VARIABLE ACCOUNT B AMERICAN INTL LIFE ASSUR CO OF NEW YORK, 485BPOS, 1997-05-02

VARIABLE ACCOUNT B AMERICAN INTL LIFE ASSUR CO OF NEW YORK
485BPOS, 1997-05-02

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Filed with the Securities and Exchange Commission on , 1997

Registration No. 33-90686

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
Post-Effective Amendment No.2
on
FORM S-6

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2

A. Exact name of trust: Variable Account B

B. Name of depositor: American International Life Assurance
Company of New York

C. Complete address of depositor's principal executive offices:
80 Pine Street, New York, New York 10005

D. Name and address of agent for service:
Robert Liguori, Vice President and General Counsel
American International Life Assurance Company of New York
80 Pine Street
New York, New York, 10005

COPIES TO:
Michael Berenson, Esq. and Florence Davis, Esq.
Jorden Burt Berenson & Johnson LLP American International
Suite 400 East Group, Inc.
1025 Thomas Jefferson Street, NW 70 Pine Street
Washington, D.C. 20007-0805 New York, New York 10270

It is proposed that this filing will become effective:

______immediately upon filing pursuant to paragraph (b)
x on May 1, 1997, pursuant to paragraph (b)

______60 days after filing pursuant to paragraph (a)(i)
______on _________ pursuant to paragraph (a)(i)of Rule 485
______this post-effective amendment designates a new effective
date for a previously filed post-effective amendment

E. Title and amount of securities being registered:
Individual Flexible Premium Variable Life Insurance Policies.
F. N/A
G. Amount of Filing Fee: N/A

Registrant has declared that it registered an indefinite number or amount
of securities in accordance with Rule 24f-2 under the Investment Company Act of
1940. Registrant filed a Rule 24f-2 notice for its most recent fiscal year on
February 28, 1997.

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CROSS REFERENCE TO ITEMS REQUIRED

BY FORM N-8B-2

N-8B-2 Item Caption in Prospectus

1...................................... The Company, The
Separate Account
2...................................... The Company
3...................................... Not Applicable
4...................................... Distribution of Policy
5...................................... The Separate Account
6(a)................................... Not Applicable
(b)................................... Not Applicable
9...................................... Legal Proceedings
10..................................... The Policy

11..................................... The Separate Account,
The Alliance Fund

12..................................... The Separate Account,
The Alliance Fund

13..................................... Charges and Deductions
14..................................... The Policy
15..................................... The Separate Account

16..................................... The Separate Account,
The Alliance Fund

17..................................... The Policy
18..................................... The Policy
19..................................... Not Applicable
20..................................... Not Applicable
21..................................... Not Applicable
22..................................... Not Applicable
23..................................... Not Applicable
24..................................... Not Applicable
25..................................... The Company
26..................................... Not Applicable
27..................................... The Company
28..................................... The Company
29..................................... The Company
30..................................... The Company
31..................................... Not Applicable
32..................................... Not Applicable
33..................................... Not Applicable
34..................................... Not Applicable

<PAGE>

CROSS REFERENCE TO ITEMS REQUIRED

BY FORM N-8B-2 (CONT'D)

N-8B-2 Item Caption in Prospectus

35..................................... The Company
37..................................... Not Applicable
38..................................... Distribution of Policy
39..................................... Distribution of Policy
40..................................... Not Applicable
41(a).................................. Distribution of Policy
42..................................... Not Applicable
43..................................... Not Applicable
44..................................... The Policy
45..................................... Not Applicable
46..................................... The Policy
47..................................... Not Applicable
48..................................... Not Applicable
49..................................... Not Applicable
50..................................... Not Applicable
51..................................... The Company, The Policy

52..................................... The Alliance Fund, The
Investment Advisors

53..................................... Tax Status
54..................................... Financial Statements
55..................................... Not Applicable

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PROSPECTUS
Flexible Premium Variable Universal Life Insurance Policies

VARIABLE ACCOUNT B
of AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
80 Pine Street
New York, New York 10005
Telephone (800) 340-2765

This prospectus describes an individual flexible premium variable universal life
insurance Policy (the "Policy") offered by American International Life Assurance
Company of New York (the "Company"). The Policy is designed to provide lifetime
insurance protection on the Insured named in the Policy and at the same time
provide flexibility to vary the amount and timing of Premiums and to change the
amount of Death Benefits payable under the Policy. This flexibility allows you
to provide for changing insurance needs under a single insurance Policy.

You also have the opportunity to allocate Net Premiums and Policy Account
Value to one or more subaccounts of Variable Account B (the "Separate Account")
and the Company's general account (the "Guaranteed Account"), within limits.
This prospectus generally describes only that portion of the Policy Account
Value allocated to the Separate Account. For a brief summary of the Guaranteed
Account, see "The Guaranteed Account," page __.

The assets of each subaccount are invested in a corresponding portfolio as
selected by the Owner from the following choices: the Conservative Investors
Portfolio, Growth Investors Portfolio, Growth Portfolio, Growth and Income
Portfolio, Money Market Portfolio, Premier Growth Portfolio, U.S.
Government/High Grade Securities Portfolio, Total Return Portfolio,
International Portfolio, Short-Term Multi-Market Portfolio, Global Bond
Portfolio, North American Government Income Portfolio, Global Dollar Government
Portfolio, Utility Income Portfolio, Worldwide Privatization Portfolio,
Technology Portfolio, Real Estate Investment Portfolio or Quasar Portfolioof the
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. ("Alliance Fund).

The accompanying prospectus for Alliance Fund, describes its portfolios,
including the risks of investing in the portfolios, and provide other
information on the portfolios and on their managers.

The Policy provides for a Net Cash Surrender Value that can be obtained by
surrendering the Policy. Because this value is based on the investment
performance of the subaccounts, to the extent of allocations to the Separate
Account, there is no guaranteed Net Cash Surrender Value. If the Net Cash
Surrender Value is insufficient to cover the charges due under the Policy, the
Policy will lapse without value. The Policy also provides for Policy loans and
permits partial surrenders within limits.
It may not be advantageous to replace existing insurance with the Policy.
Within certain limits, you may return the Policy or exchange it for another life
insurance Policy with benefits that do not vary with the investment results of a
separate account.
A Policy may be returned according to the terms of its Period to Examine
and Cancel (see "Period to Examine and Cancel Policy," Page __), during which
time Net Premium payments allocated to the Separate Account will be invested in
the Money Market subaccount.

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

INVESTMENTS IN THESE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, AND ARE NOT
GUARANTEED OR ENDORSED BY, THE ADVISER OF ANY BANK OR BANK AFFILIATE.
INVESTMENTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. ANY
INVESTMENT IN THE CONTRACT INVOLVES CERTAIN INVESTMENT RISK WHICH MAY INCLUDE
THE POSSIBLE LOSS OF PRINCIPAL.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY OR PRECEDED BY A CURRENT
PROSPECTUS FOR THE ALLIANCE FUND.

THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.

Date of Prospectus: May 1, 1997

<PAGE>

Distributor:

AIG Equity Sales Corp.
Attention: Variable Products
80 Pine Street
New York, New York 10270
1-800-888-7485

1
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TABLE OF CONTENTS
Page

<S> <C>

DEFINITIONS OF TERMS.........................................

SUMMARY OF THE POLICY........................................
Purpose of the Policy...................................
Policy Values...........................................
Policy Charges..........................................
Death Benefit.......................................
Premium Features........................................

PERFORMANCE INFORMATION......................................

INFORMATION ABOUT THE COMPANY, THE SEPARATE ACCOUNT
AND THE ALLIANCE FUND
The Company.............................................
The Separate Account....................................
The AllianceFunds and Investment Advisor..............
Alliance Fund..........................................

Conservative Investors Portfolio...................
Growth Investors Portfolio.........................
Growth Portfolio...................................
Growth and Income Portfolio........................

Money Market Portfolio............................
Premier Growth Portfolio..........................
U.S.Government/High Grade Securities Portfolio....
Total Return Portfolio............................
International Portfolio..........................
Short-Term Multi-Market Portfolio................
Global Bond Portfolio...........................
North American Government Income Portfoli........
Global Dollar Government Portfolio...............
Utility Income Portfolio..........................
Worldwide Privatization Portfolio.................
Real Estate Investment Portfolio..................
Quasar Portfolio..................................
Technology Portfolio..............................

Substitution of Securities..............................
Voting Rights...........................................

PREMIUMS AND ALLOCATIONS.....................................
Applying for a Policy...................................
Period to Examine and Cancel Policy.....................
Premiums................................................
Planned Periodic Premiums..........................
Premiums upon Increase in Specified Face Amount....
Premiums to Prevent Lapse...............................
Grace Period.......................................
Net Premium Allocations.................................
Dollar Cost Averaging...................................
Allocation Rules........................................
Crediting Premiums......................................
Transfers...............................................
Subaccount Transfer Rules..........................
Guaranteed Account Transfer Rules..................
</TABLE>

2
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<TABLE>
<CAPTION>
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GUARANTEED ACCOUNT...........................................
Interest Credited on Policy Value in the
Guaranteed Account.....................................
Calculating Guaranteed Account Value....................
Deductions from the Guaranteed Account..................
Payments from the Guaranteed Account....................

CHARGES AND DEDUCTIONS.......................................
Premium Charges.........................................
Daily Mortality and Expense Risk Charge.................
Monthly Deductions......................................
Current and Guaranteed Expense Charges.............
Cost of Insurance Charge...........................
Legal Considerations Relating to Sex-Distinct
Premiums and Benefits..................................
Supplemental Benefit Charges............................
Transfer Charge.........................................
Surrender Charges.......................................
Surrender Charges for Initial Face Amount..........
Partial Surrender Charge................................
Partial Surrender Administrative Charge.................
Dicsount Purchase Program...............................

HOW YOUR POLICY ACCOUNT VALUES VARY..........................
Determining the Policy Account Value....................
Accumulation Unit Values...........................
Net Investment Factor..............................
Guaranteed Account Value...........................
Net Policy Account......................................
Cash Surrender Value....................................
Net Cash Surrender Value................................

DEATH BENEFIT AND CHANGES IN FACE AMOUNT.....................
Death Benefit Options...................................
Changes in Death Benefit Options........................
Changes in Face Amounts.................................
Selecting and Changing the Beneficiary..................

CASH BENEFITS................................................
Policy Loans............................................

Interest...........................................
Outstanding Loans..................................
Loan Repayment; Effect if Not Repaid...............
Policy Loan Account................................
Effect of Policy Loan..............................

Surrendering the Policy for Net Cash Surrender Value....
Partial Surrenders......................................
Maturity Benefit........................................
Payment Options.........................................

ILLUSTRATIONS OF POLICY VALUES, NET CASH SURRENDER VALUES,
DEATH BENEFITS AND ACCUMULATED PREMIUMS......................

OTHER POLICY BENEFITS AND PROVISIONS.........................
Right to Convert.......................................
Limits on Our Rights to Contest the Policy..............

Incontestability...................................
Suicide Exclusion..................................
Changes in the Policy or Benefits.......................
Misstatement of Age or Sex.........................
Other Changes......................................
When Proceeds Are Paid..................................
Reports to Policy Owners................................
Assignment..............................................
Reinstatement...........................................

TAX CONSIDERATIONS...........................................
Introduction............................................
The Company.............................................
Diversification.........................................
Tax Treatment of the Policy.............................
Tax Treatment of Policy Benefits in General........
Investment in the Policy...........................
Distributions from Policies Not Classified as
Modified Endowment Contracts......................
Modified Endowment Contracts.......................
Distributions from Policies Classified as
Modified Endowment Contracts......................
Penalties on Early Distributions Policies
Classified as Modified Endowment Contracts........
Multiple Policies..................................
Interest on Policy Loans...........................
Policy Exchanges and Modifications.................
Possible Charge for the Company's Taxes............

SUPPLEMENTAL BENEFITS AND RIDERS

MANAGEMENT OF THE COMPANY....................................

DISTRIBUTION OF POLICY.......................................

OTHER POLICIES ISSUED BY THE COMPANY.........................

STATE REGULATIONS............................................

LEGAL PROCEEDINGS............................................

EXPERTS......................................................

LEGAL OPINIONS...............................................

FINANCIAL STATEMENTS.........................................

APPENDICES

</TABLE>

3
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DEFINITIONS OF TERMS

Administrative Office. One Alico Plaza, Wilmington, DE 19801

Allocation Date. The first business day after the Free Look Period expires.

Attained Age. The Insured's age on the Policy Date plus the number of full
years since the Policy Date.

Beneficiary. The person(s) who is entitled to the Insurance Benefit of this
Policy.

Cash Surrender Value. Policy Account Value less any applicable surrender
charge that would be deducted upon surrender.

Company, We, Our, Us. American International Life Assurance Company of New
York.

Death Benefit. The amount of money payable to the Beneficiary if the Insured
dies while the Policy is in force. The calculation of the Death Benefit is
described on page .

Face Amount. The amount of insurance specified by the Owner and from which
the Death Benefit will be determined. The initial Face Amount is shown in
the Policy Application.

Grace Period. The period of time following a Monthly Anniversary during which
this Policy will continue in force while the Net Cash Surrender Value is not
sufficient to cover the total monthly deduction then due.

Guaranteed Account. An account within the general account which consists of all
of the Company's assets other than the assets of the Separate Account and any
other separate accounts of the Company.

Insured. The person whose life is covered by the Policy.

Issue Date. The date the Policy is issued. It may be a later date than the
Policy Date if the initial Premium is received at Our Administrative Office and
invested before underwriting has been completed. Once issued, Policy coverage is
retroactive to the Policy Date. The Issue Date is used to measure contestability
periods. See page .

Maturity Date. The Policy Anniversary following the Insured's attained age 99.

Monthly Anniversary. The same day as the Policy Date for each succeeding month.
If the Policy Date is the 29th, 30th or 31st of a month, in any month that has
no such day, the Monthly Anniversary is deemed to be the last day of that month.
The monthly deduction is deducted on each Monthly Anniversary.

Net Cash Surrender Value. The Cash Surrender Value less any Outstanding Loans.

Net Premium. A Premium less any expense charges deducted from the premium.
See page .

Outstanding Loan. The total amount of Policy loans, including both principal
and accrued interest.

Owner, You, Your. The person who purchased the Policy as shown in the
application, unless later changed. The Owner may be someone other than the
Insured.

Planned Periodic Premium. The Premium designated at the time of application
as the amount planned to be paid at specific intervals until the Maturity
Date.

Policy. This Flexible Premium Variable Life Insurance contract between
American International Life Assurance Company of New York and You.

Policy Account Value. The total amount in the Accounts credited to a Policy.
The Policy Account Value is described on Page .

4
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Policy Anniversary. An Anniversary of the Policy Date.

Policy Date. The first date as of which We have received the initial Premium
and an application in good order. If a Policy is issued, insurance is
effective as of the Policy Date.

Policy Loan Account. The portion of the Policy Account Value held in the
Guaranteed Account as collateral for Policy loans. See page __.

Policy Month. The month commencing with the Policy Date and ending on the day
before the first Monthly Anniversary, or any following month commencing with a
Monthly Anniversary and ending on the day before the next Monthly Anniversary.

Policy Year. The year commencing with the Policy Date and ending on the day
before the first Policy Anniversary, or any following year commencing with a
Policy Anniversary and ending on the day before the next Policy Anniversary.

Premium. The total consideration paid by You in exchange for Our obligations
under the Policy. The initial Premium is due on or before delivery of the
Policy.

Separate Account. Variable Account B, a separate investment account of
American International Life Assurance Company of New York.

Subaccount. A division of the Separate Account established to invest in
shares of a corresponding portfolio of the Alliance Variable Product Series
Fund, Inc. that is available for investment under the Policy.

Valuation Date. Each day the New York Stock Exchange is open for business.

Valuation Period. A period commencing with the close of business on the New York
Stock Exchange on any particular day and ending at the close of business on the
New York Stock Exchange for the next succeeding Valuation Date.

5
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SUMMARY OF THE POLICY

This summary is intended to provide a brief overview of the more significant
aspects of the Policy. Further detail is provided in this prospectus and in the
Policy. Unless the context indicates otherwise, the discussion in this summary
and the remainder of the prospectus relates to the portion of the Policy
involving the Separate Account. The Guaranteed Account is briefly described
under "THE GUARANTEED ACCOUNT," on page __ and in the Policy.

PURPOSE OF THE POLICY

The Policy offers an Owner insurance protection on the life of the Insured
through the Maturity Date for so long as the Policy is in force. Like
traditional life insurance, the Policy provides for an initial death benefit
equal to its Face Amount, accumulation of cash value, and surrender and loan
privileges. Unlike traditional life insurance, the Policy offers a choice of
investment alternatives and an opportunity for the Policy Account Value and, if
elected by the Owner and under certain circumstances, its Death Benefit to grow
based on investment results. The Policy is a flexible premium Policy, so that,
unlike many other insurance policies and subject to certain limitations, an
Owner may choose the amount and frequency of premium payments.

POLICY VALUES

An Owner may allocate Net Premium payments among the various Subaccounts
that comprise the Separate Account and that invest in corresponding portfolios
of the Alliance Fund.An Owner may also allocate Net Premium payments to the
Guaranteed Account.

Depending on the investment experience of the selected Subaccounts, the
Policy Account Value may increase or decrease on any day. The Death Benefit may
or may not increase or decrease depending upon several factors, including the
Death Benefit Option selected by the Owner. There is no guarantee that the
Policy Account Value and Death Benefit will increase. The Owner bears the
investment risk on that portion of the Net Premiums and Policy Account Value
allocated to the Separate Account.

The Policy will remain in force until the earliest of the Maturity Date, the
death of the Insured, or a full surrender of the Policy, unless, before any of
these events, the Net Cash Surrender Value is insufficient to pay the current
monthly deduction on a Monthly Anniversary Date and a Grace Period expires
without sufficient additional premium payment or loan repayment by the Owner.

POLICY CHARGES

There are charges and deductions which the Company will deduct from each
Policy. The deductions from Premium are the sales charge of 5% plus the specific
state and local premium tax (a typical state premium tax rate would be in the
range of 2% to 2.5%).

See CHARGES AND DEDUCTIONS, Page __.

On the Issue Date and each Monthly Anniversary, the following deductions are
made from the Policy Account Value:
(a) administrative charges
(b) insurance charges
(c) supplemental benefit charges.

The monthly deduction is made from the Subaccounts pro rata on the basis of
the portion of Policy Account Value in each Subaccount. The administrative
charge varies by current Policy Face Amount. There is also an additional monthly
deduction during the first Policy Year and the 12 months immediately following
an increase in Face Amount.

See CHARGES AND DEDUCTIONS, Page __.

6
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Deductions are also made on a daily basis against the assets of each
Subaccount. Daily charges calculated at a current annual rate of 0.90% are
charged for mortality and expense risks. This charge may be decreased to not
less than 0.50% in Policy Years 11 and later. It is guaranteed not to exceed
0.90% for the duration of the Policy.

If the Policy is surrendered during the first 14 Policy Years, We will
deduct a Surrender Charge for the Initial Face Amount. If a Policy is
surrendered within 14 years immediately following an increase in Face Amount, we
will deduct a surrender charge for the increase in Face Amount. The surrender
charge will be deducted before any surrender proceeds are paid.

A charge for partial surrenders is equal to a pro rata portion of the
surrender charge that would apply to a full surrender. A partial surrender
charge is also deducted from the Policy Account Value upon a decrease in Face
Amount.

The administrative charge upon a partial surrender will be equal to the
lesser of $25 or 2% of the amount surrendered.

See CHARGES AND DEDUCTIONS, Page __.

DEATH BENEFIT

The Policy provides for the payment of benefits upon the death of the
Insured. Upon application for a Policy, the Owner designates a Planned Periodic
Premium. The Policy indicates the initial Face Amount of insurance. The Owner
also elects in the application to have the Death Benefit determined under one of
two available options. Under Option I, the Death Benefit will equal the Face
Amount on the date of the Insured's death or, if greater, the Policy Account
Value on the date of the Insured's death increased by the applicable percentage
set forth in the Policy. Under Option II, the Death Benefit will equal the Face
Amount on the date of the Insured's death plus the Policy Account Value or, if
greater, the Policy Account Value on the date of the Insured's death increased
by the applicable percentage set forth in the Policy.

See DEATH BENEFIT OPTIONS and CHANGES IN DEATH BENEFIT OPTION, Pages __ and __,
respectively.

PREMIUM FEATURES

A.Basic Minimum Premium

A Table of Basic Minimum Premiums for various ages, sex and Face
Amount in the nonsmoker class is provided in the Appendix. The
Premium for the initial Face Amount must be at least as great as the
Basic Minimum Premium at the time of application adjusted for the
Attained Age, any substandard Premium, and any supplemental benefits
riders.

B. Planned Periodic Premium

The Planned Periodic Premium is the Premium designated at the time of
application as the amount planned to be paid at specific intervals
until the Maturity Date.

C. Flexibility:

In general Premiums are flexible as to both timing and amount.
of Premiums cease at any time, the insurance provided under the Policy
will continue for as long as the Net Cash Surrender Value is sufficient
to keep the Policy in force (see Grace Period). See PREMIUMS AND
ALLOCATIONS, Page __.

When applying for a Policy, an Owner will determine a Planned Periodic
Premium that provides for the payment of level Premiums over a specified period
of time. Each Owner will receive a Premium reminder notice on either an annual,
semi-annual, quarterly, or monthly basis; however, the Owner is not required to
pay Planned Periodic Premiums.

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Payment of the Planned Periodic Premiums will not guarantee that a Policy
will remain in force. Instead, the duration of the Policy depends upon the
Policy's Net Cash Surrender Value. Even if Planned Periodic Premiums are paid,
the Policy will lapse any time the Net Cash Surrender Value is insufficient to
pay the current monthly deduction and a Grace Period expires without sufficient
payment. Any payment of additional Premium must be at least $50.00. The Company
also may reject or limit any Premium that would result in an immediate increase
in the net amount at risk under the Policy.

For information regarding the taxation of the Policy under federal income
tax law, see TAX CONSIDERATIONS, Page __.

PERFORMANCE INFORMATION

The Company from time to time may advertise the "total return" and the
"average annual total return" of the Subaccounts and the Fund. Both total return
and average total return figures are based on historical earnings and are not
intended to indicate future performance.

"Total Return" for a portfolio refers to the total of the income generated
by the portfolio net of total portfolio operating expenses plus capital gains
and losses, realized or unrealized. "Total Return" for the Subaccounts refers to
the total of the income generated by the portfolio net of total portfolio
operating expenses plus capital gains and losses, realized or unrealized, and
the monthly deduction charge. "Average Annual Total Return" reflects the
hypothetical annually compounded return that would have produced the same
cumulative return if the Fund's portfolio's or Subaccount's performance had been
constant over the entire period. Because average annual total returns tend to
smooth out variations in the return of the portfolio, they are not the same as
actual year-by-year results.

Performance information may be compared, in reports and promotional
literature, to: (i) the Standard & Poor's 500 Stock Index ("S & P 500"), Dow
Jones Industrial Average ("DJIA"), Shearson Lehman Aggregate Bond Index or other
unmanaged indices so that investors may compare the Subaccount results with
those of a group of unmanaged securities widely regarded by investors as
representative of the securities markets in general; (ii) other groups of
variable life separate accounts or other investment products tracked by Lipper
Analytical Services, a widely used independent research firm which ranks mutual
funds and other investment products by overall performance, investment
objectives, and assets, or tracked by other services, companies, publications,
or persons, such as Morningstar, Inc., who rank such investment products on
overall performance or other criteria; or (iii) the Consumer Price Index (a
measure for inflation) to assess the real rate of return from an investment in
the Subaccount. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs and
expenses.

The Company may provide in advertising, sales literature, periodic
publications or other materials information on various topics of interest to
Owners and prospective Owners. These topics may include the relationship between
sectors of the economy and the economy as a whole and its effect on various
securities markets, investment strategies and techniques (such as value
investing, market timing, dollar cost averaging, asset allocation, constant
ratio transfer and account rebalancing), the advantages and disadvantages of
investing in tax-deferred and taxable investments, customer profiles and
hypothetical purchase and investment scenarios, financial management and tax and
retirement planning, and investment alternatives to certificates of deposit and
other financial instruments, including comparisons between the Policies and the
characteristics of and market for such financial instruments.

