCES                                CASH VALUE BONUSES
- ---------------------------  -------------------------------------------------------------------------
              CREDIT AS A                                                      BONUS AS A PERCENT OF
             PERCENT OF 12                          BONUS AS A PERCENT OF         SURRENDER VALUE
                 TIMES                                 SURRENDER VALUE         AT THE END OF POLICY
  END OF      THE AVERAGE      SURRENDER VALUE      AT THE END OF POLICY             YEARS 20
POLICY YEAR MINIMUM PREMIUM    ON DATE OF BONUS          YEARS 9-19             AND LATER TO AGE 95
- ----------- ---------------  -------------------- -------------------------  -------------------------
<S>         <C>              <C>                  <C>                        <C>
7                  2%        Less than $ 50,000             .00%                       .00%
8                  6%        $ 50,000 to $299,999           .10%                       .10%
9 to Age 95       10%        $300,000 to $499,999           .55%                       .55%
                             $500,000 or more               .55%                       .80%
</TABLE>
 
   
IT IS EMPHASIZED THAT  THE HYPOTHETICAL INVESTMENT RATES  OF RETURN SHOWN  ABOVE
ARE  ILLUSTRATIVE ONLY  AND SHOULD  NOT BE  DEEMED A  REPRESENTATION OF  PAST OR
FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON A NUMBER OF FACTORS INCLUDING  THE
PREMIUM AND POLICY VALUE ALLOCATIONS MADE BY AN OWNER AND THE DIFFERENT RATES OF
RETURN  OF THE PORTFOLIOS.  THE DEATH BENEFIT, POLICY  VALUE AND SURRENDER VALUE
FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT  RATES
OF  RETURN AVERAGES 0%, 4%,  8%, AND 12% OVER A  PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW  THOSE AVERAGES FOR  INDIVIDUAL POLICY YEARS  OR IF ANY  PREMIUMS
WERE   ALLOCATED  OR  POLICY  VALUE  TRANSFERRED  TO  THE  GENERAL  ACCOUNT.  NO
REPRESENTATIONS CAN  BE MADE  BY FORTIS  BENEFITS OR  FORTIS SERIES  THAT  THESE
HYPOTHETICAL  RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
    
 
                                      B-4
<PAGE>
                               MALE ISSUE AGE 45
                      STANDARD NONSMOKER UNDERWRITING RISK
                  FACE AMOUNT: $800,000--DEATH BENEFIT TYPE A
              GUARANTEED CHARGE AND POLICY VALUE ADVANCE SCHEDULES
   
<TABLE>
<CAPTION>
                   VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES
                                              OF RETURN OF
        PREMIUMS   ------------------------------------------------------------------
       ACCUMULATED
          AT 5%              0% (1)(2)(3)                     4% (1)(2)(3)
END OF  INTEREST   -------------------------------- ---------------------------------
POLICY  PER YEAR     DEATH     POLICY    SURRENDER    DEATH      POLICY    SURRENDER
 YEAR      (1)      BENEFIT     VALUE      VALUE     BENEFIT     VALUE       VALUE
- ------ ----------- ---------- --------- ----------- ---------- ---------- -----------
<S>    <C>         <C>        <C>       <C>         <C>        <C>        <C>
  1        15,750    800,000     10,191      2,897    800,000      10,685      3,393
  2        32,288    800,000     20,005     11,320    800,000      21,412     12,730
  3        49,652    800,000     29,440     19,840    800,000      32,170     22,570
  4        67,884    800,000     38,483     28,883    800,000      42,945     33,345
  5        87,029    800,000     47,125     37,525    800,000      53,721     44,121
  6       107,130    800,000     55,341     47,113    800,000      64,471     56,243
  7       128,237    800,000     63,264     56,406    800,000      75,321     68,463
  8       150,398    800,000     71,031     65,546    800,000      86,411     80,925
  9       173,668    800,000     78,672     74,557    800,000      97,797     93,682
 10       198,102    800,000     85,733     82,990    800,000     109,024    106,281
 15       339,862    800,000    111,387    111,387    800,000     161,699    161,699
 20       520,789    800,000    114,582    114,582    800,000     202,349    202,349
 25       751,702    800,000     79,210     79,210    800,000     216,061    216,061
 40     1,902,596          0          0          0          0           0          0
 
