PENN MUTUAL VARIABLE LIFE ACCOUNT I, 485APOS, 2000-02-28

PENN MUTUAL VARIABLE LIFE ACCOUNT I
485APOS, 2000-02-28

Previous: PENN MUTUAL VARIABLE LIFE ACCOUNT I, NSAR-U, 2000-02-28

Next: UNITED INVESTORS ANNUITY VARIABLE ACCOUNT, NSAR-U, 2000-02-28

<PAGE>

As filed with the Securities and Exchange Commission on February 28, 2000
Registration No. 33-87276
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-6

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

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

POST-EFFECTIVE AMENDMENT NO. 7

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

Penn Mutual Variable Life Account I
(Exact name of trust)

THE PENN MUTUAL LIFE INSURANCE COMPANY
(Name of depositor)
600 Dresher Road
Horsham, Pennsylvania 19044
(Complete address of depositor's principal executive offices)

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

Richard F. Plush
Vice President
The Penn Mutual Life Insurance Company
600 Dresher Road
Horsham, PA 19044
(Name and complete address of agent for service)

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

Copy to:
Richard W. Grant, Esq.
C. Ronald Rubley
Morgan, Lewis & Bockius LLP
Philadelphia, PA 19103-6993

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

It is proposed that this filing will become effective:

|_| Immediately upon filing pursuant to paragraph (b) of Rule 485.
|_| On (date) pursuant to paragraph (b) of Rule 485.
|X| 60 days after filing pursuant to paragraph (a) of Rule 485.
|_| On (date) pursuant to paragraph (a) of Rule 485.

================================================================================
<PAGE>

PENN MUTUAL VARIABLE LIFE ACCOUNT I
THE PENN MUTUAL LIFE INSURANCE COMPANY

Cross Reference to Items Required by Form N-8B-2

<TABLE>
<CAPTION>
N-8B-2 Item Caption in Prospectus
- ----------- ---------------------
<S> <C>
1 Cover Page
2 Cover Page
3 Not applicable
4 Additional Information - Sale of Policies
5 Additional Information - Penn Mutual Variable Life Account I
6 Additional Information - Penn Mutual Variable Life Account I
7 Not applicable
8 Not applicable
9 Additional Information - Litigation
10 Basic Information; Additional Information - The Penn Mutual Life Insurance
Company - Penn Mutual Variable Life Account I - The Funds
11 Additional Information - The Funds
12 Additional Information - The Funds
13 Basic Information - What Are the Fees and Charges Under the Policy?
14 Basic Information - What Payments Must Be Made Under the Policy?
15 Basic Information - What Payments Must Be Made Under the Policy?
16 Additional Information - The Funds
17 Basic Information; Additional Information
18 Basic Information
19 Basic Information - How Does Penn Mutual Communicate With Me?
20 Basic Information
21 Basic Information - What Is a Policy Loan?
22 Not applicable
23 Not applicable
24 Not applicable
25 Additional Information - The Penn Mutual Life Insurance Company
26 Basic Information - What Are the Fees and Charges Under the Policy?
27 Additional Information - The Penn Mutual Life Insurance Company
28 Additional Information - The Penn Mutual Life Insurance Company Additional
Information - Penn Mutual Trustees and Officers
29 Not applicable
30 Not applicable
31 Not applicable
32 Not applicable
33 Not applicable
34 Not applicable
35 Additional Information - The Penn Mutual Life Insurance Company
36 Not applicable
37 Not applicable
38 Additional Information - Sale of Policies
39 Additional Information - Sale of Policies
</TABLE>

<PAGE>

<TABLE>
<S> <C>
40 Additional Information - Sale of Policies
41 Not applicable
42 Not applicable
43 Not applicable
44 Basic Information - How Will the Value of the Policy Change Over Time?;
Additional Information - More Information About Policy Values
45 Not applicable
46 Basic Information - How Will the Value of the Policy Change Over Time?;
Additional Information - More Information About Policy Values
47 Basic Information; Additional Information - Penn Mutual Variable Life Account I -
The Funds
48 Additional Information - The Penn Mutual Life Insurance Company
49 Not applicable
50 Not applicable
51 Basic Information
52 Additional Information - Penn Mutual Variable Life Account I
53 Additional Information - Federal Income Tax Considerations
54 Not applicable
55 Illustrations
56 Not applicable
57 Not applicable
58 Not applicable
59 Additional Information - Financial Statements
</TABLE>

<PAGE>

PART I

Information Required in Prospectus

<PAGE>

The prospectus dated May 1, 1999 relating to the Variable EstateMax last
survivor flexible premium adjustable variable life insurance policy is herein
incorporated by reference to the Registrant's Post Effective Amendment No. 6 as
filed with the Securities and Exchange Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.
<PAGE>

PROSPECTUS
FOR
VARIABLE ESTATEMAX II
a last survivor flexible premium adjustable variable life insurance policy
issued by
THE PENN MUTUAL LIFE INSURANCE COMPANY
and funded through
PENN MUTUAL VARIABLE LIFE ACCOUNT I
The Penn Mutual Life Insurance Company
Philadelphia, PA 19172
800-523-0650

The Policy provides life insurance on two insureds and a cash surrender
value that may vary with the investment performance of one or more of the funds
set forth below. These and other Policy provisions are described in this
Prospectus.

<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
Penn Series Funds, Inc. Manager
Money Market Fund Independence Capital Management, Inc.
Limited Maturity Bond Fund Independence Capital Management, Inc.
Quality Bond Fund Independence Capital Management, Inc.
High Yield Bond Fund T. Rowe Price Associates, Inc.
Flexibly Managed Fund T. Rowe Price Associates, Inc.
Growth and Income Fund Independence Capital Management, Inc.
Growth Equity Fund Independence Capital Management, Inc.
Large Cap Value Fund Putnam Investment Management, Inc.
Index 500 Fund Wells Capital Management Incorporated
Mid Cap Growth Fund Turner Investment Partners, Inc.
Mid Cap Value Fund Neuberger Berman Management, Inc.
Emerging Growth Fund RS Investment Management, Inc.
Small Cap Value Fund Royce & Associates, Inc.
International Equity Fund Vontobel USA, Inc.
- -------------------------------------------------------------------------------------------------------------------
Neuberger Berman Advisors Management Trust Manager
Balanced Portfolio Neuberger Berman Management Incorporated
- -------------------------------------------------------------------------------------------------------------------
Fidelity Investments' Variable Insurance Products Fund Manager
Equity-Income Portfolio Fidelity Management and Research Company
Growth Portfolio Fidelity Management and Research Company
- -------------------------------------------------------------------------------------------------------------------
Fidelity Investments' Variable Insurance Products Fund II Manager
Asset Manager Portfolio Fidelity Management and Research Company
- -------------------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter Universal Funds, Inc. Manager
Emerging Markets Equity (International) Portfolio Morgan Stanley Dean Witter Investment
Management Inc.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

Please note that the Securities and Exchange Commission ("SEC") has not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
May 1, 2000

<PAGE>

Guide to Reading this Prospectus

This prospectus contains information that you should know before you buy
the Policy or exercise any of your rights under the Policy. The purpose of this
prospectus is to provide information on the essential features and provisions of
the Policy and the investment options available under the Policy. Your rights
and obligations under the Policy are determined by the language of the Policy
itself. When you receive your Policy, read it carefully.

The prospectus is arranged as follows:

o The first section is called "Basic Information". It is in a question
and answer format. We suggest you read the Basic Information section
before reading any other section of the prospectus.

o The next section contains illustrations of a hypothetical Policy
that help clarify how the Policy works. The "Illustrations" sections
start on page __.

o After the Illustrations sections is the "Additional Information"
section. It gives additional information about Penn Mutual, Penn
Mutual Variable Life Account I and the Policy. It generally does not
repeat information that is in the Basic Information section. A table
of contents for the Additional Information section appears on page
__.

o The financial statements for Penn Mutual and Penn Mutual Variable
Life Account I follow the Additional Information section. They start
on page __.

o Appendices A through D are after the financial statements. The
Appendices are referred to in the Basic Information section. They
provide specific information and examples to help understand how the
Policy works.

**********

The prospectuses of the funds that accompany this prospectus contains
important information that you should know about the investments that may be
made under the Policy. You should read the relevant prospectus(es) carefully
before you invest.

2
<PAGE>

BASIC INFORMATION

This part of the prospectus provides answers to basic questions that may
be asked about the Policy. Here are the page numbers where the questions and
answers appear.

Question Page
- -------- ----

What Is the Policy?............................................................5
Who Owns the Policy?...........................................................6
What Payments Must Be Made Under the Policy?...................................6
How Will the Value of the Policy Change Over Time?.............................8
What Are the Fees and Charges Under the Policy?................................8
Are There Other Charges That Penn Mutual Could Deduct in the Future?..........11
How Can I Change My Policy's Investment Allocations?..........................12
What Is a Policy Loan?........................................................13
How Can I Withdraw Money from My Policy?......................................13
What Is the Timing of Transactions Under the Policy?..........................14
How Much Life Insurance Coverage Does the Policy Provide?.....................15
Can I Change Insurance Coverage Under My Policy?..............................16
What Are the Supplemental Benefit Riders That I Can Buy?......................16
Do I Have the Right to Cancel My Policy?......................................17
Can I Choose Different Payout Options Under My Policy? .......................18
How Is the Policy Treated for Federal Income Tax Purposes?....................18
How Do I Communicate With Penn Mutual?........................................19
How Does Penn Mutual Communicate With Me?.....................................20

3
<PAGE>

What Is the Policy?

The Policy provides life insurance on two persons. It is called a "last
survivor" Policy because no insurance proceeds ("death benefit") are payable
until the death of the second of two insureds (the "last surviving insured").
The value of your Policy will increase or decrease based upon the performance of
the investment options you choose. The death benefit may also increase or
decrease based on investment performance. In addition, the Policy allows you to
allocate a part of your policy value to a fixed interest option where the value
will accumulate interest.

While at least one of the two insured persons is alive, you will have
several options under the Policy. Here are some major ones:

o Determine when and how much you pay to us under the Policy

o Determine when and how much to allocate your policy value to
investment options

o Borrow from your Policy

o Change the beneficiary who will receive the death benefit

o Decrease the amount of insurance protection

o Change the death benefit option you have selected under your Policy

o Surrender or partially surrender your Policy for all or part of its
net cash surrender value

o Choose the form in which you would like the death benefit or other
proceeds paid out from your Policy

Most of these options are subject to limits that are explained later in
this prospectus.

If you want to purchase a Policy, you must complete an application and
submit it to one of our authorized agents. We require satisfactory evidence of
insurability, which may include a medical examination of each or one of the
proposed insureds. We evaluate the information provided in accordance with our
underwriting rules and then decide whether to accept or not accept the
application.

The maturity date of your Policy is the policy anniversary nearest the
younger Insured's 100th birthday. If the Policy is still in force on the
maturity date, a maturity benefit will be paid to you. The maturity benefit is
equal to the policy value less any policy loan on the maturity date. Upon the
written request of the owner, this policy will continue in force beyond the
maturity date. Thereafter, the death benefit will be the net policy value.

4
<PAGE>

Who Owns the Policy?

You decide who owns the Policy when you apply for it. The owner of the
Policy is the person who can exercise most of the rights under the Policy, such
as the right to choose the death benefit option, the beneficiary, the investment
options, and the right to surrender the Policy. Whenever we have used the term
"you" in this prospectus, we have assumed that the reader is the owner or the
person who has whatever right or privilege we are discussing.

What Payments Must Be Made Under the Policy?

Premium Payments

Amounts you pay to us under your Policy are called "premiums" or "premium
payments." The amount we require as your first premium depends on a number of
factors, such as age, sex, rate classification, the amount of insurance
specified in the application, and any supplemental benefits. Sample minimum
initial premiums are shown in Appendix A at the end of this prospectus. Within
limits, you can make premium payments when you wish. That is why the Policy is
called a "flexible premium" Policy.

Additional premiums may be paid in any amount and at any time. A premium
must be at least $25. We may require satisfactory evidence of insurability
before accepting any premium which increases our net amount of risk.

We reserve the right to limit total premiums paid in a policy year to the
planned premiums you select in your application. Also, if you make a premium
payment that exceeds certain other limits imposed under federal tax law, you
could incur a penalty on amounts you take out of your policy. We will monitor
the Policy and will attempt to notify you on a timely basis if you are about to
exceed this limit. See How is this Policy Treated for Federal Income Tax
Purposes? below.

Planned Premiums

The Policy Specifications page of your Policy will show the "planned
premium" for the Policy. You choose this amount in the Policy application. We
will send a premium reminder notice to you based upon the planned premium that
you specified in your application. You also chose in your application how often
to pay planned premiums -- annually, semi-annually, quarterly or monthly. You
are not required to pay the planned premium as long as your Policy has
sufficient net cash surrender value to pay Policy charges. You need only pay
enough premium to maintain net cash surrender value sufficient to pay Policy
charges. See Five Year No-Lapse Feature and Lapse and Reinstatement below.

Ways to Pay Premiums

If you pay premiums by check or money order, they must be drawn on a U.S.
bank in U.S. dollars and made payable to The Penn Mutual Life Insurance Company.
Premiums after the first must be sent to our office.

5
<PAGE>

We will also accept premiums:

o by wire or by exchange from another insurance company,

o via an electronic funds transfer program (any owner interested in
making monthly premium payments must use this method), or

o if we agree to it, through a salary deduction plan with your
employer.

You can obtain information on these other methods of premium payment by
contacting your Penn Mutual representative or by contacting our office.

Five Year No-Lapse Feature

Your Policy will remain in force during the first five policy years,
regardless of investment performance and your net cash surrender value, if:

(a) The total premiums you have paid, less any partial surrenders you
made equals or exceeds

(b) The monthly "no-lapse premium" specified in your Policy, multiplied
by the number of months the Policy has been in force.

The monthly "no-lapse premium" will generally be less than the monthly
equivalent of the planned premium you specified.

The five year no-lapse feature will not apply if the amount borrowed under
your Policy results in excessive indebtedness. See What Is a Policy Loan? later
in this section.

Lapse and Reinstatement

If the net cash surrender value of your Policy is not sufficient to pay
Policy charges, and the five-year no-lapse feature is not in effect, we will
notify you of how much premium you will need to pay to keep the Policy in force.
You will have a 61 day "grace period" from the date we notify you to make that
payment. If you don't pay at least the required amount by the end of the grace
period, your Policy will terminate (i.e., lapse). All coverage under the Policy
will then cease.

If the last survivor dies during the grace period, we will pay the death
benefit to your beneficiary less any unpaid Policy charges and outstanding
policy loan.