The Policies were first offered to the public in 1995. However, total return
data may be advertised based on the period of time that the portfolios have been
in existence. The results for any period prior to the Policies being offered
will be calculated as if the Policies had been offered during that period of
time, with all charges assumed to be those applicable to the Policies.

Performance information for any Subaccount in any advertising, will
reflect only the performance of a hypothetical investment in the Subaccount
during the particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio in which
the Subaccount invests and the market conditions during the given time period,
and should not be considered as a representation of what may be achieved in the
future. Actual returns may be more or less than those shown in any advertising
and will depend on a number of factors, including the investment allocations by
an Owner and the different investment rates of return for the portfolios.
Performance information for the Subaccounts has not been reflected since or the
Policy was first offered on May 1, 1997.

8
<PAGE>

GENERAL INFORMATION ABOUT THE COMPANY, THE SEPARATE ACCOUNT AND THE ALLIANCE

FUND

THE COMPANY

American International Life Assurance Company of New York is a stock life
insurance company which is organized under the laws of the State of New York in
1962. The Company provides a full range of individual and group life,
disability, annuities, accidental death and dismemberment policies. The Company
is a subsidiary of American International Group, Inc., which serves as the
holding company for a number of companies engaged in the international insurance
business, both life and general, in approximately 130 countries and
jurisdictions around the world.

9
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THE SEPARATE ACCOUNT

We established the Separate Account as a separate investment account on
June 5, 1986. It may be used to support the Policies as well as other variable
life insurance policies, and for other purposes permitted by law. The Separate
Account is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act") and
qualifies as a "separate account" within the meaning of the federal securities
law.

We own the assets in the Separate Account. The Separate Account is divided
into Subaccounts. The Subaccounts available under the Policies invest in shares
of a specific portfolios of the Alliance The Separate Account may include other
Subaccounts which are not available under the Policies and are not otherwise
discussed in this Prospectus.

Income, gains and losses, realized or unrealized, of a Subaccount are
credited to or charged against the Subaccount without regard to any other
income, gains or losses of the Company. Assets equal to the reserves and other
contract liabilities with respect to each Subaccount are not chargeable with
liabilities arising out of any other business or account of the Company. If the
assets exceed the required reserves and other liabilities, we may transfer the
excess to our general account. We are obligated to pay all benefits provided
under the Policies.

Subject to compliance with all applicable regulatory requirements, we have
reserved certain rights. We have the right to change, add or delete designated
investment companies. We have the right to add or remove Subaccounts. We have
the right to withdraw assets of a class of policies to which the Policy belongs
from a Subaccount and put them in another Subaccount. We also have the right to
combine any two or more Subaccounts. The term Subaccount in the Policy shall
then refer to any other Subaccount in which the assets of a class of policies to
which the Policy belongs were placed.

We have the right to register other separate accounts or deregister the
Separate Account under the Investment Company Act of 1940. We have the right to
run the Separate Account under the direction of a committee, and discharge such
committee at any time. We have the right to restrict or eliminate any voting
rights of Owners, or other persons who have voting rights as to the Separate
Account. We also have the right to operate the Separate Account or one or more
of the Subaccounts by making direct investments or in any other form. If We do
so, We may invest the assets of the Separate Account or one or more of the
Subaccounts in any legal investments. We will rely upon Our own or outside
counsel for advice in this regard. Also, unless otherwise required by law or
regulation, an investment advisor or any investment of a Subaccount of Our
Separate Account will not be changed by Us unless approved by the Commissioner
of Insurance of the State of New York or deemed approved in accordance with such
law or regulation. If so required, the process for getting such approval is on
file with the insurance supervisory official of the jurisdiction in which this
Policy is delivered.

If any of these changes result in a material change in the underlying
investments of a Subaccount of Our Separate Account, We will notify You of such
change, as required by law. If You have value in that Subaccount, We will
transfer it at Your written direction from that Subaccount (without charge) to
another Subaccount of Our Separate Account or to Our Guaranteed Account, and You
may then change Your Premium allocation percentages.

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THE FUND AND INVESTMENT ADVISOR

The Alliance Fund is registered with the SEC as a diversified open-end
management investment company under the 1940 Act. It is a series fund-type fund
made up of different seriesor portfolios("Portfolios"). Shares of the Portfolios
are sold only to separate accounts of life insurance companies. The investment
objectives of each of the portfoliosin which Subaccounts invest are set forth
below. There is, of course, no assurance that these objectives will be met.

ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.

CONSERVATIVE INVESTORS PORTFOLIO - seeks the highest total return without undue
risk to principal by investing in a diversified mix of publicly traded equity
and fixed-income securities.

GROWTH INVESTORS PORTFOLIO - seeks the highest total return available with
reasonable risk by investing in a diversified mix of publicly traded equity and
fixed-income securities.

GROWTH PORTFOLIO - seeks the long term growth of capital by investing primarily
in common stocks and other equity securities.

GROWTH AND INCOME PORTFOLIO - seeks to balance the objectives of reasonable
current income and opportunities for appreciation through investments primarily
in dividend-paying common stocks of good quality. Money Market Portfolio-seeks
safety of principal, maintenance of liquidity and maximum current income by
investing in a broadly diversified portfolio of money market securities. An
investment in the Money Market Portfolio is neither insured nor guaranteed by
the U.S. Government. There can be no assurance that the Portfolio will be able
to maintain a stable net asset value of 1.00 per share, although it expects to
do so.

PREMIER GROWTH PORTFOLIO-seeks growth of capital rather than current income. In
pursuing its investment objective, the Premier Growth Portfolio will employ
aggressive investment policies. Since investments will be made based upon their
potential for capital appreciation, current income will be incidental to the
objective of capital growth. The Portfolio is not intended for investors whose
principal objective is assured income or preservation of capital.

U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO-seeks a high level of current
income consistent with preservation of capital by investing principally in a
portfolio of U.S. Government Securities and other high grade debt securities.

TOTAL RETURN PORTFOLIO-seeks to achieve a high return through a combination of
current income and capital appreciation by investing in a diversified portfolio
of common and preferred stocks, senior corporate debt securities, and U.S.
Government and agency obligation, bonds and senior debt securities.

INTERNATIONAL PORTFOLIO-seeks to obtain a total return on its assets from
long-term growth of capital and from income principally through a broad
portfolio of marketable securities of established non-United States companies
(or United States companies having their principal activities and interests
outside the United States), companies participating in foreign economies with
prospects for growth , and foreign government securities.

SHORT-TERM MULTI-Market Portfolio-seeks the highest level of current income,
consistent with what the Fund's Advisor considers to be prudent investment risk,
that is available from a portfolio of high-quality debt securities having
remaining maturities of not more than three years.

GLOBAL BOND PORTFOLIO-seeks a high level of return from a combination of current
income and capital appreciation by investing in a globally diversified portfolio
of high quality debt securities denominated in U.S.
Dollars and a range of foreign currencies.

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<PAGE>

NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO-seeks the highest level of current
income, consistent with what the Fund's Adviser considers to be prudent
investment risk that is available from a portfolio of debt securities issued or
guaranteed by the governments of the United States, Canada and Mexico, their
political subdivisions (including Canadian Provinces but excluding the States of
the United States), agencies, instrumentalities or authorities. The Portfolio
seeks high current yields by investing in government securities denominated in
local currency and U.S. Dollars. Normally, the Portfolio expects to maintain at
least 25% of its assets in securities denominated in U.S. Dollars.

Global Dollar Government Portfolio-seeks a high level of current income through
investing substantially all of its assets in U.S. and non-U.S. fixed income
securities denominated only in U.S. Dollars. As a secondary objective, the
Portfolio seeks capital appreciation. Substantially all of the Portfolios assets
will be invested high yield, high risk securities that are low-rated (i.e.,
below investment grade), or of comparable quality and unrated, and that are
considered to be predominately speculative as regards the issuer's capacity to
pay interest and repay principal.

UTILITY INCOME PORTFOLIO-seeks current income and capital appreciation by
investing primarily in the equity and fixed-income securities of companies in
the "utilities industry." The Portfolio's investment objective and policies are
designed to take advantage of the characteristics and historical performance of
securities of utilities companies. The utilities industry consists of companies
engaged in the manufacture, production generation, provision, transmission, sale
and distribution of gas, electric energy, and communications equipment and
services, and in the provision of other utility or utility-related goods and
services.

WORLDWIDE PRIVATIZATION PORTFOLIO-seeks long-term capital appreciation by
investing principally in equity securities issued by enterprise that are
undergoing, or have undergone, privatization. The balance of the Portfolio's
investment portfolio will include equity securities of companies that are
believed by the Fund's Advisor to be beneficiaries of the privatization process.

TECHNOLOGY PORTFOLIO-seeks growth of capital through investment in companies
expected to benefit from advances in technology. The Portfolio invests
principally in a diversified portfolio of securities of companies which use
technology extensively in the development of new or improved products or
processes.

QUASAR PORTFOLIO-seeks growth of capital through investment in companies
expected to benefit from advances in technology. The Portfolio invests
principally in a diversified portfolio of securities of companies which use
technology extensively in the development of new or improved products or
processes.

REAL ESTATE INVESTMENT PORTFOLIO-seeks a total return on its assets from
long-term growth of capital and from income principally through investing in a
portfolio of equity securities of issuers that are primarily engaged in or
related to the real estate industry.

The Alliance Fund is managed by Alliance Capital Management L.P.,("Alliance").
The fund also includes other portfolios which are not available for use by the
Separate Account. More detailed information regarding management of
thePortfolios, investment objectives, investment advisory fees and other
charges, may be found in the current Alliance Fund Prospectus which contains a
discussion of the risks involved in investing. The Alliance Fund Prospectus is
included with this Prospectus.

THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE THEIR STATED
OBJECTIVES.

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<PAGE>

The shares of the Portfolios are sold not only to the Separate Account,
but may be sold to other separate accounts of the Company that fund benefits
under variable annuity contracts and variable life policies. The shares of
Alliance Fund are also sold to separate accounts of other insurance companies.
It is conceivable that in the future it may become disadvantageous for variable
life and variable annuity Policy separate accounts to invest in the same
underlying portfolios. Although neither we nor the Alliance Fundcurrently
perceive or anticipate any such disadvantage, the Company will monitor events to
determine whether any material conflict exists between variable annuity Owners
and variable life Owners.

Material conflicts could result from such occurrences as: (1) changes in
state insurance laws; (2) changes in federal income tax law; (3) changes in the
investment management of any Fund; or (4) differences between voting
instructions given by variable annuity Owners and those given by variable life
Owners. In the event of a material irreconcilable conflict, We will take the
steps necessary to protect our variable annuity and variable life Owners. This
could include discontinuance of investment in a Fund.

Each Portfolio sells and redeems its shares at Net Asset Value without any
sales charge. Any dividends or distributions from security transactions of a
portfolio are reinvested at Net Asset Value in shares of the same Portfolio;
however, there are sales and additional charges associated with the purchase of
the Policies. See PREMIUMS AND ALLOCATIONS, Page__.

Further information about the Alliance Fund is contained in the
accompanying prospectus, which You should read in conjunction with this
Prospectus.

SUBSTITUTION OF SECURITIES

If investment in a Subaccount should no longer be possible or, if in Our
judgment, becomes inappropriate to the purposes of the Policies, or, if in Our
judgment, investment in another Subaccount or insurance company separate account
is in the interest of Owners, We may substitute another Subaccount or insurance
company separate account. No substitution may take place without notice to
Owners and prior approval of the SEC and insurance regulatory authorities, to
the extent required by the 1940 Act and applicable law.

VOTING RIGHTS

We are the legal owner of shares held by the Subaccounts and as such have
the right to vote on all matters submitted to shareholders of the Funds.
However, as required by law, We will vote shares held in the Subaccounts at
regular and special meetings of shareholders of the Funds in accordance with
instructions received from Owners with a Policy Account Value in the
Subaccounts. Should the applicable federal securities laws, regulations or
interpretations thereof change so as to permit Us to vote shares of the Funds in
Our own right, We may elect to do so.

To obtain voting instructions from Owners, before a meeting We will send
Owners voting instruction material, a voting instruction form and any other
related material. The number of shares held by each Subaccount for which an
Owner may give voting instructions is currently determined by dividing the
portion of the Owner's Policy Account Value in the Subaccount by the Net Asset
Value of one share of the applicable Portfolio. Fractional votes will be
counted. The number of votes for which an Owner may give instructions will be
determined as of a date chosen by the Company but not more than 90 days prior to
the meeting of shareholders. Shares held by a Subaccount for which no timely
instructions are received will be voted by the Company in the same proportion as
those shares for which voting instructions are received.

We may, if required by state insurance officials, disregard Owner voting
instructions if such instructions would require shares to be voted so as to
cause a change in sub-classification or investment objectives of one or more of
the Portfolios, or to approve or disapprove an investment advisory agreement. In
addition, We may under certain circumstances disregard voting instructions that
would require changes in the investment Policy or investment adviser of one or
more of the Portfolios, provided that We reasonably disapprove of such changes
in accordance with applicable federal regulations. If We ever disregard voting
instructions, We will advise Owners of that action and of Our reasons for such
action in the next semiannual report. Finally, We reserve the right to modify
the manner in which We calculate the weight to be given to pass through voting
instructions where such a change is necessary to comply with current federal
regulations or the current interpretation thereof.

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<PAGE>

PREMIUMS AND ALLOCATIONS

APPLYING FOR A POLICY

If You want to purchase a Policy, You must complete an application and
submit it to one of Our authorized agents. The minimum Policy size will be
$50,000 of Face Amount at issue. You must pay an initial Premium at least equal
to the minimum required. See "PREMIUMS," below. Your Premium may be submitted
with the application or at a later date, but Policy coverage will not become
effective until the initial Premium is received at Our Administrative Office.

We require satisfactory evidence of the Insured's insurability, which may
include a medical examination of the Insured. Generally, We will issue a Policy
covering an Insured up to age 75 if evidence of insurability satisfies Our
underwriting rules. Acceptance of an application depends on Our underwriting
rules. We reserve the right to reject an application for any reason.

PERIOD TO EXAMINE AND CANCEL POLICY

The Policy provides for an initial period during which the Owner may
examine the Policy and cancel it for any reason. The Owner may cancel the Policy
before the latest of: (a) 45 days after Part I of the Application for the Policy
is signed; (b) 10 days after the Owner receives the Policy; and (c) 10 days
after the Company mails or personally delivers a Notice of Withdrawal Right to
the Owner. The period will be extended beyond 10 days after Policy delivery, if
required by the state where the Owner resides. Upon returning the Policy to the
Administrative Office or to an agent of the Company within such time with a
written request for cancellation, the Owner will receive a refund equal to the
gross premium paid on the Policy and will not reflect the investment experience
of the Separate Account.

The Period to Examine and Cancel also applies after a requested increase
in Face Amount as to the amount of the increase and the Premium paid for
increase Face Amount.

PREMIUMS

The minimum initial Premium required depends on a number of factors, such
as the age, sex and underwriting rate class of the proposed Insured, the desired
Face Amount ($50,000 minimum amount) and any supplemental benefits. The minimum
initial Premium must be at least equal to two monthly payments of the Planned
Periodic Premium. See "PLANNED PERIODIC PREMIUMS," below. Sample Basic Minimum
Premiums are shown in the Appendix.

Additional Premiums may be paid in any amount and at any time, subject to
the following limits. First, a Premium must be at least $50 and must be sent to
Our Administrative Office. We may require satisfactory evidence of insurability
before accepting any Premium which results in an increase in the net amount at
risk (defined on page __).

In addition, total Premiums paid may not exceed guideline Premium
limitations for life insurance set forth in the Internal Revenue Code. We will
refund any portion of any Premium which is determined to be in excess of the
Premium limit established by law to qualify a Policy as a Policy for life
insurance. (The amount refunded will be the excess Premium.) In addition, We
will monitor Policies and will attempt to notify the Owner on a timely basis if
his or her Policy is in jeopardy of becoming a modified endowment contract under
the Internal Revenue Code. See "TAX CONSIDERATIONS," Page __.

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<PAGE>

Lastly, no Premium will be accepted after the Maturity Date.

We will send You a reminder notice for Your Planned Periodic Premiums.

PLANNED PERIODIC PREMIUMS. When applying for a Policy, You select a plan
for paying level Premiums at specified intervals, e.g., monthly, quarterly,
semi-annually or annually, until the Maturity Date. You are not required to pay
Premiums in accordance with this plan; rather, You can pay more or less than
planned or skip a Planned Periodic Premium entirely. You can change the amount
and frequency of Planned Periodic Premiums whenever You want by sending written
notice to Our Administrative Office. However, We reserve the right to limit the
amount of a Premium or the total Premiums paid, as discussed above.

The Planned Periodic Premium may be recalculated if the Policy Face Amount
is increased or decreased.

The first year minimum Premium payable must be at least as great as the
Planned Periodic Premium. If Premiums cease at any time, the insurance provided
under the Policy will continue for as long as the Net Cash Surrender Value in
the Policy is sufficient to keep it in force (see GRACE PERIOD below).

Premiums upon Increase in Specified Face Amount. Depending on the Policy
Account Value at the time of an increase in the Face Amount and the amount of
the increase requested, an additional premium or change in the amount of Planned
Periodic Premiums may be advisable. See "CHANGES IN FACE AMOUNT", Pages__ and
__.

PREMIUMS TO PREVENT LAPSE

Failure to pay Planned Periodic Premiums will not necessarily cause a
Policy to lapse. Conversely, paying all Planned Periodic Premiums will not
necessarily guarantee that a Policy will not lapse. Rather, whether a Policy
lapses depends on whether its Net Cash Surrender Value is insufficient to cover
the monthly deduction (see page __) when due.

If the Net Cash Surrender Value on a Monthly Anniversary is less than the
amount of the monthly deduction to be deducted on that date, the Policy will be
in default and a Grace Period will begin. This could happen if investment
experience has been sufficiently unfavorable that it has resulted in a decrease
in the Net Cash Surrender Value or the Net Cash Surrender Value has decreased
because of any combination of the following: Outstanding Loans, partial
surrenders, expense charges, or insufficient Premiums paid to offset the monthly
deduction. A Policy that lapses with an Outstanding Lloan may have tax
consequences. (See "TAX CONSIDERATIONS," Page __.)

GRACE PERIOD. If Your Policy goes into default, You will be allowed a
61-day Grace Period to pay a Premium sufficient to keep the Policy in force for
3 months. We will send notice of the amount required to be paid during the Grace
Period ("Grace Period Premium") to Your last known address and to any assignee
of record. The Grace Period will begin when the notice is sent. Your Policy will
remain in effect during the Grace Period. If the Insured should die during the
Grace Period or before the Grace Period Premium is paid, the Death Benefit will
still be payable to the Beneficiary, although the amount paid will reflect a
reduction for the monthly deductions due on or before the date of the Insured's
death. See "Amount of Death Benefit," page __. If the Grace Period Premium has
not been paid before the Grace Period ends, Your Policy will lapse. It will have
no value and no benefits will be payable. See "REINSTATEMENT," Page __.

A Grace Period also may begin if Outstanding Loans exceed the Policy
limit. See "LOAN REPAYMENT; EFFECT IF NOT REPAID," Page __.

NET PREMIUM ALLOCATIONS

In the application, You specify the percentage of a Net Premium to be
allocated to each Subaccount. This allocation must comply with the allocation
rules described in the following paragraph. However, until the Period to Examine
and Cancel expires, all Net Premiums received are invested in the Money Market
Subaccount. The first business day after the period expires, the Policy Account
Value in the Money Market Subaccount is transferred and allocated based on the
Premium allocation percentages in the application. See "DETERMINING THE POLICY
VALUE," Page __.

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<PAGE>

The Premium allocation percentages specified in the application will apply
to subsequent Premiums until You change them. You can change the allocation
percentages at any time, subject to the rules below, by sending written notice
to Our Administrative Office. The change will apply to all Premiums received
with or after Your notice.

DOLLAR COST AVERAGING

If elected, this option allows for automatic transfer from the Money
Market Subaccount into other Subaccounts for a specified dollar amount or number
of months not in excess of 24. This option can be elected at any time provided
there is a minimum balance of $2,000 in the Money Market Subaccount at the time
of election. The allocation to the Subaccounts will be based on Your Premium
allocation that is in effect at the time of each transfer. The automatic
transfers will begin on the first Monthly Anniversary following the end of Your
Free Look Period; or, if You elect the option after Your application has been
submitted, the automatic transfers will begin on the second Monthly Anniversary
following the receipt of Your request at Our Administrative Office.

If You elect to transfer a specific dollar amount each month, the
automatic transfers will continue until Your Money Market Subaccount is
depleted. If You elect to have Your funds transferred over a specific number of
months, We will transfer a fraction equal to one divided by the number of months
remaining in the period. For example, if You elect to transfer over a 12 month
period, the first transfer will be 1/12 of Your Money Market Subaccount value,
the second transfer will be for 1/11, the third will be for 1/10 and so on until
the end of the requested period.

Automatic transfers will remain in effect until one of the following
conditions occur:

1. The funds in the Money Market Subaccount are depleted;
2. We receive Your written request at Our Administrative Office to
cancel future transfers;
3. We receive notification of death of the Insured; or
4. The Policy lapses.

Use of Dollar Cost Averaging does not guarantee investment gains or
protect against loss in a declining market.

The allocation and transfer provisions discussed below do not apply to
transfers effected under the Dollar Cost Averaging Option.

Allocation Rules. No less than 5% of a Premium may be allocated to any one
Subaccount. The sum of Your allocations must equal 100% and each allocation
percentage must be a whole number.

CREDITING PREMIUMS

The initial Net Premium will be credited to the Policy as of the Policy
Date. Subsequent Planned Periodic Premiums and accepted unplanned premiums will
be credited to the Policy and the Net Premiums will be invested as of the date
the Premium or notification of deposit is received at Our Administrative Office.
However, any Net Premiums requiring underwriting will be allocated to the Money
Market Subaccount until underwriting has been completed. When accepted or at the
end of the Period to Examine and Cancel, the Policy Account Value in the Money
Market Subaccount attributable to the resulting Net Premium will be credited to
the Policy and allocated in accordance with the specified allocation
percentages. Net Premiums not requiring underwriting will be invested in the
Subaccounts according to the specified allocation percentages directly. If
additional Premium is rejected, We will refund the excess amount.

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<PAGE>

TRANSFERS

You may transfer Policy Account Value among the Subaccounts subject to the
following rules, some of which depend on whether Policy Account Value is to be
transferred from a Subaccount or the Guaranteed Account. Transfer requests must
be in writing. Transfers may not be requested until after the end of the Period
to Examine and Cancel (see page __). A transfer will take effect on the date the
request is received at Our Administrative Office. We may, however, defer
transfers under the same conditions as described in the section "WHEN PROCEEDS
ARE PAID," page __. There is no limit on the number of transfers. However, after
twelve (12) transfers have been made during a Policy Year, We currently impose a
$25 transfer charge on each subsequent transfer. See "TRANSFER CHARGE," page __.
The minimum amount of Policy Account Value that may be transferred is $250. If
less than the full amount of Policy Account Value in a Subaccount is being
transferred from the Subaccount, the amount remaining must be at least $250. If
the amount remaining would be less than $250, the full amount of the Policy
Account Value will be transferred. The Company reserves the right to increase or
decrease the number of "free" transfers allowed in any Policy Year.

SUBACCOUNT TRANSFER RULES. Transfers among Subaccounts and from
Subaccounts to the Guaranteed Account may be made at any time after the Period
to Examine and Cancel. All transfers processed on the same business date will
count as one transfer for purposes of determining whether the transfer is free
or may be subject to the $25 charge.

GUARANTEED ACCOUNT TRANSFER RULES. Policy Account Value held in the
Guaranteed Account may be transferred to a Subaccount or Subaccounts only during
the 60-day period within 30 days before and following the end of each Policy
Year. The amount transferred must be at least $250, or the Policy Account Value
held in the Guaranteed Account, whichever is less. If the amount transferred is
less than the Policy Account Value then held in the Guaranteed Account, at least
$250 must remain in the Guaranteed Account. The maximum allowable amount that
can be transferred from the Guaranteed Account, at any one time, is 25% of the
unloaned portion of the Guaranteed Account. See "DEDUCTIONS FROM THE GUARANTEED
ACCOUNT," page __ for additional rules and limits for the Guaranteed Account.