<CAPTION>
 
                 8% (1)(2)(3)(4)                    12% (1)(2)(3)(4)
END OF ----------------------------------- ----------------------------------
POLICY    DEATH      POLICY     SURRENDER     DEATH      POLICY    SURRENDER
 YEAR    BENEFIT      VALUE       VALUE      BENEFIT      VALUE      VALUE
- ------ ----------- ----------- ----------- ----------- ----------- ----------
<S>    <C>         <C>         <C>         <C>         <C>         <C>
  1        800,000      11,182      3,890      800,000      11,679     4,387
  2        800,000      22,860     14,182      800,000      24,351    15,676
  3        800,000      35,059     25,459      800,000      38,112    28,512
  4        800,000      47,796     38,196      800,000      53,063    43,463
  5        800,000      61,094     51,494      800,000      69,315    59,715
  6        800,000      74,960     66,731      800,000      86,983    78,755
  7        800,000      89,563     82,706      800,000     106,350    99,493
  8        800,000     105,095     99,610      800,000     127,746   122,260
  9        800,000     121,697    117,582      800,000     151,505   147,390
 10        800,000     138,968    136,225      800,000     177,400   174,657
 15        800,000     236,725    236,725      800,000     351,742   351,742
 20        800,000     361,572    361,572      800,000     649,598   649,598
 25        800,000     529,360    529,360    1,347,518   1,161,654 1,161,654
 40      1,743,730   1,660,696  1,660,696    5,994,297   5,708,854 5,708,854
</TABLE>
    
 
(1)Assumes annual  premium of  $15,000 paid  in full  at the  beginning of  each
   Policy  year. The values vary from those  shown if the amount or frequency of
   payments vary.
 
(2)Assumes that  no Policy  loan or  partial  withdrawal has  been made  and  no
   optional  insurance  riders  have been  selected.  Zero values  in  the Death
   Benefit column indicate Policy lapse in the absence of sufficient  additional
   premium payments.
 
(3)Reflects  Policy Value Advances and Cash  Value Bonuses credited according to
   the following schedule:
 
<TABLE>
<CAPTION>
   POLICY VALUE ADVANCES                                CASH VALUE BONUSES
- ---------------------------  -------------------------------------------------------------------------
              CREDIT AS A                                                      BONUS AS A PERCENT OF
             PERCENT OF 12                          BONUS AS A PERCENT OF         SURRENDER VALUE
                 TIMES                                 SURRENDER VALUE       AT THE END OF POLICY YEAR
  END OF      THE AVERAGE      SURRENDER VALUE      AT THE END OF POLICY                20
POLICY YEAR MINIMUM PREMIUM    ON DATE OF BONUS          YEARS 9-19             AND LATER TO AGE 95
- ----------- ---------------  -------------------- -------------------------  -------------------------
<S>         <C>              <C>                  <C>                        <C>
7                  2%        Less than $ 50,000             .00%                       .00%
8                  6%        $ 50,000 to $299,999           .10%                       .10%
9 to Age 95       10%        $300,000 to $499,999           .55%                       .55%
                             $500,000 or more               .55%                       .80%
</TABLE>
 
   
(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 45
                      STANDARD NONSMOKER UNDERWRITING RISK
                  FACE AMOUNT: $800,000--DEATH BENEFIT TYPE B
              GUARANTEED CHARGE AND POLICY VALUE ADVANCE SCHEDULES
    
   
<TABLE>
<CAPTION>
                   VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES
                                              OF RETURN OF
        PREMIUMS   ------------------------------------------------------------------
       ACCUMULATED
          AT 5%              0% (1)(2)(3)                     4% (1)(2)(3)
END OF  INTEREST   -------------------------------- ---------------------------------
POLICY  PER YEAR     DEATH     POLICY    SURRENDER    DEATH      POLICY    SURRENDER
 YEAR      (1)      BENEFIT     VALUE      VALUE     BENEFIT     VALUE       VALUE
- ------ ----------- ---------- --------- ----------- ---------- ---------- -----------
<S>    <C>         <C>        <C>       <C>         <C>        <C>        <C>
  1    $   15,750    810,148     10,148      2,854    810,641      10,641      3,348
  2        32,288    819,880     19,880     11,194    821,277      21,277     12,595
  3        49,652    829,188     29,188     19,588    831,893      31,893     22,293
  4        67,884    838,058     38,058     28,458    842,464      42,464     32,864
  5        87,029    846,473     46,473     36,873    852,965      52,965     43,365
  6       107,130    854,404     54,404     46,175    863,353      63,353     55,125
  7       128,237    861,974     61,974     55,116    873,742      73,742     66,884
  8       150,398    869,313     69,313     63,828    884,252      84,252     78,767
  9       173,668    876,436     76,436     72,322    894,913      94,913     90,798
 10       198,102    882,878     82,878     80,136    905,243     105,243    102,500
 15       339,862    903,556    103,556    103,556    949,827     149,827    149,827
 20       520,789    897,675     97,675     97,675    972,379     172,379    172,379
 25       751,702    849,520     49,520     49,520    950,558     150,558    150,558
 40     1,902,596          0          0          0          0           0          0
 