If the Policy terminates, you can reinstate it within five years from the
beginning of the grace period if both insureds are alive or if one of the
insureds died prior to the lapse. You will have to provide evidence that the
insured person (or persons, if both insureds are living) still meets our
requirements for issuing insurance. You will also have to pay a minimum amount
of

6
<PAGE>

premium and be subject to the other terms and conditions applicable to
reinstatements, as specified in the Policy.

How Will the Value of the Policy Change Over Time?

From each premium payment you make, we deduct a premium charge. We
allocate the rest to the investment options you have selected (except for the
first premium payment which will be invested in the Penn Series Money Market
Fund during the free look period of time).

Your policy value, which is allocated (or transferred) to the variable
investment options, will vary with the investment performance of the underlying
investment funds.

The amount you allocate to the fixed interest option will earn interest at
a rate we declare from time to time. We guarantee that this rate will be at
least 4%. The current declared rate will appear in the annual statement we will
send to you. If you want to know what the current declared rate is, simply call
or write to us. Amounts you allocate to the fixed interest option will not be
subject to the mortality and expense risk charge described later in this
section. Your policy value will be affected by deductions we make from your
Policy for policy charges.

At any time, your policy value is equal to:

o the net premiums you have paid,

o plus or minus the investment results of the policy value allocated
or transferred to the variable investment options,

o plus interest credited to the amount of your policy value allocated
or transferred to the fixed interest option

o minus policy charges we deduct, and

o minus partial surrenders you have made.

If you borrow money under your Policy, other factors affect your policy
value. See What is a Policy Loan? described later in this section.

For more information on policy values and the variable and fixed
investment options, see also the Additional Information section of this
prospectus.

What Are the Fees and Charges Under the Policy?

Premium Charge

o Premium Charge - 7.5% is deducted from premium payments before
allocation to the investment options. It consists of 2.5% to cover
state premium taxes and 5% to partially compensate us for the
expense of selling and distributing the Policies. For premiums
received after the first 15 policy years, we intend to

7
<PAGE>

deduct only the 2.5% to cover state premium taxes. We will notify
you in advance if we change our current rates. For policies issued
to New York residents, see the table in Appendix C at the end of
this Prospectus.

Monthly Deductions

o Insurance Charge - A monthly charge for the cost of insurance
protection. The amount of insurance risk we assume varies from
Policy to Policy and from month to month. The insurance charge
therefore also varies. To determine the charge for a particular
month, we multiply the amount of insurance for which we are at risk
by a cost of insurance rate based upon an actuarial table. The table
in your Policy will show the maximum cost of insurance rates that we
can charge. The cost of insurance rates that we currently apply are
generally less than the maximum rates shown in your Policy. The
table of rates we use will vary by issue age and length of time the
Policy has been in effect and the insurance risk characteristics. We
place insureds in a rate class when we issue the Policy, based on
our examination of information bearing on insurance risk. We
currently place people we insure in the following rate classes: a
smoker or nonsmoker standard rate class, a preferred underwriting
class, or a rate class involving a higher mortality risk (a
"substandard class"). Regardless of the table used, cost of
insurance rates generally increase each year that you own your
Policy, as the insureds' attained ages increase. The charge is
deducted pro-rata from your variable investment and fixed interest
accounts.

o Administrative Charge - A maximum monthly charge to help cover our
administrative costs. This charge has two parts: (1) a flat dollar
charge of up to $15 (Currently, the flat dollar charge is $15 in the
first policy year and $5 thereafter -- we will notify you in advance
if we change our current rates) and (2) for the first 12 months
after the policy date, a charge based on the initial specified
amount of insurance not to exceed 0.20 per $1,000 per month of
initial specified amount of insurance (Currently, the charge is
$0.15 per $1,000 per month of initial specified amount of insurance
up to a maximum amount of $375.00). Administrative expenses relate
to premium billing and collection, recordkeeping, processing of
death benefit claims, policy loans and Policy changes, reporting and
overhead costs, processing applications and establishing Policy
records. We do not anticipate making any profit from this charge.
The charge is deducted pro-rata from your variable investment and
fixed interest accounts.

o Optional Supplemental benefit charges - Monthly charges for any
optional supplemental insurance benefits that are added to the
Policy by means of a rider.

Daily Mortality and Expense Risk Charge

We deduct a daily charge from your policy value which is allocated to the
variable investment options. The charge does not apply to the fixed interest
option. It is guaranteed not to exceed 0.90% for the duration of the policy.
Currently, the charge is an annual rate of 0.90% of assets of the policy value
allocated in the variable accounts. After the fifteenth policy year, we intend
to charge 0.60%. We will notify you in advance if we change our current rates.
We

8
<PAGE>

may realize a profit from this charge, and if we do, it will be added to our
surplus. For policies issued to New York residents, see the table in Appendix C
at the end of this Prospectus.

The mortality risk we assume is the risk that the persons we insure may
die sooner than anticipated and that Penn Mutual will pay an aggregate amount of
death benefits greater than anticipated. The expense risk we assume is the risk
that expenses incurred in issuing and administering the policies and the
Separate Account will exceed the amount we charge for administration.

Transfer Charge

We reserve the right to impose a $10 transfer charge on any transfer of
policy value among the variable investment options and/or fixed interest option
in excess of the 12 transfers each policy year. We will notify you before
imposing the charge. No transfer charge will be made if the specified amount of
insurance exceeds $4,999,999.

Surrender Charge

If you surrender your Policy during the first 16 policy years, we will
deduct a surrender charge in calculating the surrender proceeds payable. We
determine the surrender charge by the following formula:

the sum of (a) plus (b), multiplied by (c), where:

(a) = 25% of the lesser of (i) the sum of all premiums paid in the
Policy and (ii) the maximum surrender charge premium (which is an
amount calculated separately for each policy);

(b) = an administrative charge based on the initial specified amount of
insurance and the younger insured's attained age on the policy date
(ranging from $6 at insured's age 20 to $14 at insured's age 60 and
over, per $1,000 of initial specified amount -- for more information
on this charge, see Appendix B at the end of this prospectus); and

Surrender Factor
Surrender During Policy Year Applied to (c) in Formula
- --------------------------------------------------------------------------------
1st through 7th 1.00
- --------------------------------------------------------------------------------
8th .90
- --------------------------------------------------------------------------------
9th .80
- --------------------------------------------------------------------------------
10th .70
- --------------------------------------------------------------------------------
11th .60
- --------------------------------------------------------------------------------
12th .50
- --------------------------------------------------------------------------------
13th .40
- --------------------------------------------------------------------------------
14th .30
- --------------------------------------------------------------------------------

9
<PAGE>

- --------------------------------------------------------------------------------
15th .20
- --------------------------------------------------------------------------------
16th .10
- --------------------------------------------------------------------------------
17th and later 0
- --------------------------------------------------------------------------------

Under the formula, the surrender charge declines by 10% each policy year
after the seventh, to $0 by the 17th policy year so that, after the 16th policy
year, there is no surrender charge. For policies issued to New York residents,
see the table in Appendix C at the end of this prospectus.

The surrender charge consists of a sales charge component and an
administrative charge component. The sales charge component is to reimburse us
for some of the expenses incurred in the distribution of the Policies. The sales
charge component, together with the sales charge component of the premium
charge, may be insufficient to recover distribution expenses related to the sale
of the Policies. Our unrecovered sales expenses are paid for from our surplus.

The administrative charge component of the surrender charge covers
administrative expenses associated with underwriting and issuing the Policy,
including the costs of processing applications, conducting medical exams,
determining insurability and the Insureds' rate class, and creating and
maintaining Policy records, as well as the administrative costs of processing
surrender requests. We do not anticipate making any profit on the administrative
charge component of the surrender charge.

Partial Surrender Charge

If you partially surrender your Policy, we will deduct the lesser of $25
or 2% of the amount surrendered. The charge will be deducted from the available
net cash surrender value and will be considered part of the partial surrender.
We also do not anticipate making a profit on this charge.

Fees and Charges of Investment Funds

The funds must pay investment management fees and other operating
expenses. The fees and expenses are different for each fund. They reduce the
investment return of each fund. Current fees and expenses of the funds are as
set forth in the Additional Information section of this prospectus.

Are There Other Charges That Penn Mutual Could Deduct in the Future?

We currently make no charge against policy values to pay federal income
taxes. However, we reserve the right to do so in the event there is a change in
the tax laws. We currently do not expect that any such charge will be necessary.

Under current laws, we may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, we reserve
the right to make such deductions for such taxes.

10
<PAGE>

How Can I Change My Policy's Investment Allocations?

Future Premium Payments

You may change the investment allocation for future premium payments at
any time. You make your original allocation in the application for your Policy.
The percentages you select for allocating premium payments must be in whole
numbers and must equal 100% in total.

Transfers Among Existing Investment Options

You may also transfer amounts from one investment option to another, and
to and from the fixed interest option. To do so, you must tell us how much to
transfer, either as a percentage or as a specific dollar amount. Transfers are
subject to the following conditions:

o the minimum amount that may be transferred is $250 (or the amount
held under the investment options from which you are making the
transfer, if less);

o if less than the full amount held under an investment option is
transferred, the amount remaining under the investment option must
be at least $250;

o we may defer transfers under certain condition;

o transfers may not be made during the free look period;

o transfers may be made from the fixed interest option only during the
30 day period following the end of each policy year.

Dollar Cost Averaging

This is a program of automatic monthly transfers out of the money market
variable investment option into one or more of the other investment options and
to the fixed interest option. You choose the investment options and the dollar
amount and timing of the transfers. The program is designed to reduce the risks
that result from market fluctuations. It does this by spreading out the
allocation of your money to investment options over a longer period of time.
This allows you to reduce the risk of investing most of your money at a time
when market prices are high. The success of this strategy depends on market
trends. The program allows owners to take advantage of investment fluctuations,
but does not assume a profit or protect against lows in a declining market. To
begin the program, the planned premium for the year must be $600 and the amount
transferred each month must be at least $50. You may discontinue the program at
any time.

Asset Rebalancing

This is a program that automatically reallocates your policy value among
the variable investment options in accordance with the proportions you
originally specified. Over time, variations in investment results will change
the allocation percentage. On a quarterly basis, the rebalancing program will
periodically transfer your policy value among the variable investment

11
<PAGE>

options to reestablish the percentages you had chosen. Rebalancing can result in
transferring amounts from a variable investment option with relatively higher
investment performance to one with relatively lower investment performance. The
minimum policy value to start the program is $1,000. If you also have a dollar
cost averaging program in effect, the portion of your policy value invested in
the Money Market Fund may not be included in the Rebalancing Program. You may
discontinue the program at any time.

What Is a Policy Loan?

You may borrow up to 90% of your cash surrender value.

Interest charged on a policy loan is 5.0% and is payable at the end of
each policy year. If interest is not paid when due, it is added to the loan. A
policy loan does not reduce your policy value. An amount equivalent to the loan
is withdrawn from the investment options and the fixed interest option on a
prorated basis (unless you designate a different withdrawal allocation when you
request the loan) and is transferred to a special loan account. The special loan
account will earn interest at 4.0% (or more in our discretion). With the
interest we credit to the special loan account, the net cost of the policy loan
is 1%. After the tenth policy year, we intend to credit interest at the rate of
4.75% (which will result in a net policy loan cost of 0.25% in those years).

You may repay all or part of a loan at any time. Upon repayment, an amount
equal to the repayment will be transferred from the special loan account to the
investment options you specify. If you do not specify the allocation for the
repayment, the amount will be allocated in accordance with your current standing
allocation instructions.

The amount of any loan outstanding under your Policy on the death of the
surviving insured will reduce the amount of the death benefit by the amount of
such loan.

If you want a payment to us to be used as a loan repayment, you must
include instructions to that effect. Otherwise, all payments will be assumed to
be premium payments.

How Can I Withdraw Money from My Policy?

Full Surrender

You may surrender your Policy in full at any time. If you do, we will pay
you the policy value, less any policy loan outstanding and less any surrender
charge that then applies. This is called your "net cash surrender value." You
must return your Policy when you request a full surrender.

Partial Surrender

You may partially surrender your Policy for net cash surrender value,
subject to the following conditions:

12
<PAGE>

o the net cash surrender value remaining in the Policy after the
partial surrender must exceed $1,000;

o No more than four partial surrenders may be made in a policy year;

o each partial surrender must be at least $250;

o a partial surrender may not be made from an investment option if the
amount remaining under the option is less than $250;

o during the first five policy years, the partial surrender may not
reduce the specified amount of insurance under your Policy to less
than $200,000.

If you elected the Option 1 insurance coverage (see How Much Insurance
Coverage Does My Policy Provide? below), a partial surrender will reduce your
specific amount of insurance.

What Is the Timing of Transactions Under the Policy?

We will ordinarily pay any death benefit, loan proceeds or partial or full
surrender proceeds, and will make transfers among the investment options and the
fixed interest option, within seven days after receipt at our office of all the
documents required for completion of the transaction. Other than the death
benefit, which is determined as of the date of death, transactions will be based
on values at the end of the valuation period in which we receive all required
instructions and necessary documentation. A valuation period is the period
commencing with the close of the New York Stock Exchange and ending at the close
of the next succeeding business day of the New York Stock Exchange.

A planned premium and an unplanned premium which does not require
evaluation of additional insurance risk will be credited to the Policy and the
net premium will be allocated to the designated investment options based on
values at the end of the valuation period in which we receive the premium.

Any premium requiring evaluation of additional insurance risk will be
allocated to the Penn Series Money Market investment option until our evaluation
of risk and administrative work has been completed and the premium has been
accepted. When accepted, the net premium will be allocated to the investment
options you have designated.

We may defer making a payment or transfer from a variable account
investment option 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 our Policy owners.

We may also defer making a payment or transfer from the fixed interest
option for up to six months from the date we receive the written request.
However, we will not defer payment of a partial surrender or policy loan
requested to pay a premium due on a Penn Mutual Policy. If a

13
<PAGE>

payment from the fixed interest option is deferred for 30 days or more, it will
bear interest at a rate of 3% per year compounded annually while it is deferred.

How Much Life Insurance Coverage Does the Policy Provide?

In your application for the Policy, you will tell us how much life
insurance coverage you want on the lives of the two persons to be insured. This
is called the "specified amount" of insurance. The minimum specified amount of
insurance is $200,000.