GUARANTEED ACCOUNT

Because of exemptive and exclusionary provisions, interests in the
Guaranteed Account have not been registered under the Securities Act of 1933 nor
has the Guaranteed Account been registered as an investment company under the
Investment Company Act of 1940. Accordingly, neither the Guaranteed Account nor
any interests therein are subject to the provisions of these Acts and, as a
result, the staff of the Securities and Exchange Commission has not reviewed the
disclosure in this Prospectus relating to the Guaranteed Account. The disclosure
regarding the Guaranteed 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.

The Guaranteed Account is an account within the general account of the
Company. It is part of Our general account assets. Our general account assets
are used to support Our insurance and annuity obligations other than those
funded by separate accounts. Subject to applicable law, We have sole discretion
over the investment of the assets of the general account. The Policy Loan
Account is part of the Guaranteed Account.

INTEREST CREDITED ON POLICY VALUE IN THE GUARANTEED ACCOUNT

Net Premiums allocated to the Guaranteed Account and Policy Account Values
transferred from the Subaccounts to the Guaranteed Account are credited to the
Guaranteed Account portion of the Policy Account Value. We will credit interest
on these amounts at rates We determine in Our sole discretion, but in no event
will interest credited on these amounts be less than an effective rate of at
least 0.32737% per month, compounded monthly which equates to 4% per year,
compounded annually. The Policy Loan Account portion of the Guaranteed Account
will be credited with interest at an annual rate that is 2.0% less than the then
current Policy loan interest rate.

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<PAGE>

However, if at the time of an allocation or transfer to the Guaranteed
Account, We are crediting a rate of interest higher than 4%, the higher rate
will apply to the amount from the date of its allocation or transfer to the
Guaranteed Account through the end of the period during which the excess rate is
effective. If a higher rate of interest is credited, different rates of interest
may apply to amounts allocated or transferred at different times, and different
rates of interest may apply to amounts held in a Policy Loan Account than to the
remaining portion of Policy Account Value held in the Guaranteed Account. YOU
ASSUME THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE GUARANTEED MINIMUM
RATE OF 4% PER YEAR.

CALCULATING GUARANTEED ACCOUNT VALUE

The Guaranteed Account Value is calculated daily. See "GUARANTEED
ACCOUNT VALUE," page __.

DEDUCTIONS FROM THE GUARANTEED ACCOUNT

Amounts allocated to the Guaranteed Account at different times, whether
from Net Premiums or transfers, may be credited with different rates of
interest. Whenever a charge is deducted from the Policy Account Value in the
Guaranteed Account, or an amount is withdrawn from the Policy Account Value in
the Guaranteed Account to satisfy a partial surrender, transfer or Policy loan
request, the charge or withdrawal will be taken first from the amount most
recently allocated to the Guaranteed Account, then the amount next most recently
allocated, and so forth. See page __ for limits and restrictions on transfers of
Policy Account Value from the Guaranteed Account.

If there is any Policy Account Value in the Policy Loan Account, it is not
available for transfers, partial surrenders or Policy loans, nor any charges
deducted from this portion of Policy Account Value. Amounts are transferred to
or from the Policy Loan Account only when Policy loans are taken or repayments
made. If an amount is transferred from the Policy Loan Account to the remaining
portion of the Guaranteed Account Value, it will be treated as a new allocation
to the Guaranteed Account and will be credited with interest at the rate then in
effect for Guaranteed Account allocations.
See "POLICY LOAN ACCOUNT," page __.

PAYMENTS FROM THE GUARANTEED ACCOUNT

We may defer payment of proceeds from the Guaranteed Account for a partial
surrender, surrender or Policy loan request for up to six months from the date
We receive the written request. If a payment from the Guaranteed Account is
deferred for 30 days or more, it will bear interest at a rate of 4% per year
compounded annually while it is deferred.

CHARGES AND DEDUCTIONS

Periodically, the Company will deduct charges from the Policy Account
Value and also from each Premium to cover certain expenses related to issuing
and administering the Policy. These charges and deductions are described in the
Policy as either guaranteed or current. The Company will never charge more than
the guaranteed amount; however, solely within the Company's discretion, it may
on a current basis charge less than the guaranteed amount.

PREMIUM CHARGES

We will deduct a charge from each Premium. This charge consists of a 5%
sales charge plus an explicit percent of Premium equal to the state and local
premium tax rate applicable to the Policy (i.e., a typical state premium tax
rate would be in the range of 2% to 2.5%). An additional sales charge may be
deducted on a partial surrender or surrender of a Policy during the first 14
Policy Years. See "SURRENDER CHARGES", Page__.

The 5% sales charge partially compensates Us for the expenses of selling
and distributing the Policies, including paying sales commissions, printing
prospectuses, preparing sales literature and paying for other promotional
activities.

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<PAGE>

DAILY MORTALITY AND EXPENSE RISK CHARGE

We deduct a daily charge from assets in the Subaccounts attributable to
the Policies for assuming certain mortality and expense risks under the Policy.
This charge does not apply to Guaranteed Account assets attributable to the
Policies. The guaranteed and current charge is at an annual rate of 0.90% of net
assets. Although the charge may be decreased to not less than 0.50% in Policy
Years 11 and later, it is guaranteed not to exceed 0.90% for the duration of a
Policy. Starting in Policy Year 11, if the current charge is less than .90%, We
will notify You before We increase this charge. We may realize a profit from
this charge.

The mortality risk We assume is that the Insureds on the Policies may die
sooner than anticipated and that therefore the Company will pay an aggregate
amount of death benefits greater than anticipated. The expense risk we assume is
that expenses incurred in issuing and administering the Policies and the
Separate Account will exceed the amounts realized from the administrative
charges assessed against the Policies.

MONTHLY DEDUCTION

On the Issue Date and each Monthly Anniversary, We deduct the monthly
deduction from the Policy Account Value. The amount deducted on the Issue Date
is for the Policy Date and any Monthly Anniversaries that have elapsed since the
Policy Date. (For this purpose, the Policy Date is treated as a Monthly
Anniversary.) The monthly deduction consists of (1) administrative charges (the
"Monthly Expense Charge"), (2) insurance charges ("Cost of Insurance Charge"),
and (3) any charges for additional benefits added by supplemental agreement to a
Policy ("Supplemental Benefit Charges"), as described below. The monthly
deduction is deducted from the Accounts pro rata on the basis of the portion of
Policy Account Value in each Account. See "DEDUCTIONS FROM THE GUARANTEED
ACCOUNT," page ___.

Current and Guaranteed Expense Charges. The monthly expense charge varies
by current Policy Face Amount. There is also an additional monthly charge (see
"First Year Additional Charge" in table below) during the first Policy year and
the twelve months immediately following an increase in Face Amount.

The monthly expense charges per Policy varying by the Policy Face Amount
and the additional monthly charge during the first Policy Year and every twelve
months immediately following an increase in Face Amount for current and
guaranteed expense charges are shown below:
<TABLE>
<CAPTION>

MONTHLY EXPENSE CHARGE PER POLICY CURRENT GUARANTEED
CHARGE CHARGE
- ----------------------------------------------------------------------------
<S> <C> <C>

If Face Amount is between $50,000 and $199,999 $7.50 $15.00

If Face Amount is between $200,000 and $499,999 $5.00 $10.00
If Face Amount is $500,000 or greater $4.00 $10.00
First Year Additional Charge $20.00 $25.00
</TABLE>

These charges compensate Us for administrative expenses associated with
the Policies and the Separate Account. These expenses relate to Premium billing
and collection, recordkeeping, processing Death Benefit claims, Policy Loans,
Policy changes, reporting and overhead costs, processing applications and
establishing Policy records.

COST OF INSURANCE CHARGE. This charge compensates Us for providing
insurance coverage. The charge depends on a number of factors, such as Attained
Age, sex and rate class of the Insured, and therefore will vary from Policy to
Policy and from Monthly Anniversary to Monthly Anniversary. For any Policy the
cost of insurance on a Monthly Anniversary is calculated by multiplying the cost
of insurance rate for the Insured by the net amount at risk under the Policy for
that Monthly Anniversary.

19
<PAGE>

The Net Amount at Risk is calculated as (a) minus (b) where
(a) is the current Death Benefit at the beginning
of the Policy month divided by 1.0032737.
(b) is current total Policy Account Value.

The cost of insurance rate for a Policy is based on the Attained Age, sex
and rate class of the Insured, and therefore varies from time to time. We
currently place Insureds in one of three basic rate classifications, based on
our underwriting: a smoker, a nonsmoker standard, or a rate class involving a
higher mortality risk (a "substandard class"). Insureds Attained Age 14 and
under are placed in a rate class that does not distinguish between smoker and
nonsmoker, and are assigned to a smoker class at Attained Age 15 unless they
have provided satisfactory evidence that they qualify for a nonsmoker class.

We place the Insured in a rate class when We issue the Policy, based on
Our underwriting of the application. This original rate class applies to the
initial Face Amount. When an increase in Face Amount is requested, We conduct
underwriting before approving the increase (except as noted below) to determine
whether a different rate class will apply to the increase. If the rate class for
the increase has lower cost of insurance rates than the original rate class, the
rate class for the increase also will be applied to the initial Face Amount. If
the rate class for the increase has higher cost of insurance rates than the
original rate class, the rate class for the increase will apply only to the
increase in Face Amount, and the original rate class will continue to apply to
the initial Face Amount.

If there have been increases in the Face Amount, we may use different cost
of insurance rates for the increased portions of the policy Face Amount, For
purposes of calculating the cost of insurance charge after the Face Amount has
been increased, the Policy Account Value will be applied to the initial Face
Amount first and then to any subsequent increases in Face Amount. If at the time
an increase is requested, the Policy Account Value exceeds the initial Face
Amount (or any subsequently increased Face Amount) divided by 1.0032737, the
excess will then be applied to the subsequent increase in Face Amount in the
sequence of the increases.

If the death benefit equals the Policy Account Value multiplied by the
applicable death benefit corridor percentage, any increase in Policy Account
Value will cause an automatic increase in death benefit. The attained age and
underwriting class for such increase will be the same as that used for the most
recent increase in Face Amount (that has not been eliminated through a
subsequent decrease in Face Amount).

If there is a decrease in Face Amount after there had been prior increases
to the Face Amount, then for purposes of calculating the cost of insurance
charge, the decrease will first be applied to reduce any prior increases in Face
Amount, starting with the most recent increase in Face Amount and then to each
prior increase.

The guaranteed cost of insurance rates for substandard policies issued on
a table rated basis are based on multiples of the 1980 CSO tables. The
substandard multiple applicable depends on the substandard underwriting
classification assigned to the insured. Currently, multiples range from 125% to
500% of the 1980 CSO tables.

The guaranteed cost of insurance charges at any given time for a
substandard policy with flat extra charges will be based on the guaranteed
maximum cost of insurance rate for the policy (including table rating multiples
if applicable), the current net amount at risk at the time the deduction is
made, plus the actual dollar amount of the flat extra charge.

Our current cost of insurance rates may be less than the guaranteed rates.
Our current cost of insurance rates will be determined based on Our expectations
as to future mortality, investment, expense and persistency experience. These
rates may change from time to time. In the Company's discretion, the current
charge may be increased in any amount up to the maximum guaranteed charge shown
in the table.

20
<PAGE>

Cost of insurance rates (whether guaranteed or current) for an Insured in
a nonsmoker standard class are lower than guaranteed rates for an Insured of the
same age and sex in a smoker standard class. Cost of insurance rates (whether
guaranteed or current) for an Insured in a nonsmoker or smoker standard class
are generally lower than guaranteed rates for an Insured of the same age and sex
and smoking status in a substandard class.

We do not conduct underwriting for an increase in Face Amount if the
increase is requested as part of a conversion from a term Policy issued by the
Company. See "SUPPLEMENTAL BENEFITS," page __. In the case of a term conversion,
the rate class that applies to the increase is the same rate class that applied
to the term Policy.

LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS. Mortality
tables for the Policies generally distinguish between males and females. Thus,
Premiums and benefits under Policies covering males and females of the same age
will generally differ.

We do, however, also offer Policies based on unisex mortality tables if
required by state law. Employers and employee organizations considering purchase
of a Policy should consult their legal advisors to determine whether purchase of
a Policy based on sex-distinct actuarial tables is consistent with Title VII of
the Civil Rights Act of 1964 or other applicable law. Upon request, We may offer
Policies with unisex mortality tables to such prospective purchasers.

Supplemental Benefit Charges. See "SUPPLEMENTAL BENEFITS," page __.

TRANSFER CHARGE

We currently impose a $25 transfer charge on any transfer of Policy
Account Value among the subaccounts in excess of twelve free transfers permitted
each Policy Year. If the charge is imposed, it will be deducted from the amount
requested to be transferred before allocation to the new Subaccount(s) and shown
in the Confirmation of the transaction. If an amount is being transferred from
more than one Subaccount, the transfer charge will be deducted proportionately
from the amount being transferred from each Subaccount. This charge, if imposed,
will reimburse Us for administrative expenses incurred in effecting transfers.
We do not anticipate making any profit on this charge.

SURRENDER CHARGES

If the Policy is surrendered during the first 14 Policy Years, We will
deduct a Surrender Charge for the initial Face Amount. If a Policy is
surrendered within 14 years after an increase in Face Amount, We will deduct a
Surrender Charge for the increase in Face Amount. The Surrender Charge will be
deducted before any surrender proceeds are paid.

21
<PAGE>

SURRENDER CHARGE FOR INITIAL FACE AMOUNT. The Surrender Charge for the
initial Face Amount will be no greater than the sum of (1) and (2) times a
duration factor (as shown in the table below), where:

(1) is equal to 25% of the first year paid Premium up to the surrender
charge premium (which is an amount calculated separately for each
Policy based on age, sex and smoker/nonsmoker class and is provided
in the Appendix); and

(2) is equal to 4% of the first year paid Premium in excess of the
surrender charge premium.

The following table lists the Policy duration factor as described above:

POLICY SURRENDER
DURATION CHARGE FACTOR
-------------------------------------------------
<S> <C>

1 100%
2 100%
3 100%
4 100%
5 100%
6 90%
7 80%
8 70%
9 60%
10 50%
11 40%
12 30%
13 20%
14 10%
15+ 0%
</TABLE>

A Table of Surrender Charge Premiums for various ages, sex and Face Amount
in the nonsmoker class is shown in Appendix B.

An increase in the Face Amount of the Policy will result in an additional
surrender charge during the 14 years. The additional surrender charge period
will begin on the effective date of the increase.

If the Face Amount of the Policy is reduced before the end of the 14th
Policy Year or within 14 years immediately following a Face Amount increase, We
may also deduct a pro rata share of any applicable surrender charge from Your
Policy Account Value. Reductions will first be applied against the most recent
increase in the Face Amount of the Policy. They will then be applied to prior
increases in the Face Amount of the Policy in the reverse order in which such
increases took place, and then to the original Face Amount of the Policy.

PARTIAL SURRENDER CHARGE

The Partial Surrender Charge is equal to a pro rata portion of the
surrender charge that would apply to a full surrender, determined by multiplying
the applicable full surrender charge by a fraction (equal to the partial
surrender amount payable plus the Partial Surrender Administrative Charge
divided by the result of subtracting the applicable surrender charge from the
unloaned portion of the Policy Account Value). This amount is assessed against
the Subaccounts or the Guaranteed Account in the same manner as provided for
with respect to the partial surrender amount paid.

22
<PAGE>

A partial surrender charge is also deducted from the Policy Account Value
upon a decrease in Face Amount. The charge is equal to the applicable surrender
charge multiplied by a fraction (equal to the decrease in Face Amount divided by
the Face Amount of the Policy prior to the decrease).

PARTIAL SURRENDER ADMINISTRATIVE CHARGE

We will deduct an administrative charge upon a partial surrender. This
charge is $25. If required by the insurance regulations of any state, the
administrative charge for a partial surrender will be equal to the lesser of $25
or 2% of the amount surrendered. This charge will be deducted from the Policy
Account Value in addition to the amount requested to be surrendered and will be
considered to be part of the partial surrender amount. See page __ for rules for
allocating the deduction and Partial Surrenders on page__.
We do not anticipate making a profit on this charge.

Each partial surrender will reduce the Policy Account Value by the amount
of partial surrender plus the proportional surrender charge and $25 fee. If the
Death Benefit coverage is the Level Death Benefit Option, the Face Amount will
also be reduced by the amount of the partial surrender in the following order:

1. The most recent increase in the Face Amount, if any, will be
reduced first.
2. The next most recent increases in the Face Amount, if any, will
then be successively decreased.

3. The initial Face Amount will then be decreased.

DISCOUNT PURCHASE PROGRAMS

The amount of the Surrender Charge may be reduced or eliminated when sales
of the Policies are made to individuals or to groups of individuals in a manner
that, in the opinion of the Company, results in savings of sales expenses. For
purchases made by officers, directors and employees of the Company, an
affiliate, or any individual, firm, or company that has executed the necessary
agreements to sell the Policies, and members of the immediate families of such
officers, directors, and employees, the Company may reduce or eliminate the
Surrender Charge.

HOW YOUR POLICY ACCOUNT VALUES VARY

There is no minimum guaranteed Policy Account Value or Net Cash Surrender
Value. These values will vary with the investment experience of the Subaccounts
and/or the crediting of interest in the Guaranteed Account, and will depend on
the allocation of Policy Account Value. If the Net Cash Surrender Value on a
Monthly Anniversary is less than the amount of the monthly deduction to be
deducted on that date (see page __), the Policy will be in default and a Grace
Period will begin.

DETERMINING THE POLICY ACCOUNT VALUE

On the Policy Date the Policy Account Value is equal to the initial Net
Premium. If the Policy Date and the Issue Date are the same day, the Policy
Account Value is equal to the initial Net Premium, less the monthly deduction.
On each Valuation Date thereafter, the value is the aggregate of the
accumulation values in the Subaccounts and the Guaranteed Account portion of the
Policy Account Value. The Policy Account Value will vary to reflect the
performance of the Subaccounts to which amounts have been allocated, interest
credited on amounts allocated to the Guaranteed Account, charges, transfers,
withdrawals, Policy loans and Policy loan repayments.

ACCUMULATION UNIT VALUES. When You allocate an amount to a Subaccount,
either by Net Premium allocation or transfer of Policy Account Value, Your
Policy is credited with accumulation units in that Subaccount. The number of
accumulation units is determined by dividing the amount allocated to the
Subaccount by the Subaccount's accumulation unit value for the Valuation Date
when the allocation is effected.

The number of Subaccount accumulation units credited to Your Policy will
increase when Net Premiums are allocated to the Subaccount, amounts are
transferred to the Subaccount and loan repayments are credited to the
Subaccount. The number of Subaccount accumulation units credited to a Policy
will decrease when the allocated portion of the monthly deduction is taken from
the Subaccount, a Policy loan is taken from the Subaccount, an amount is
transferred from the Subaccount, or a partial surrender, including the partial
surrender charge, is taken from the subaccount.

A Subaccount's accumulation unit value varies to reflect the investment
experience of the underlying Portfolio, and may increase or decrease from one
Valuation Date to the next. The accumulation unit value for each Subaccount was
arbitrarily set at $10 when the Subaccount was established. For each Valuation
Period after the date of establishment, the accumulation unit value is
determined by multiplying the value of an accumulation unit for a Subaccount for
the prior valuation period by the net investment factor for the Subaccount for
the current valuation period.

23
<PAGE>

NET INVESTMENT FACTOR. The net investment factor is an index used to
measure the investment performance of a Subaccount from one Valuation Period to
the next. It is based on the change in net asset value of the Fund shares held
by the Subaccount, and reflects any dividend or capital gain distributions on
Fund shares and the deduction of the daily mortality and expense risk charge.

GUARANTEED ACCOUNT VALUE. On any Valuation Date, the Guaranteed Account
portion of the Policy Account Value of a Policy is the total of all Net Premiums
allocated to the Guaranteed Account, plus any amounts transferred to the
Guaranteed Account, plus interest credited on such Net Premiums and amounts,
less the amount of any transfers from the Guaranteed Account, less the amount of
any partial surrenders, including the partial surrender charges, taken from the
Guaranteed Account, and less the pro rata portion of the monthly deduction
deducted from the Guaranteed Account. If there have been any Policy Loans, the
Guaranteed Account Value is further adjusted to reflect the amount in the Policy
Loan Account held in the Guaranteed Account, including transfers to and from the
Policy Loan Account as loans are taken and repayments are made, and interest
credited on the Policy Loan Account.

NET POLICY ACCOUNT VALUE

The Net Policy Account Value on a Valuation Date is the Policy Account
Value less Outstanding Loans on that date.

CASH SURRENDER VALUE

The Cash Surrender Value on a Valuation Date is the Policy Account Value
reduced by any surrender charge that would be assessed if the Policy were
surrendered on that date. The Cash Surrender Value is used to calculate the loan
value and to determine whether Outstanding Loans exceed the Policy limits (see
page __). The loan value may not exceed 90% of the Net Cash Surrender Value at
the time the loan is made.

NET CASH SURRENDER VALUE

The Net Cash Surrender Value on a Valuation Date is equal to the Net
Policy Account Value reduced by any surrender charge that would be imposed if
the Policy were surrendered on that date. It is the amount received upon a full
surrender of the Policy.

DEATH BENEFIT AND CHANGES IN FACE AMOUNT

As long as the Policy remains in force, We will pay the Death Benefit upon
receipt at Our Administrative Office of satisfactory proof of the Insured's
death. We will require return of the Policy. The Death Benefit will be paid in a
lump sum generally within seven days after We receive due proof of the death of
the Insured, (see "WHEN PROCEEDS ARE PAID," page __) or, if elected, under a
payment option (see "PAYMENT OPTIONS," page __). The Death Benefit will be paid
to the Beneficiary. See "SELECTING AND CHANGING THE BENEFICIARY," page __.

If part or all of the Death Benefit is paid in one sum, the Company will
pay interest on this sum from the date of the Insured's death to the date of
payment. We determine the interest rate, but it will not be less than a rate of
3% per year compounded annually.

DEATH BENEFIT OPTIONS

The Policy Owner may choose one of two Death Benefit Options, which will
determine the Death Benefit. Under Option I, the Death Benefit is the greater of
the Face Amount or the applicable percentage of Policy Account Value on the date
of the Insured's death. Under Option II, the Death Benefit is the greater of the
Face Amount plus the Policy Account Value, or the applicable percentage of the
Policy Account Value, on the date of the Insured's death.

If investment performance is favorable the amount of the Death Benefit may
increase. However, under Option I, the Death Benefit ordinarily will not change
for several years to reflect any favorable investment performance and may not
change at all, whereas under Option II, the Death Benefit will vary directly
with the investment performance of the Policy Account Value. To see how and when
investment performance may begin to affect the Death Benefit, please see the
illustrations beginning on page __.

24
<PAGE>

The applicable percentage of Policy Account Value is 250% when the Insured
is Attained Age 40 or less, and decreases each year thereafter to 100% when the
Insured is Attained Age 95. A table showing the applicable percentages for
Attained Ages 0 to 99 is shown below. The Internal Revenue Code requires that
the applicable percentage requirements be met in order for the Policy to qualify
under the Code as life insurance.

TABLE OF APPLICABLE PERCENTAGES
-----------------------------------------------------------
ATTAINED AGE PERCENTAGE OF POLICY
ACCOUNT VALUE
------------ --------------------
<S> <C>

Under 40 250%
45 215%
50 185%
55 150%
60 130%
70 115%
75 through 90 105%
95 through 99 100%

</TABLE>

The initial Face Amount is set at the time the Policy is issued. You may
increase or decrease the Face Amount from time to time, as discussed below. You
select from Options I or II when you apply for the Policy. You also may change
the Option, as discussed below.

