COVA VARIABLE ANNUITY ACCOUNT ONE, 497, 1997-01-06

COVA VARIABLE ANNUITY ACCOUNT ONE
497, 1997-01-06

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COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY

Marketing and Annuity Service Office:
Executive Office: Cova Financial Services Life
One Tower Lane, Suite 3000 Insurance Company
Oakbrook Terrace, IL 60181-4644 Policy Service Office
(800) 831-LIFE P.O. Box 10366
Des Moines, IA 50306-9989
(515) 243-5834
(800) 343-8496

INDIVIDUAL SINGLE PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY
COVA VARIABLE ANNUITY ACCOUNT ONE
AND
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY

The Individual Single Purchase Payment Deferred Variable Annuity Contracts
(the "Contracts") described in this Prospectus provide for accumulation of
Contract Values and payment of monthly annuity payments on a fixed and variable
basis. The Contracts are designed for use by individuals in retirement plans on
a Qualified or Non-Qualified basis. (See "Definitions".)

At the Contract Owner's direction, the purchase payment for the Contract will be
allocated to a segregated investment account of Cova Financial Services Life
Insurance Company (the "Company") which account has been designated Cova
Variable Annuity Account One (the "Variable Account") or to the Company's
General Account. Prior to June 1, 1995, the Company was known as Xerox Financial
Services Life Insurance Company and the Variable Account was known as Xerox
Variable Annuity Account One. The Variable Account invests in shares of Cova
Series Trust (see "Cova Series Trust"), and Lord Abbett Series Fund, Inc.
(see "Lord Abbett Series Fund, Inc."). Cova Series Trust is a series fund with
eleven Portfolios ten of which are currently available in connection with the
Contracts: Money Market Portfolio, Quality Income Portfolio, High Yield
Portfolio, Stock Index Portfolio, Growth and Income Portfolio, Select Equity
Portfolio, Small Cap Stock Portfolio, International Equity Portfolio, Quality
Bond Portfolio, and Bond Debenture Portfolio. Lord Abbett Series Fund, Inc. is a
series fund with three Portfolios, one of which is currently available: Growth
and Income Portfolio. THE GLOBAL EQUITY PORTFOLIO IS NO LONGER AVAILABLE IN
CONNECTION WITH THE CONTRACTS OFFERED UNDER THIS PROSPECTUS. Subject to
regulatory approval, shares of the International Equity Portfolio of Cova Series
Trust will be substituted for shares of the Global Equity Portfolio of Lord
Abbett Series Fund, Inc. (see "The Variable Account Proposed Substitution
Transaction").

This Prospectus concisely sets forth the information a prospective investor
should know before investing. Additional information about the Contracts is
contained in the "Statement of Additional Information" which is available at no
charge. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
Table of Contents of the Statement of Additional Information can be found on
Page 33 of this Prospectus. For the Statement of Additional Information, call
(800) 831-LIFE or write the Marketing and Executive Office address listed above.

INQUIRIES:

Any inquiries regarding purchasing a Contract can be made by telephone or in
writing to Cova Life Sales Company at (800) 831-LIFE or One Tower Lane, Suite
3000, Oakbrook Terrace, Illinois 60181-4644. All other questions should be
directed to the Annuity Service Office listed above.

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

This Prospectus and the Statement of Additional Information are dated
December 2, 1996.

The Prospectus should be kept for future reference.

TABLE OF CONTENTS

PAGE

DEFINITIONS

HIGHLIGHTS

FEE TABLE

CONDENSED FINANCIAL INFORMATION

THE COMPANY

THE VARIABLE ACCOUNT
Cova Series Trust
Lord Abbett Series Fund, Inc.
Voting Rights
Substitution of Securities
Proposed Substitution Transaction

CHARGES AND DEDUCTIONS
Deduction for Withdrawal Charge (Sales Load)
Reduction or Elimination of the Withdrawal Charge
Deduction for Mortality and Expense Risk Premium
Deduction for Administrative Expense Charge
Deduction for Contract Maintenance Charge
Deduction for Premium Taxes
Deduction for Income Taxes
Deduction for Trust and Fund Expenses
Deduction for Transfer Fee

THE CONTRACTS
Ownership
Annuitant
Assignment
Beneficiary
Change of Beneficiary
Transfers of Contract Values During the Accumulation Period
Death of the Annuitant
Death of the Contract Owner