When the survivor of the insured persons dies, we will pay the death
benefit less the amount of any outstanding policy loan. We offer two different
types of death benefits. You choose which one you want in the application. They
are:

o Option 1 - The death benefit is the greater of (a) the specified
amount of insurance or (b) the policy value multiplied by the
applicable net single premium factor.

o Option 2 - The death benefit is the greater of (a) the specified
amount of insurance plus your policy value on the date of death, or
(b) the policy value multiplied by the net single premium factor.

Net single premium factors are based on the insureds' sexes, rate classes
and attained ages on the date of calculation. The factor decreases each policy
anniversary as the insureds' ages increase. A table of net single premium
factors as of each policy anniversary is included in your Policy. A table
illustrating net single premium factors is included in Appendix D at the end of
this prospectus.

In order for the Policy to qualify as "life insurance" for federal income
taxes, it must satisfy the "cash value accumulation test" under Section 7702(b)
of the Internal Revenue Code of 1986, as amended. The test requires that under
the terms of the Policy, the death benefit must be sufficient so that the policy
value does not at any time exceed the net single premium required to pay for the
future benefits provided under the policy. The net single premiums factors
included in your Policy are intended to satisfy the cash value accumulation
test.

If the investment performance of the variable account investment options
you have chosen is favorable, the amount of the death benefit may increase.
However, under Option 1, favorable investment performance will not ordinarily
increase the death benefit for several years and may not increase it at all,
whereas under Option 2, the death benefit will vary directly with the investment
performance of the policy value. To see how and when investment performance may
begin to affect the death benefit, see the Illustrations section of this
prospectus.

Assuming favorable investment performance, the death benefit under Option
2 will tend to be higher than the death benefit under Option 1. On the other
hand, the monthly insurance charge will be higher under Option 2 to compensate
us for the additional insurance risk we take. Because of that, the policy value
will tend to be higher under Option 1 than under Option 2 for the same premium
payments.

14
<PAGE>

Can I Change Insurance Coverage Under My Policy?

Change of Death Benefit Option

You may change your insurance coverage from Option 1 to Option 2 and
vice-versa, subject to the following conditions:

o after the change, the specified amount of insurance must be at least
$200,000;

o no change may be made in the first policy year and no more than one
change may be made in any policy year;

o if you request a change from Option 1 to Option 2, we may request
evidence of insurability; if a different rate class is indicated for
the insureds, the requested change will not be allowed.

Decrease in Specified Amount of Insurance

You may decrease the specified amount of insurance, subject to the
following conditions:

o no change may be made in the first policy year;

o no change may be made if it would cause the Policy not to qualify as
insurance under federal income tax law.

o any decrease in the specified amount of insurance must be at least
$10,000 and the specified amount after the decrease must be at least
$200,000.

You may not increase the specified amount of insurance under your Policy.

Tax Consequences

See Federal Income Tax Considerations in the Additional Information
section of this Prospectus to learn about possible tax consequences of changing
your insurance coverage under the Policy.

What Are the Supplemental Benefit Riders That I Can Buy?

We offer supplemental benefit riders that may be added to your Policy.
There are monthly charges for the riders, in addition to the charges described
above. If any of these riders are added to your Policy, monthly charges for the
supplemental benefits will be deducted from your policy value as part of the
monthly deduction.

Flexible Period Single Life Term Rider -- provides term insurance covering
the named insured for the designated period.

15
<PAGE>

Policy Split Option -- permits the Policy to be split into two fixed
benefit (nonvariable) policies upon the issuance of a final divorce decree
relating to the two insureds or a change in federal estate tax law that
results in the inability to defer estate taxes until the death of the last
surviving Insured.

Estate Growth Benefit -- provides for automatic annual increase of 3% or
6% of the initial specified amount of insurance.

Change of Insured -- permits a change in one insured so long as the new
insured has the same insurable relationship to the remaining insured as
did the insured being replaced.

Supplemental Term Insurance -- provides additional death benefit payable
on the death of the last surviving insured if the death occurs during the
term of the Policy.

Guaranteed Continuation of Policy -- guarantees that the Policy will
remain in force and a death benefit will be payable regardless of the
sufficiency of the net cash surrender value of the Policy.

Extended Maturity -- provides that the maturity date of the Policy is
extended, subject to conditions and limitations.

Return of Supplement Term Insurance -- provides term insurance which will
not be less than the amount of all premiums paid up to the most recent
policy month. It is only available on policies that provide an Option 1
death benefit. There is no cash value for this benefit.

Estate Preservation -- provides additional death benefit payable on the
death of the last surviving insured if the death occurs during the first
four Policy years.

Additional rules and limits apply to these supplemental benefits. All
supplemental benefits may not be available in your state. Please ask your
authorized Penn Mutual representative for further information or contact our
office.

Do I Have the Right to Cancel My Policy?

You have the right to cancel your Policy within 10 days after you receive
it or within 45 days after you signed your application (or longer in some
states). This is referred to as the "free look" period. To cancel your Policy,
simply deliver or mail the Policy to our office or to our representative who
delivered the Policy to you.

In most states, you will receive a refund of your premium as of the date
of cancellation plus the premium charge and the monthly deductions. The date of
cancellation will be the date we receive the Policy.

During the "free look" period, money held under your Policy will be
invested in the Penn Series Money Market Fund.

16
<PAGE>

Can I Choose Different Payout Options Under My Policy?

Choosing a Payout Option

You may choose to receive proceeds from the Policy as a single sum. This
includes proceeds that become payable because of death or full surrender.
Alternatively, you can elect to have proceeds of $5,000 or more applied to any
of a number of other payment options as set forth in your Policy. Periodic
payments may not be less than $50 each.

Changing a Payment Option

You can change the payment option at any time before the proceeds are
payable. If you have not made a choice, the payee may change the payment option
within the period specified in the Policy. The person entitled to the proceeds
may elect a payment option as set forth in the Policy.

Tax Impact

There may be tax consequences to you or your beneficiary depending upon
which payment option is chosen. You should consult a qualified tax adviser
before making that choice.

How Is the Policy Treated for Federal Income Tax Purposes?

Death benefits paid under life insurance policies are not subject to
income tax. Investment gains from your Policy are not subject to income tax as
long as we do not pay them out to you.

Assuming your Policy is not treated as a "modified endowment contract"
under federal income tax law, distributions from the Policy are generally
treated as first recovering the investment in the Policy and then, only after
the return of all investment in the Policy, as receiving taxable income. Amounts
borrowed under the Policy also are not generally subject to federal income tax
at the time of the borrowing.

However, some of the tax rules change if your Policy is found to be a
"modified endowment contract." This can happen if you have paid more than a
certain amount of premiums in relation to the insurance provided under the
Policy. Under those circumstances, additional taxes and penalties may be payable
for Policy distributions and loans.

For further information about the qualifications of the Policy as life
insurance under federal tax law and the tax consequences of owning a Policy, see
Federal Income Tax Considerations in the Additional Information section of this
prospectus.

17
<PAGE>

How Do I Communicate With Penn Mutual?

General Rules

You may mail all checks and money orders for premium payments to The Penn
Mutual Life Insurance Company, Post Office Box 7460, Philadelphia, Pennsylvania,
19172, or express all checks and money orders to The Penn Mutual Life Insurance
Company, Receipts Processing (3V), 600 Dresher Road, Horsham, Pennsylvania,
19044.

Certain requests pertaining to your Policy must be made in writing and be
signed and dated by you. They include the following:

o policy loans in excess of $5,000, and full and partial surrenders,

o change of death benefit option,

o decrease in specified amount of insurance,

o change of beneficiary,

o election of payment option for Policy proceeds,

o tax withholding elections,

o grant of telephone transaction privilege to a third party,

You should mail or express these requests to our office. You should also
send notice of the insured person's death and related documentation to our
office. Communications are not treated as "received" until such time as they
have arrived at our office in proper form. Any communication that arrives after
the close of our business day, or on a day that is not a business day, will be
considered "received" by us on the next following business day. Our business day
currently closes at 5:00 p.m. Eastern Standard Time, but special circumstances
(such as suspension of trading on a major exchange) may dictate an earlier
closing time.

We have special forms that must be used for a number of the requests
mentioned above. You can obtain these forms from your Penn Mutual representative
or by calling our office 800-523-0650. Each communication to us must include
your name, your Policy number and the name of the insured person. We cannot
process any request that does not include this required information.

Telephone Transactions

You may request transfers among investment options by calling our office.
In addition, if you complete a special authorizing form, you may authorize your
Penn Mutual agent or other third person to act on your behalf in giving us
telephone transfer instructions. We will not be liable for following transfer
instructions communicated by telephone that we reasonably believe to be genuine.
We may require certain identifying information to process a telephone transfer.

18
<PAGE>

The policies are not designed for professional market timing organizations
or other entities that use programmed and frequent transfers among investment
options. For reasons such as that, we reserve the right to change our telephone
transaction policies or procedures at any time. We also reserve the right to
suspend or terminate the privilege altogether.

How Does Penn Mutual Communicate With Me?

At least once each year we will send to you a report showing your current
policy values, premiums paid and deductions made since the last report, any
outstanding policy loans, and any additional premiums permitted under your
Policy. We will also send to you an annual and a semi-annual report for each
Fund underlying a subaccount to which you have allocated policy value, as
required by the 1940 Act. In addition, when you pay premiums (other than by pre-
authorized check), or if you borrow money under your policy, transfer amounts
among the investment options or make partial surrenders, we will send a written
confirmation to you.

19
<PAGE>

ILLUSTRATIONS

The tables on the following pages show how values under a hypothetical
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 two insured persons of given ages on the issue
date, would vary over time if planned premiums were paid annually and the return
on the assets in the selected funds were a uniform gross annual rate of 0%, 6%
and 12%. The values would be different from those shown if the returns averaged
0%, 6% or 12%, but fluctuated over and under those averages throughout the years
shown. The tables also show planned premiums accumulated at 5% interest. The
hypothetical investment rates of return are illustrative only and should not be
deemed a representation of past or future investment rates of return. Actual
rates of return for a particular Policy may be more or less than the
hypothetical investment rates of return and will depend on a number of factors
including the investment allocations made by an Owner, prevailing rates and
rates of inflation.

The tables reflect the daily charge against the investments for the
mortality and expense risks we assume, which is equivalent to an effective
annual charge of 0.90% of assets and currently is reduced to 0.60% of assets
after the fifteenth policy year. In addition, the tables assume an average
annual expense ratio of 0.83% of the underlying investment funds available under
the Policies. The average annual expense ratio is based on the expense ratios of
the Funds for the last fiscal year or, in the case of certain Funds, estimates
of their expense ratios. For information on fund expenses, see the prospectuses
on the funds that accompany this Prospectus.

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 -1.73%, 4.27% and
10.27%, respectively, and -1.43%, 4.57% and 10.57%, respectively, at current
rates after the fifteenth policy year.

The tables also reflect the deduction of the monthly administrative charge
and the monthly cost of insurance charge for the hypothetical insured persons.
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 the following pages. All the tables reflect the fact that no
charges for federal or state income taxes are currently made against the
investments made under a hypothetical policy and assume no policy loans or
charges for supplemental benefits.

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

For New York residents, the illustrations using current cost of insurance
rates may differ after the end of Policy Year 15. Upon request, we will furnish
illustrations reflecting current costs and charges for New York residents.

20
<PAGE>

Illustration of Policy Values
Penn Mutual Life Insurance Company

Male Issue Age: 56 Non-Smoker
Female Issue Age: 53 Non-Smoker

$4,000 ANNUAL PREMIUM
$1.000,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION 1

USING CURRENT COST OF INSURANCE RATES

<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Accumulated
End of at Net Cash Net Cash Net Cash
Policy 5% Interest Policy Surrender Death Policy Surrender Death Policy 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 13,650 9811 0 1000000 10467 0 1000000 11124 0 1000000
2 27,983 21253 5940 1000000 23241 7928 1000000 25308 9996 1000000
3 43,032 32372 17060 1000000 36432 21119 1000000 40818 25506 1000000
4 58,833 43150 27838 1000000 50033 34721 1000000 57765 42453 1000000
5 75,425 53571 38258 1000000 64043 48730 1000000 76278 60965 1000000
6 92,846 63619 48307 1000000 78457 63145 1000000 96499 81187 1000000
7 111,138 73275 57962 1000000 93270 77957 1000000 118585 103272 1000000
8 130,345 82532 68751 1000000 108489 94707 1000000 142723 128941 1000000
9 150,513 91365 79115 1000000 124101 111851 1000000 169102 156852 1000000
10 171,688 99754 89035 1000000 140106 129387 1000000 197947 187228 1000000
15 294,547 133991 130928 1000000 225597 222535 1000000 388767 385705 1000000
20 451,350 159041 159041 1000000 328964 328964 1000000 709061 709061 1151760
25 651,475 170633 170633 1000000 451805 451805 1000000 1229974 1229974 1749249
30 906,890 153076 153076 1000000 594361 594361 1000000 2063708 2063708 2645839
</TABLE>

(1) Assumes that no policy loans have been made.
(2) Current values reflect current cost of insurance rates, a monthly flat
dollar administrative charge of $15.00 in year 1 and $5.00 thereafter, a
monthly per $1,000 administrative charge of 0.15 per $1,000 of specified
amount of insurance for the first policy year and a mortality and expense
risk charge of 0.90% of assets in years 1-15 and 0.60% thereafter.
(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 each policy year.
Values would be different if the premiums are paid with a different
frequency or in different amounts.

THE HYPOTHETICAL INVESTMENT RATES 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.

21
<PAGE>

Illustration of Policy Values
Penn Mutual Life Insurance Company

Male Issue Age: 56 Non-Smoker
Female Issue Age: 53 Non-Smoker

$13,000 ANNUAL PREMIUM
$1.000,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION 1

USING GUARANTEED COST OF INSURANCE RATES

<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Accumulated
End of at Net Cash Net Cash Net Cash
Policy 5% Interest Policy Surrender Death Policy Surrender Death Policy 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 13,650 9217 0 1000000 9853 0 1000000 10491 0 1000000
2 27,983 20550 5237 1000000 22478 7165 1000000 24484 9171 1000000
3 43,032 31562 16250 1000000 35513 20201 1000000 39782 24469 1000000
4 58,833 42235 26922 1000000 48952 33640 1000000 56495 41183 1000000
5 75,425 52545 37232 1000000 62785 47472 1000000 74743 59430 1000000
6 92,846 62467 47155 1000000 76998 61685 1000000 94654 79342 1000000
7 111,138 71972 56660 1000000 91572 76259 1000000 116369 101057 1000000
8 130,345 81016 67235 1000000 106477 92696 1000000 140034 126253 1000000
9 150,513 89548 77298 1000000 121672 109422 1000000 165804 153554 1000000
10 171,688 97499 86780 1000000 137101 126382 1000000 193841 183122 1000000
15 294,547 125142 122080 1000000 214775 211713 1000000 374990 371927 1000000
20 451,350 118988 118988 1000000 281550 281550 1000000 653869 653869 1062109
25 651,475 34935 34935 1000000 301065 301065 1000000 1068950 1068950 1520243
30 906,890 0 0 0 183127 183127 1000000 1649034 1649034 2114194
</TABLE>

(1) Assumes that no policy loans have been made.
(2) Guaranteed values reflect guaranteed cost of insurance rates, a monthly
flat dollar administrative charge of $15.00 per month, a monthly per
$1,000 administrative charge of $0.20 per $1,000 of specified amount per
month for the first policy year and a mortality and expense risk charge of
0.90% of assets.
(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 each policy year.
Values would be different if the premiums are paid with a different
frequency or in different amounts.