CHANGES IN DEATH BENEFIT OPTIONS

You can change Your Death Benefit Option on Your Policy subject to the
following rules. After any change, We may require that You submit evidence,
satisfactory to Us that the Insured is then insurable. If You ask Us to change
from Option I to Option II, We will decrease the Face Amount of the Policy by
the amount in Your Policy Account Value on the date the change takes effect.
However, We reserve the right to decline to make such change if it would reduce
the Face Amount of this Policy below the minimum Face Amount for which We would
then issue the Policy under Our rules. If You ask Us to change from Option II to
Option I, We will increase the Face Amount of this Policy by the amount in Your
Policy Account Value on the date the change takes effect. Such decreases and
increases in the Face Amount of the Policy are made so that the Death Benefit
remains the same on the date the change takes effect. However, if Your Death
Benefit is determined by a percentage multiple of the Policy Account Value,
there may be an increase in the Death Benefit.

The change will take effect at the beginning of the Policy Month that
coincides with or next follows the date We approve Your request.

We reserve the right to decline to make any change that We determine would
cause the Policy to fail to qualify as life insurance under applicable tax law
as interpreted by Us.

You may ask for a change by completing an Application For Change, which
You can get from Our agent or by writing to Us at Our Administrative Office. A
copy of Your Application For Change will be attached to the new policy
information section of the Policy that We will issue when the change is made.
The new section and the Application For Change will become a part of the Policy.
We may require You to return the Policy to Our Administrative Office to make a
Policy change.

25
<PAGE>

CHANGES IN FACE AMOUNT

At any time after the first Policy Year while the Policy is in force, You
may request a change in the Face Amount, subject to the following conditions. No
change will be permitted that would result in Your Policy's death benefit not
being excludable from gross income due to not satisfying the requirements of
Section 7702 of the Internal Revenue Code. (See TAX CONSIDERATIONS, Page __.)

Any increase in the Face Amount must be at least $10,000, however, the
resulting Face Amount of the Policy after the increase may not be in excess of
twice the Face Amount of the Policy on the Issue Date. A written application
must be submitted to Our Administrative Office along with evidence of
insurability satisfactory to the Company. A change in the Planned Periodic
Premium may be advisable. See "PREMIUMS UPON INCREASE IN FACE AMOUNT," page __.
The increase in Face Amount will become effective on the Monthly Anniversary on
or next following the date the increase is approved, and the Policy Account
Value will be adjusted to the extent necessary to reflect a monthly deduction as
of the effective date based on the increase in Face Amount. You must return Your
Policy so We can amend the Policy to reflect the increase. There will be an
additional $20 per month in Monthly Expense Charges imposed on the contract for
the next twelve months immediately following the effective date of such an
increase.

Any decrease in the Face Amount must be at least $5,000 and the Face
Amount after the decrease must be at least $50,000. In addition, no decrease may
be made in the first twelve months following the effective date of an increase
in Face Amount. During the first five Policy years, the Face Amount may not be
decreased by more than 10 percent of the initial Face Amount in any one Policy
Year. A decrease in Face Amount will become effective on the Monthly Anniversary
that coincides with or next follows Our receipt of a request at Our
Administrative Office.

There is an impact on Surrender Charges for both increases and decreases
in Face Amount. (See SURRENDER CHARGES, Page __.) In addition, an increase or
decrease in face amount may impact the status of the Policy as a Modified
Endowment Contract. (See "TAX CONSIDERATIONS," page __.)

SELECTING AND CHANGING THE BENEFICIARY

You select a Beneficiary in Your application. You may later change the
Beneficiary in accordance with the terms of the Policy. If the Insured dies and
there is no surviving Beneficiary, the Owner's estate will be the Beneficiary.

CASH BENEFITS

POLICY LOANS

You may borrow up to the loan value of Your Policy at any time after the
first twelve months of the Policy, or after the first twelve months following
any increase in Face Amount, by submitting a written request to Our
Administrative Office. The minimum amount You may borrow is $500. The loan value
is 90% of Your Net Cash Surrender Value. Outstanding Policy loans reduce the
amount of the loan value available for new Policy loans. Policy loans will be
processed as of the date Your written request is received and loan proceeds
generally will be sent to You within seven days. See "WHEN PROCEEDS ARE PAID,"
page __, and "PAYMENTS FROM THE GUARANTEED ACCOUNT," page __. In addition, loans
from Modified Endowment Contracts may be treated for tax purposes as
distributions of income. (See "TAX CONSIDERATIONS," page __.)

INTEREST. We will charge interest daily on any outstanding Policy loan at
a declared annual rate not in excess of 8.00%. The current rate, subject to
change by the Company, is 8.00%. Interest is due and payable at the end of each
Policy Year while a Policy loan is outstanding. If interest is not paid when
due, the amount of the interest is added to the loan and becomes part of the
outstanding Policy loan.

OUTSTANDING LOANS. Unrepaid Policy loans (including unpaid interest
added to the Loan) plus accrued interest not yet due equals the Outstanding
loans.

LOAN REPAYMENT; EFFECT IF NOT REPAID. You may repay all or part of Your
Outstanding loan at any time while the Insured is living and the Policy is in
force. Loan repayments must be sent to Our Administrative Office and will be
credited as of the date received. If the Death Benefit becomes payable while a
Policy loan is outstanding, the Outstanding Loan will be deducted in calculating
the Death Benefit. If the Outstanding loans exceed the Net Cash Surrender Value
on any monthly anniversary, the Policy will be in default. We will send You, and
any assignee of record, notice of the default. You will have a 61-day Grace
Period to submit a sufficient payment to avoid termination. The notice will
specify the amount that must be repaid to prevent termination.

26
<PAGE>

POLICY LOAN ACCOUNT. When a Policy Loan is made, an amount equal to the
loan proceeds is withdrawn from the Policy Account Value in the Subaccounts.
This withdrawal is made pro rata on the basis of the Policy Account Value in
each Subaccount unless You direct a different allocation when requesting the
loan. The loan amount withdrawn is then transferred to the Policy Loan Account
in the Guaranteed Account. Conversely, when a loan is repaid, an amount equal to
the repayment will be transferred from the Policy Loan Account to the
Subaccounts in accordance with Your then effective Net Premium allocation
percentages. Thus, a loan or loan repayment will have no immediate effect on the
Policy Account Value, but other Policy values, such as the Net Policy Value and
Net Cash Surrender Value, will be reduced or increased immediately by the amount
transferred to or from the Policy Loan Account.

POLICY LOAN NET COST. The maximum net cost of a Loan is 2.00% per year
(the difference between the rate of interest We charge in Policy loans and the
amount We credit on the equivalent amount held in the Policy Loan Account). In
addition, We currently intend to credit 6.00% on the amount held in the Policy
Loan Account during the first 10 Policy Years. The net loan cost during the
first 10 Policy Years will always be no more than 2.00%.

For Policy Years 11 and later, a portion of the maximum loanable amount
may be available on a preferred loan basis. The amount available on a preferred
basis is the excess, if any, of the Policy Account Value over the sum of the
Premiums paid. For a preferred loan, the interest rate charged and credited to
the preferred portion of the loan value will be the same.

EFFECT OF POLICY LOAN. A Policy Loan, whether or not repaid, will have a
permanent effect on the Death Benefit and Policy Account Values because the
investment results of the Subaccounts and current interest rates credited in the
Guaranteed Account will apply only to the non-loaned portion of the Policy
Account Value. The longer the Loan is outstanding, the greater this effect is
likely to be. Depending on the investment results of the Subaccounts or credited
interest rates for the Guaranteed Account while the Policy Loan is outstanding,
the effect could be favorable or unfavorable. Also, Policy Loans could,
particularly if not repaid, make it more likely than otherwise for a Policy to
terminate.

SURRENDERING THE POLICY FOR NET CASH SURRENDER VALUE

You may surrender your Policy at any time for its Net Cash Surrender Value
by submitting a written request to Our Administrative Office. We will require
return of the Policy. A Surrender Charge may apply. See "SURRENDER CHARGES,"
page __. A surrender request will be processed as of the date Your written
request and all required documents are received and generally will be paid
within seven days. See "WHEN PROCEEDS ARE PAID," page __, and "PAYMENTS FROM THE
GUARANTEED ACCOUNT," page __. The Net Cash Surrender Value may be taken in one
sum or it may be applied to a payment option. See "PAYMENT OPTIONS," page __.
Your Policy will terminate and cease to be in force if it is surrendered for one
sum. It cannot later be reinstated.

PARTIAL SURRENDERS

We will not allow a partial surrender during the first twelve months of
the Policy or during the first twelve Policy months immediately following an
increase in the Face Amount of the Policy. After the first Policy year, You may
make partial surrenders under Your Policy up to a maximum of 90% of the Net Cash
Surrender Value subject to the following conditions. You must submit a written
request to Our Administrative Office. The Net Cash Surrender Value must exceed
$500 after the partial surrender is deducted from the Policy Account Value. No
more than two partial surrenders may be made during a Policy Year, and each
partial surrender must be at least $500. A partial surrender charge and an
administrative charge will be assessed on a partial surrender. See "PARTIAL
SURRENDER CHARGE," page __. This charge will be deducted from Your Policy
Account Value along with the amount requested to be surrendered and will be
considered part of the partial surrender (together, the "partial surrender
amount"). Policy Account Values will be reduced by the partial surrender amount.

27
<PAGE>

When You request a partial surrender, You can direct how the partial
surrender amount will be deducted from Your Policy Account Value in the
Accounts. If You provide no directions, the partial surrender amount will be
deducted from Your Policy Account Value in the Accounts on a pro rata basis.
See "Deductions from the Guaranteed Account," page __.

If the Option I is in effect, the Face Amount will also be reduced by the
partial surrender amount. If the Face Amount has been increased, the partial
surrender will reduce first the most recent increase, and then the next most
recent increase, if any, in reverse order, and finally the initial Face Amount.
No partial surrender may be made that would reduce the Face Amount to less than
$50,000.

Partial surrender requests will be processed as of the date your written
request is received, and generally will be paid within seven days. See "WHEN
PROCEEDS ARE PAID," page __, and "PAYMENTS FROM THE GUARANTEED ACCOUNT," page
__.

Surrenders of all or part of a Policy may have tax consequences. (See "TAX
CONSIDERATIONS," page __.)

MATURITY BENEFIT

The Maturity Date is the Policy Anniversary following Insured's Attained
Age 99 unless you requested an extended Maturity Date. An extended Maturity Date
is not available in New York. If the Policy is still in force on the Maturity
Date, the Maturity Benefit will be paid to You. The Maturity Benefit is equal to
the Policy Account Value less Outstanding Loans on the Maturity Date. Maturity
of a Policy may have tax consequences. (See "TAX CONSIDERATIONS," page __.)

PAYMENT OPTIONS

The Policy offers a wide variety of optional ways of receiving proceeds
payable under the Policy, such as on surrender, death or maturity, other than in
a lump sum. Any agent authorized to sell this Policy can explain these options
upon request. None of these options vary with the investment performance of a
separate account because they are all forms of guaranteed benefit payments.

28
<PAGE>

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

The following tables have been prepared to show how certain values under a
Policy change with investment performance over an extended period of time. The
tables illustrate how Policy Values, Net Cash Surrender Values and Death
Benefits under a Policy covering an Insured of a given age on the Issue Date,
would vary over time if planned premiums were paid annually and the return on
the assets in the selected Funds was an average rate of 0%, 6% or 12%. The
tables also show Planned Periodic Premiums accumulated at 5% interest.

The tables reflect the fact that the net investment return on the assets
held in the subaccounts is lower than the gross after tax return of the selected
Funds. The tables assume an average annual expense ratio of 0.93% of the average
daily net assets of the Funds available under the Policies. This average annual
expense ratio is based on the expense ratios of each of the Funds for the last
fiscal year, adjusted, as appropriate, for any material changes in expenses
effective for the current fiscal year of a Fund. For information on Fund
expenses, see the prospectuses for the Funds accompanying this prospectus.

In addition, the tables reflect the daily charge to the Separate Account
for assuming mortality and expense risks, which is equivalent to an effective
annual charge at the guaranteed maximum rate of 0.90% which is also the current
rate. In Policy Years 11 and later, the Company may reduce the effective annual
charge to a current rate of no less than 0.50%. After deduction of Fund expenses
and the mortality and expense risk charge, the illustrated gross annual
investment rates of return of 0%, 6% and 12% would correspond to approximate net
annual rates of - 1.74%, 4.26% and 10.26%.

The tables also reflect the deduction of the monthly expense charge and
the monthly Cost of Insurance Charge for the hypothetical Insured. Our current
cost of insurance charges and the higher guaranteed maximum cost of insurance
charges We have the contractual right to charge are reflected in separate tables
on each of the following pages. All the tables reflect the fact that no charges
for federal income taxes are currently made against the Separate Account and
assume no Outstanding Loans or charges for supplemental benefits. The tables
also reflect a state premium tax rate of 2.00%.

The illustrations are based on Our sex distinct rates for nonsmokers. Upon
request, We will furnish a comparable illustration based upon the proposed
Insured's individual circumstances. Such illustrations may assume different
hypothetical rates of return than those illustrated in the following tables.

29
<PAGE>

Illustration of Policy Values
The American International Life Assurance
Company of New York

Non Smoker
Male Issue Age 40
$3,200 Annual Premium
$250,000 Face Amount
Death Benefit Option (Level)

Using Current Cost of Insurance Rates
----------------------------------------------------------------------------------------
Premiums 0% Hypothetical 6% Hypothetical 12% Hypothetical
Accumulated Gross Investment Return Gross Investment Return Gross Investment Return
---------------------------------------------------------- ----------------------------
End of at 5.00% Policy Net Cash Policy Net Cash Policy Net Cash
Policy Interest Account Surrender Death Account Surrender Death Account Surrender Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit

1 $3,360 $2,203 $1,403 $250,000 $2,356 $1,556 $250,000 $2,509 $1,709 $250,000
2 $6,888 $4,589 $3,789 $250,000 $5,038 $4,238 $250,000 $5,505 $4,705 $250,000
3 $10,592 $6,921 $6,121 $250,000 $7,819 $7,019 $250,000 $8,790 $7,990 $250,000
4 $14,482 $9,198 $8,398 $250,000 $10,701 $9,901 $250,000 $12,392 $11,592 $250,000
5 $18,566 $11,406 $10,606 $250,000 $13,675 $12,875 $250,000 $16,328 $15,528 $250,000
6 $22,854 $13,509 $12,789 $250,000 $16,704 $15,984 $250,000 $20,593 $19,873 $250,000
7 $27,357 $15,519 $14,879 $250,000 $19,806 $19,166 $250,000 $25,234 $24,594 $250,000
8 $32,085 $17,445 $16,885 $250,000 $22,989 $22,429 $250,000 $30,299 $29,739 $250,000
9 $37,049 $19,325 $18,845 $250,000 $26,294 $25,814 $250,000 $35,868 $35,388 $250,000
10 $42,262 $21,129 $20,729 $250,000 $29,698 $29,298 $250,000 $41,966 $41,566 $250,000
11 $47,735 $22,924 $22,604 $250,000 $33,313 $32,993 $250,000 $48,818 $48,498 $250,000
12 $53,482 $24,627 $24,387 $250,000 $37,032 $36,792 $250,000 $56,342 $56,102 $250,000
13 $59,516 $26,251 $26,091 $250,000 $40,874 $40,714 $250,000 $64,628 $64,468 $250,000
14 $65,851 $27,799 $27,719 $250,000 $44,848 $44,768 $250,000 $73,763 $73,683 $250,000
15 $72,504 $29,245 $29,245 $250,000 $48,938 $48,938 $250,000 $83,824 $83,824 $250,000
16 $79,489 $30,545 $30,545 $250,000 $53,108 $53,108 $250,000 $94,884 $94,884 $250,000
17 $86,824 $31,714 $31,714 $250,000 $57,381 $57,381 $250,000 $107,077 $107,077 $250,000
18 $94,525 $32,722 $32,722 $250,000 $61,737 $61,737 $250,000 $120,521 $120,521 $250,000
19 $102,611 $33,551 $33,551 $250,000 $66,168 $66,168 $250,000 $135,363 $135,363 $250,000
20 $111,102 $34,241 $34,241 $250,000 $70,718 $70,718 $250,000 $151,806 $151,806 $250,000
25 $160,363 $35,511 $35,511 $250,000 $95,592 $95,592 $250,000 $264,945 $264,945 $323,232
30 $223,235 $31,435 $31,435 $250,000 $124,296 $124,296 $250,000 $448,888 $448,888 $520,710
</TABLE>

The above illustrations are based on the following:
(1) Assumes no policy loans have been made.
(2) Current values reflect current cost of insurance rates, a state
premium tax rate of 2.00%, a combined administrative charge of $25.00
per month in year 1 and $5.00 per month thereafter, and a mortality and
expense risk charge of 0.90% of assets for the first 10 policy years
and 0.50% for policy years eleven and later.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the premium is paid at the beginning of the policy year.
Values would be different if the premiums are paid with a different
frequency or in different amounts.

================================================================================
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING
THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, OR 12%
OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.

================================================================================

30
<PAGE>

Illustration of Policy Values
The American International Life Assurance
Company of New York
Male Issue Age 40
Non Smoker

$3,200 Annual Premium
$250,000 Face Amount
<TABLE>
<CAPTION>
Death Benefit Option (Level)

Using Guaranteed Cost of Insurance Rates
------------------------------------------------------------------------------------------
Premiums 0% Hypothetical 6% Hypothetical 12% Hypothetical
Accumulated Gross Investment Return Gross Investment Return Gross Investment Return
----------------------------------------------------------- -----------------------------
End of at 5.00% Policy Net Cash Policy Net Cash Policy Net Cash
Policy Interest Account Surrender Death Account Surrender Death Account Surrender Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit

1 $3,360 $1,925 $1,125 $250,000 $2,069 $1,269 $250,000 $2,213 $1,413 $250,000
2 $6,888 $4,074 $3,274 $250,000 $4,489 $3,689 $250,000 $4,922 $4,122 $250,000
3 $10,592 $6,144 $5,344 $250,000 $6,968 $6,168 $250,000 $7,862 $7,062 $250,000
4 $14,482 $8,133 $7,333 $250,000 $9,505 $8,705 $250,000 $11,052 $10,252 $250,000
5 $18,566 $10,037 $9,237 $250,000 $12,098 $11,298 $250,000 $14,513 $13,713 $250,000
6 $22,854 $11,852 $11,132 $250,000 $14,743 $14,023 $250,000 $18,270 $17,550 $250,000
7 $27,357 $13,575 $12,935 $250,000 $17,439 $16,799 $250,000 $22,349 $21,709 $250,000
8 $32,085 $15,204 $14,644 $250,000 $20,187 $19,627 $250,000 $26,781 $26,221 $250,000
9 $37,049 $16,735 $16,255 $250,000 $22,982 $22,502 $250,000 $31,600 $31,120 $250,000
10 $42,262 $18,163 $17,763 $250,000 $25,822 $25,422 $250,000 $36,842 $36,442 $250,000
11 $47,735 $19,478 $19,158 $250,000 $28,700 $28,380 $250,000 $42,546 $42,226 $250,000
12 $53,482 $20,670 $20,430 $250,000 $31,606 $31,366 $250,000 $48,751 $48,511 $250,000
13 $59,516 $21,726 $21,566 $250,000 $34,530 $34,370 $250,000 $55,502 $55,342 $250,000
14 $65,851 $22,630 $22,550 $250,000 $37,458 $37,378 $250,000 $62,851 $62,771 $250,000
15 $72,504 $23,370 $23,370 $250,000 $40,378 $40,378 $250,000 $70,856 $70,856 $250,000
16 $79,489 $23,931 $23,931 $250,000 $43,278 $43,278 $250,000 $79,587 $79,587 $250,000
17 $86,824 $24,299 $24,299 $250,000 $46,147 $46,147 $250,000 $89,123 $89,123 $250,000
18 $94,525 $24,466 $24,466 $250,000 $48,978 $48,978 $250,000 $99,563 $99,563 $250,000
19 $102,611 $24,412 $24,412 $250,000 $51,753 $51,753 $250,000 $111,011 $111,011 $250,000
20 $111,102 $24,111 $24,111 $250,000 $54,451 $54,451 $250,000 $123,588 $123,588 $250,000
25 $160,363 $17,666 $17,666 $250,000 $65,761 $65,761 $250,000 $209,302 $209,302 $255,349
30 $223,235 $0 $0 $0 $69,500 $69,500 $250,000 $347,746 $347,746 $403,386
</TABLE>

The above illustrations are based on the following:
(1) Assumes no policy loans have been made.
(2) Values reflect guaranteed cost of insurance rates, a state
premium tax rate of 2.00%, a combined administrative charge of $35.00
per month in year 1 and $10.00 per month thereafter, and a mortality
and expense risk charge of 0.90% of assets for all years.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the premium is paid at the beginning of the policy year.
Values would be different if the premiums are paid with a different
frequency or in different amounts.

===============================================================================
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING
THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, OR 12%
OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.

================================================================================

31
<PAGE>

Illustration of Policy Values
The American International Life Assurance
Company of New York
Male Issue Age 50 Non Smoker
$8,500 Annual Premium
$400,000 Face Amount
Death Benefit Option (Level)

Using Current Cost of Insurance Rates
-----------------------------------------------------------------------------------------------------------
Premiums 0% Hypothetical 6% Hypothetical 12% Hypothetical
Accumulated Gross Investment Return Gross Investment Return Gross Investment Return
---------------------------------------------------------------------- ----------------------------------
End of at 5.00% Policy Net Cash Policy Net Cash Policy Net Cash
Policy Interest Account Surrender Death Account Surrender Death Account Surrender Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit

1 $8,925 $6,111 $3,986 $400,000 $6,525 $4,400 $400,000 $6,939 $4,814 $400,000
2 $18,296 $12,245 $10,120 $400,000 $13,455 $11,330 $400,000 $14,717 $12,592 $400,000
3 $28,136 $18,188 $16,063 $400,000 $20,592 $18,467 $400,000 $23,196 $21,071 $400,000
4 $38,468 $23,947 $21,822 $400,000 $27,946 $25,821 $400,000 $32,453 $30,328 $400,000
5 $49,316 $29,482 $27,357 $400,000 $35,490 $33,365 $400,000 $42,532 $40,407 $400,000
6 $60,707 $34,724 $32,811 $400,000 $43,156 $41,243 $400,000 $53,445 $51,533 $400,000
7 $72,667 $39,703 $38,003 $400,000 $50,982 $49,282 $400,000 $65,318 $63,618 $400,000
8 $85,226 $44,375 $42,887 $400,000 $58,932 $57,445 $400,000 $78,214 $76,726 $400,000
9 $98,412 $48,715 $47,440 $400,000 $66,990 $65,715 $400,000 $92,229 $90,954 $400,000
10 $112,258 $52,795 $51,733 $400,000 $75,232 $74,170 $400,000 $107,565 $106,502 $400,000
11 $126,796 $56,812 $55,962 $400,000 $83,977 $83,127 $400,000 $124,847 $123,997 $400,000
12 $142,060 $60,644 $60,006 $400,000 $93,043 $92,406 $400,000 $143,964 $143,326 $400,000
13 $158,088 $64,237 $63,812 $400,000 $102,403 $101,978 $400,000 $165,102 $164,677 $400,000
14 $174,918 $67,560 $67,348 $400,000 $112,054 $111,842 $400,000 $188,497 $188,285 $400,000
15 $192,589 $70,595 $70,595 $400,000 $122,005 $122,005 $400,000 $214,436 $214,436 $400,000
16 $211,143 $73,322 $73,322 $400,000 $132,269 $132,269 $400,000 $243,247 $243,247 $400,000
17 $230,625 $75,691 $75,691 $400,000 $142,837 $142,837 $400,000 $275,303 $275,303 $400,000
18 $251,082 $77,642 $77,642 $400,000 $153,700 $153,700 $400,000 $311,044 $311,044 $400,000
19 $272,561 $79,133 $79,133 $400,000 $164,869 $164,869 $400,000 $350,981 $350,981 $410,648
20 $295,114 $80,125 $80,125 $400,000 $176,366 $176,366 $400,000 $395,103 $395,103 $458,319
25 $425,964 $75,405 $75,405 $400,000 $239,728 $239,728 $400,000 $693,434 $693,434 $741,974
30 $592,967 $48,180 $48,180 $400,000 $319,732 $319,732 $400,000 $1,181,083 $1,181,083 $1,240,137
</TABLE>

===============================================================================

THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING
THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, OR 12%
OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE
FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.