<CAPTION>
 
                  8% (1)(2)(3)                       12% (1)(2)(3)
END OF ----------------------------------- ----------------------------------
POLICY    DEATH      POLICY     SURRENDER     DEATH      POLICY    SURRENDER
 YEAR    BENEFIT      VALUE       VALUE      BENEFIT      VALUE      VALUE
- ------ ----------- ----------- ----------- ----------- ----------- ----------
<S>    <C>         <C>         <C>         <C>         <C>         <C>
  1        811,135      11,135      3,843      811,630      11,630     4,339
  2        822,717      22,717     14,038      824,198      24,198    15,522
  3        834,755      34,755     25,155      837,780      37,780    28,180
  4        847,255      47,255     37,655      852,454      52,454    42,854
  5        860,218      60,218     50,618      868,306      68,306    58,706
  6        873,632      73,632     65,404      885,411      85,411    77,183
  7        887,637      87,637     80,780      904,008     104,008    97,150
  8        902,390     102,390     96,905      924,367     124,367   118,881
  9        917,985     117,985    113,871      946,741     146,741   142,626
 10        933,970     133,970    131,227      970,809     170,809   168,066
 15      1,018,673     218,673    218,673    1,122,605     322,605   322,605
 20      1,104,699     304,699    304,699    1,348,764     548,764   548,764
 25      1,176,807     376,807    376,807    1,677,072     877,072   877,072
 40              0           0          0    3,505,070   2,705,070 2,705,070
</TABLE>
    
 
(1)Assumes annual  premium of  $15,000 paid  in full  at the  beginning of  each
   Policy  year. The values vary from those  shown if the amount or frequency of
   payments vary.
 
(2)Assumes that  no Policy  loan or  partial  withdrawal has  been made  and  no
   optional  insurance  riders  have been  selected.  Zero values  in  the Death
   Benefit column indicate Policy lapse in the absence of sufficient  additional
   premium payments.
 
(3)Reflects  Policy Value Advances and Cash  Value Bonuses credited according to
   the following schedule:
 
<TABLE>
<CAPTION>
     POLICY VALUE ADVANCES                                      CASH VALUE BONUSES
- -------------------------------  ---------------------------------------------------------------------------------
                CREDIT AS A                               BONUS AS A PERCENT OF          BONUS AS A PERCENT OF
            PERCENT OF 12 TIMES                              SURRENDER VALUE                SURRENDER VALUE
  END OF    THE AVERAGE MINIMUM    SURRENDER VALUE     AT THE END OF POLICY YEARS    AT THE END OF POLICY YEAR 20
POLICY YEAR       PREMIUM          ON DATE OF BONUS               9-19                    AND LATER TO AGE 95
- ----------- -------------------  -------------------- -----------------------------  -----------------------------
<S>         <C>                  <C>                  <C>                            <C>
7                    2%          Less than $ 50,000             .00%                           .00%
8                    6%          $ 50,000 to $299,999           .10%                           .10%
9 to Age 95         10%          $300,000 to $499,999           .55%                           .55%
                                 $500,000 or more               .55%                           .80%
</TABLE>
 
IT IS EMPHASIZED THAT  THE HYPOTHETICAL INVESTMENT RATES  OF RETURN SHOWN  ABOVE
ARE  ILLUSTRATIVE ONLY  AND SHOULD  NOT BE  DEEMED A  REPRESENTATION OF  PAST OR
FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON A NUMBER OF FACTORS INCLUDING  THE
PREMIUM AND POLICY VALUE ALLOCATIONS MADE BY AN OWNER AND THE DIFFERENT RATES OF
RETURN  OF THE PORTFOLIOS.  THE DEATH BENEFIT, POLICY  VALUE AND SURRENDER VALUE
FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT  RATES
OF  RETURN AVERAGES 0%, 4%,  8%, AND 12% OVER A  PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW  THOSE AVERAGES FOR  INDIVIDUAL POLICY YEARS  OR IF ANY  PREMIUMS
WERE   ALLOCATED  OR  POLICY  VALUE  TRANSFERRED  TO  THE  GENERAL  ACCOUNT.  NO
REPRESENTATIONS CAN  BE MADE  BY FORTIS  BENEFITS OR  FORTIS SERIES  THAT  THESE
HYPOTHETICAL  RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
 