22
<PAGE>

Illustration of Policy Values
Penn Mutual Life Insurance Company

Male Issue Age: 56 Non-Smoker
Female Issue Age: 53 Non-Smoker

$4,000 ANNUAL PREMIUM
$300,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION 1

USING CURRENT COST OF INSURANCE RATES

<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Accumulated
End of at Net Cash Net Cash Net Cash
Policy 5% Interest Policy Surrender Death Policy Surrender Death Policy 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 4,200 2,909 0 300,000 3,108 0 300,000 3,306 0 300,000
2 8,610 6,392 1,798 300,000 6,992 2,398 300,000 7,616 3,022 300,000
3 13,241 9,777 5,183 300,000 11,004 6,410 300,000 12,329 7,735 300,000
4 18,103 13,058 8,465 300,000 15,141 10,547 300,000 17,480 12,886 300,000
5 23,208 16,232 11,638 300,000 19,403 14,809 300,000 23,107 18,513 300,000
6 28,568 19,293 14,699 300,000 23,789 19,195 300,000 29,254 24,660 300,000
7 34,196 22,236 17,642 300,000 28,297 23,704 300,000 35,969 31,375 300,000
8 40,106 25,058 20,924 300,000 32,930 28,796 300,000 43,309 39,175 300,000
9 46,312 27,753 24,078 300,000 37,685 34,010 300,000 51,333 47,658 300,000
10 52,827 30,314 27,098 300,000 42,560 39,345 300,000 60,107 56,891 300,000
15 90,630 40,800 39,881 300,000 68,637 67,718 300,000 118,188 117,269 300,000
20 138,877 48,562 48,562 300,000 100,256 100,256 300,000 215,718 215,718 350,401
25 200,454 52,292 52,292 300,000 137,930 137,930 300,000 374,222 374,222 532,213
30 279,043 47,318 47,318 300,000 181,896 181,896 300,000 627,912 627,912 805,033
</TABLE>

23
<PAGE>

Illustration of Policy Values
Penn Mutual Life Insurance Company

Male Issue Age: 56 Non-Smoker
Female Issue Age: 53 Non-Smoker

$4,000 ANNUAL PREMIUM
$300,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION 1

USING GUARANTEED COST OF INSURANCE RATES

<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Accumulated
End of at Net Cash Net Cash Net Cash
Policy 5% Interest Policy Surrender Death Policy Surrender Death Policy 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 4,200 2731 0 300000 2924 0 300000 3117 0 300000
2 8,610 6098 1504 300000 6677 2083 300000 7280 2686 300000
3 13,241 9369 4775 300000 10552 5959 300000 11832 7238 300000
4 18,103 12538 7945 300000 14547 9954 300000 16805 12211 300000
5 23,208 15600 11006 300000 18659 14065 300000 22233 17639 300000
6 28,568 18545 13951 300000 22882 18289 300000 28156 23562 300000
7 34,196 21366 16772 300000 27213 22619 300000 34615 30021 300000
8 40,106 24049 19914 300000 31640 27506 300000 41652 37518 300000
9 46,312 26578 22903 300000 36153 32478 300000 49315 45640 300000
10 52,827 28934 25719 300000 40734 37518 300000 57650 54435 300000
15 90,630 37082 36163 300000 63754 62835 300000 111467 110549 300000
20 138,877 35080 35080 300000 83395 83395 300000 194214 194214 315470
25 200,454 9655 9655 300000 88606 88606 300000 317543 317543 451605
30 279,043 0 0 0 51852 51852 300000 489899 489899 628089
</TABLE>

24
<PAGE>

Illustration of Policy Values
Penn Mutual Life Insurance Company

Male Issue Age: 61 Non-Smoker
Female Issue Age: 57 Non-Smoker

$23,000 ANNUAL PREMIUM
$1,000,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION 1

USING CURRENT COST OF INSURANCE RATES

<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Accumulated
End of at Net Cash Net Cash Net Cash
Policy 5% Interest Policy Surrender Death Policy Surrender Death Policy 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 24,150 18851 2698 1000000 20060 3907 1000000 21270 5118 1000000
2 49,508 39065 22912 1000000 42722 26570 1000000 46526 30374 1000000
3 76,133 58680 42527 1000000 66097 49944 1000000 74115 57963 1000000
4 104,090 77659 61507 1000000 90170 74017 1000000 104236 88083 1000000
5 133,444 95961 79808 1000000 114922 98769 1000000 137104 120952 1000000
6 164,266 113594 97442 1000000 140387 124235 1000000 173019 156866 1000000
7 196,630 130557 114404 1000000 166592 150440 1000000 212305 196152 1000000
8 230,611 146801 132264 1000000 193524 178986 1000000 255284 240747 1000000
9 266,292 162303 149381 1000000 221194 208272 1000000 302351 289429 1000000
10 303,756 177042 165735 1000000 249624 238318 1000000 353959 342652 1000000
15 521,122 239476 236246 1000000 405259 402029 1000000 700794 697564 1168004
20 798,543 296025 296025 1000000 608476 608476 1000000 1279155 1279155 1856738
25 1,152,609 337934 337934 1000000 866788 866788 1129401 2213766 2213766 2884477
30 1,604,498 325867 325867 1000000 1171632 1171632 1410786 3681557 3681557 4433036
</TABLE>

(1) Assumes that no policy loans have been made.

(2) Current values reflect current cost of insurance rates, a monthly flat
dollar administrative charge of $15.00 in year 1 and $5.00 thereafter, a
monthly per $1,000 administrative charge of 0.15 per $1,000 of specified
amount of insurance for the first policy year and a mortality and expense
risk charge of 0.90% of assets in years 1-15 and 0.60% thereafter.

(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 each policy year.
Values would be different if the premiums are paid with a different
frequency or in different amounts.

25
<PAGE>

Illustration of Policy Values
Penn Mutual Life Insurance Company

Male Issue Age: 61 Non-Smoker
Female Issue Age: 57 Non-Smoker

$23,000 ANNUAL PREMIUM
$1,000,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION 1

USING GUARANTEED COST OF INSURANCE RATES

<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Accumulated
End of at Net Cash Net Cash Net Cash
Policy 5% Interest Policy Surrender Death Policy Surrender Death Policy 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 24,150 18256 2104 1000000 19446 3294 1000000 20638 4485 1000000
2 49,508 38362 22209 1000000 41959 25807 1000000 45701 29549 1000000
3 76,133 57869 41717 1000000 65178 49025 1000000 73079 56926 1000000
4 104,090 76743 60591 1000000 89088 72936 1000000 102965 86812 1000000
5 133,444 94939 78786 1000000 113668 97515 1000000 135572 119420 1000000
6 164,266 112398 96245 1000000 138883 122730 1000000 171129 154976 1000000
7 196,630 129046 112893 1000000 164684 148532 1000000 209879 193727 1000000
8 230,611 144794 130257 1000000 191013 176476 1000000 252097 237560 1000000
9 266,292 159551 146629 1000000 217811 204889 1000000 298103 285181 1000000
10 303,756 173206 161900 1000000 245007 233700 1000000 348264 336957 1000000
15 521,122 220151 216921 1000000 384405 381174 1000000 679002 675771 1131682
20 798,543 206898 206898 1000000 519085 519085 1000000 1172866 1172866 1702456
25 1,152,609 60738 60738 1000000 634417 634417 1000000 1868390 1868390 2434461
30 1,604,498 0 0 0 718655 718655 1000000 2814941 2814941 3389526
</TABLE>

26
<PAGE>

Illustration of Policy Values
Penn Mutual Life Insurance Company

Male Issue Age: 61 Non-Smoker
Female Issue Age: 57 Non-Smoker

$7,000 ANNUAL PREMIUM
$300,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION 1

USING CURRENT COST OF INSURANCE RATES

<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Accumulated
End of at Net Cash Net Cash Net Cash
Policy 5% Interest Policy Surrender Death Policy Surrender Death Policy 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 7,350 5621 776 300000 5986 1140 300000 6350 1504 300000
2 15,068 11735 6890 300000 12836 7991 300000 13981 9136 300000
3 23,171 17669 12823 300000 19903 15057 300000 22318 17473 300000
4 31,679 23411 18565 300000 27182 22336 300000 31421 26575 300000
5 40,613 28949 24103 300000 34667 29821 300000 41355 36509 300000
6 49,994 34286 29440 300000 42368 37523 300000 52211 47365 300000
7 59,844 39421 34575 300000 50295 45449 300000 64086 59241 300000
8 70,186 44340 39979 300000 58443 54081 300000 77080 72719 300000
9 81,045 49036 45160 300000 66815 62939 300000 91311 87434 300000
10 92,448 53503 50111 300000 75420 72028 300000 106916 103524 300000
15 158,602 72456 71487 300000 122553 121584 300000 211794 210825 352994
20 243,035 89680 89680 300000 184158 184158 300000 386637 386637 561217
25 350,794 102529 102529 300000 262412 262412 341916 669177 669177 871920
30 488,326 99302 99302 300000 354673 354673 427068 1112903 1112903 1340069
</TABLE>

27
<PAGE>

Illustration of Policy Values
Penn Mutual Life Insurance Company

Male Issue Age: 61 Non-Smoker
Female Issue Age: 57 Non-Smoker

$7,000 ANNUAL PREMIUM
$300,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION 1

USING GUARANTEED COST OF INSURANCE RATES

<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Accumulated
End of at Net Cash Net Cash Net Cash
Policy 5% Interest Policy Surrender Death Policy Surrender Death Policy 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 7,350 5443 597 300000 5801 956 300000 6160 1315 300000
2 15,068 11441 6596 300000 12521 7676 300000 13645 8800 300000
3 23,171 17261 12415 300000 19452 14606 300000 21821 16975 300000
4 31,679 22891 18045 300000 26588 21742 300000 30745 25900 300000
5 40,613 28318 23472 300000 33923 29078 300000 40482 35636 300000
6 49,994 33524 28678 300000 41448 36602 300000 51098 46252 300000
7 59,844 38487 33642 300000 49146 44300 300000 62667 57821 300000
8 70,186 43181 38820 300000 57000 52639 300000 75270 70909 300000
9 81,045 47578 43701 300000 64993 61116 300000 89003 85126 300000
10 92,448 51644 48252 300000 73103 69711 300000 103973 100581 300000
15 158,602 65573 64604 300000 114624 113655 300000 202670 201701 337787
20 243,035 61408 61408 300000 154565 154565 300000 350100 350100 508182
25 350,794 17242 17242 300000 188240 188240 300000 557728 557728 726705
30 488,326 0 0 0 210969 210969 300000 840293 840293 1011813
</TABLE>

28
<PAGE>

ADDITIONAL INFORMATION

This section of the prospectus provides information about Penn Mutual,
Penn Mutual Variable Life Account I, the investment funds and the Policy.

<TABLE>
<CAPTION>
Contents of this Section Page
------------------------ ----
<S> <C>
The Penn Mutual Life Insurance Company.........................................................................30
Penn Mutual Variable Life Account I............................................................................30
The Funds......................................................................................................31
More Information About Policy Values...........................................................................34
Federal Income Tax Considerations..............................................................................36
Sale of Policies...............................................................................................39
Penn Mutual Trustee and Officers...............................................................................40
State Regulation...............................................................................................41
Additional Information.........................................................................................41
Independent Auditors...........................................................................................42
Experts........................................................................................................42
Litigation.....................................................................................................42
Legal Matters..................................................................................................42
Financial Statements...........................................................................................42
Appendix A - Minimum Initial Annual Premiums..................................................................A-1
Appendix B....................................................................................................B-1
- Administrative Surrender Charges per $1,000 of Initial Specified Amount
- Sample Surrender Charge Premiums for $1,000,000 Specified Amount
Appendix C - Policies Issued to New York residents ...........................................................C-1
Appendix D - Illustrative Net Single Premium Factors..........................................................D-1
</TABLE>

29
<PAGE>

The Penn Mutual Life Insurance Company

Penn Mutual is a Pennsylvania mutual life insurance company. We were
chartered in 1847 and have been continuously engaged in the life insurance
business since that date. We are authorized to sell insurance in all 50 states
and the District of Columbia. Our corporate headquarters are located at 600
Dresher Road, Horsham, Pennsylvania, 19044, a suburb of Philadelphia. Our
mailing address is The Penn Mutual Life Insurance Company, Philadelphia,
Pennsylvania, 19172.

Penn Mutual Variable Life Account I

We established Penn Mutual Variable Life Account I (the "Separate
Account") as a separate investment account under Pennsylvania law on January 27,
1987. The Separate Account is registered with the Securities and Exchange
Commission (the "SEC") 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 laws.

Net premiums received under the Policy and under other variable life
insurance policies are allocated to subaccounts of the Separate Account for
investment in investment funds. They are allocated in accordance with
instructions from Policy owners

Income, gains and losses, realized or unrealized, in a subaccount are
credited or charged without regard to any other income, gains or losses of Penn
Mutual. Assets equal to the reserves and other contract liabilities with respect
to the investments held in each subaccount are not chargeable with liabilities
arising out of any other business or account of Penn Mutual. 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.

If investment in a fund 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 fund is in the interest of owners, we may
substitute another fund. 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 Shares of the Funds

We are the legal owner of shares of the funds 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 Separate Account at regular and
special meetings of shareholders of the funds in accordance with instructions
received from owners. 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 for which an owner may give voting
instructions is currently determined by dividing the portion of the owner's
policy value allocated to the Separate Account by the net asset value of

30
<PAGE>

one share of the applicable fund. 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 Penn Mutual but not more than 90 days prior to the meeting of
shareholders. Shares for which no timely instructions are received will be voted
by Penn Mutual 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 funds, 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 funds, 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.