================================================================================

32
<PAGE>

Illustration of Policy Values
The American International Life Assurance
Company of New York

Male Issue Age 50 Non Smoker
$8,500 Annual Premium
$400,000 Face Amount
Death Benefit Option (Level)
<TABLE>
<CAPTION>

Using Guaranteed Cost of Insurance Rates
-----------------------------------------------------------------------------------------------------
Premiums 0% Hypothetical 6% Hypothetical 12% Hypothetical
Accumulated Gross Investment Return Gross Investment Return Gross Investment Return
----------------------------------------------------------------- ----------------------------------
End at 5.00% Policy Net Cash Policy Net Cash Policy Net Cash
of
Policy Interest Account Surrender Death Account Surrender Death Account Surrender Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

1 $8,925 $5,355 $3,230 $400,000 $5,745 $3,620 $400,000 $6,136 $4,011 $400,000
2 $18,296 $10,759 $8,634 $400,000 $11,877 $9,752 $400,000 $13,045 $10,920 $400,000
3 $28,136 $15,891 $13,766 $400,000 $18,087 $15,962 $400,000 $20,471 $18,346 $400,000
4 $38,468 $20,730 $18,605 $400,000 $24,353 $22,228 $400,000 $28,447 $26,322 $400,000
5 $49,316 $25,259 $23,134 $400,000 $30,661 $28,536 $400,000 $37,015 $34,890 $400,000
6 $60,707 $29,460 $27,547 $400,000 $36,991 $35,078 $400,000 $46,222 $44,310 $400,000
7 $72,667 $33,315 $31,615 $400,000 $43,329 $41,629 $400,000 $56,128 $54,428 $400,000
8 $85,226 $36,817 $35,330 $400,000 $49,668 $48,181 $400,000 $66,808 $65,320 $400,000
9 $98,412 $39,940 $38,665 $400,000 $55,985 $54,710 $400,000 $78,334 $77,059 $400,000
10 $112,258 $42,649 $41,586 $400,000 $62,250 $61,188 $400,000 $90,786 $89,723 $400,000
11 $126,796 $44,907 $44,057 $400,000 $68,431 $67,581 $400,000 $104,257 $103,407 $400,000
12 $142,060 $46,675 $46,037 $400,000 $74,492 $73,854 $400,000 $118,856 $118,219 $400,000
13 $158,088 $47,885 $47,460 $400,000 $80,374 $79,949 $400,000 $134,698 $134,273 $400,000
14 $174,918 $48,469 $48,256 $400,000 $86,018 $85,806 $400,000 $151,927 $151,714 $400,000
15 $192,589 $48,359 $48,359 $400,000 $91,369 $91,369 $400,000 $170,723 $170,723 $400,000
16 $211,143 $47,489 $47,489 $400,000 $96,370 $96,370 $400,000 $191,316 $191,316 $400,000
17 $230,625 $45,787 $45,787 $400,000 $100,966 $100,966 $400,000 $213,988 $213,988 $400,000
18 $251,082 $43,181 $43,181 $400,000 $105,102 $105,102 $400,000 $239,088 $239,088 $400,000
19 $272,561 $39,569 $39,569 $400,000 $108,700 $108,700 $400,000 $267,035 $267,035 $400,000
20 $295,114 $34,811 $34,811 $400,000 $111,653 $111,653 $400,000 $298,336 $298,336 $400,000
25 $425,964 $0 $0 $0 $109,909 $109,909 $400,000 $518,422 $518,422 $554,712
30 $592,967 $0 $0 $0 $49,880 $49,880 $400,000 $870,640 $870,640 $914,172
</TABLE>

(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the premium is paid at the beginning of the policy year.
Values would be different if the premiums are paid with a different frequency
or in different
amounts.

================================================================================

33
<PAGE>

Illustration of Policy Values
The American International Life Assurance
Company of New York
Male Issue Age 35 Non Smoker
$2,000 Annual Premium
$200,000 Face Amount
Death Benefit Option (Level)

1 $2,100 $1,276 $776 $200,000 $1,368 $868 $200,000 $1,460 $960 $200,000
2 $4,305 $2,757 $2,257 $200,000 $3,027 $2,527 $200,000 $3,309 $2,809 $200,000
3 $6,620 $4,197 $3,697 $200,000 $4,740 $4,240 $200,000 $5,328 $4,828 $200,000
4 $9,051 $5,598 $5,098 $200,000 $6,510 $6,010 $200,000 $7,536 $7,036 $200,000
5 $11,604 $6,953 $6,453 $200,000 $8,332 $7,832 $200,000 $9,944 $9,444 $200,000
6 $14,284 $8,269 $7,819 $200,000 $10,215 $9,765 $200,000 $12,580 $12,130 $200,000
7 $17,098 $9,548 $9,148 $200,000 $12,162 $11,762 $200,000 $15,468 $15,068 $200,000
8 $20,053 $10,795 $10,445 $200,000 $14,181 $13,831 $200,000 $18,638 $18,288 $200,000
9 $23,156 $12,008 $11,708 $200,000 $16,272 $15,972 $200,000 $22,118 $21,818 $200,000
10 $26,414 $13,176 $12,926 $200,000 $18,428 $18,178 $200,000 $25,927 $25,677 $200,000
11 $29,834 $14,328 $14,128 $200,000 $20,704 $20,504 $200,000 $30,191 $29,991 $200,000
12 $33,426 $15,419 $15,269 $200,000 $23,043 $22,893 $200,000 $34,866 $34,716 $200,000
13 $37,197 $16,455 $16,355 $200,000 $25,450 $25,350 $200,000 $40,002 $39,902 $200,000
14 $41,157 $17,466 $17,416 $200,000 $27,961 $27,911 $200,000 $45,678 $45,628 $200,000
15 $45,315 $18,429 $18,429 $200,000 $30,557 $30,557 $200,000 $51,931 $51,931 $200,000
16 $49,681 $19,322 $19,322 $200,000 $33,221 $33,221 $200,000 $58,807 $58,807 $200,000
17 $54,265 $20,146 $20,146 $200,000 $35,960 $35,960 $200,000 $66,380 $66,380 $200,000
18 $59,078 $20,914 $20,914 $200,000 $38,788 $38,788 $200,000 $74,737 $74,737 $200,000
19 $64,132 $21,625 $21,625 $200,000 $41,711 $41,711 $200,000 $83,968 $83,968 $200,000
20 $69,439 $22,260 $22,260 $200,000 $44,716 $44,716 $200,000 $94,160 $94,160 $200,000
25 $100,227 $23,689 $23,689 $200,000 $60,636 $60,636 $200,000 $163,681 $163,681 $219,333
30 $139,522 $22,144 $22,144 $200,000 $78,654 $78,654 $200,000 $277,452 $277,452 $338,491
</TABLE>

The above illustrations are based on the following:
(1) Assumes no policy loans have been made.
(2) Current values reflect current cost of insurance rates, a state
premium tax rate of 2.00%, a combined administrative charge of $25.00
per month in year 1 and $5.00 per month thereafter, and a mortality and
expense risk charge of 0.90% of assets for the first 10 policy years
and 0.50%for policy years eleven and later.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the premium is paid at the beginning of the policy year.
Values would be different if the premiums are paid with a
different frequency or in different amounts.

================================================================================

34
<PAGE>

Illustration of Policy Values
The American International Life Assurance
Company of New York
Male Issue Age 35

Non Smoker

$2,000 Annual Premium
$200,000 Face Amount

Death Benefit Option (Level)

1 $2,100 $1,072 $572 $200,000 $1,157 $657 $200,000 $1,243 $743 $200,000
2 $4,305 $2,406 $1,906 $200,000 $2,653 $2,153 $200,000 $2,910 $2,410 $200,000
3 $6,620 $3,695 $3,195 $200,000 $4,188 $3,688 $200,000 $4,723 $4,223 $200,000
4 $9,051 $4,939 $4,439 $200,000 $5,764 $5,264 $200,000 $6,694 $6,194 $200,000
5 $11,604 $6,136 $5,636 $200,000 $7,381 $6,881 $200,000 $8,838 $8,338 $200,000
6 $14,284 $7,282 $6,832 $200,000 $9,034 $8,584 $200,000 $11,169 $10,719 $200,000
7 $17,098 $8,376 $7,976 $200,000 $10,725 $10,325 $200,000 $13,702 $13,302 $200,000
8 $20,053 $9,418 $9,068 $200,000 $12,453 $12,103 $200,000 $16,460 $16,110 $200,000
9 $23,156 $10,404 $10,104 $200,000 $14,217 $13,917 $200,000 $19,461 $19,161 $200,000
10 $26,414 $11,333 $11,083 $200,000 $16,016 $15,766 $200,000 $22,729 $22,479 $200,000
11 $29,834 $12,200 $12,000 $200,000 $17,846 $17,646 $200,000 $26,287 $26,087 $200,000
12 $33,426 $13,003 $12,853 $200,000 $19,706 $19,556 $200,000 $30,164 $30,014 $200,000
13 $37,197 $13,739 $13,639 $200,000 $21,596 $21,496 $200,000 $34,392 $34,292 $200,000
14 $41,157 $14,404 $14,354 $200,000 $23,511 $23,461 $200,000 $39,005 $38,955 $200,000
15 $45,315 $14,995 $14,995 $200,000 $25,449 $25,449 $200,000 $44,041 $44,041 $200,000
16 $49,681 $15,503 $15,503 $200,000 $27,404 $27,404 $200,000 $49,540 $49,540 $200,000
17 $54,265 $15,920 $15,920 $200,000 $29,367 $29,367 $200,000 $55,548 $55,548 $200,000
18 $59,078 $16,233 $16,233 $200,000 $31,330 $31,330 $200,000 $62,113 $62,113 $200,000
19 $64,132 $16,431 $16,431 $200,000 $33,279 $33,279 $200,000 $69,292 $69,292 $200,000
20 $69,439 $16,502 $16,502 $200,000 $35,207 $35,207 $200,000 $77,150 $77,150 $200,000
25 $100,227 $14,516 $14,516 $200,000 $44,117 $44,117 $200,000 $129,740 $129,740 $200,000
30 $139,522 $6,678 $6,678 $200,000 $50,100 $50,100 $200,000 $215,536 $215,536 $262,954
</TABLE>

================================================================================

35
<PAGE>

OTHER POLICY BENEFITS AND PROVISIONS

RIGHT TO CONVERT

The Policy may be converted to a Policy of flexible premium fixed benefit
life insurance on the life of the Insured. This conversion may be made either:

a. within 24 months after the Date of Issue while the Policy is in
force; within 24 months of any increase in Face Amount, or
b. within 60 days of the effective date of a material change in the
investment Policy of a Subaccount, or within 60 days of the
notification of such change, if later. In the event of such a
change, the Company will notify the Owner and give the Owner
information on the options available.

When such a conversion is made, no evidence of insurability is required.
When a conversion is requested, the Company accomplishes this by transferring
all of the Policy Account Value to the Guaranteed Account. There is no charge
for this transfer. Once this option is exercised, the entire Policy Account
Value must remain in the Guaranteed Account for the life of the Policy. The Face
Amount in effect at the time of the conversion remains unchanged. The Effective
Date, Date of Issue and Issue Age are unchanged. The Owner and Beneficiary are
the same as were recorded immediately before the conversion.

LIMITS ON OUR RIGHTS TO CONTEST THE POLICY

Incontestability. We will not contest the Policy after it has been in
force during the Insured's lifetime for two years from the Issue Date. Any
increase in the Face Amount will be incontestable with respect to statements
made in the evidence of insurability for that increase after the increase has
been in force during the life of the Insured for two years after the effective
date of the increase.

SUICIDE EXCLUSION. If the Insured commits suicide (while sane or insane)
within two years after the Issue Date, Our liability will be limited to the
payment of a single sum. This sum will be equal to the Premiums paid, minus any
loan and accrued loan interest and minus any partial surrender and minus the
cost of any riders attached to the Policy. If the Insured commits suicide (while
sane or insane) within two years after the effective date of an increase in the
Face Amount, then Our liability as to the increase in amount will be limited to
the payment of a single sum equal to the monthly cost of insurance deductions
made for such increase plus the expense charge deducted for the increase.

CHANGES IN THE POLICY OR BENEFITS

Misstatement of Age or Sex. If an Insured's age or sex has been misstated
in the Policy, the Death Benefit and any benefits provided by Riders to the
Policy shall be those which would be purchased at the then current Cost of
Insurance Charge for the correct age and sex.

OTHER CHANGES. At any time We may make such changes in the Policy as are
necessary to assure compliance at all times with the definition of life
insurance prescribed by the Internal Revenue Code or to make the Policy conform
with any law or regulation issued by any government agency to which it is
subject. Any such change, however, may be accepted or rejected by the Owner.

WHEN PROCEEDS ARE PAID

We will ordinarily pay any Death Benefit, loan proceeds or partial or full
surrender proceeds within seven days after receipt at Our Administrative Office
of all the documents required for such a payment. Other than the Death Benefit,
which is determined as of the date of death, the amount will be determined as of
the date of receipt of required documents. However, We may delay making a
payment or processing a transfer request if (1) the disposal or valuation of the
Separate Account's assets is not reasonably practicable because the New York
Stock Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the SEC, or the SEC declares that an emergency exists; or (2) the
SEC by order permits postponement of payment to protect the Company's Policy
owners. See also "PAYMENTS FROM THE GUARANTEED ACCOUNT," page __.

36
<PAGE>

Reports to Policy Owners

You will receive a confirmation within seven days of the transaction of:
the receipt of any Premium (except Premiums received before the Date of Issue);
any change of allocation of Premiums; any transfer between Subaccounts; any
loan, interest repayment, or loan repayment; any partial surrender; or any
return of Premium necessary to comply with applicable maximum receipt of any
Premium payment. You will also receive confirmation within seven days of
transaction of: (1) exercise of the Right to Examine and Canel privilege; (2) an
exchange of the Policy; (3) full Surrender of the Policy; and (4) payment of the
Death Benefit under the Policy.

Within 30 days after each Policy Anniversary an annual statement will be
sent to each Owner. The statement will show the current amount of Death Benefits
payable under the Policy, the current Policy Account Value, the current Cash
Surrender Value and current Outstanding Loans. The statement will also show
Premiums paid, all charges deducted during the Policy Year, and all
transactions. The Company will also send to Owners annual and semi-annual report
of the Separate Account.

ASSIGNMENT

The Policy may be assigned in accordance with its terms on a form provided
by Us. We will not be deemed to know of an assignment unless We receive a copy
of it at Our Administrative Office. We assume no responsibility for the validity
or sufficiency of any assignment. Any assignment or pledge of a Modified
Endowment Contract as collateral for a loan may result in a taxable event. (See
"TAX CONSIDERATIONS," page __.)

REINSTATEMENT

If the Policy has ended without value, You may reinstate Policy benefits
while the Insured is alive if You:

1. Ask for reinstatement of Policy benefits within 3 years from the
end of the Grace Period; and
2. Provide evidence of insurability satisfactory to Us; and
3. Make a payment of an amount sufficient to cover (i) the total
monthly administrative charges from the beginning of the Grace
Period to the effective date of reinstatement; (ii) total monthly
deductions for 3 months, calculated from the effective date of
reinstatement; and (iii) the charge for applicable taxes, the
Premium charge, and any increase in surrender charges associated
with this payment. We will determine the amount of this required
payment as if no interest or investment performance were credited to
or charged against Your Policy Account Value; and
4. Repay or reinstate any Policy Loan which existed on the date the
Policy ended.

The effective date of the reinstatement of Policy benefits will be the
beginning of the Policy Month which coincides with or next follows the date We
approve Your request.

From the required payment We will deduct the charge for applicable taxes
and the premium charge. The Policy Account Value, Policy Loan and surrender
charges that will apply after reinstatement will be those that were in effect on
the date the Policy lapsed.

We will start to make monthly deductions again as of the effective date of
reinstatement. The monthly expense charge from the beginning of the Grace Period
to the effective date of reinstatement will be deducted from the Policy Account
Value as of the effective date of reinstatement.
No other charges will accrue for this period.

37
<PAGE>

TAX CONSIDERATIONS

The following description is based upon the Company's understanding of
current federal income tax law applicable to life insurance in general. The
Company cannot predict the probability that any changes in such laws will be
made. Purchasers are cautioned to seek competent tax advice regarding the
possibility of such changes.

Section 7702 of the Internal Revenue Code of 1986, as amended ("Code"),
defines the term "life insurance contract" for purposes of the Code. The Company
believes that the Policies to be issued will qualify as "life insurance
contracts" under Section 7702, but the Company does not guarantee the tax status
of the Policies. Purchasers bear the complete risk that the Policies may not be
treated as "life insurance" under federal income tax laws. Purchasers should
consult their own tax advisers with regard to these risks.

INTRODUCTION

The discussion contained herein is general in nature and is not intended
as tax advice. Each person concerned should consult a competent tax adviser. No
attempt is made to consider any applicable state or other tax laws. Moreover,
the discussion herein is based upon the Company's understanding of current
federal income tax laws and the current interpretation of those laws. No
representation is made regarding the likelihood of continuation of those current
federal income tax laws or of the current interpretations by the Internal
Revenue Service.

THE COMPANY

The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Company and its operations form a part of the Company.

DIVERSIFICATION

Section 817 (h) of the Code and the regulations prescribed under that
Section by the United States Treasury Department ("Treasury Department") impose
certain diversification standards on the investments underlying variable life
insurance contracts. Section 817(h) of the Code provides that if the investment
assets underlying a variable life insurance contract are not properly
diversified in accordance with the Treasury regulations issued under that
Section, then that contract shall be immediately and permanently disqualified
from treatment as a life insurance contract for federal income tax purposes.
Disqualification of the Policy as a life insurance contract would result in
imposition of federal income tax on the Policy Owner with respect to earnings
allocable to the Policy prior to the receipt of payments under the Policy.

Generally, for purposes of determining whether the diversification
standards imposed by Section 817(h) of the Code on the underlying assets of
variable contracts have been met, "each United States government agency or
instrumentality shall be treated as a separate issuer." To the extent that any
segregated asset account with respect to a variable life insurance Contract is
invested in securities issued by the U.S. Treasury, the investments made by such
accounts shall be treated as adequately diversified. The Code also contains a
safe harbor provision which provides that a segregated asset account underlying
life insurance contracts such as the Policies will meet the diversification
requirements of Section 817(h) if, as of the close of each quarter, the
underlying assets of the account meet the diversification requirements
applicable to regulated investment companies and not more than 55 percent of the
value of the assets of the account are attributable to cash and cash items
(including receivables), Government securities and securities of other regulated
investment companies.

Treasury Regulation Section 1.817-5 establishes the specific
diversification requirements applicable to the investment portfolios underlying
variable life insurance contracts such as the Policies, and provides
alternatives to the safe harbor provisions described above. Under this
Regulation, an investment portfolio will be deemed adequately diversified if:
(i) no more than 55% of the value of the total assets of the portfolio is
represented by any one investment; (ii) no more than 70% of the value of the
total assets of the portfolio is represented by any two investments; (iii) no
more than 80% of the value of the total assets of the portfolio is represented
by any three investments; and (iv) no more than 90% of the value of the total
assets of the portfolio is represented by any four investments. For purposes of
these percentage tests, all securities of the same issuer are generally treated
as a single investment. The Regulation also provides a remedial procedure
pursuant to which some of the adverse consequences of a violation of the
diversification requirements may be avoided. This procedure requires, among
other things, a tax penalty payment by the issuer of the affected policies.

The Company intends that each Fund underlying the Policies will be managed
by its Investment Manager in such a manner as to comply with these
diversification requirements.

38
<PAGE>

When Regulations under Section 817(h) of the Code were first proposed in
1989, the Treasury Department also indicated that guidelines would be
forthcoming under which a variable life insurance Policy would not be treated as
a life insurance contract for tax purposes if the owner of the Policy had an
excessive degree of control over the investments underlying the Policy (e.g., by
being able to transfer values among Sub-accounts with only limited
restrictions). The issuance of such guidelines could require the Company to
impose limitations on the rights of the Policy Owners to control investment
designations under the Policies. It is not presently known whether any such
guidelines will be issued or whether any such guidelines would have retroactive
effect.

TAX TREATMENT OF THE POLICY

Section 7702 of the Code sets forth a detailed definition of a life
insurance contract for Federal tax purposes. The Treasury Department is
authorized to prescribe regulations implementing Section 7702. While proposed
regulations and other interim guidance have been issued, final regulations have
not been adopted so that the extent of the official guidance as to how Section
7702 is to be applied is quite limited. If a Policy were determined not to be a
life insurance contract for purposes of Section 7702, that Policy would not
qualify for the favorable tax treatment normally provided to a life insurance
Policy.

With respect to a Policy issued on the basis of a standard rate class, the
Company believes (largely in reliance on IRS Notice 88-128 and the proposed
regulations under Section 7702, issued on July 5, 1991) that such a Policy
should meet the Section 7702 definition of a life insurance contract.

With respect to a Policy that is issued on a substandard basis (i.e., a
premium class involving higher than standard mortality risk), there is less
certainty, in particular as to how the mortality and other expense requirements
of Section 7702 are to be applied in determining whether such a Policy meets the
definition of a life insurance contract set forth in section 7702. Thus, it is
not clear that such a Policy would satisfy Section 7702, particularly if the
Owner pays the full amount of premiums permitted under the Policy.

If subsequent guidance issued under Section 7702 leads the Company to
conclude that a Policy does not (or may not) satisfy Section 7702, the Company
will take appropriate and necessary steps for the purpose of causing such Policy
to comply with Section 7702, but the Company can give no assurance that it will
be possible to achieve that result. The Company expressly reserves the right to
restrict Policy transactions if it determines such action to be necessary as
part of an attempt by the Company to qualify the Policies as life insurance
contracts under Section 7702.

The discussion set forth below assumes that each Policy will qualify as a
life insurance contract for Federal income tax purposes under Section 7702.

TAX TREATMENT OF POLICY BENEFITS IN GENERAL.

The Company believes that the Policy should be treated as a life insurance
contract for Federal income tax purposes. Thus, the Death Benefit under the
Policy should be excluded from the gross income of the Beneficiary under Section
101(a)(1) of the Code. In addition, the cash value increases of a Policy should
not be taxed until there has been a distribution from the Policy such as a
surrender, partial surrender, lapse with loan, or a payment of benefits at a
Policy's Maturity Date.

Upon a complete Surrender or lapse of any Policy or upon a payment of
benefits at a Policy's Maturity Date, any excess of the amount received plus the
amount of Outstanding Loan over the total investment in the Policy, will
generally be treated as ordinary income subject to tax. This treatment of
surrenders, lapses, and payments at a Policy's Maturity Date applies whether the
Policy is or is not treated as a Modified Endowment Contract.

39
<PAGE>

INVESTMENT IN THE POLICY. The term "investment in the Policy" means (i)
the aggregate amount of any Premiums or other consideration paid for a Policy,
minus (ii) the aggregate amount received under the Policy which is excluded from
gross income of the Owner (except that the amount of any loan from, or secured
by, a Policy that is a Modified Endowment Contract, to the extent such amount is
excluded from gross income, will be disregarded), plus (iii) the amount of any
loan from, or secured by, a Policy that is a Modified Endowment Contract to the
extent that such amount is included in the gross income of the Owner.

DISTRIBUTIONS FROM POLICIES NOT CLASSIFIED AS MODIFIED ENDOWMENT
CONTRACTS. Distributions from a Policy that is not a Modified Endowment
Contract, are generally treated first as a recovery of the Owner's investment in
the Policy and then, but only after the return of all such investment in the
Policy, as a distribution of taxable income. An exception to this general rule
applies 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 fifteen years after
the Policy is issued and that results in a cash distribution to the Owner, even
where such a distribution must be made in order for the Policy to continue
complying with the definitional limits of Section 7702. Such a 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, or secured by, a Policy that is not a Modified Endowment
Contract are not treated as distributions. Instead, any such loan is generally
treated as an Outstanding Loan of the Owner.