ANNUITY PROVISIONS
Annuity Date and Annuity Option
Change in Annuity Date and Annuity Option
Allocation of Annuity Payments
Transfers During the Annuity Period
Annuity Options
Frequency and Amount of Annuity Payments

PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments
Allocation of Purchase Payments
Dollar Cost Averaging
Distributor
Contract Value
Accumulation Unit

WITHDRAWALS
Texas Optional Retirement Program
Suspension of Payments or Transfers

PERFORMANCE INFORMATION
Money Market Portfolio
Other Portfolios

TAX STATUS
General
Diversification
Contracts Owner by Other Than Natural Persons
Multiple Contracts
Tax Treatment of Assignments
Income Tax Withholding
Tax Treatment of Withdrawals - Non-Qualified Contracts
Qualified Plans
Tax Treatment of Withdrawals - Qualified Contracts
Tax-Sheltered Annuities - Withdrawal Limitations

FINANCIAL STATEMENTS

LEGAL PROCEEDINGS

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

DEFINITIONS

ACCOUNT - General Account and/or one or more of the Sub-Accounts of the Variable
Account.

ACCUMULATION UNIT - An accounting unit of measure used to calculate the Contract
Value in a Sub-Account of the Variable Account prior to the Annuity Date.

ANNUITANT - The natural person on whose life Annuity Payments are based.

ANNUITY DATE - The date on which Annuity Payments begin.

ANNUITY PAYMENTS - The series of payments made to the Annuitant after the
Annuity Date under the Annuity Option elected.

ANNUITY PERIOD - The period starting on the Annuity Date.

ANNUITY UNIT - An accounting unit of measure used to calculate Annuity Payments
after the Annuity Date.

BENEFICIARY - The person(s) who will receive the death benefit.

COMPANY - Cova Financial Services Life Insurance Company at its Annuity Service
Office shown on the cover page of this Prospectus.

CONTRACT ANNIVERSARY - An anniversary of the Issue Date.

CONTRACT VALUE - The sum of the Contract Owner's interest in the General Account
and the Sub-Accounts of the Variable Account.

CONTRACT YEAR - One year from the Issue Date and from each Contract Anniversary.

DISTRIBUTOR - Cova Life Sales Company, One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644.

ELIGIBLE INVESTMENT(S) - An investment entity which can be selected by the
Contract Owner to be an underlying investment of the Contract.

FIXED ANNUITY - A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company and do not vary with the
investment experience of the Variable Account.

GENERAL ACCOUNT - The Company's general account which contains all the assets of
the Company with the exception of the Variable Account and other segregated
asset accounts.

GENERAL ACCOUNT VALUE - The Contract Owner's interest in the General Account.

ISSUE DATE - The date on which the first Contract Year begins.

NON-QUALIFIED CONTRACTS - Contracts issued under Non-Qualified Plans which do
not receive favorable tax treatment under Sections 401, 403(b) or 408 of the
Internal Revenue Code of 1986, as amended (the "Code").

PORTFOLIO - A segment of an Eligible Investment which constitutes a separate and
distinct class of shares.

QUALIFIED CONTRACTS - Contracts issued under Qualified Plans which receive
favorable tax treatment under Sections 401, 403(b) or 408 of the Code.

SUB-ACCOUNT - A segment of the Variable Account.

SUB-ACCOUNT VALUE - The Contract Owner's interest in a Sub-Account.

VALUATION DATE - The Variable Account will be valued each day that the New York
Stock Exchange is open for trading which is Monday through Friday, except for
normal business holidays.

VALUATION PERIOD - The period beginning at the close of business of the New York
Stock Exchange on each Valuation Date and ending at the close of business for
the next succeeding Valuation Date.

VARIABLE ACCOUNT - A separate investment account of the Company, designated as
Cova Variable Annuity Account One, into which purchase payments will be
allocated.

VARIABLE ACCOUNT VALUE - The sum of the Contract Owner's interest in each of the
Sub-Accounts of the Variable Account.

VARIABLE ANNUITY - A series of payments made during the Annuity Period which
vary in amount with the investment experience of each applicable Sub-Account.