The Funds

Penn Series Funds, Inc., Neuberger Berman Advisors Management Trust,
Fidelity Investments' Variable Insurance Products Fund, Fidelity Investments'
Variable Insurance Products Fund II and Morgan Stanley Dean Witter Universal
Funds, Inc. are each registered with the SEC as a diversified open-end
management investment company under the 1940 Act. Each is a series-type mutual
fund made up of different series or Funds.

The investment objective of each of the Funds available as investment
options under the Policy is set forth below. There is, of course, no assurance
that these objectives will be met.

Penn Series -- Money Market Fund -- preserve capital, maintain liquidity
and achieve the highest possible level of current income consistent
therewith.

Penn Series -- Limited Maturity Bond Fund -- the highest current income
consistent with low risk to principal and liquidity; a secondary objective
-- enhance total return through capital appreciation when market factors,
such as falling interest rates and rising bond prices, indicate that
capital appreciation may be available without significant risk to
principal.

Penn Series -- Quality Bond Fund -- highest income over the long term
consistent with the preservation of principal.

Penn Series -- High Yield Bond Fund -- high current income.

Penn Series -- Flexibly Managed Fund -- maximize total return (capital
appreciation and income).

31
<PAGE>

Penn Series -- Growth and Income Fund -- total return through a
combination of current income and capital appreciation.

Penn Series -- Growth Equity Fund -- long-term growth of capital and
increase of future income.

Penn Series -- Large Cap Value Fund -- maximize total return (capital
appreciation and income).

Penn Series -- Index 500 Fund -- total return of (income and capital
appreciation) which corresponds to that of the Standard & Poor's Composite
Index of 500 stocks.

Penn Series -- Mid Cap Growth Fund -- maximize capital appreciation.

Penn Series -- Mid Cap Value Fund -- growth of capital.

Penn Series-- Emerging Growth Fund-- capital appreciation.

Penn Series -- Small Cap Value Fund -- capital appreciation.

Penn Series-- International Equity Fund-- capital appreciation.

Neuberger Berman -- Balanced Portfolio -- long-term capital growth and
reasonable current income without undue risk to principal.

Fidelity Investments' VIP Fund -- Equity-Income Portfolio -- reasonable
income by investing primarily in income-producing equity securities; in
choosing these securities, the Fund will also consider the potential for
capital appreciation; the Fund's goal is to achieve a yield which exceeds
the composite yield on the securities comprising the Standard & Poor's 500
Composite Stock Price Index.

Fidelity Investments' VIP Fund -- Growth Portfolio -- capital
appreciation.

Fidelity Investments' VIP Fund II -- Asset Manager Portfolio -- high total
return with reduced risk over the long-term.

Morgan Stanley Dean Witter Universal Funds, Inc. -- Emerging Markets
Equity (International) Portfolio -- long term capital appreciation.

The Managers

Independence Capital Management, Inc. ("Independence Capital Management"),
a subsidiary of Penn Mutual, of Horsham, Pennsylvania, is investment adviser to
each of the Penn Series Funds.

T. Rowe Price Associates, Inc., of Baltimore, Maryland, is investment
sub-adviser to the Penn Series Flexibly Managed Fund and Penn Series High Yield
Bond Fund.

32
<PAGE>

Putnam Investment Management, Inc. of Boston, Massachusetts, is the
investment sub-adviser to the Penn Series Large Cap Value Fund.

Wells Capital Management Incorporated of Minneapolis, Minnesota, is the
sub-adviser to the Penn Series Index 500 Fund.

Turner Investment Partners, Inc. of Berwyn, Pennsylvania, is the
investment sub-adviser to the Penn Series Mid Cap Growth Fund.

Neuberger Berman Management Incorporated, of New York, New York, is the
investment sub-adviser to Penn Series Mid Cap Value Fund as well as the
investment adviser to the series of Advisers Managers Trust underlying the
Neuberger Berman Balanced Portfolio.

RS Investment Management, Inc. (formerly Robertson Stephens Investment
Management, Inc.), of San Francisco, California, is investment sub-adviser to
the Penn Series Emerging Growth Fund.

Royce & Associates, Inc., of New York, New York, is investment sub-adviser
to the Penn Series Small Cap Value Fund.

Vontobel USA Inc., of New York, New York, is the investment sub-adviser to
the Penn Series International Equity Fund.

Fidelity Management & Research Corporation ("FMR"), of Boston,
Massachusetts, is the investment adviser to VIP Fund's Equity Income Portfolio
and Growth Portfolio and VIP Fund II's Asset Manager Portfolio. FMR utilizes the
services of two subsidiaries on a sub-advisory basis for foreign securities
investments for the Asset Manager Portfolio. These subsidiaries are Fidelity
Management & Research (U.K.) Inc. and Fidelity Management & Research (Far East)
Inc.

Morgan Stanley Dean Witter Investment Management Inc. ("Morgan Stanley
Dean Witter"), of New York, New York, is the investment adviser to Morgan
Stanley Universal Funds' Emerging Markets Equity (International) Portfolio.

Further information about the Funds is contained in the accompanying
prospectuses, which you should read in conjunction with this prospectus.

We have entered into agreements with Penn Series, Neuberger Berman,
Fidelity Investments' VIP Fund, Fidelity Investments' VIP Fund II and Morgan
Stanley Dean Witter governing the Separate Account's investment in those Funds.
The advisers to Fidelity Investments' VIP Fund, Fidelity Investments' VIP Fund
II and Morgan Stanley Dean Witter Portfolios, or their affiliates, compensate
Penn Mutual for administrative and other services rendered in making shares of
the portfolios available under the Policies.

The shares of Penn Series, Neuberger Berman, Fidelity Investments' VIP
Fund, Fidelity Investments' VIP Fund II and Morgan Stanley Dean Witter are sold
not only to the Separate Account, but to other separate accounts of Penn Mutual
that fund benefits under variable annuity

33
<PAGE>

policies. The shares of Neuberger Berman, Fidelity Investments' VIP Fund,
Fidelity Investments' VIP Fund II and Morgan Stanley Dean Witter are also sold
to separate accounts of other insurance companies, and may also be sold directly
to qualified pension and retirement plans. It is conceivable that in the future
it may become disadvantageous for both variable life and variable annuity Policy
separate accounts (and also qualified pension and retirement plans) to invest in
the same underlying mutual fund. Although neither we nor Penn Series, Neuberger
Berman, Fidelity Investments' VIP Fund, Fidelity Investments' VIP Fund II or
Morgan Stanley Dean Witter currently perceives or anticipates any such
disadvantage, the Boards of Directors of Penn Series and Morgan Stanley Dean
Witter, respectively, and the Boards of Trustees of Neuberger Berman, Fidelity
Investments' VIP Fund and Fidelity Investments' VIP Fund II, respectively, will
monitor events to determine whether any material conflict between variable
annuity Policyowners and variable life Policyowners (and also qualified pension
and retirement plans with respect to Neuberger Berman) arises.

Material conflicts could result from such things as: (1) changes in state
insurance laws; (2) changes in federal income tax law; (3) changes in the
investment management of any Fund or of Penn Series, Neuberger Berman, Fidelity
Investments' VIP Fund, Fidelity Investments' VIP Fund II and Morgan Stanley Dean
Witter, respectively; or (4) differences between voting instructions given by
variable annuity Policyowners and those given by variable life Policyowners. In
the event of a material irreconcilable conflict, we will take the steps
necessary to protect our variable annuity and variable life Policyowners. This
could include discontinuance of investment in a Fund.

More Information About Policy Values

On the policy date (the date from which policy years and monthly
anniversaries are measured), the policy value is equal to the initial net
premium. If the policy date and the policy issue date (the date the policy is
issued) are the same day, the policy value is equal to the initial net premium,
less the monthly deduction. On each valuation date (each day the New York Stock
Exchange and our office is open for business) thereafter, the policy value is
the aggregate of the Policy's variable account values and the fixed interest
account value. The policy value will vary to reflect the variable account
values, interest credited to the fixed interest account, policy charges,
transfers, partial surrenders, policy loans and policy loan repayments.

Variable Account Values

When you allocate an amount to a variable account investment option,
either by net premium allocation or transfer, your Policy is credited with
accumulation units. The number of accumulation units is determined by dividing
the amount allocated to the variable account investment option by the variable
account's accumulation unit value for the valuation period in which the
allocation was made.

The number of accumulation units credited to your Policy for a variable
account investment option will increase when net premiums are allocated to the
variable account, amounts are transferred to the variable account and loan
repayments are credited to the variable account. The number of accumulation
units will decrease when the allocated portion of the monthly deduction is taken
from the variable account, a policy loan is taken from the variable

34
<PAGE>

account, an amount is transferred from the variable account or a partial
surrender is made from the variable account (including the partial surrender
charge).

Accumulation Unit Values

An accumulation unit value varies to reflect the investment experience of
the underlying investment fund in which the Policy is invested and the mortality
and expense risk charge assessed against the investment, and may increase or
decrease from one valuation date to the next. The accumulation unit value of
each subaccount of the Separate Account that invests in a fund 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.

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.

Fixed Account Value

On any valuation date, the fixed account value of a Policy is the total of
all net premiums allocated to the fixed account, plus any amounts transferred to
the fixed account, plus interest credited on such net premiums and transferred
amounts, less the amount of any transfers from the fixed account, less the
amount of any partial surrenders taken from the fixed account (including the
partial surrender charges), and less the pro rata portion of the monthly
deduction deducted from the fixed account. If there have been any policy loans,
the fixed account value is further adjusted to reflect the amount in the special
loan account, including transfers to and from the special loan account as loans
are taken and repayments are made, and interest credited on the special loan
account.

Net Policy Value

The net policy value on a valuation date is the policy value less the
amount of any policy loan on that date.

Cash Surrender Value

The cash surrender value on a valuation date is the policy 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.

35
<PAGE>

Net Cash Surrender Value

The net cash surrender value on a valuation date is equal to the net
policy value reduced by any surrender charge that would be imposed if the Policy
were surrendered on that date. The net cash surrender value is used to calculate
the amount available for partial surrenders. It is the amount received upon a
full surrender of the Policy.

Federal Income Tax Considerations

The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all situations. This discussion is not intended as tax
advice. Counsel or other competent tax advisors should be consulted for more
complete information. This discussion is based on Penn Mutual's understanding of
the present Federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "IRS"). No representation is made as to the
likelihood of continuation of the present Federal income tax laws or of the
current interpretations by the IRS.

Tax Status of the Policy

To qualify as a life insurance contract for federal income tax purposes,
the Policy must meet the definition of a life insurance contract which is set
forth in Section 7702 of the Internal Revenue Code of 1986, as amended (the
"Code"). The manner in which Section 7702 should be applied to certain features
of the Policy offered in this prospectus is not directly addressed by Section
7702 or any guidance issued to date under Section 7702. Nevertheless, Penn
Mutual believes it is reasonable to conclude that the Policy will meet the
Section 7702 definition of a life insurance contract. In the absence of final
regulations or other pertinent interpretations of Section 7702, however, there
is necessarily some uncertainty as to whether a Policy will meet the statutory
life insurance contract definition, particularly if it insures a substandard
risk. If a Policy were determined not to be a life insurance contract for
purposes of Section 7702, such contract would not provide most of the tax
advantages normally provided by a life insurance contract.

If it is subsequently determined that a Policy does not satisfy Section
7702, we may take whatever steps that are appropriate and reasonable to comply
with Section 7702. For these reasons, we reserve the right to restrict Policy
transactions as necessary to attempt to qualify it as a life insurance contract
under Section 7702.

Section 817(h) of the Code requires that the investments of each
Subaccount of the Separate Account must be "adequately diversified" in
accordance with Treasury regulations in order for the Policy to qualify as a
life insurance contract under Section 7702 of the Code (discussed above). The
Separate Account, through the funds, intends to comply with the diversification
requirements prescribed in Treas. Reg. ss. 1.817-5, which affect how the funds'
assets are to be invested. Penn Mutual believes that the Separate Account will
thus meet the diversification requirement, and Penn Mutual will monitor
continued compliance with this requirement.

36
<PAGE>

The IRS has stated in published rulings that a variable contract owner
will be considered the owner of separate account assets if the contract owner
possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. In circumstances where the variable
contract owner is considered the owner of separate account assets, income and
gain from the assets would be includable in the variable contract owner's gross
income. In connection with the issuance of regulations on the phrase "adequate
diversification," the Treasury Department announced in 1984 that guidance would
be given, by way of regulation or ruling, on the "extent to which Policyholders
may direct their investments to particular subaccounts without being treated as
owners of underlying assets." As of the date of this Prospectus, no ruling or
regulation has been issued.

The following discussion assumes that the Policy qualifies as a life
insurance contract for federal income tax purposes.

We believe that the proceeds and cash value increases of a Policy should
be treated in a manner consistent with a fixed-benefit life insurance Policy for
Federal income tax purposes. Thus, the death benefit under the Policy should be
excludable from the gross income of the Beneficiary under Section 101(a)(1) of
the Code.

Modified Endowment Contracts

The Internal Revenue Code establishes a class of life insurance contracts
designated as "modified endowment contracts," which applies to Policies entered
into or materially changed 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 exceeds 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. The determination of whether a Policy will be a modified endowment
contract after a material change generally depends upon the relationship of the
death benefit and policy value at the time of such change and the additional
premiums paid in the seven years following the material change. At the time a
premium is credited which would cause the Policy to become a modified endowment
contract, we will notify you that unless a refund of the excess premium (with
interest) is requested, your Policy will become a modified endowment contract.
You will have 30 days after receiving such notification to request the refund.

All policies that we or our affiliate issues to the same owner during any
calendar year, which are treated as modified endowment contracts, are treated as
one modified endowment contract for purposes of determining the amount
includable in the gross income under Section 72(e) of the Code.

The rules relating to whether a Policy will be treated as a modified
endowment contract are complex and make it impracticable to adequately describe
in the limited confines of this summary. Therefore, you may wish to consult with
a competent advisor to determine whether a Policy transaction will cause the
Policy to be treated as a modified endowment contract.

37
<PAGE>

Distributions from Policies Classified as Modified Endowment Contracts

Policies classified as a modified endowment contract will be subject to
the following tax rules. First, all distributions, including distributions upon
surrender and partial withdrawals from such a Policy are treated as ordinary
income subject to tax up to the amount equal to the excess (if any) of the
policy value immediately before the distribution over the investment in the
Policy (described below) at such time. Second, loans taken from or secured by,
such a Policy are treated as distributions from such a Policy and taxed
accordingly. Past due loan interest that is added to the loan amount will be
treated as a loan. Third, a 10 percent additional income tax is imposed on the
portion of any distribution from, or loan taken from or secured by, such a
Policy that is included in income except where the distribution or loan is made
on or after the owner attains age 59 1/2, is attributable to the owner's
becoming totally and permanently disabled, or is part of a series of
substantially equal periodic payments 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.