MODIFIED ENDOWMENT CONTRACTS. Section 7702A of the Code establishes a
class of life insurance contracts designated as "Modified Endowment Contracts,"
which applies to Policies entered into or Policies with certain material changes
after June 20, 1988. Due to the Policy's flexibility, classification as a
Modified Endowment Contract will depend on the individual circumstances of each
Policy.

In general, a Policy will be a Modified Endowment Contract if the
accumulated Premiums paid at any time during the first seven Policy Years exceed
the sum of the net level Premiums which would have been paid on or before such
time if the Policy provided for paid-up future benefits after the payment of
seven level annual Premiums. Whether a Policy will be a Modified Endowment
Contract after a material change generally depends upon the relationship of the
Death Benefit and Policy Account Value at the time of such change and the
additional premiums paid in the seven years following the material change.

The rules relating to whether a Policy will be treated as a Modified
Endowment Contract are extremely complex and cannot be adequately described in
the limited confines of this summary. Therefore, a current or prospective Owner
should consult with a competent advisor to determine whether a Policy
transaction will cause the Policy to be treated as a Modified Endowment
Contract. The Company will, however, monitor Policies and will take all steps
reasonably necessary to notify an Owner on a timely basis if his or her Policy
is in jeopardy of becoming a Modified Endowment Contract.

DISTRIBUTIONS FROM POLICIES CLASSIFIED AS MODIFIED ENDOWMENT CONTRACTS.
Any Policies that are classified as Modified Endowment Contracts will be subject
to additional adverse tax rules. Loans taken from, or secured by, such a Policy
will be treated as distributions from the Policy and will be taxed accordingly.
(Past due loan interest that is added to the loan amount will also be treated as
a loan for this purpose.) In addition, all distributions, including any loans
and any distributions upon any full or partial surrender, a lapse, or a payment
of benefits at the Maturity Date of such a Policy, will be treated as ordinary
income to the extent of the excess (if any) of the Policy Account Value
immediately before the distribution over the Owner's investment in the Policy
(described above) at such time. These rules may also apply to Policies during
the two-year period prior to a Policy's classification as a Modified Endowment
Contract.

PENALTIES ON EARLY DISTRIBUTIONS POLICIES CLASSIFIED AS MODIFIED
ENDOWMENT CONTRACTS. A ten percent additional income tax may be imposed under
Section 72 (v) of the Code on the portion of any distribution (or any loan) from
a Policy that is classified as a Modified Endowment Contract. This additional
tax applies to the full amount that is included in the Owner's taxable income
except where the distribution from the Policy (including distributions upon
surrender) or loan is made from or secured by the Policy or loan is made on or
after the date that the Owner attains age 59 1/2, is attributable to the Owner's
becoming disabled, or is part of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Owner or the joint lives (or joint life expectancies) of the
Owner and the Owner's Beneficiary. If a Policy is not a Modified Endowment
Contract, however, then neither distributions (including distributions upon
surrender) nor loans from, or secured by, the Policy will be subject to the 10%
additional tax.

40
<PAGE>

MULTIPLE POLICIES. Section 72(e)(11) of the Code provides that if two or
more Modified Endowment Contracts are issued within the same calendar year to
the same Owner by one company or its affiliates, then all such contracts must be
treated as one Modified Endowment Contract for purposes of determining the
taxable portion of any loans or distributions. Such treatment may result in
adverse tax consequences including more rapid taxation of the loans or other
amounts distributed from all such contracts. Owners should consult a tax adviser
prior to purchasing more than one Modified Endowment Contract in any calendar
year.

INTEREST ON POLICY LOANS. Except in special circumstances, interest paid
on a loan under a Policy which is owned by an individual is treated as personal
interest under Section 163(h) of the Code and thus will not be tax deductible.
In addition, the deduction of interest that is incurred on any loan under a
Policy owned by a taxpayer and covering the life of any individual who is an
officer or employee of or who is financially interested in the business carried
on by that taxpayer may also be subject to certain restrictions set forth in
Section 264 of the Code. Before taking a Policy loan, an Owner should consult a
tax adviser as to the tax consequences of such a loan. (Also Section 264 of the
Code may preclude business Policy Owners from deducting premium payments.)

POLICY EXCHANGES AND MODIFICATIONS. Depending on the circumstances, the
exchange of a Policy, a change in the Policy's Death Benefit option (e.g., a
change from Level Option to Increasing Option or vice versa), a Policy loan, a
partial surrender, a Surrender, a change in ownership, or an assignment of the
Policy may have Federal income tax consequences. In addition, the Federal, state
and local transfer, and other tax consequences of ownership or receipt of Policy
proceeds will depend on the circumstances of each Owner or Beneficiary.

WITHHOLDING. The Company is required to withhold Federal income taxes on
the taxable portion of any amounts received under the Policy unless you elect to
not have any withholding or in certain other circumstances. Special withholding
rules apply to payments made to non-resident aliens.

You are liable for payment of Federal income taxes on the taxable portion
of any amounts received under the Policy. You may be subject to penalties under
the estimated tax rules if your withholding and estimated tax payments are not
sufficient.

GENERATION SKIPPING TRANSFER TAX. A transfer of the Policy or the
designation of a beneficiary who is either 37 1/2 years younger than the Owner
or a grandchild of the Owner may have Generation Skipping Transfer Tax
consequences.

CONTRACTS ISSUED IN CONNECTION WITH TAX QUALIFIED PENSION PLANS. Prior to
purchase of a Policy in connection with a qualified plan, the applicable tax
rules relating to such plans and life insurance thereunder should be examined in
consultation with a qualified tax advisor.

POSSIBLE CHARGE FOR THE COMPANY'S TAXES

At the present time, the Company makes no charge for any Federal, state or
local taxes (other than state premium taxes) that it incurs that may be
attributable to the Separate and Guaranteed Accounts or to the Policies. The
Company, however, reserves the right in the future to make a charge for any such
tax or other economic burden resulting from the application of the tax laws that
it determines to be properly attributable to the Separate Account or to the
Policies.

41
<PAGE>

SUPPLEMENTAL BENEFITS AND RIDERS

The Company intends to make available certain supplemental benefits and
riders which may be issued with the Policy. Any monthly charges for these
supplemental benefits and riders, as listed below, will be deducted from the
Policy Account Value.

- Accidental Death Benefit (ADB)
- Accelerated Benefits Rider
- Waiver of Monthly Deductions
- Waiver of Specified Premium
- Child's Term Rider
- Primary Insured Term Rider (PIR)
- Other Insured Term Rider (OIR)
- Minimum Guaranteed Death Benefit

For a complete description of these supplemental benefits and riders, their
costs, and any rules or limits applicable to their issue, please contact Our
Administrative Office or one of Our authorized agents.

42
<PAGE>

MANAGEMENT OF THE COMPANY

The Directors and Principal Officers of the Company are listed below with
their current principal business affiliation and their principal occupations
during the past five (5) years. All officers have been affiliated with the
Company during the past five (5) years unless otherwise indicated.
<TABLE>
<CAPTION>

Current Principal
Business Affiliations
and Principal
Occupations During
Name and Address Office Past Five Years
<S> <C> <C>

Robert John O'Connell* President,Director President and CEO,AIG
& CEO Domestic Life Companies

Peter Joseph. Dalia Director Retired; formerly Vice
20281 E. County Club Dr. President and Comptroller
Apt. 2212 American International
Aventura, FL 33180 Group, Inc.

Marion Elizabeth Fajen Director Retired; formerly Vice President
5608 N. Waterbury Rd. and Secretary of AIG, Inc.
Des Moines, IA 50312

Cecil Calvert Gamwell, III Director Director-LifeDivision AIG Inc.
80 Pine Street Director- Seguros, Venezuala
13th Floor and Director (ALT) Seguros
New York, New York 10270 Interamericanos
of New York

Maurice Raymond Greenberg* Director Chairman of the Board,
President and Chief Officer
of American International
Group, Inc.

Howard Earl Gunton, Jr. Vice President Vice President and
One Alico Plaza Comptroller Comptroller of AIG
Wilmington DE 19801 Domestic Life Companies

Jacob Ernest Hansen Director President, AIG Marketing,
505 Carr Road Inc.
Wilmington, DE 19803

Jack Russell Harnes Director Retired.Formerly Medical
72 Wall Street, 1st Floor Director of American
New York, New York 10270 International Group, Inc.

John Iniss Howell Director Director of AIG Life
Indian Rock Corporation Insurance Company and
P.O. Box 2606 American International
Greenwich, CT 06830 Life Assurance Company
of New York,and Director
of Schroder Capital Management.

Jeffrey Merton Kestenbaum Director and Senior VicePresident AIG;
Senior Vice Formerly Senior Vice President
President and General Manager AIA, and
Senior Vice President AIG,
Japan.

Edwin A.G. Manton Director Director of AIG Life
Insurance Company.

Jerome Thomas Muldowney* Senior Vice Senior Vice President
President and President AIG Domestic
and Director Life Companies.

Win Jay Neuger Director Senior Vice President -AIG,
Inc. Formerly, Managing
Director - Banker's Trust Co.

Nicholas Alexander O'Kulich* Vice President Vice President,Treasurer,
Treasurer and American International
Director Companies.

John Robert Skar Vice President Senior Vice President,
One Alico Plaza Actuary and Actuary and Director,AIG
P.O. Box 667 Director Domestic Life Companies.
Wilmington DE 19899 Formerly, Senior Vice
President, Fidelity Mutual
Life Insurance Company.

Ernest Edward Stempel* Director and Chairman of the Board
Chairman of and Director of
the Board American International
Group,Inc.

</TABLE>

<PAGE>

Elizabeth Margaret Tuck* Secretary Secretary and Assistant
Secretary of AIG, Inc.and
certain affiliates

David James Walsh* Director DBG General Counsel AIG
Life Companies,Formerly
Director of Insurance State
of Alaska.

Gerald Walter Wyndorf* Director and Executive Vice President
Executive Vice AIG Domestic Life Companies;
President Formerly Regional V.P.
Mutual of New York

Patrick Joseph Foley* Director Retired; Formerly Vice
Vice President President and Associate General
and Associate American International Life
General Counsel Assurance Company of New
York, AIG Insurance Company

* Indicates the business address of the individual, which is 70 Pine Street, New
York, New York 10270

</TABLE>

<PAGE>

DISTRIBUTION OF POLICY

The Policy is sold by licensed insurance agents, where the Policy may be
lawfully sold, who are registered representatives of broker-dealers which are
registered under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc.

The Policy will be distributed through the principal underwriter for the
Separate Account, AIG Equity Sales Corp. (AESC) 80 Pine Street, New York, New
York, an affiliate of the Company. The Company pays commissions on behalf of
AESC to selling product dealers and registered representatives.

Commissions may be paid to registered representatives based on Premiums paid
for Policies sold, in amounts up to 50% of first year Premiums, 5% on Premiums
paid during the 2nd through 10th Policy Years, and 2% on Premiums paid after the
first ten Policy Years. Other expense reimbursements, allowances, and overrides
may also be paid. Registered representatives who meet certain productivity and
profitability standards may be eligible for additional compensation. Additional
payments may be made for administrative or other services not directly related
to the sale of the Policies.

OTHER POLICIES ISSUED BY THE COMPANY

The Company may offer other Policies similar to those offered herein.

STATE REGULATION

The Company is subject to the laws of New York governing insurance companies
and to regulation by the New York Insurance Department. An annual statement in a
prescribed form is filed with the Insurance Department each year covering the
operation of the Company for the preceding year and its final condition as of
the end of such year. Regulation by the Insurance Department includes periodic
examinations to determine the Company's Policy liabilities and reserves so that
the Insurance Department may certify the items are correct. The Company's books
and accounts are subject to review by the Insurance Department at all times and
a full examination of its operations is conducted periodically by the staff of
the Insurance Department pursuant to the National Association of Insurance
Commissioners. Such regulation does not, however, involve any supervision of
management or investment practices or policies. In addition, the Company is
subject to regulation under the insurance laws of other jurisdictions in which
it may operate.

<PAGE>

LEGAL PROCEEDINGS

There are no legal proceedings to which the Separate Account or the
principal underwriter is a party. The Company is engaged in Various kinds of
routine litigation which, in the opinion of the Company, are not of material
importance in relation to the total capital and surplus of the Company.

EXPERTS

The financial statements of the Company which appear in this Prospectus have
been audited by Coopers & Lybrand, independent certified public accountants, as
stated in their reports, and have been included in reliance upon the authority
of such firm as experts in accounting and auditing.

LEGAL OPINIONS

Legal matters relating to the federal securities laws are being passed upon by
the firm of Jorden Burt Berenson & Johnson L.L.P. of Washington, D.C.

PUBLISHED RATINGS

The Company may from time to time publish in advertisements, sales
literature and reports to Owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A. M. Best Company,
Moody's, and Standard & Poor's. The purpose of the ratings is to reflect the
financial strength and/or claims-paying ability of the Company and should not be
considered as bearing on the investment performance of assets held in the
separate account. Each year the A. M. Best Company reviews the financial status
of thousands of insurers, culminating in the assignment of Best's Ratings. These
ratings reflect A. M. Best's current opinion of the relative financial strength
and operating performance of an insurance company in comparison to the norms of
the life/health insurance industry. In addition, the claims-paying ability of
the Company as measured by Standard & Poor's Insurance Ratings Services, and the
financial strength of the Company as measured by Moody's Investors Services, may
be referred to in advertisements, sales literature or in reports to Owners.
These ratings are their opinions of an operating insurance company's financial
capacity to meet the obligations of its life insurance policies and annuity
contracts in accordance with their terms. In regard to their ratings of the
Company, these ratings are explicitly based on the existence of a Support
Agreement, dated as of December 13, 1991, between the Company and its parent
Amaerican International Group, Inc. ("AIG"), pursuant to which AIG has agreed to
cause the Company to maintain a positive net worth and to provide the Company
with funds on a timely basis sufficient to meet the Company's obligations to its
policyholders. The Support Agreement is not, however, a direct or indirect
guarantee by AIG to any person of the payment of any of the Company's
indebtedness, liabilities or other obligations (including obligations to the
Company's policyholders).

The ratings are not recommendations to purchase the Company's life insurance
or annuity products, or to hold or sell these products, and the ratings do not
comment on the suitability of such products for a particular investor. There can
be no assurance that any rating will remain in effect for any given period of
time or that any rating will not be lowered or withdrawn entirely by a rating
organization if, in such organization's judgment, future circumstances relating
to the Support Agreement, such as a lowering of AIG's long-term debt rating, so
warrant. The ratings do not reflect the investment performance of the separate
account or the degree of risk associated with an investment in the separate
account.

FINANCIAL STATEMENTS

The financial statements of the Company are included herein should only be
considered as bearing upon the ability of the Company to meet its obligations
under the Policy.

F-1
<PAGE>

AMERICAN INTERNATIONAL LIFE ASSURANCE
COMPANY OF NEW YORK
(a wholly-owned subsidiary of
American International Group, Inc.)

REPORT ON AUDITS OF FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

F-2
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors
American International Life Assurance Company of New York:

We have audited the accompanying balance sheets of American International Life
Assurance Company of New York (a wholly-owned subsidiary of American
International Group, Inc.) as of December 31, 1996 and 1995, and the related
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1996. 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 American International Life
Assurance Company of New York as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 22, 1997

F-3
<PAGE>

AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
(in thousands)

December 31,
-------------

1996 1995

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

Assets

Investments and cash:
Fixed maturities:
Bonds available for sale, at market value $ 4,636,022$ 4,434,329
(cost: 1996-$4,456,608: 1995 - $4,139,170)
Equity securities:
Common stock
(cost: 1996-$19,800: 1995 - $16,613) 33,099 24,365
Non-redeemable preferred stocks
(cost: 1996-$649; 1995 - $4,564) 590 4,570
Mortgage loans on real estate, net 513,470 448,700
Real estate, net of accumulated
depreciation of $6,046 in 1996; and $5,269 in 1995 26,227 27,000
Policy loans 11,063 10,991
Other invested assets 65,744 69,360
Short -term investments 60,333 104,048
Cash 1,726 1,105
------------- --------------

Total investments and cash 5,348,274 5,124,468

Amounts due from related parties 4,277 973
Investment income due and accrued 77,433 74,355
Premium and insurance balances receivable-net 13,617 13,289
Reinsurance assets 25,211 22,552
Deferred policy acquisition cost 35,754 31,225
Separate and variable accounts 153,678 68,151
Other assets 2,591 16,814
-----------------------------

Total assets $ 5,660,835 $ 5,351,827
=========== ===========

</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>

AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
(in thousands, except share amounts)

<TABLE>
<CAPTION>
December 31,

1996 1995

-------------- ----------
<S> <C> <C>
Liabilities

Policyholders' funds on deposit $ 3,308,208 $ 3,060,581
Future policy benefits 1,588,563 1,561,760
Reserve for unearned premiums 8,167 10,808
Policy and contract claims 44,173 37,201
Reserve for commissions, expenses and taxes 4,905 4,433
Insurance balances payable 7,981 7,771
Federal income tax payable 3,758 3,477
Deferred income taxes 43,445 62,325
Amounts due to related parties 5,227 5,260
Separate and variable accounts 153,678 68,151
Other liabilities 22,588 23,553
------------- -------------
Total liabilities 5,190,693 4,845,320
------------ -----------

Commitments and contingencies (See Note 6)

Stockholders' Equity

Common stock, $200 par value; 16,125 shares
authorized, issued and outstanding 3,225 3,225
Additional paid-in capital 197,025 197,025
Unrealized appreciation (depreciation) of
investments, net of future policy benefits
and taxes of $72,979 in 1996 and
$82,352 in 1995; 135,524 153,086
Retained earnings 134,368 153,171
------------ -------------

Total stockholders' equity 470,142 506,507
----------- ------------
Total liabilities and stockholders' equity $ 5,660,835 $ 5,351,827
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>

AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
(in thousands)

Years ended December 31,

1996 1995 1994
------------ ------------ --------
<S> <C> <C> <C>

Revenues:
Premiums $ 149,472 $ 84,357 $ 71,826
Net investment income 401,647 386,680 335,510
Realized capital gains 610 1,436 1,932
------------ ------------- -----------

Total revenues 551,729 472,473 409,268
--------- ----------- ---------

Benefits and expenses:
Benefits to policyholders 163,377 167,319 163,585
Increase in future policy benefits
and policyholders' funds on deposit 284,936 209,512 165,291
Acquisition and insurance expenses 54,875 54,808 62,759
---------- ------------ ----------

Total benefits and expenses 503,188 431,639 391,635
--------- ----------- ---------

Income before income taxes 48,541 40,834 17,633
---------- ---------- -----------

Income taxes (benefits):
Current 26,85322,070 18,939
Deferred (9,509) (7,572) (12,262)
------------ ------------- -----------

Total income taxes 17,344 14,498 6,677
---------- ----------- -----------

Net income $ 31,197 $ 26,336 $ 10,956
========== =========== ==========

</TABLE>

See accompanying notes to financial statements

F-7
<PAGE>

AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)

Years ended December 31,

1996 1995 1994
------------ ------------ ---------

Common Stock

Balance at beginning of year $ 3,225 $ 3,225 $ 3,225
------------ ------------ ------------

Balance at end of year 3,225 3,225 3,225
------------ ----------- ------------

Additional paid-in capital

Balance at beginning of year: 197,025 197,025 197,025
---------- ---------- ----------

Balance at end of year 197,025 197,025 197,025
---------- ---------- ----------

Unrealized appreciation (depreciation)
of investments, net
Balance at beginning of year 153,086 (60,149) 58,102
Change during year (102,936) 404,059 (182,008)
Changes due to deferred income
tax benefit expense) and
future policy benefits 85,374 (190,824) 63,757
----------- ----------- ------------

Retained earnings
Balance at beginning of year 153,171 126,835 115,879
Net income 31,197 26,336 10,956
Dividends to Stockholders (50,000) - -
----------------------------------------------

Balance at end of year 134,368 153,171 126,835
----------- ---------- -----------

Total stockholders' equity$ 470,142 $ 506,507 $ 266,936
========== ========== ==========

</TABLE>

See accompanying notes to financial statements

F-8
<PAGE>

AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
(in thousands)

Years ended December 31,

1996 1995 1994

Cash flows from operating activities:
Net income $ 31,197 $ 26,336 $ 10,956
----------- ----------- -----------

Adjustments to reconcile net income
to net cash provided by operating
activities:
Non-cash revenues, expenses, gains and losses
included in income:
Change in insurance reserves 107,134 37,251 45,554
Change in premiums and insurance balances
receivable and payable -net (117) (110) (138)
Change in reinsurance assets (2,658) 3,761 5,570
Change in deferred policy acquisition costs (4,530) (1,599) (213)
Change in investment income due and accrued (3,078) (6,732) (8,153)
Realized capital gains (610) (1,436) (1,932)
Change in current and deferred income taxes -net (9,227) (5,417) (6,927)
Change in reserves for commissions, expenses
and taxes 472 1,356 149
Change in other assets and liabilities - net (17,396) (18,394) 7,597
----------- ----------- ------------
Total adjustments 69,990 8,680 41,507
----------- ------------ -----------
Net cash provided by operating activities 101,187 35,016 52,463
---------- ----------- -----------

Cash flows from investing activities:
Cost of fixed maturities, at market sold ....... 136,829 65,623 63,695
Cost of fixed maturities, at market
matured or redeemed ........................... 424,317 247,551 255,229
Cost of equity securities sold ................. 4,877 1,310 958
Realized capital gains ........................ 610 3,436 4,715
Purchase of fixed maturities.................. (858,793) (627,188) (837,973)
Purchase of equity securities ................... (4,149) (1,005) (137)
Mortgage loans granted ........................ (124,280) (111,402) (77,824)
Repayments of mortgage loans..................... 59,577 60,476 9,621
Change in policy loans........................... (71) (674) 601
Change in short-term investments ................ 43,715 26,372 (7,485)
Change in other invested assets ................. 10,475 (4,083) (6,479)
Other - net ................................... 8,701 (17,713) (1,020)
-------------- ---------------------------
Net cash used in investing activities (298,192) (357,297) (596,099)
------------ ------------------------

Cash flows from financing activities:
Change in policyholders' funds on deposit 247,626 318,169 542,729
Dividends to stockholders (50,000) - -
---------------------------------------------
Net cash provided by financing activities 197,626 318,169 542,729
------------- ---------- ----------

Change in cash ..................................... 621 (4,112) (907)
Cash at beginning of year ........................ 1,105 5,217 6,124
------------- ---------------------------
Cash at end of year $ 1,726 $ 1,105 $ 5,217
============= ============= ==============
</TABLE>

See accompanying notes to financial statements

F-9
<PAGE>

AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

(a)Basis of Presentation: American International Life Assurance Company of
New York (the Company) is a wholly-owned subsidiary of American
International Group, Inc. (the Parent). The financial statements of the
Company have been prepared on the basis of generally accepted accounting
principles (GAAP). The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates. The Company is
licensed to sell life and accident & health insurance in the District of
Columbia and all states except Arizona, Connecticut and Maryland. The
Company is also licensed in America Samoa, Virgin Islands and Guam.

The Company also files financial statements prepared in accordance with
statutory practices prescribed or permitted by the Insurance Department of
the State of New York. Financial statements prepared in accordance with
generally accepted accounting principles differ in certain respects from
the practices prescribed or permitted by regulatory authorities. The
significant differences are: (1) statutory financial statements do not
reflect fixed maturities available for sale at market value; (2) policy
acquisition costs, charged against operations as incurred for regulatory
purposes, have been deferred and are being amortized over the anticipated
life of the contracts; (3) individual life and annuity policy reserves
based on statutory requirements have been adjusted based upon mortality,
lapse and interest assumptions applicable to these coverages, including
provisions for reasonable adverse deviations; these assumptions reflect
the Company's experience and industry standards; (4) deferred income taxes
not recognized for regulatory purposes have been provided for temporary
differences between the bases of assets and liabilities for financial
reporting purposes and tax purposes; (5) for regulatory purposes, future
policy benefits, policyholders' funds on deposit, policy and contract
claims and reserve for unearned premiums are presented net of ceded
reinsurance; and (6) an asset valuation reserve and interest maintenance
reserve using National Association of Insurance Commissioners (NAIC)
formulas are set up for regulatory purposes.