                                      B-6
<PAGE>
APPENDIX C
 
THE GENERAL ACCOUNT
 
A  POLICY OWNER MAY  ALLOCATE PREMIUMS OR  TRANSFER POLICY VALUE  TO THE GENERAL
ACCOUNT, WHICH CONSISTS OF ALL FORTIS BENEFITS' ASSETS NOT HELD IN THE  SEPARATE
ACCOUNT   OR  OTHER  SEGREGATED   ASSET  ACCOUNTS.  BECAUSE   OF  EXEMPTIVE  AND
EXCLUSIONARY  PROVISIONS,  INTERESTS  IN  THE  GENERAL  ACCOUNT  HAVE  NOT  BEEN
REGISTERED  UNDER THE SECURITIES  ACT OF 1933,  AND THE GENERAL  ACCOUNT HAS NOT
BEEN REGISTERED  AS  AN INVESTMENT  COMPANY  UNDER THE  1940  ACT.  ACCORDINGLY,
NEITHER  THE GENERAL ACCOUNT NOR ANY  INTERESTS THEREIN ARE GENERALLY SUBJECT TO
THE PROVISIONS OF THOSE ACTS AND FORTIS BENEFITS HAS BEEN ADVISED THAT THE STAFF
OF THE SECURITIES AND  EXCHANGE COMMISSION HAS NOT  REVIEWED THE DISCLOSURES  IN
THIS  PROSPECTUS  RELATING TO  THE  GENERAL ACCOUNT.  DISCLOSURES  REGARDING THE
GENERAL ACCOUNT  MAY,  HOWEVER,  BE  SUBJECT  TO  CERTAIN  GENERALLY  APPLICABLE
PROVISIONS  OF  THE  FEDERAL  SECURITIES  LAWS  RELATING  TO  THE  ACCURACY  AND
COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
 
This prospectus is generally intended to serve as a disclosure document only for
the aspects  of the  Policy involving  the Separate  Account and  contains  only
selected  information regarding the General  Account. More information regarding
the General Account may  be obtained from Fortis  Benefits' Home Office or  from
your sales representatives.
 
GENERAL DESCRIPTION
 
Subject  to  applicable  law,  Fortis  Benefits  has  sole  discretion  over the
investment of  the assets  of the  General  Account. Unlike  the assets  of  the
Separate  Account,  the  assets  of  the  General  Account  are  chargeable with
liabilities arising out of any other business of Fortis Benefits.
 
The allocation or transfer of amounts to the General Account does not entitle  a
Policy  owner  to share  in the  investment experience  of the  General Account.
Instead, Fortis Benefits  guarantees that  Policy Value in  the General  Account
will  accrue interest at an effective annual rate of at least 4%, independent of
the actual investment experience of the General Account. Fortis Benefits is  not
obligated  to credit interest  at any higher rate,  although Fortis Benefits, in
its sole discretion, may do so. The  rates of interest actually credited to  any
amount  in the General Account from time to time may vary depending on when that
amount was first allocated to the General Account.
 
The Policy owner may select  either Death Benefit Type A  or B under the  Policy
and  may change such option or the Policy's Face Amount, subject to satisfactory
evidence of insurability where  required and subject to  all the conditions  and
limitations applicable to such transactions generally. See "Policy Benefits."
 
GENERAL ACCOUNT POLICY VALUE
 
The Policy Value in the General Account will reflect the amount and frequency of
premium  payments allocated to  the General Account, the  amount of interest and
any Policy Value  Advances and  Cash Value Bonuses  credited to  amounts in  the
General  Account, any partial withdrawals, any transfers from or to the Separate
Account, any Policy loans  and the Monthly Deduction  imposed on amounts in  the
General  Account in connection with  the Policy. Charges under  a Policy are the
same as when the Separate  Account is being used,  except that no daily  charges
for  mortality and  expense risk  or premium  tax and  sales expenses,  or daily
deductions to  recover any  Policy Value  Advances, are  imposed on  amounts  of
Policy Value in the General Account. See "Charges and Deductions."
 
TRANSFERS, SURRENDERS AND POLICY LOANS
 
Amounts  in the  General Account  are generally subject  to the  same rights and
limitations and will be subject to the same charges as are amounts allocated  to
the  Subaccounts  of  the  Separate Account  with  respect  to  transfers, total
surrenders, partial withdrawals, and Policy  loans. See "Payment and  Allocation
of  Premiums--Allocation of Premiums  and Policy Value,"  "Loan Privileges," and
"Surrender and Partial Withdrawal." One exception  is that transfers out of  the
General  Account are limited to one transfer  in each Policy year, which may not
be for more than 50% of the  Policy Value in the General Account (excluding  the
amount of General Account Policy Value attributable to Policy loans) at the date
of  transfer. However, if the unloaned General  Account Policy Value at the date
of transfer is less than $1,000, the entire unloaned balance may be  transferred
from the General Account to the Separate Account. See "Payment and Allocation of
Premiums--Allocation of Premiums and Policy Value." Fortis Benefits reserves the
right  to review these limits  on an annual basis and,  subject to the limits in
the Policy, to reduce them.
 