Distributions from Policies Not Classified as Modified Endowment Contracts

Distributions from a Policy that is not a modified endowment contract, are
generally treated as first recovering the investment in the Policy (described
below) and then, only after the return of all such investment in the Policy, as
distributing taxable income. An exception to this general rule occurs in the
case of a decrease in the Policy's death benefit or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in a cash distribution to the owner in order for the
Policy to continue complying with the Section 7702 definitional limits. Such 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, such loans are treated as
indebtedness of the owner.

Finally, neither distributions (including distributions upon surrender)
nor loans from, or secured by, a Policy that is not a modified endowment
contract are subject to the 10 percent additional tax.

Policy Loan Interest

Generally, personal interest paid on a loan under a Policy which is owned
by an individual is not deductible. In addition, interest on any loan under a
Policy owned by a taxpayer and covering the life of any individual will
generally not be tax deductible. The deduction of interest on policy loans may
also be subject to the restrictions of Section 264 of the Code. An owner should
consult a tax adviser before deducting any interest paid in respect of a policy
loan.

Investment in the Policy

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

38
<PAGE>

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.

Taxation of Policy Split

The Policy Split Option Rider which we offer permits a Policy to be split
into two other life policies upon the occurrence of a divorce of the joint
insureds or certain changes in federal estate tax law. A Policy split could have
adverse tax consequence. For example, it is not clear whether a Policy split
will be treated as a nontaxable exchange under Section 1031 through 1043 of the
Code. If a Policy split is not treated as a nontaxable exchange, a split could
result in the recognition of taxable income in an amount up to any gain in the
Policy at the time of the split. In addition, it is not clear whether, in all
circumstances, the individual policies that result from a Policy split would be
treated as life insurance contracts for federal income tax purposes and, if so
treated, whether the individual contracts would be classified as modified
endowment contracts. Before you exercise rights provided by the Policy split
option, it is important that you consult with a competent tax advisor regarding
the possible consequences of a Policy split.

Other Tax Considerations

The transfer of the Policy or the designation of a beneficiary may have
federal, state, and/or local transfer and inheritance tax consequences,
including the imposition of gift, estate and generation-skipping transfer taxes.
For example, the transfer of the Policy to, or the designation as beneficiary
of, or the payment of proceeds to, a person who is assigned to a generation
which is two or more generations below the generation of the owner, may have
generation skipping transfer tax considerations under Section 2601 of the Code.

The individual situation of each owner or beneficiary will determine the
extent, if any, to which federal, state and local transfer taxes may be imposed.
Consult with your tax adviser for specific information in connection with these
taxes.

Sale of the Policies

Hornor, Townsend & Kent, Inc. ("HTK"), a wholly-owned subsidiary of Penn
Mutual, acts as a principal underwriter of the Policies. HTK also acts as
principal underwriter for Penn Mutual Variable Annuity Account III, a separate
account also established by Penn Mutual and for PIA Variable Annuity Account I,
a separate account established by The Penn Insurance and Annuity Company, a
wholly-owned subsidiary of Penn Mutual. HTK is a registered broker-dealer under
the Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. The Policy is sold by registered representatives of HTK
who are also appointed and licensed as insurance agents. The Policy may also be
offered through other insurance and securities brokers. Registered
representatives may be paid commissions on a Policy they sell based on premiums
paid in amounts up to [50%] of first year premiums, [2%] on premiums paid during
the second through fifteenth policy years, and [1.2%] on premiums paid after the
first fifteen policy years. Registered representatives may also be paid
commissions of up to [0.25%] of policy value. Other allowances and overrides
also may be paid. Registered

39
<PAGE>

representatives who meet certain productivity and profitability standards may be
eligible for additional compensation.

Penn Mutual Trustees and Officers

Penn Mutual is managed by a board of trustees. The following table sets
forth the name, address and principal occupations during the past five years of
each of Penn Mutual's trustees.

Board of Trustees

<TABLE>
<CAPTION>
Position with
NAME AND ADDRESS Penn Mutual Principal Occupation During Past Five years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Robert E. Chappell Chairman of the Board Chairman of the Board and Chief Executive Officer (since December
The Penn Mutual Life and Chief Executive 1996), President and Chief Executive Officer (April 1995-December
Insurance Company Officer 1996), President and Chief Operating Officer, (January 1994 to April
Philadelphia, PA 19172 1995), The Penn Mutual Life Insurance Company.
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel J. Toran President, Chief President and Chief Operating Officer (since January 1997), Executive
The Penn Mutual Life Operating Officer Vice President, (May 1996-January 1997), The Penn Mutual Life
Insurance Company and Trustee Insurance Company; Executive Vice President, The New England Mutual
Philadelphia, PA 19172 Life Insurance Company (prior thereto).
- ------------------------------------------------------------------------------------------------------------------------------------
Julia Chang Bloch Trustee Visiting Professor, Institute of International Relations in Beijing, China,
1743 22nd Street, NW and distinguished adviser, American Studies Center (April 1998 to
Washington, DC 20008 present); President, US-Japan Foundation (July 1996 to March 1998);
Group Executive Vice President, Bank America NT & SA (June 1993 to
June 1996).
- ------------------------------------------------------------------------------------------------------------------------------------
James A. Hagen Trustee Retired (since May 1996), Chairman of the Board, Conrail, Inc. (prior
2040 Montrose Lane thereto).
Wilmington, NC 28405
- ------------------------------------------------------------------------------------------------------------------------------------
Philip E. Lippincott Trustee Retired (since April 1994), Chairman and Chief Executive Officer, Scott
4301 Bayberry Drive Paper Company (prior thereto).
Avalon, NJ 08202
- ------------------------------------------------------------------------------------------------------------------------------------
John F. McCaughan Trustee Retired Chairman (since 1996), Chairman of the Board (prior thereto),
921 Pebble Hill Road Betz Laboratories, Inc.
Doylestown, PA 18901
- ------------------------------------------------------------------------------------------------------------------------------------
Alan B. Miller Trustee Chairman and President, Universal Health Services, Inc.
367 S. Gulph Road
King of Prussia, PA 19406
- ------------------------------------------------------------------------------------------------------------------------------------
Edmond F. Notebaert Trustee President and Chief Executive Officer, The Children's Hospital of
34th and Civic Center Blvd. Philadelphia (since 1987).
Philadelphia, PA 19104
- ------------------------------------------------------------------------------------------------------------------------------------
Robert H. Rock Trustee President, MLR Holdings, LLC (since 1987).
1845 Walnut Street - 9th Floor
Philadelphia, PA 19103
- ------------------------------------------------------------------------------------------------------------------------------------
Norman T. Wilde, Jr. Trustee Co-Chairman of the Board (since 2000), President and Chief Executive
1801 Market Street Officer, Janney Montgomery Scott LLC (a securities broker/dealer and
Philadelphia, PA 19103 subsidiary of The Penn Mutual Life Insurance Company).
- ------------------------------------------------------------------------------------------------------------------------------------
Wesley S. Williams, Jr., Esq. Trustee Partner, Covington & Burling (law firm).
1201 Pennsylvania Ave., NW
P.O. Box 7566
Washington, D.C. 20004
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following table sets forth the names, addresses and principal
occupations during the past five years of the senior officers of Penn Mutual
(other than officers who are members of Penn Mutual's Board of Trustees).

40
<PAGE>

Senior Officers

<TABLE>
<CAPTION>
Name Principal Occupation During Past Five years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
John M. Albanese Senior Vice President, Customer Service and Information Systems (since June 1997), Vice President,
The Penn Mutual Life Information Systems Application (prior thereto), The Penn Mutual Life Insurance Company.
Insurance Company
Philadelphia, PA 19172
- ------------------------------------------------------------------------------------------------------------------------------------
Michael A. Biondolillo Senior Vice President, Human Resources (since June 1997); Corporate Vice President and General
The Penn Mutual Life Manager, Human Resources and Quality MG Industries, America (prior thereto).
Insurance Company
Philadelphia, PA 19172
- ------------------------------------------------------------------------------------------------------------------------------------
Nancy S. Brodie Executive Vice President and Chief Financial Officer (since December 1995), Senior Vice President and
The Penn Mutual Life Chief Financial Officer (prior thereto). The Penn Mutual Life Insurance Company .
Insurance Company
Philadelphia, PA 19172
- ------------------------------------------------------------------------------------------------------------------------------------
Bill D. Fife Senior Vice President, Independence Financial Network (since January 2000), Regional Vice President,
Independence Financial Network (since 1997), The Penn Mutual Life Insurance Company; Vice President
of Agencies (since 1994), General Manager, Western and Northwest Regions (prior thereto), Aetna Life
& Casualty.
- ------------------------------------------------------------------------------------------------------------------------------------
Larry L. Mast Executive Vice President, The Penn Mutual Life Insurance Company (May 1997 to present). Formerly
The Penn Mutual Life Senior Vice President, Lafayette Life Insurance Company (September 1994 to May 1997); Vice President,
Insurance Company Security Benefit Insurance Company (May 1993 to September 1994); Vice President, Home Life Insurance
Philadelphia, PA 19172 Company (July 1990 to May 1993); Agency Manager, The Equitable Life Insurance Company (August
1978 to July 1990).
- ------------------------------------------------------------------------------------------------------------------------------------
Nina M. Mulrooney General Auditor (since November 1991), Vice President, Market Conduct (since December 1997),
The Penn Mutual Life Assistant Vice President, Corporate Accounting and Control (prior thereto), The Penn Mutual Life
Insurance Company Insurance Company.
Philadelphia, PA 19172
- ------------------------------------------------------------------------------------------------------------------------------------
Peter M. Sherman Executive Vice President (since December 1998), Chief Investment Officer (since May 1996), Senior Vice
The Penn Mutual Life President (May 1996 to December 1996), Vice President, Investments (January 1996 to April 1996), Vice
Insurance Company President, Fixed Income Portfolio Management (prior thereto), The Penn Mutual Life Insurance Company;
Philadelphia, PA 19172 President, Independence Capital Management, Inc. (an investment advisory organization and subsidiary
of Penn Mutual).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

State Regulation

Penn Mutual is subject to regulation by the Department of Insurance of the
Commonwealth of Pennsylvania, which periodically examines our financial
condition and operations. We are also subject to the insurance laws and
regulations of all jurisdictions where we do business. The Policy described in
this prospectus has been filed with and, where required, approved by, insurance
officials in those jurisdictions where it is sold.

We are required to submit annual statements of our operations, including
financial statements, to the insurance departments of the various jurisdictions
where we do business to determine solvency and compliance with applicable
insurance laws and regulations.

Additional Information

A registration statement under the Securities Act of 1933 has been filed
with the SEC relating to the offering described in this prospectus. This
prospectus does not include all the information set forth in the registration
statement. The omitted information may be obtained at the SEC's principal office
in Washington, D.C. by paying the SEC's prescribed fees.

41
<PAGE>

Independent Auditors

Ernst & Young LLP serves as independent auditors of The Penn Mutual Life
Insurance Company and Penn Mutual Variable Life Account I. Their offices are
located at 2001 Market Street, Suite 4000, Philadelphia, PA

Experts

Actuarial matters included in this prospectus have been examined by Edward
S. Attarian, FSA, MAAA, Actuary of Penn Mutual, whose opinion is filed as an
exhibit to the Registration Statement.

Litigation

No litigation is pending that would have a material effect upon the
subaccounts or Penn Mutual.

Legal Matters

Morgan, Lewis & Bockius, LLP of Philadelphia, Pennsylvania, has provided
advice on certain matters relating to the federal securities laws and the
offering of the Policies.

Financial Statements

The financial statements of the Separate Account and Penn Mutual appear on
the following pages. The financial statements of Penn Mutual should be
distinguished from any financial statements of the Separate Account and should
be considered only as bearing upon Penn Mutual's ability to meet its obligations
under the Policies.

42
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANT
AND FINANCIAL STATEMENTS TO BE FILED BY AMENDMENT

43
<PAGE>

APPENDIX A

Minimum Initial Annual Premiums

The following table shows for Insureds of varying ages, the minimum
initial annual premium for a Policy with a Basic death benefit of $1,000,000.
The table assumes the Insureds will be placed in a nonsmoker class and that no
supplemental benefits will be added to the base Policy.

Age of Male Age of Female Minimum Initial Annual
Premium
- --------------------------------------------------------------------------------
35 35 $2,802
- --------------------------------------------------------------------------------
40 45 $3,224
- --------------------------------------------------------------------------------
45 45 $3,296
- --------------------------------------------------------------------------------
50 45 $3,376
- --------------------------------------------------------------------------------
55 45 $3,462
- --------------------------------------------------------------------------------
55 55 $4,248
- --------------------------------------------------------------------------------
60 58 $4,687
- --------------------------------------------------------------------------------
65 70 $7,146
- --------------------------------------------------------------------------------
70 62 $6,391
- --------------------------------------------------------------------------------

A-1
<PAGE>

APPENDIX B

Administrative Surrender Charges per $1,000 of Initial Specified Amount

Attained Age of Younger Charge Per Each $1,000 of
Insured on Policy Date Initial Specified Amount
------------------------------------------------------------------
20-29 $6.00
------------------------------------------------------------------
30-39 $8.00
------------------------------------------------------------------
40-49 $10.00
------------------------------------------------------------------
50-59 $12.00
------------------------------------------------------------------
60-over $14.00
------------------------------------------------------------------

Sample Surrender Charge Premiums for $1,000,000 Specified Amount
(NS = Nonsmoker; S = Smoker)

Age of Smoking Age of Smoking Maximum Surrender
Male Status Female Status Charge Premium
- --------------------------------------------------------------------------------
50 NS 45 NS $9,254
- --------------------------------------------------------------------------------
65 NS 65 NS $29,399
- --------------------------------------------------------------------------------
55 S 55 S $16,280
- --------------------------------------------------------------------------------
55 S 45 NS $10,392
- --------------------------------------------------------------------------------
45 NS 45 S $9,040
- --------------------------------------------------------------------------------
35 NS 35 NS $5,364
- --------------------------------------------------------------------------------
70 NS 62 S $25,370
- --------------------------------------------------------------------------------
40 S 45 S $9,044
- --------------------------------------------------------------------------------
65 S 70 NS $31,204
- --------------------------------------------------------------------------------
60 NS 58 NS $16,885
- --------------------------------------------------------------------------------

B-1
<PAGE>

APPENDIX C

Policies Issued to New York Residents

Premium Charge

Policy Year % of Premium Charge
1 - 15 7.5%
16+ 5.5%

Mortality and Expense Risk Charge

Policy Years 1 - 15 -- 0.90%
Policy Years 16+ -- 0.60%

Surrender Charge

For Policies issued to New York residents, the surrender charge declines
during the 6th through the 14th policy years so that no surrender charge is
deductible during the 15th and later policy years. The surrender factors used to
calculate the surrender charge for such Policies are as follows:

Surrender Factor
Surrender During Applied to (c) in
Policy Year Formula on Page
----------------------------------------------------
1st through 5th 1.00
----------------------------------------------------
6th .90
----------------------------------------------------
7th .80
----------------------------------------------------
8th .70
----------------------------------------------------
9th .60
----------------------------------------------------
10th .50
----------------------------------------------------
11th .40
----------------------------------------------------
12th .30
----------------------------------------------------
13th .20
----------------------------------------------------
14th .10
----------------------------------------------------
15th 0
----------------------------------------------------

C-1
<PAGE>

APPENDIX D

Illustrative Net Single Premium Factors

For a Policy Issued to a Male Nonsmoker, age 65, standard underwriting
class and Female, Nonsmoker, age 65, standard underwriting class.