(b)Investments: Fixed maturities available for sale, where the company may
not have the ability or positive intent to hold these securities until
maturity, are carried at market value. Included in fixed maturities
available for sale are collateralized mortgage obligations (CMO's).
Premiums and discounts arising from the purchase of CMO'S are treated as
yield adjustments over the estimated life. Common and non-redeemable
preferred stocks are carried at market value. Short-term investments are
carried at cost, which approximates market.

Unrealized gains and losses from investment in equity securities and fixed
maturities available for sale are reflected in stockholders' equity, net
of amounts recorded as future policy benefits and any related deferred
income taxes.

Realized capital gains and losses are determined principally by specific
identification. Where declines in values of securities below cost or
amortized cost are considered to be other than temporary, a charge is
reflected in income for the difference between cost or amortized cost and
estimated net realizable value.

Mortgage loans on real estate are carried at unpaid principal balance less
unamortized loan origination fees and costs less an allowance for
uncollectible loans.

F-10
<PAGE>

1. Summary of Significant Accounting Policies - (continued)

Real estate is carried at depreciated cost and is depreciated on a
straight-line basis over 31.5 years. Expenditures for maintenance and
repairs are charged to income as incurred; expenditures for betterments
are capitalized and depreciated over their estimated lives.

Policy loans are carried at the aggregate unpaid principal balance.

Other invested assets consist primarily of limited partnership interests
which are carried at market value. Unrealized gains and losses from the
revaluation of these investments are reflected in stockholders' equity,
net of any related taxes. Also included in this category is an interest
rate cap agreement, which is carried at its amortized cost. The cost of
the cap is being amortized against investment income on a straight line
basis over the life of the cap.

(c) Income Taxes: The Company joins in a consolidated federal income tax
return with the Parent and its domestic subsidiaries. The Company and the
Parent have a written tax allocation agreement whereby the Parent agrees
not to charge the Company a greater portion of the consolidated tax
liability than would have been paid by the Company if it had filed a
separate return. Additionally, the Parent agrees to reimburse the Company
for any tax benefits arising out of its net losses within ninety days
after the filing of that consolidated tax return for the year in which
these losses are utilized. Deferred federal income taxes are provided for
temporary differences related to the expected future tax consequences of
events that have been recognized in the Company's financial statements or
tax returns.

(d)Premium Recognition and Related Benefits and Expenses: Premiums on
traditional life insurance and life contingent annuity contracts are
recognized when due. Revenues for universal life and investment-type
products consist of policy charges for the cost of insurance,
administration, and surrenders during the period. Premiums on accident and
health insurance are reported as earned over the contract term. The
portion of accident and health premiums which is not earned at the end of
a reporting period is recorded as unearned premiums. Estimates of premiums
due but not yet collected are accrued. Policy benefits and expenses are
associated with earned premiums on long-duration contracts resulting in a
level recognition of profits over the anticipated life of the contracts.

Policy acquisition costs for traditional life insurance products are
generally deferred and amortized over the premium paying period of the
policy. Deferred policy acquisition costs and policy initiation costs
related to universal life and investment-type products are amortized in
relation to expected gross profits over the life of the policies (see Note
3).

The liability for future policy benefits and policyholders' contract
deposits is established using assumptions described in Note 4.

(e)Policy and Contract Claims: Policy and contract claims include amounts
representing: (1) the actual in-force amounts for reported life claims and
an estimate of incurred but unreported claims; and (2) an estimate, based
upon prior experience, for accident and health reported and incurred but
unreported losses. The methods of making such estimates and establishing
the resulting reserves are continually reviewed and updated and any
adjustments resulting therefrom are reflected in income currently.

(f)Separate and Variable Accounts: These accounts represent funds for which
investment income and investment gains and losses accrue directly to the
policyholders. Each account has specific investment objectives, and the
assets are carried at market value. The assets of each account are legally
segregated and are not subject to claims which arise out of any other
business of the Company.

F-11
<PAGE>

1. Summary of Significant Accounting Policies - (continued)

(g)Reinsurance Assets: Reinsurance assets include the balances due from both
reinsurance and insurance companies under the terms of the Company's
reinsurance arrangements for ceded unearned premiums, future policy
benefits for life and accident and health insurance contracts,
policyholders' funds on deposit and policy and contract claims. It also
includes funds held under reinsurance treaties.

(h) Accounting Standards:

In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed
Of" (FASB 121). This statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not be recoverable and an impairment loss must be recognized.

FASB 121 was effective for the Company commencing January 1, 1996. The
adoption of this statement in 1996 had no significant effect on the
Company's results of operations, financial condition and liquidity.

In December 1995, FASB issued "Special Report, a Guide to the
Implementation of Statement No. 115 on Accounting for Certain Investments
in Debt and Equity Securities". Among other things, this guide provided
for a transition provision permitting a one-time transfer of debt
securities from the held to maturity classification to the available for
sale classification. The Company did not transfer any securities from the
held to maturity classification to available for sale classification.

(i)The financial statements for 1994 and 1995 have been reclassified to
conform to the 1996 presentation.

2. Investment Information

(a) Statutory Deposits: Securities with a carrying value of $9,369,000 and
$9,381,000 were deposited by the Company under requirements of regulatory
authorities as of December 31, 1996 and 1995, respectively.

F-12
<PAGE>

2. Investment Information - (continued)

b)Net Investment Income: An analysis of net investment income
is as follows (in thousands):

Years ended December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>

Fixed maturities $351,702 $334,828 $289,374
Equity securities 999 1,006 1,156
Mortgage loans 41,865 40,383 33,251
Real estate 2,835 2,760 2,947
Policy loans 794 733 764
Cash and short-term investments 4,699 4,124 6,839
Other invested assets 2,662 6,381 4,465
--------- --------- ---------
Total investment income 405,556 390,215 338,796

Investment expenses 3,909 3,535 3,286
--------- --------- ---------

Net investment income $401,647 $386,680 $335,510
======== ======== ========

</TABLE>

(c)Investment Gains and Losses: The net realized capital gains (losses) and
change in unrealized appreciation (depreciation) of investments for 1996,
1995 and 1994 are summarized below (in thousands):

Years ended December 31,

1996 1995 1994
---- ---- ----

Net realized gains (losses)
on investments:
Fixed maturities $ (104) $ (115)$ (75)
Equity securities 714 3,515 2,046
Mortgage loans - (2,000) (2,783)
Other invested assets - 36 2,744
------------ --------------------
Net realized gains $ 610 $ 1,436 $ 1,932
========= ======== ========

Change in unrealized appreciation
(depreciation) of investments:
Fixed maturities $(115,746) $ 402,020 $(186,892)
Equity securities 5,913 666 (697)
Other invested assets 6,897 1,373 5,581
----------- ------------------------
Change in unrealized appreciation
(depreciation) of investments $ (102,936) $ 404,059 $(182,008)
=========== ========= ==========

Proceeds from the sale of investments in fixed maturities during 1996,
1995 and 1994 were $136,829,000, $65,623,000 and $79,504,000,
respectively.

During 1996, 1995 and 1994, gross gains of $636,000, $624,000 and
$4,861,000, respectively, and gross losses of $740,000, $739,000 and
$4,936,000, respectively, were realized on dispositions of fixed
maturities.

During 1996, 1995 and 1994, gross gains of $714,000, $3,516,000 and
$2,047,000, respectively, and gross losses of $0, $1,000 and $1,000,
respectively, were realized on dispositions of equity securities.

</TABLE>

F-13
<PAGE>

2. Investment Information - (continued)

(d)Market Value of Fixed Maturities and Unrealized Appreciation of
Investments: At December 31, 1996 and 1995, unrealized appreciation of
investments in equity securities (before applicable taxes) included gross
gains of $15,648,000 and $9,650,000 and gross losses of $398,000 and
$480,000, respectively.

The amortized cost and estimated market values of investments in fixed
maturities at December 31, 1996 and 1995 are as follows (in thousands):

Gross
1996 Amortized Unrealized Gross Market
Cost Gains Unrealized Value
Losses
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Government and government
agencies and authorities $ 79,195 $ 14,104 $ 420 $ 92,879
States, municipalities and
political subdivisions 854,402 36,479 4,574 886,307
Foreign governments 39,549 3,579 283 42,845
All other corporate 3,483,462 148,570 18,041 3,613,991
---------- --------- ------- ---------

Total fixed maturities $ 4,456,608 $ 202,732 $ 23,318 $4,636,022
========== ======== ======= ==========
</TABLE>
<TABLE>
<CAPTION>

Gross Gross
1995 Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>

Fixed maturities:
U.S. Government and government
agencies and authorities $ 84,063 $ 19,982 $ 39 $ 104,006
States, municipalities and
political subdivisions 883,646 56,568 89 940,125
Foreign governments 33,927 5,291 75 39,143
All other corporate 3,137,534 224,452 10,931 3,351,055
--------- -------- -------- ---------
Total fixed maturities $4,139,170 $ 306,293 $ 11,134 $ 4,434,329
========== ======== ======= ==========

</TABLE>

The amortized cost and estimated market value of fixed maturities
available for sale at December 31, 1996, by contractual maturity, are
shown below (in thousands). Actual maturities could differ from
contractual maturities because certain borrowers have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>

<S> <C> <C>
Estimated
Amortized Market
Cost Value

Due in one year or less $ 280,178 $ 287,023
Due after one year through five years 1,293,766 1,338,015
Due after five years through ten years 1,758,183 1,834,170
Due after ten years 1,124,481 1,176,814
----------- ------------
$4,456,608 $ 4,636,022
---------- -----------
---------- -----------

</TABLE>

F-14
<PAGE>

2. Investment Information - (continued)

(e) CMO's: CMOs are U.S. Government and Government agency backed and triple
A-rated securities. In the preceding table, CMO's are included in other
corporate fixed maturities. At December 31, 1996 and 1995, the market
value of the CMO portfolio was $1,031,431,000 and $1,114,196,000,
respectively; the estimated amortized cost was approximately $991,305,000
in 1996 and $1,049,450,000 in 1995. The Company's CMO portfolio is readily
marketable. There were no derivative (high risk) CMO securities contained
in the portfolio at December 31, 1996.

(f)Fixed Maturities Below Investment Grade: At December 31, 1996 and 1995,
the fixed maturities held by the Company that were below investment grade
had an aggregate amortized cost of $270,068,000 and $204,254,000,
respectively, and an aggregate market value of $267,331,000 and
$206,442,000, respectively.

(g) Non-income Producing Assets: Non-income producing assets were
insignificant.

(h)Investments Greater than 10% Equity: The market value of investments in
the following companies and institutions exceeded 10% of the Company's
total stockholders' equity at December 31, 1996 (in thousands):

<S> <C>
Fixed Maturities:
General Motors Acceptance Corporation $ 72,009
Morgan Stanley Mortgage Trust $ 71,790
Transamerica Finance $ 55,300
Chrysler Finance Corporation $ 49,132

</TABLE>

3. Deferred Policy Acquisition Costs

The following reflects the policy acquisition costs deferred (commissions,
direct solicitation and other costs) which will be amortized against future
income and the related current amortization charged to income, excluding
certain amounts deferred and amortized in the same period (in thousands):

Years ended December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>

Balance at beginning of year $31,225 $29,626 $29,413
Acquisition costs deferred 8,482 5,933 3,286
Amortization charged to income (3,953) (4,334) (3,073)
------ ------- -------
Balance at end of year $35,754 $31,225 $29,626
======= ======= =======

</TABLE>

F-15
<PAGE>

4. Future Policy Benefits and Policyholders' Funds on Deposit

(a)The analysis of the future policy benefits and policyholders' funds on
deposit liabilities as at December 31, 1996 and 1995 follows (in
thousands):
<TABLE>
<CAPTION>

1996 1995
---- ----
<S> <C> <C>

Future policy benefits:
Long duration contracts $1,565,362 $1,537,901
Short duration contracts 23,201 23,859
----------- -----------
$1,588,563 $1,561,760

Policyholder funds on deposit:
Annuities $2,458,340 $2,216,319
Guaranteed investment contracts (GICs) 744,284 739,947
Universal life 98,466 98,214
Other investment contracts 7,118 6,101
$3,308,208 $3,060,581
</TABLE>

(b)Long duration contract liabilities included in future policy benefits, as
presented in the table above, result from traditional life products. Short
duration contract liabilities are primarily accident and health products.
The liability for future policy benefits has been established based upon
the following assumptions:

(i) Interest rates for traditional life insurance products are 9.5 percent
graded to 7.0 percent over 30 years. The liability for future policy
benefits for universal life insurance has been established using FASB 97
and assumes a 1.0 percent investment margin. Interest rates (exclusive of
immediate/terminal funding annuities), which vary by year of issuance and
products, range from 3.0 percent to 10.0 percent. Interest rates on
immediate/terminal funding annuities are at a maximum of 12.2 percent and
grade to not greater than 7.5 percent.

(ii) Mortality and withdrawal rates are based upon actual experience
modified to allow for variations in policy form. The weighted average
lapse rate, including surrenders, for individual life approximated 15.0
percent.

(c)The liability for policyholders' fund on deposit has been established
based on the following assumptions:

(i) Interest rates credited on deferred annuities vary by year of issuance
and range from 3.0 percent to 8.0 percent. Credited interest rate
guarantees are generally for a period of one year. Withdrawal charges
generally range from 6.0 percent to 10.0 percent grading to zero over a
period of 6 to 10 years.

(ii) GICs have market value withdrawal provisions for any funds withdrawn
other than benefit responsive payments. Interest rates credited generally
range from 4.7 percent to 8.1 percent and maturities range from 2 to 7
years.

(iii) The universal life funds have credited interest rates of 5.9 percent
to 7.5 percent and guarantees ranging from 3.5 percent to 5.5 percent
depending on the year of issue. Additionally, universal life funds are
subject to surrender charges that amount to 10.0 percent of the fund
balance and grade to zero over a period not longer than 20 years.

F-16
<PAGE>

5. Income Taxes

(a)The Federal income tax rate applicable to ordinary income is 35% for
1996, 1995 and 1994. Actual tax expense on income from operations differs
from the "expected" amount computed by applying the Federal income tax
rate because of the following (in thousands except percentages):

Years ended December 31,

1996 1995 1994
---------------- -------------- -----------
PERCENT PERCENT PERCENT
OF OF OF
PRE-TAX PRE-TAX PRE-TAX
OPERATING OPERATING OPERATING
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
<S> <C> <C> <C> <C> <C> <C>

"Expected" income tax
expense $16,989 35.0% $14,287 35.0% $6,172 35.0%
Prior year federal
income tax benefit - - - - - -
State income tax 578 1.2 609 1.5 667 3.8
Other (223) (0.5) (398) (1.0) (162) (0.9)
-------- ----- -------- ---- --------- ----
Actual income
tax expense $17,344 35.7% $14,498 35.5% $ 6,677 37.9%
======= ==== ======= ==== ======= ====
</TABLE>

(b) The components of the net deferred tax liability were as
follows (in thousands):

Years ended December 31,
1996 1995
<S> <C> <C>
Deferred tax assets:
Adjustments to mortgage loans
and investment income $ 5,321 $ 5,420
Adjustment to life reserves 35,370 23,835
Other 363 1,571
----------- ---------
41,054 30,826

Deferred tax liabilities:
Deferred policy acquisition costs $ 1,437 $ 1,637
Fixed maturities discount 9,816 8,745
Unrealized appreciation on investments 72,979 82,352
Other 267 417
----------- ----------
84,499 93,151
--------- --------

Net deferred tax liability $ 43,445 $ 62,325
======== ========
</TABLE>

(c)At December 31, 1996, accumulated earnings of the Company for Federal
income tax purposes include approximately $2,879,000 of "Policyholders'
Surplus" as defined under the Code. Under provisions of the Code,
"Policyholders' Surplus" has not been currently taxed but would be taxed
at current rates if distributed to the Parent. There is no present
intention to make cash distributions from "Policyholders' Surplus" and
accordingly, no provision has been made for taxes on this amount.

(d)Income taxes paid in 1996, 1995, and 1994 amounted to $25,353,000,
$19,056,000, and $13,537,000, respectively.

F-17
<PAGE>

6. Commitments and Contingent Liabilities

The Company, in common with the insurance industry in general, is subject
to litigation, including claims for punitive damages, in the normal course
of their business. The Company does not believe that such litigation will
have a material effect on its operating results and financial condition.

7. Fair Value of Financial Instruments

(a)Statement of Financial Accounting Standards No. 107 "Disclosures about
Fair Value of Financial Instruments" (FASB 107) requires disclosure of
fair value information about financial instruments for which it is
practicable to estimate such fair value. These financial instruments may
or may not be recognized in the balance sheet. In the measurement of the
fair value of certain of the financial instruments, quoted market prices
were not available and other valuation techniques were utilized. These
derived fair value estimates are significantly affected by the assumptions
used. FASB 107 excludes certain financial instruments, including those
related to insurance contracts.

The following methods and assumptions were used by the Company in
estimating the fair value of the financial instruments presented:

Cash and short term investments: The carrying amounts reported in the
balance sheet for these instruments approximate fair value.

Fixed maturities: Fair values for fixed maturity securities carried at
market value are generally based upon quoted market prices. For certain
fixed maturities for which market prices were not readily available, fair
values were estimated using values obtained from independent pricing
services.

Equity securities: Fair values for equity securities were based upon
quoted market prices.

Mortgage and policy loans: Where practical, the fair values of loans on
real estate were estimated using discounted cash flow calculations based
upon the Company's current incremental lending rates for similar type
loans. The fair values of policy loans were not calculated as the Company
believes it would have to expend excessive costs for the benefits derived.
Therefore, the fair value of policy loans was estimated at carrying value.

Interest rate cap: Fair values for the interest rate cap were estimated
using values obtained from an independent pricing service.

Policyholders' funds on deposit: Fair values of policyholder contract
deposits were estimated using discounted cash flow calculations based upon
interest rates currently being offered for similar contracts consistent
with those remaining for the contracts being valued.

F-18
<PAGE>

7. Fair Value of Financial Instruments - (continued)

(b) The fair value and carrying amounts of financial instruments
is as follows (in thousands):

1996
FAIR CARRYING
VALUE AMOUNT
-------------------------------------------------------------

Cash and short-term investments $ 62,059 $ 62,059
Fixed maturities 4,636,022 4,636,022
Equity securities 33,689 33,689
Mortgage and policy loans 533,981 524,533
Interest rate cap 226 283

Policyholders' funds on deposit $3,366,450 $3,308,208

</TABLE>
<TABLE>
<CAPTION>

1995
FAIR CARRYING
VALUE AMOUNT
-------------------------------------------------------------
<S> <C> <C>

Cash and short-term investments $ 105,153 $ 105,153
Fixed maturities 4,434,329 4,434,329
Equity securities 28,935 28,935
Mortgage and policy loans 489,768 459,691
Interest rate cap 433 510

Policyholders' funds on deposit $3,125,730 $3,060,581

</TABLE>

8. Stockholders' Equity

(a)The Company may not distribute dividends to the Parent without prior
approval of regulatory agencies. Generally, this limits the payment of
such dividends to an amount which, in the opinion of the regulatory
agencies, is warranted by the financial condition of the Company. During
1996, the Company paid a $50,000,000 dividend to American International
Group, Inc., the parent.

(b)The Company's stockholders' equity as determined in accordance with
statutory accounting practices was $254,169,000 at December 31, 1996 and
$257,910,000 at December 31, 1995. Statutory net income amounted to
$48,474,000, $49,059,000, and $21,226,000 for 1996, 1995 and 1994,
respectively.

F-19
<PAGE>

9. Employee Benefits

(a)The Company participates with its affiliates in a qualified,
non-contributory, defined benefit pension plan which is administered by
the Parent. All qualified employees who have attained age 21 and completed
twelve months of continuous service are eligible to participate in this
plan. An employee with 5 or more years of service is entitled to pension
benefits beginning at normal retirement age 65. Benefits are based upon a
percentage of average final compensation multiplied by years of credited
service limited to 44 years of credited service. Prior to January 1, 1996
the average final compensation is subject to certain limitations. Annual
funding requirements are determined based on the "projected unit credit"
cost method which attributes a pro rata portion of the total projected
benefit payable at normal retirement to each year of credited service.
Pension expense for current service costs, retirement and termination
benefits for the years ended December 31, 1996, 1995 and 1994 were
approximately $241,000, $225,000 and $190,000, respectively. The Parent's
plans do not separately identify projected benefit obligations and plan
assets attributable to employees of participating affiliates. The
projected benefit obligations exceeded the plan assets at December 31,
1996 by $42,149,000.

(b)The Parent also sponsors a voluntary savings plan for domestic employees
(a 401(k) plan), which during the two years ended December 31, 1994,
provided for salary reduction contributions by employees and matching
contributions by the Parent up to 2 percent of annual salary. Commencing
January 1, 1995, the 401(k) plan provided for matching contributions by
the Parent of up to 6 percent of annual salary depending on the employee's
years of service.

(c)On April 1, 1985, the Parent terminated and replaced its then existing
U.S. pension plan, a contributory qualified defined benefit plan, with the
current non-contributory qualified defined benefit plan. Settlement of the
obligations of the prior plan was accomplished through the purchase of
annuities from the Company for accrued benefits as of the date of
termination. Future policy benefits reserves in the accompanying balance
sheet that relate to these annuity contracts are $73,866,000 at December
31, 1996 and $73,171,000 at December 31, 1995.

(d)In addition to the Parent's defined benefit pension plan, the Parent and
its subsidiaries provide a post-retirement benefit program for medical
care and life insurance. Eligibility in the various plans is generally
based upon completion of a specified period of eligible service and
reaching a specified age.

(e)The Parent applies APB Opinion 25 "Accounting for Stock issued to
Employees" and related interpretations in accounting for its plans.
Employees of the Company participate in certain stock option and stock
purchase plans of the Parent. In general, under the stock option plan,
officers and other key employees are granted options to purchase AIG
common stock at a price not less than fair market value at the date of
grant. In general, the stock purchase plan provide for eligible employees
to receive privileges to purchase AIG common stock at a price equal to 85%
of the fair market value on the date of grant of the purchase privilege.
The Parent has not recognized compensation costs for either plan. The
effect of the compensation costs, as determined consistent with
FASB 123, was not computed on a subsidiary basis, but rather on a
consolidated basis for all subsidiaries of the Parent and therefore are
not presented herein.

F-20
<PAGE>

10. Leases

(a)The Company occupies leased space in many locations under various
long-term leases and has entered into various leases covering the
long-term use of data processing equipment. At December 31, 1996, the
future minimum lease payments under operating leases were as follows:

Year Payments
<S> <C>
1997 $ 1,035
1998 894
1999 396
2000 220
2001 139
Remaining years after 2001 -
---------

Total $2,684
------
------
</TABLE>

Rent expense approximated $866,000, $661,000 and $801,000 for the years
ended December 31, 1996, 1995 and 1994, respectively.

(b)Sublease Income - The Company does not participate in sublease agreements.

11. Reinsurance

(a)The Company reinsures portions of its life and accident and health
insurance risks with unaffiliated companies. Life insurance risks are
reinsured primarily under coinsurance and yearly renewable term treaties.
Accident and health insurance risks are reinsured primarily under
coinsurance, excess of loss and quota share treaties. Amounts recoverable
from reinsurers are estimated in a manner consistent with the assumptions
used for the underlying policy benefits and are presented as a component
of reinsurance assets. A contingent liability exists with respect to
reinsurance ceded to the extent that any reinsurer is unable to meet the
obligations assumed under the reinsurance agreements. The Company also
reinsures portions of its life and accident and health insurance risks
with affiliated companies (see Note 12).