                                      C-1
<PAGE>


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)

$___________ 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

/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.

$___________ 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
- --------------------------------------------------------------------------------

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>
FORTIS-REGISTERED TRADEMARK-
FORTIS FINANCIAL GROUP
P.O. BOX 64284
ST. PAUL, MN 55164
 
                                         BULK RATE
                                        U.S. POSTAGE
                                            PAID
                                      PERMIT NO. 3794
                                      MINNEAPOLIS, MN
 
   
PROSPECTUS
MAY 1, 1998
    
 
FORTIS
SERIES FUND, INC.
 
FORTIS
VUL500
<PAGE>

                      CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

     Facing Sheet.

     Cross-Reference Table. (Filed as a part of the initial filing of this 
     Form S-6 Registration Statement filed on June 5, 1992.)

     Prospectus, consisting of    pages.

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

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

     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 (Filed with Exhibit 6 below).
    
          David A. Peterson, Esq. (Filed with Exhibit 3 below).

          Ernst & Young LLP, Independent Auditors

     The following exhibits:

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

          (2)  --Not applicable

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

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

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

<PAGE>

          (4)  --Not applicable

          (5)  --(a) Specimen Flexible Premium Variable Life Insurance Policy 
               (Filed as part of Post-Effective Amendment No. 8 to this Form S-6
               registration statement filed on 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 (Incorporated by 
               reference from Exhibit 1.A(5)(c) to Pre-Effective Amendment No. 1
               to registrant's Form S-6 Registration Statement, File No. 
               33-28551, filed on August 18, 1989).

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

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

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

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

               --(c) Amendment to Articles of Incorporation and Bylaws dated 
               November 21, 1991 (Incorporated by reference from Exhibit 
               1.A(6)(c) to registrant's Post-Effective Amendment No. 4 to 
               Form S-6 Registration Statement, File No. 33-28551, filed on 
               March 2, 1992).

          (7)  --Not applicable.

          (8)  --Not applicable.

          (9)  --Not applicable.

          (10) --(a) Application Form for Flexible Premium Variable Life 
               Insurance Policy and Form of Temporary Insurance Agreement. 
               (Incorporated by reference from Exhibit No. 10(a) to 
               Post-Effective Amendment No. 9 to registrant's Form S-6 
               registration statement, File No. 33-28551, filed April 29, 1994.)

               --(b) Policy Change Application, Transfer Request Form, and 
               Change of Premium Allocation Form (Incorporated by reference 
               from Exhibit 1.A(10)(b) to registrant's Post-Effective Amendment 
               No. 4 to Form S-6 Registration Statement, File 33-28851, filed on
               March 2, 1992).

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


<PAGE>

          3.   --Opinion and consent of counsel as to the legality of Securities
               being registered. (Filed as a part of the initial filing of this 
               Form S-6 Registration Statement filed on June 5, 1992.)

          4.   --Not applicable.

          5.   --Not applicable.

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

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

          7.   --Forms of Notice of Cancellation Right and Request for 
               Cancellation pursuant to Rule 6e-3(T)(b)(13)(viii) under the 
               Investment Company Act of 1940. (Filed as a part of the initial 
               filing of this Form S-6 Registration Statement filed on June 5, 
               1992.)

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

          9.   --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) 
               (Incorporated by reference from Exhibit 10(b) to Post-Effective 
               Amendment No. 1 to registrant's Form S-6 Registration, File No. 
               33-28551, on April 30, 1990).

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

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

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

          12.  --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 25, 1997.

   /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 
amended Registration Statement to be signed on its behalf by the undersigned 
thereunto duly authorized, and its seal to be hereunto affixed and attested, 
all in the City of St. Paul, State of Minnesota this 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 reports 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. 10 to the Registration Statement 
(Form S-6 No. 33-48266) and the related Prospectus of Fortis Benefits 
Insurance Company being filed under the Securities Act of 1933 and the 
Investment Company Act of 9140 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
    
<PAGE>

                              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 45, than to a
          prospective purchaser of Policies for males of other ages or
          underwriting classes, or for females.  Nor have the particular
          examples set forth in the illustrations been selected for the purpose
          of making this relationship appear more favorable.

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

Sincerely,

/s/ Kay Doughty

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


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