65 2.2464 83 1.2787
- --------------------------------------------------------------------------------
66 2.1200 84 1.2557
- --------------------------------------------------------------------------------
67 2.0406 85 1.2348
- --------------------------------------------------------------------------------
68 1.9656 86 1.2159
- --------------------------------------------------------------------------------
69 1.8949 87 1.1987
- --------------------------------------------------------------------------------
70 1.8283 88 1.1831
- --------------------------------------------------------------------------------
71 1.7657 89 1.1686
- --------------------------------------------------------------------------------
72 1.7068 90 1.1550
- --------------------------------------------------------------------------------
73 1.6517 91 1.1421
- --------------------------------------------------------------------------------
74 1.6002 92 1.1295
- --------------------------------------------------------------------------------
75 1.5523 93 1.1171
- --------------------------------------------------------------------------------
76 1.5080 94 1.1044
- --------------------------------------------------------------------------------
77 1.4670 95 1.0913
- --------------------------------------------------------------------------------
78 1.4290 96 1.0778
- --------------------------------------------------------------------------------
79 1.3940 97 1.0643
- --------------------------------------------------------------------------------
80 1.3615 98 1.0520
- --------------------------------------------------------------------------------
81 1.3316 99 1.0321
- --------------------------------------------------------------------------------
82 1.3040
- --------------------------------------------------------------------------------

D-1
<PAGE>

PART II

<PAGE>

UNDERTAKING 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 heretofore or hereafter duly adopted pursuant to
authority conferred in that section.

UNDERTAKING PURSUANT TO RULE 484 UNDER THE SECURITIES ACT OF 1933

Section 6.2 of the By-laws of The Penn Mutual Life Insurance Company
("Penn Mutual" or the "Company") provides that, in accordance with the
provisions of the Section, the Company shall indemnify trustees and officers
against expenses (including attorneys' fees), judgments, fines, excise taxes and
amounts paid in settlement actually and reasonably incurred in connection with
actions, suits and proceedings, to the extent such indemnification is not
prohibited by law, and may provide other indemnification to the extent not
prohibited by law. The By-laws are filed as Exhibit 6(b) on the Form N-4
Registration Statement of Penn Mutual Variable Annuity Account III filed on
September 30, 1998 (File No. 33-62811).

Pennsylvania law (15 Pa. C.S.A. ss.ss.1741-1750) authorizes Pennsylvania
corporations to provide indemnification to directors, officers and other
persons.

Penn Mutual owns a directors and officers liability insurance policy
covering liabilities that trustees and officers of Penn Mutual and its
subsidiaries may incur in acting as trustees and officers.

Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant 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 the Act and will
be governed by the final adjudication of such issue.

II-1
<PAGE>

REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940

Registrant represents that the fees and charges debuted under the Last
Survivor Flexible Premium Adjustable Variable Life Insurance Policies contained
in this Post Effective Amendment, in the aggregate, are reasonable in relation
to the services rendered, the expenses expected to be incurred, and the risks
assumed by the Registrant.

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

The facing sheet.
The prospectus and its appendices consisting of 47 pages.
Undertaking to file reports.
Rule 484 Undertaking.
Section 26(e)(2)(A) Representation.
The signatures.

The following exhibits:

1. Copies of all exhibits which would be required by paragraph A of the
instructions as to exhibits in Form N-8B-2 if a Registration Statement on
that Form were currently being filed.

A(1) (a) Resolution of the Board of Trustees of The Penn Mutual
Life Insurance Company establishing the Penn Mutual
Variable Life Account I. Incorporated herein by
reference to Exhibit A(1)(a) to Post Effective Amendment
No. 6 to Registrant's Registration Statement on Form S-6
(File No. 33-87276), as filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

(b) Resolution of the Executive Committee of the Board of
Trustees of The Penn Mutual Life Insurance Company
relating to investments held in Penn Mutual Variable
Life Account I. Incorporated herein by reference to
Exhibit A(1)(b) to Post Effective Amendment No. 6 to
Registrant's Registration Statement on Form S-6 (File
No. 33-87276), as filed with the Securities and Exchange
Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

A(2) Not Applicable.

A(3) (a)(1) Distribution Agreement between The Penn Mutual Life
Insurance Company and Hornor, Townsend & Kent, Inc.
Incorporated herein by reference to Exhibit A(3)(a)(1)
to Post Effective Amendment No. 6 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange

II-2
<PAGE>

Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

(a)(2) Form of Sales Support Agreement between The Penn Mutual
Life Insurance Company and Hornor, Townsend & Kent, Inc.
Incorporated herein by reference to Exhibit A(3)(a)(2)
to Post Effective Amendment No. 6 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000867) on April 30,
1999.

(b)(1) Form of Agent's Agreement relating to broker-dealer
supervision. Incorporated herein by reference to Exhibit
3(c) to the Registration Statement on Form N-4 of Penn
Mutual Variable Annuity Account III (File No.
333-62811), as filed with the Securities and Exchange
Commission via EDGAR (Accession No.
0001036050-98-001504) on September 3, 1998.

(b)(2) Form of Broker-Dealer Selling Agreement (for
broker-dealers licensed to sell variable annuity
contracts and/or variable life insurance contracts under
state insurance laws). Incorporated herein by reference
to Exhibit 3(d) to the Pre-Effective Amendment to the
Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (File No. 333-62811), as
filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0001036050-98-002055) on November
30, 1998.

(b)(3) Form of Broker-Dealer Selling Agreement (for
broker-dealers with affiliated corporations licensed to
sell variable annuity contracts and/or variable life
insurance policies under state insurance laws) and
companion Form of Corporate Insurance Agent Selling
Agreement. Incorporated herein by reference to Exhibit
3(e) to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (File No. 333-62825), as
filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000834) on April 27,
1999.

(c) Schedule of Sales Commissions. Incorporated herin by
reference to Exhibit A(3)(c) to Post-Effective Amendment
No. 6 to Registrant's Registration Statement on Form S-6
(File No. 33-87276), as filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

A(4) Not Applicable.

A(5) (a)(1) Specimen Last Survivor Flexible Premium Adjustable
Variable Life Insurance Policy (Sex Distinct).
Incorporated herein by reference to Exhibit A(5)(a)(1)
to Post Effective Amendment No. 6 to Registrant's

II-3
<PAGE>

Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000867) on April 30,
1999.

(a)(2) Specimen Last Survivor Flexible Premium Adjustable
Variable Life Insurance Policy (Unisex). Incorporated
herein by reference to Exhibit A(5)(a)(2) to Post
Effective Amendment No. 6 to Registrant's Registration
Statement on Form S-6 (File No. 33-87276), as filed with
the Securities and Exchange Commission via EDGAR
(Accession No. 0000950116-99-000867) on April 30, 1999.

(a)(3) Specimen Last Survivor Flexible Premium Adjustable
Variable Life Insurance Policy (New York). Incorporated
herein by reference to Exhibit A(5)(a)(3) to Post
Effective Amendment No. 6 to Registrant's Registration
Statement on Form S-6 (File No. 33-87276), as filed with
the Securities and Exchange Commission via EDGAR
(Accession No. 0000950116-99-000867) on April 30, 1999.

(b)(1) Flexible Period Single Life Supplemental Term Insurance
Agreement (Sex Distinct). Incorporated herein by
reference to Exhibit A(5)(b)(1) to Post Effective
Amendment No. 6 to Registrant's Registration Statement
on Form S-6 (File No. 33-87276), as filed with the
Securities and Exchange Commission via EDGAR (Accession
No. 0000950116-99-000867) on April 30, 1999.

(b)(2) Flexible Period Single Life Supplemental Term Insurance
Agreement (Unisex). Incorporated herein by reference to
Exhibit A(5)(b)(2) to Post Effective Amendment No. 6 to
Registrant's Registration Statement on Form S-6 (File
No. 33-87276), as filed with the Securities and Exchange
Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

(c)(1) Policy Split Option Agreement. Incorporated herein by
reference to Exhibit A(5)(c)(1) to Post Effective
Amendment No. 6 to Registrant's Registration Statement
on Form S-6 (File No. 33-87276), as filed with the
Securities and Exchange Commission via EDGAR (Accession
No. 0000950116-99-000867) on April 30, 1999.

(c)(2) Policy Split Option Agreement (New York). Incorporated
herein by reference to Exhibit A(5)(c)(2) to Post
Effective Amendment No. 6 to Registrant's Registration
Statement on Form S-6 (File No. 33-87276), as filed with
the Securities and Exchange Commission via EDGAR
(Accession No. 0000950116-99-000867) on April 30, 1999.

(d) Estate Growth Benefit Agreement. Incorporated herein by
reference to Exhibit A(5)(d) to Post Effective Amendment
No. 6 to Registrant's Registration Statement on Form S-6
(File No. 33-87276), as filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

(e)(1) Supplemental Exchange Agreement. Incorporated herein by
reference to Exhibit A(5)(e)(1) to Post Effective
Amendment No. 6 to Registrant's Registration Statement
on Form S-6 (File No. 33-87276), as filed with the

II-4
<PAGE>

Securities and Exchange Commission via EDGAR (Accession
No. 0000950116-99-000867) on April 30, 1999.

(e)(2) Supplemental Exchange Agreement (New York).
Incorporated herein by reference to Exhibit A(5)(e)(2)
to Post Effective Amendment No. 6 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000867) on April 30,
1999.

(f)(1) Supplemental Term Insurance Agreement (Sex Distinct).
Incorporated herein by reference to Exhibit A(5)(f)(1)
to Post Effective Amendment No. 6 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000867) on April 30,
1999.

(f)(2) Supplemental Term Insurance Agreement (Unisex).
Incorporated herein by reference to Exhibit A(5)(f)(2)
to Post Effective Amendment No. 6 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000867) on April 30,
1999.

(g)(1) Guaranteed Continuation of Policy Agreement (Sex
Distinct). Incorporated herein by reference to Exhibit
A(5)(g)(1) to Post Effective Amendment No. 6 to
Registrant's Registration Statement on Form S-6 (File
No. 33-87276), as filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

(g)(2) Guaranteed Continuation of Policy Agreement (Unisex).
Incorporated herein by reference to Exhibit A(5)(g)(2)
to Post Effective Amendment No. 6 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000867) on April 30,
1999.

(h)(1) Extended Maturity Agreement (Sex Distinct). To be filed
by Amendment.

(h)(2) Extended Maturity Agreement (Unisex). To be filed by
Amendment.

II-5
<PAGE>

(i) Return of Supplement Term Insurance Agreement. To be
filed by Amendment.

(j)(1) Estate Preservation Agreement (Sex Distinct). To be
filed by Amendment.

(j)(2) Estate Preservation Agreement (Unisex). To be filed by
Amendment.

A(6) (a) Charter of The Penn Mutual Life Insurance Company.
Incorporated herein by reference to Exhibit 6(a) to the
Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (File No. 333-62811), as
filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0001036050-98-001504) on September
3, 1998.

(b) By-Laws of The Penn Mutual Life Insurance Company.
Incorporated herein by reference to Exhibit 6(b) to the
Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (File No. 333-62811), as
filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0001036050-98-001504)on September
3, 1998.

A(7) Not Applicable.

A(8) (a) Form of Sales Agreement between The Penn Mutual Life
Insurance Company and Penn Series Funds, Inc.
Incorporated herein by reference to Exhibit A(8)(a) to
Post Effective Amendment No. 6 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000867) on April 30,
1999.

(b)(1) Form of Sales Agreement between The Penn Mutual Life
Insurance Company and Neuberger & Berman Advisers
Management Trust. Incorporated herein by reference to
Exhibit 8(b)(1) to Post Effective Amendment No. 1 to
Registrant's Registration Statement on Form S-6 (File
No. 33-87276), as filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0000950109-96-002471) on April 29, 1996.

(b)(2) Assignment and Modification Agreement between Neuberger
& Berman Management Incorporated, Neuberger & Berman
Advisers Management Trust and The Penn Mutual Life
Insurance Company. Incorporated herein by reference to
Exhibit 8(b)(2) to Post Effective Amendment No. 1 to
Registrant's Registration Statement on Form S-6 (File
No. 33-87276), as filed with the Securities and Exchange
Commission via EDGAR (Accession No.
0000950109-96-002471) on April 29, 1996.

II-6
<PAGE>

(b)(3) Amendment to Agreement between The Penn Mutual Life
Insurance Company and Neuberger & Berman Advisers
Management Trust. Incorporated herein by reference to
Exhibit A(8)(b)(3) to Post Effective Amendment No. 5 to
the Registration Statement on Form S-6 for Penn Mutual
Variable Life Account I (File No. 33-54662) as filed
with the Securities and Exchange Commission via EDGAR
(Accession No. 0000950109-97-003328) on April 30, 1997.

(c) Form of Fund Participation Agreement between The Penn
Mutual Life Insurance Company, TCI Portfolios, Inc.
(renamed American Century Variable Portfolios, Inc.
effective May 1, 1997) and Investors Research Company
(renamed American Century Investment Management, Inc).
Incorporated herein by reference to Exhibit 8(a) to the
Registration Statement of Penn Mutual Variable Annuity
Account III (File No. 333-62811) on Form N-4 as filed
with the Securities and Exchange Commission via EDGAR
(Accession No. 0001036050-98-001504) on September 3,
1998.