The effect of all reinsurance contracts, including reinsurance assumed, is
as follows (in thousands, except percentages):
<TABLE>
<CAPTION>

PERCENTAGE
OF AMOUNT
December 31, 1996 ASSUMED
GROSS CEDED ASSUMED NET TO NET
---------------------------------------------------
<S> <C> <C> <C> <C> <C>

Life Insurance in Force $4,776,324 $638,583 $ 3,282 $4,141,023 0.1%
========== ======== ========== ==========

Premiums:
Life 25,625 3,788 82 21,919 0.4%
Accident and Health 20,553 6,729 22,009 35,833 61.4%
Annuity 92,441 721 - 91,720 -
------------ --------- ---------- ---------- -------

Total Premiums $ 138,619 $11,238 $ 22,091 $149,472 14.8%
=========== ========= ========= ==========
</TABLE>

F-21
<PAGE>

11. Reinsurance - (continued)
<TABLE>
<CAPTION>

PERCENTAGE
OF AMOUNT
December 31, 1995 ASSUMED
GROSS CEDED ASSUMED NET TO NET
---------------------------------------------------
<S> <C> <C> <C> <C> <C>

Life Insurance in Force $4,415,460 $711,025 $ 3,574 $3,708,009 0.2%
========== ======== ========== ==========

Premiums:
Life 25,938 3,368 6 22,576 -
Accident and Health 22,136 8,034 20,822 34,924 59.6%
Annuity 27,496 639 - 26,857 -
------------ ----------- -------- --------

Total Premiums $ 75,570 $ 12,041 $ 20,828 $ 84,357 24.7%
============ ========= ========= ===========
</TABLE>
<TABLE>
<CAPTION>

PERCENTAGE
OF AMOUNT
December 31, 1994 ASSUMED
GROSS CEDED ASSUMED NET TO NET

Life Insurance in Force $4,241,039 $512,028 $ 3,980 $3,732,991 0.1%
===============================================

Premiums:
Life 26,345 3,677 13 22,681 0.1%
Accident and Health 23,622 9,520 20,612 34,714 59.4%
Annuity 14,892 461 - 14,431 -
--------- ---------- --------------------------

Total Premiums $ 64,859 $ 13,658 $ 20,625 $ 71,826 28.7%
=========== ====================== ============

</TABLE>

(b) The maximum amount retained on any one life by the Company is $1,000,000.

(c)Reinsurance recoveries, which reduced death and other benefits,
approximated $7,176,000, $7,667,000 and $6,720,000 respectively, for each
of the years ended December 31, 1996, 1995 and 1994.

The Company's reinsurance arrangements do not relieve it from its direct
obligation to its insureds.

12. Transactions with Related Parties

(a)The Company is party to several reinsurance agreements with its
affiliates covering certain life and accident and health insurance risks.
Premium income and commission ceded to affiliates amounted to $857,000 and
$(2,000), respectively, for the year ended December 31, 1996. Premium
income and commission ceded for 1995 amounted to $800,000 and $(3,000),
respectively. Premium income and commission ceded for 1994 amounted to
$574,000 and $(3,000), respectively. Premium income and ceding commission
expense assumed from affiliates aggregated $20,764,000 and $(120,000),
respectively, for 1996, compared to $19,679,000 and $(141,000),
respectively, for 1995, and $19,331,000 and $98,000, respectively, for
1994.

(b)The Company provides life insurance coverage to employees of the Parent
and its domestic subsidiaries in connection with the Parent's employee
benefit plans. The statement of income includes $5,142,000 in premiums
relating to this business for 1996, $4,080,000 for 1995, and $3,952,000
for 1994.

F-22
<PAGE>

12. Transactions with Related Parties - (continued)

(c)The Company is party to several cost sharing agreements with its
affiliates. Generally, these agreements provide for the allocation of
costs upon either the specific identification basis or a proportional cost
allocation basis which management believes to be reasonable. For the years
ended December 31, 1996, 1995 and 1994, the Company was charged
$24,204,000, $19,148,000, and $17,401,000, respectively, for expenses
attributed to the Company but incurred by affiliates. During the same
period, the Company received reimbursements from affiliates aggregating
$21,198,000, $20,920,000 and $19,505,000, respectively, for costs incurred
by the Company but attributable to affiliates.

(d)During 1995, the Company sold a mortgage loan to AIG Real Estate
Investment and Management Company for the aggregate unpaid principal
balance of $5,000,000.

A-1
<PAGE>

APPENDIX A

Minimum Premiums
The following table shows for Insureds of varying ages, the current minimum
initial Premium for a Policy with the Face Amount indicated. This table assumes
that the insured will be placed in a nonsmoker class and that no supplemental
benefits will be added to the base policy.

Minimum Planned Periodic Premium
By Premium Payment Mode
Issue Policy Minimum
Age of Sex of Face Initial
- --------------------------------------------------------------------------------------
Insured Insured Amount Premium Annual Semiannual Quarterly Monthly
<S> <C> <C> <C> <C> <C> <C> <C>

25 Male $75,000 $102.08 $612.50 $306.25 $153.13 $51.04
30 Female $100,000 $107.33 $644.00 $322.00 $161.00 $53.67
35 Male $250,000 $175.42 $1,052.50 $526.25 $263.13 $87.71
40 Female $300,000 $227.83 $1,367.00 $683.50 $341.75 $113.92
45 Male $500,000 $476.67 $2,860.00 $1,430.00 $715.00 $238.33
50 Female $350,000 $427.50 $2,565.00 $1,282.50 $641.25 $213.75
55 Male $300,000 $686.33 $4,118.00 $2,059.00 $1,029.50 $343.17
60 Female $250,000 $620.83 $3,725.00 $1,862.50 $931.25 $310.42
65 Male $200,000 $1,185.67 $7,114.00 $3,557.00 $1,778.50 $592.83
70 Female $100,000 $670.50 $4,023.00 $2,011.50 $1,005.75 $335.25
75 Male $75,000 $1,210.71 $7,264.25 $3,632.13 $1,816.06 $605.35

</TABLE>

B-1
<PAGE>

APPENDIX B

Surrender Charge Premium

The surrender charge premium is an amount used to determine the sales charge
deducted on surrender of the policy. The surrender charge premium is calculated
for each Policy based on the issue age, sex, and smoker status of the Insured
and the Face Amount of the Policy.

The following table shows for Insureds of varying ages, the surrender charge
premium for a policy with the Face Amount indicated. This table assumes that the
Insured will be placed in a nonsmoker class.

Issue Policy Surrender
Age of Sex of Face Charge
Insured Insured Amount Premium
<S> <C> <C> <C>

25 Male $75,000 $483.75
30 Female $100,000 $690.00
35 Male $250,000 $2,562.50
40 Female $300,000 $3,327.00
45 Male $500,000 $8,530.00
50 Female $350,000 $6,373.50
55 Male $300,000 $8,880.00
60 Female $250,000 $7,800.00
65 Male $200,000 $10,762.00
70 Female $100,000 $5,781.00
75 Male $75,000 $7,689.75

</TABLE>

<PAGE>

REPRESENTATIONS

1. Registrant represents that Section (b)(13)(iii)(F) of Rule
6e-3(T) is being relied on.

2. Registrant represents that the level of the risk charge is reasonable in
relation to the risks assumed by the life insurer under the Policies.

3. Registrant represents that it has analyzed the risk charge taking into
consideration such facts as current charge levels, potential adverse
mortality, the manner in which charges are imposed, the markets in which the
Policy will be offered and anticipated sales and lapse rates.

Registrant also represents that a memorandum has been prepared in connection
with the analysis of the risk charge as set forth above. Registrant
undertakes to keep and make available to the Commission on request a copy of
the memorandum.

4. Registrant represents that the Company has concluded that there is a
reasonable likelihood that the distribution financing arrangements of the
Separate Account will benefit the Separate Account and Policyholders and will
keep and make available to the Commission on request a copy of the memorandum
setting forth the basis for this representation.

5. Registrant represents that the Separate Account will invest only in
management investment companies which have undertaken to have a Board of
Directors, a majority of whom are not interested persons of the Company, to
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.

6. Registrant represents that Variable Account B meets the definition of a
separate account under federal securities laws.

II-1
<PAGE>

PART II

UNDERTAKINGS TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission theretofore or hereafter duly adopted pursuant to
authority conferred in that section.

In addition, American International Life Assurance Company of New York
represents that the fees and charges deducted under the policies covered by 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 the company.

INDEMNIFICATION

Under its Bylaws, the Company, to the full extent permitted by New York law
shall indemnify any person who was or is a party to any proceeding (whether
brought by or in the right of the Company or otherwise) by reason of the fact
that he or she is or was a Director of the Company, or while a Director of the
Company, is or was serving at the request of the Company as a Director, Officer,
Partner, Trustee, Employee, or Agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise or employee benefit plan,
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by him or her in connection with such proceeding.

The Company shall extend such indemnification, as is provided to directors
above, to any person, not a director of the Company, who is or was an officer of
the Company or is or was serving at the request of the Company as a director,
officer, partner, trustee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise or employee benefit plan. In
addition, the Board of Directors of the Company may, by resolution, extend such
further indemnification to an officer or such other person as may to it seem
fair and reasonable in view of all relevant circumstances.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to such provisions of the bylaws or statutes or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any such action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the Policies issued by the Variable Account, the Company
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public Policy as
expressed in said Act and will be governed by the final adjudication of such
issue.

II-2
<PAGE>

Part II
Other Information
Page 2

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

The facing sheet.

The Prospectus consisting of ______ pages.

Representations.

The signatures.

Written Consents of the Following Persons:
Kenneth D. Walma
Jorden Burt Berenson & Johnson
Michael Burns
Coopers and Lybrand
Powers of Attorney

The following exhibits:

A. Copies of all exhibits required by paragraph A of
instructions for Exhibits in Form N-8B-2.

1. Resolution of the Board of Directors of the Company*

2. Not Applicable

3. a. Principal Underwriter's Agreement****
b. Registered Representative's Agreement****

4. Not Applicable

5. Individual Flexible Premium Variable Universal
Life Insurance Policy****

6. a. Articles of Incorporation of the Company**
b. ByLaws of the Company**

7. Not Applicable

8. Not Applicable

9. Not Applicable

10. Application Form****

11. Powers of Attorney(filed electronically herein)

II-3
<PAGE>

Part II
Other Information
Page 3

B. Opinion of Counsel(Filed electroncally herein)

C. Opinion and Consent of Actuary*****
(i) Opinion and Consent of Actuary regarding Illustrations
(filed electronically herein)

D. Consent of Independent Certified Public Accountants (Filed
electronically herein)

E. Consent of Jorden Burt Berenson & Johnson LLP (Filed
electronically herein)

F. Memorandum Regarding Administrative Procedures****
* Incorporated by reference to Registrant's Form N-8B-2.
**Incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 to Form N-8B-2.

*** Incorporated by reference to Registrant's Post-Effective
Amendment No. 7 filed on Form S-6, December 8, 1994
(File No. 33-18301).

**** Incorporated by reference to Registrant's filing on Form S-6,
March 28, 1995 (File No. 33-90684).
***** Incorporated by reference to Registrant's filing on Form S-6,
April 28,1995 (File No. 33-90684).
<PAGE>

SIGNATURES

As required by the (Securities Act of 1933 and) the Investment Company Act of
1940, the Registrant (certifies that it meeds the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and) has caused
this Registration Statement to be signed on its behalf, in the City of
Wilington, and State of Delaware on this 26th day of April, 1997.

VARIABLE ACCOUNT B
------------------------
(Registrant)

By: AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
-------------------------------------------------------------
(Sponsor)

By: /s/Kenneth D. Walma
------------------------
Kenneth D. Walma, Assistant Secretary and Associate Counsel

ATTEST: /s/Robert Liguori
Robert Liguori Vice President & General Counsel

<PAGE>

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date

Nicholas A. O'Kulich Director April 24, 1997
----------------------------
Nicholas A. O'Kulich

Maurice R. Greenberg* Director April 14, 1997
----------------------------
Maurice R.Greenberg

Peter J. Dalia * Director April 16, 1997
---------------------------
Peter J. Dalia

Marion E. Fajen* Director April 21, 1997
--------------------------
Marion E. Fajen

Cecil C. Gamwell, III* Director April 17, 1997
----------------------------
Cecil C. Gamwell, III

Jacob E. Hansen* Director April 18, 1997
-------------------
Jacob E. Hansen

Jack R. Harnes* Director April 16, 1997
-------------------
Jack R. Harnes

John I. Howell* Director April 16, 1997
-------------------
John I. Howell

Jeffrey M. Kestenbaum* Director April 16, 1997
-----------------------------
Jeffrey M. Kestenbaum

Edwin A. G. Manton* Director April 12, 1997
-------------------------
Edwin A. G. Manton

Jerome T. Muldowney* Director April 15, 1997
------------------------
Jerome T. Muldowney

Win J. Neuger* Director April 15, 1997
-----------------------
Win J. Neuger

John R. Skar* Director April 14, 1997
----------------------
John R. Skar

Ernest E. Stempel* Director April 15, 1997
----------------------
Ernest E. Stempel

<PAGE>

Signature Title Date

David J. Walsh*
-------------------- Director April 15, 1997
David J. Walsh

Gerald W. Wyndorf* Director April 15, 1997
----------------------
Gerald W. Wyndorf

Robert J. O'Connell* Director April 16, 1997
-----------------------
Robert J. O'Connell

Patrick J. Foley* Director April 14, 1997
---------------------
Patrick J. Foley

Howard E. Gunton, Jr. Director April 15, 1997
--------------------
Howard E. Gunton, Jr.

By: /s/ Kenneth D. Walma
----------------------------
Kenneth D. Walma,
Attorney in Fact

<PAGE>

INDEX TO EXHIBITS

EXHIBIT PAGE
A.11 Powers of Attorney

B. Opinion of Counsel

C. Opinion and Consent of Actuary

D. Consent of Independent Certified
Public Accountants

E. Consent of Jorden Burt Berenson & Johnson LLP

<PAGE>
LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, MARION E. FAJEN, a Director of
American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 21th day of April, 1997

WITNESS:

/s/ Catherine L. Fajen /s/ Marion E. Fajen
- ------------------ ------------------
Catherine L. Fajen Marion E. Fajen

<PAGE>
LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, NICHOLAS A. O'KULICH, a Director of
American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 24th day of April, 1997

WITNESS:

/s/ Carolyn Grossi /s/ Nicholas A. O'Kulich
- ------------------ ------------------
Carolyn Grossi Nicholas A. O'Kulich

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, JACK R. HARNES, a Director of
American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 16th day of April, 1997

WITNESS:

/s/ Carolyn Grossi /s/ Jack R. Harnes
- ------------------ ------------------
Carolyn Grossi Jack R. Harnes

<PAGE>
LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, PETER J. DALIA, a Director of
American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 16th day of April, 1997

WITNESS:

/s/June M Romia /s/ Peter J. Dalia
- ------------------ ------------------
June M. Romia Peter J. Dalia

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, C.C. GAMWELL, III a
Director of American International Life Assurance Company of New York, a
corporation duly organized under the laws of the State of New York, do hereby
appoint Kenneth D.Walma as my attorney and agent, for me, and in my name as a
Director of this Company on behalf of the company or otherwise, with full power
to execute, delivery and file with the Securities and Exchange Commission all
documents required for registration of a security under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 17th day of April, 1997.

WITNESS:

/s/Henry C.T. Hsiang /s/ C.C. Gamwell, III
- --------------------- ----------------------
Henry C.T. Hsiang C.C. Gamwell, III

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, PATRICK J. FOLEY a
Director of American International Life Assurance Company of New York, a
corporation duly organized under the laws of the State of New York, do hereby
appoint Kenneth D.Walma as my attorney and agent, for me, and in my name as a
Director of this Company on behalf of the company or otherwise, with full power
to execute, delivery and file with the Securities and Exchange Commission all
documents required for registration of a security under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 14th day of April, 1997.

WITNESS:

/s/Judy Pirouz /s/ Patrick J. Foley
- -------------- --------------------
Judy Pirouz Patrick J. Foley

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, MAURICE R. GREENBERG, a
Director of American International Life Assurance Company of New York, a
corporation duly organized under the laws of the State of New York, do hereby
appoint Kenneth D.Walma as my attorney and agent, for me, and in my name as a
Director of this Company on behalf of the company or otherwise, with full power
to execute, delivery and file with the Securities and Exchange Commission all
documents required for registration of a security under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 14th day of April, 1997.

WITNESS:

/s/ Carolyn Grossi /s/ Maurice R. Greenberg
- ------------------ ------------------------
Carolyn Grossi Maurice R. Greenberg

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, HOWARD E.GUNTON, JR.,
Chief Accounting Officer of American International Life Assurance Company of New
York,a corporation duly organized under the laws of the State of New York, do
hereby appoint Kenneth D. Walma as my attorney and agent, for me, and in my
name as a Director of this Company on behalf of the company or otherwise, with
full power to execute, delivery and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may
deem necessary or advisable to comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 15th day of April, 1997.

WITNESS:

/s/ Kathleen E. Baker /s/ Howard E. Gunton, Jr.
- --------------------- ---------------------
Kathleen E. Baker Howard E. Gunton, Jr.

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, JEFFREY M. KESTENBAUM, a Director
of American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 16th day of April, 1997.

WITNESS:

/s/ Carolyn Grossi /s/ Jeffrey M. Kestenbaum
- ------------------ ----------------------
Carolyn Grossi Jeffrey M. Kestenbaum

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, JACOB E. HANSEN, a Director
of American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 16th day of April, 1997.

WITNESS:

/s/ Carolyn Grossi /s/ Jacob E. Hansen
- ------------------ ----------------------
Carolyn Grossi Jacob E. Hansen

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, EDWIN A. G. MANTON, a Director
of American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 12th day of April, 1997.

WITNESS:

/s/ Judith Caruso /s/ Edwin A. G. Manton
- ----------------- ----------------------
Judith Caruso Edwin A. G. Manton

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, JEROME T. MULDOWNEY, a
Director of American International Life Assurance Company of New York, a
corporation duly organized under the laws of the State of New York, do hereby
appoint Kenneth D. Walma as my attorney and agent, for me, and in my name as a
Director of this Company on behalf of the company or otherwise, with full power
to execute, delivery and file with the Securities and Exchange Commission all
documents required for registration of a security under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 15th day of April, 1997.

WITNESS:

/s/ Carolyn Grossi /s/ Jerome T. Muldowney
- ------------------ -----------------------
Carolyn Grossi Jerome T. Muldowney

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, WIN J. NEUGER, a Director of
American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 15th day of April, 1997.

WITNESS:

/s/ Carolyn Grossi /s/ Win J. Neuger
- ------------------ -----------------
Carolyn Grossi Win J. Neuger

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, ROBERT J. O'CONNELL, Director,
Chief Executive Officer and President of American International Life Assurance
Company of New York, a corporation duly organized under the laws of the State
of New York, do hereby appoint Kenneth D. Walma as my attorney and agent, for
me, and in my name as a Director of this Company on behalf of the company or
otherwise, with full power to execute, delivery and file with the Securities
and Exchange Commission alldocuments required for registration of a security
under the Securities Act of 1933, as amended, and the Investment Company Act of
1940, as amended, and to do and perform each and every act that said
attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.

WITNESS my hand and seal this 16th day of April, 1997.
WITNESS:

/s/ Carolyn Grossi /s/ Robert J. O'Connell
- ------------------ -----------------------
Carolyn Grossi Robert J. O'Connell

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, JOHN R. SKAR, a Director,
of American International Life Assurance Company of New York, a corporation
duly organized under the laws of the State of New York, do hereby appoint
Kenneth D. Walma as my attorney and agent, for me, and in my name as a Director
of this Company on behalf of the company or otherwise, with full power to
execute, delivery and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, as amended,
and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 14th day of April 1997.
WITNESS:

/s/Carol L. Norris /s/ John R. Skar
- ----------------- ----------------
Carol L. Norris John R. Skar

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, ERNEST E. STEMPEL, a Director
of American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 15th day of April, 1997.
WITNESS:

/s/ Carolyn Grossi /s/ Ernest E. Stempel
- ------------------ ---------------------
Carolyn Grossi Ernest E. Stempel

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, GERALD W. WYNDORF, a Director
of American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 15th day of April, 1997.

WITNESS:

/s/ Carolyn Grossi /s/ Gerald W. Wyndorf
- ------------------ ---------------------
Carolyn Grossi Gerald W. Wyndorf

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, DAVID J. WALSH, a Director of
American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 15th day of April, 1997.

WITNESS:

/s/ Carolyn Grossi /s/ David J. Walsh
- --------------------- ------------------
Carolyn Grossi David J. Walsh

<PAGE>

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENT, that I, JOHN I. HOWELL, a Director of
American International Life Assurance Company of New York, a corporation duly
organized under the laws of the State of New York, do hereby appoint Kenneth
D. Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.

WITNESS my hand and seal this 16th day of April, 1997.

WITNESS:

/s/ Joan H. Nixon /s/ John I. Howell
- --------------------- ------------------
Joan H. Nixon John I.Howell

<PAGE>

EXHIBIT B

OPINION AND CONSENT OF COUNSEL
Gentlemen:

I have made such examination of the law and have examined such Company
records and documents as in my judgment are necessary or appropriate to enable
me to render the opinion:

1. American International Life Assurance Company of New York is a valid
and existing stock life insurance company of the State of New York.

2. Variable Account B is a separate investment account of American
International Life Assurance Company of New York created and validly
existing pursuant to the New York Insurance Laws and the Regulations
thereunder.

3. All of the prescribed corporate procedures for the issuance of the
Policies have been followed, and, when such Policies are issued in
accordance with the Prospectus contained in Post Effective Amendment
No. 2 to the Registration Statement, all state requirements
relating to such Policies will have been complied with.

4. Upon the acceptance of Premiums made by Owners pursuant to a Policy
issued in accordance with the Prospectus contained in Post Effective
Amendment No. 2 to the Registration Statement and upon compliance
with the applicable law, such Owner will have a legally issued, fully
paid, non-assessable contractual interest in such Policy.

This opinion, or a copy hereof, may be used as an exhibit to or in
connection with the filing with the Securities and Exchange Commission of the
Registration Statement on Form S-6 for the Contracts to be issued by American
International Life Assurance Company of New York and its separate account,
Variable Account B.

/s/ Kenneth D. Walma
---------------------
Kenneth D. Walma
Assistant Secretary and
Associate Counsel

Dated April 21, 1997

<PAGE>

EXHIBIT C

OPINION AND CONSENT OF ACTUARY

On behalf of American International Life Assurance Company of New York, I hereby
consent to the inclusion of the section entitled "Illustration of Policy
Values", and the Table of Minimum and Maximum Face Amounts in a Registration
Statement of Form S-6 registering Variable Life Insurance Policies. The
illustrations have been prepared in accordance with standard actuarial
principles and reflect the operation of the Policy by taking into account all
charges under the Policy and in the underlying fund.

/s/ Michael J. Burns
--------------------------
Michael J. Burns, FSA, MAAA

Dated: April 28, 1997

<PAGE>

Exhibit D

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the following with respect of Post-effective Amendment No.
2 to the Registration Statement (No. 33-90686) on Form S-6 under the Securities
Act of 1933 of Variable Account B of American International Life Assurance
Company of New York.

1. The inclusion in the Prospectus of Variable Account B of American
International Life Assurance Company of our report dated February 20, 1997
relating to our audits of the financial statements of American
International Life Assurance Company.

2. The inclusion in the Prospectus of Variable Account B of American
International Life Assurance Company of our report dated February 20, 1997
relating to our audit of the financial statements of Variable Account B.

3. The reference to our firm under the heading "Experts."

Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 22, 1997

<PAGE>

JORDEN BURT BERENSON &JOHNSON LLP
SUITE 400 EAST
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 2007-0805
(202) 985-8100
TELECOPIER (202) 965-8104

April 21, 1997

American International Life
Assurance Company of New York
One Alico Plaza
P.O. Box 667
Wilmington, DE 19899

Gentlemen:

We hereby consent to the refernce to our name under th ecaption "Legal Counsel"
in the Prospectus contained in Post-Effective Amendment No. 2 to the
Registration Statement on Form S-6 (File No. 33- 90686)filed by American
International Life Assurance Company of New York and Variable Account B with the
Securities and Exchange Commisssion under the Securities Act of 1933 and the
Investment Company Act of 1940.

Very Truly yours,
/s/ Jorden Burt Berenson & Johnson
Jorden Burt Berenson & Johnson