(d) Form of Participation Agreement between The Penn Mutual
Life Insurance Company, Variable Insurance Products Fund
and Fidelity Distributors Corporation. Incorporated
herein by reference to Exhibit 8(d) to the Registration
Statement on Form N-4 of Penn Mutual Variable Annuity
Account III (File No. 333-62811), as filed with the
Securities and Exchange Commission via EDGAR (Accession
No. 0001036050-98-001504) on September 3, 1998.

(e) Form of Participation Agreement between The Penn Mutual
Life Insurance Company and Variable Insurance Products
Fund II. Incorporated herein by reference to Exhibit
8(e) to the Registration Statement on Form N-4 of Penn
Mutual Variable Annuity Account III (File No.
333-62811), as filed with the Securities and Exchange
Commission via EDGAR (Accession No.
0001036050-98-001504) on September 3, 1998.

(f) Participation Agreement between The Penn Mutual Life
Insurance Company and Morgan Stanley Universal Funds,
Inc. Incorporated herein by reference to Exhibit 8(f) to
Post Effective Amendment No. 22 to the Registration
Statement on Form N-4 of Penn Mutual Variable Annuity
Account III (File No. 2-77283), as filed with the
Securities and Exchange Commission via EDGAR (Accession
No. 0001021408-97-000161) on April 29, 1997.

A(9) Not applicable.

A(10) (a) Application form for Last Survivor Flexible Premium
Adjustable Variable Life Insurance. Incorporated herein
by reference to Exhibit A(10)(a) to Post Effective
Amendment No. 6 to Registrant's Registration Statement
on Form S-6 (File No. 33-87276), as filed with the
Securities and Exchange Commission via EDGAR (Accession
No. 0000950116-99-000867) on April 30, 1999.

(b) Supplemental application form for Last Survivor Flexible
Premium Adjustable Variable Life Insurance. Incorporated
herein by reference to

II-7
<PAGE>

Exhibit A(10)(b) to Post Effective Amendment No. 6 to
Registrant's Registration Statement on Form S-6 (File
No. 33-87276), as filed with the Securities and Exchange
Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

A(11) Memorandum describing issuance, transfer and redemption
procedures. Incorporated herein by reference to Exhibit
A(11) to Post Effective Amendment No. 6 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276),
as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950116-99-000867) on April 30,
1999.

2. Opinion and consent of C. Ronald Rubley, Esq., Associate General Counsel,
The Penn Mutual Life Insurance, dated April 11, 1995, as to the legality
of the securities being registered. Incorporated herein by reference to
Exhibit 2 to Post Effective Amendment No. 6 to Registrant's Registration
Statement on Form S-6 (File No. 33-87276), as filed with the Securities
and Exchange Commission via EDGAR (Accession No. 0000950116-99-000867) on
April 30, 1999.

3. Opinion and Consent of Edward S. Attarian, FSA, MAAA, Actuary, The Penn
Mutual Life Insurance Company, dated April 23, 1999, as to actuarial
matters pertaining to the securities being registered. Incorporated herein
by reference to Exhibit 3 to Post Effective Amendment No. 6 to
Registrant's Registration Statement on Form S-6 (File No. 33-87276), as
filed with the Securities and Exchange Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

4. (a) Consent of Ernst & Young, LLP. To be filed by Amendment.

(b) Consent of Morgan, Lewis & Bockius LLP. To be filed by Amendment.

5. (a) Powers of Attorney of Robert E. Chapell, James A. Hagen, Phillip E.
Lippincott, John F. McCaughan, Alan B. Miller, Daniel J. Toran,
Norman T. Wilde, Jr., Wesley S. Williams, Jr. and Nancy S. Brodie.
Incorporated herein by reference to Post Effective Amendment No. 2
to Registrant's Registration Statement on Form S-6 (File No.
33-87276), of Penn Mutual Variable Life Account I as filed with the
Securities and Exchange Commission via EDGAR (Accession No.
0000950109-97-003355) on April 30, 1997.

(b) Powers of Attorney of Edmond F. Notebaert and Robert H. Rock.
Incorporated herein by reference to Post Effective Amendment No. 4
to Registrant's Registration Statement on Form S-6 (File No.
33-87276), as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0001036050-98-000671) on April 23, 1998.

(c) Power of Attorney of Julia Chang Bloch. Incorporated herein by
reference to Post Effective Amendment No. 5 to Registrant's
Registration Statement on Form S-6 (File No. 33-87276), as filed
with the Securities and Exchange Commission via EDGAR (Accession No.
0000950116-99-000329) on March 1, 1999.

II-8
<PAGE>

SIGNATURES

On its behalf and on behalf of Penn Mutual Variable Life Account I,
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the The Penn Mutual Life Insurance
Company certifies that it has duly caused this Post-Effective Amendment No. 7 to
the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the Township of Horsham and the Commonwealth of Pennsylvania, on the 28th day
of February, 2000.

[SEAL] The Penn Mutual Life Insurance Company
on its behalf and on behalf of Penn
Mutual Variable Life Account I

Attest: /s/ Laura M. Ritzko By: /s/ Robert E. Chappell
--------------------- -----------------------------
Laura M. Ritzko Robert E. Chappell
Chairman of the Board of Trustees
And Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 7 to the Registration Statement has been signed
below by the following persons in the capacities indicated on the 28th day of
February, 2000.

Signature Title
- --------- -----

/s/ Robert E. Chappell Chairman of the Board of Trustees
- ------------------------------------ and Chief Executive Officer
Robert E. Chappell

/s/ Nancy S. Brodie Executive Vice President
- ------------------------------------ and Chief Financial Officer
Nancy S. Brodie

*JULIA CHANG BLOCH Trustee

*JAMES A. HAGEN Trustee

*PHILIP E. LIPPINCOTT Trustee

*JOHN F. McCAUGHAN Trustee

*ALAN B. MILLER Trustee

*EDMOND F. NOTEBAERT Trustee

II-9
<PAGE>

*ROBERT H. ROCK Trustee

*DANIEL J. TORAN Trustee

*NORMAN T. WILDE, JR. Trustee

*WESLEY S. WILLIAMS, JR. Trustee

*By /s/ Robert E. Chappell
------------------------------------
Robert E. Chappell, attorney-in-fact

II-10
<PAGE>

Exhibit Index

A(1)a Resolution of the Board of Trustees of The Penn Mutual Life
Insurance Company establishing the Penn Mutual Variable Life
Account I.(1)

A(1)b Resolution of the Executive Committee of the Board of Trustees of
The Penn Mutual Life Insurance Company relating to investments held
in Penn Mutual Variable Life Account I.(1)

A(3)(a)(1) Distribution Agreement between the Penn Mutual Life Insurance
Company and Hornor, Townsend & Kent, Inc.(1)

A(3)(a)(2) Form of Sales Support Agreement between The Penn Mutual Life
Insurance Company and Hornor, Townsend & Kent, Inc.(1)

A(3)(b)(1) Form of Agent's Agreement relating to broker-dealer supervision.(2)

A(3)(b)(2) Form of Broker-Dealer Selling Agreement (for broker-dealers licensed
to sell variable annuity contracts and/or variable life insurance
contracts under state insurance laws).(3)

A(3)(b)(3) Form of Broker-Dealer Selling Agreement (for broker-dealers with
affiliated corporations licensed to sell variable annuity contracts
and/or variable life insurance policies under state insurance
laws).(4)

A(3)(c) Schedule of Sales Commissions.(1)

A(5)(a)(1) Specimen Last Survivor Flexible Premium Adjustable Variable Life
Insurance Policy (Sex Distinct).(1)

A(5)(a)(2) Specimen Last Survivor Flexible Premium Adjustable Variable Life
Insurance Policy (Unisex).(1)

A(5)(a)(3) Specimen Last Survivor Flexible Premium Adjustable Variable Life
Insurance Policy (New York).(1)

A(5)(b)(1) Flexible Period Single Life Supplemental Term Insurance Agreement
(Sex Distinct).(1)

A(5)(b)(2) Flexible Period Single Life Supplemental Term Insurance Agreement
(Unisex).(1)

A(5)(c)(1) Policy Split Option Agreement.(1)

A(5)(c)(2) Policy Split Option Agreement (New York).(1)

A(5)(d) Estate Growth Benefit Agreement.(1)

A(5)(e)(1) Supplemental Exchange Agreement.(1)

A(5)(e)(2) Supplemental Exchange Agreement (New York).(1)

II-11
<PAGE>

A(5)(f)(1) Supplemental Term Insurance Agreement (Sex Distinct).(1)

A(5)(f)(2) Supplemental Term Insurance Agreement (Unisex).(1)

A(5)(g)(1) Guaranteed Continuation of Policy Agreement (Sex Distinct).(1)

A(5)(g)(2) Guaranteed Continuation of Policy Agreement (Unisex).(1)

A(5)(h)(1) Extended Maturity Agreement (Sex Distinct). To be filed by
Amendment.

A(5)(h)(2) Extended Maturity Agreement (Unisex). To be filed by Amendment.

A(5)(i) Return of Supplement Term Insurance Agreement. To be filed by
Amendment.

A(5)(j)(1) Estate Preservation Agreement (Sex Distinct). To be filed by
Amendment.

A(5)(j)(2) Estate Preservation Agreement (Unisex). To be filed by Amendment.

A(6)(a) Charter of the Penn Mutual Life Insurance Company.(2)

A(6)(b) By-Laws of the Penn Mutual Life Insurance Company.(2)

A(8)(a) Form of Sales Agreement between The Penn Mutual Life Insurance
Company and Penn Series Funds, Inc.(1)

A(8)(b)(1) Form of Sales Agreement between the Penn Mutual Life Insurance
Company and Neuberger & Berman Advisers Management Trust.(5)

A(8)(b)(2) Assignment and Modification Agreement between Neuberger & Berman
Management Incorporated, Neuberger & Berman Advisers Management
Trust and The Penn Mutual Life Insurance Company.(5)

A(8)(b)(3) Amendment to Agreement between The Penn Mutual Life Insurance
Company and Neuberger & Berman Advisers Management Trust.(6)

A(8)(c) Form of Fund Participation Agreement between the Penn Mutual Life
Insurance Company, TCI Portfolios, Inc. (renamed American Century
Variable Portfolios, Inc. effective May 1, 1997) and Investors
Research Company (renamed American Century Management, Inc).(2)

A(8)(d) Form of Participation Agreement between the Penn Mutual Life
Insurance Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation.(2)

A(8)(e) Form of Participation Agreement between The Penn Mutual Life
Insurance Company and Variable Insurance Products Fund II.(2)

A(8)(f) Participation Agreement between the Penn Mutual Life Insurance
Company and Morgan Stanley Universal Funds, Inc.(7)

<PAGE>

A(10)(a) Application form for Last Survivor Flexible Premium Adjustable
Variable Life Insurance.(1)

A(10)(b) Supplemental application form for Last Survivor Flexible Premium
Adjustable Variable Life Insurance.(1)

A(11) Memorandum describing issuance, transfer and redemption
procedures.(1)

2 Opinion and consent of C. Ronald Rubley, Esq., Associate General
Counsel, The Penn Mutual Life Insurance Company, dated April 11,
1995, as to the legality of the securities being registered.(1)

3 Opinion and Consent of Edward S. Attarian, FSA, MAAA, Actuary, The
Penn Mutual Life Insurance Company, dated April 23, 1999, as to
actuarial matters pertaining to the securities being registered.(1)

4(a) Consent of Ernst & Young, LLP. to be filed by Amendment.

4(b) Consent of Morgan, Lewis & Bockius LLP. To be filed by Amendment.

5(a) Powers of Attorney of Robert E. Chapell, James A. Hagen, Phillip E.
Lippincott, John F. McCaughan, Alan B. Miller, Daniel J. Toran,
Norman T. Wilde, Jr., Wesley S. Williams, Jr. and Nancy S.
Brodie.(8)

5(b) Powers of Attorney of Edmond F. Notebaert and Robert H. Rock.(9)

5(c) Power of Attorney of Julia Chang Block.(10)

- --------------------
(1) Incorporated herein by reference to Post Effective Amendment No. 6 to
Registrant's Registration Statement on Form S-6 (File No. 33-87276) as
filed with the Securities and Exchange Commission via EDGAR (Accession No.
0000950116-99-000867) on April 30, 1999.

(2) Incorporated herein by reference to the Registration Statement on Form N-4
of Penn Mutual Variable Annuity Account III (File No. 333-62811), as filed
with the Securities and Exchange Commission via EDGAR (Accession No.
0001036050-98-001504) on September 3, 1998.

(3) Incorporated herein by reference to Pre-Effective Amendment to the
Registration Statement on Form N-4 of Penn Mutual Variable Annuity Account
III (File No. 333-62811), as filed with the Securities and Exchange
Commission via EDGAR (Accession No. 0001036050-98-002055) on November 30,
1998.

(4) Incorporated herein by reference to Post Effective Amendment No. 1 to the
Registration Statement on Form N-4 of Penn Mutual Variable Annuity Account
III (File No. 333-62825), as filed with the Securities and Exchange
Commission via EDGAR (Accession No. 0000950116-99-000834) on April 27,
1999.

(5) Incorporated herein by reference to Post Effective Amendment No. 1 to
Registrant's Registration Statement on Form S-6 (File No. 33-87276), as
filed with the Securities and Exchange Commission via EDGAR (Accession No.
0000950109-96-002471) on April 29, 1996.

(6) Incorporated herein by reference to Post Effective Amendment No. 5 to the
Registration Statement on Form S-6 for Penn Mutual Variable Account I (File
No. 33-54662) as filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000950109-97-003328) on April 30, 1997.

(7) Incorporated herein by reference to Post Effective Amendment No. 22 to the
Registration Statement N-4 of Penn Mutual Variable Annuity Account III
(File No. 2-77283), as filed with the Securities and Exchange Commission
via EDGAR (Accession No. 0001021408-97-000161) on April 29, 1997.

(8) Incorporated herein by reference to Post Effective Amendment No. 2 to
Registrant's Registration Statement on Form S-6 (File No. 33-87276), as
filed with the Securities and Exchange Commission via EDGAR (Accession No.
0000950109-97-003355) on April 30, 1997.

(9) Incorporated herein by reference to Post Effective Amendment No. 4 to
Registrant's Registration Statement on Form S-6 (File No. 33-87276), as
filed with the Securities and Exchange Commission via EDGAR (Accession No.
0001036050-98-000671) on April 23, 1998.

(10) Incorporated herein by reference to Post Effective Amendment No. 5 to
Registrant's Registration Statement on Form S-6 (File No. 33-87276), as
filed with the Securities and Exchange Commission via EDGAR (Accession No.
0000950116-99-000329) on March 1, 1999.

II-12