WITHDRAWAL VALUE - The Withdrawal Value is:

1) the Contract Value for the Valuation Period next following the
Valuation Period during which the written request to the Company for
withdrawal is received; less

2) any applicable taxes not previously deducted; less

3) the Withdrawal Charge, if any; less

4) the Contract Maintenance Charge, if any.

HIGHLIGHTS

Within ten days of the day the Contract is received by the Contract Owner,
it may be returned by delivering or mailing it to the Company at its Annuity
Service Office or to the agent through whom it was purchased. When the
Contract is received by the Company, it will be voided as if it had never
been in force. The Company will refund the Contract Value (which may be more
or less than the purchase payment) computed at the end of the Valuation
Period during which the Contract is received by the Company. Under certain
circumstances, the Company may be required to refund the purchase payment.

A Withdrawal Charge (sales load) may be deducted in the event of a withdrawal of
all or a portion of the Contract Value. The Withdrawal Charge is imposed on
withdrawals of all or a portion of the Contract Value and is equal to 5% of the
withdrawn purchase payment. After the first Contract Anniversary, a Contract
Owner may, not more frequently than once annually on a non-cumulative basis,
make a withdrawal each Contract Year of up to ten percent (10%) of the purchase
payment free from Withdrawal Charges provided the Contract Value prior to the
withdrawal exceeds $5,000. Additionally, the Contract Owner may, within thirty
(30) days following the fifth Contract Anniversary and every fifth Contract
Anniversary thereafter, make a withdrawal of all or a portion of the Contract
Value free from the Withdrawal Charge. (See "Charges and Deductions - Deduction
for Withdrawal Charge" (Sales Load).)

There is a charge for the Mortality and Expense Risk Premium which is equal, on
an annual basis, to 1.25% of the daily net asset value of the Variable Account.
This Charge compensates the Company for assuming the mortality and expense risks
under the Contracts. (See "Charges and Deductions - Deduction for Mortality and
Expense Risk Premium".)

There is an Administrative Expense Charge which is equal, on an annual basis, to
.15% of the daily net asset value of the Variable Account. This Charge
compensates the Company for costs associated with the administration of the
Contract and the Variable Account. (See "Charges and Deductions - Deduction for
Administrative Expense Charge".)

There is an annual Contract Maintenance Charge of $30 each Contract Year. (See
"Charges and Deductions - Deduction for Contract Maintenance Charge".)

Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the Contract Values. (See "Charges and Deductions
- -Deduction for Premium Taxes".)

Under certain circumstances, a Transfer Fee may be assessed when a Contract
Owner transfers Contract Values from one Sub-Account to another Sub-Account or
to or from the General Account. (See "Charges and Deductions - Deduction for
Transfer Fee".)

There is a ten percent (10%) federal income tax penalty that may be applied to
the income portion of any distribution from the Contracts. However, the penalty
is not imposed under certain circumstances.(See "Tax Status - Tax Treatment of
Withdrawals - Qualified Contracts" and "Tax Treatment of Withdrawals
- - Non-Qualified Contracts".) For a further discussion of the taxation of the
Contracts, see "Tax Status".

Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) are limited
to circumstances only when the Contract Owner attains age 59 1/2, separates from
service, dies, becomes disabled (within the meaning of Section 72(m)(7) of the
Code), or in the case of hardship. Withdrawals for hardship are restricted to
the portion of the Contract Owner's Contract Value which represents
contributions made by the Contract Owner and does not include any investment
results. The limitations on withdrawals became effective on January 1, 1989, and
apply only to: (1) salary reduction contributions made after December 31, 1988;
(2) income attributable to such contributions; and (3) income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers or transfers between certain Qualified Plans. Tax penalties may
also apply. (See "Tax Status - Tax Treatment of Withdrawals - Qualified
Contracts".) Contract Owners should consult their own tax counsel or other tax
adviser regarding any distributions. (See "Tax Status - Tax-Sheltered
Annuities - Withdrawal Limitations".)

Because of certain exemptive and exclusionary provisions, interests in the
General Account are not registered under the Securities Act of 1933 and the
General Account is not registered as an investment company under the Investment
Company Act of 1940, as amended. Accordingly, neither the General Account nor
any interests therein are subject to the provisions of these Acts, and the
Company has been advised that the staff of the Securities and Exchange
Commission has not reviewed the disclosures in the Prospectus relating to the
General Account. Disclosures regarding the General Account may, however, be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.

COVA VARIABLE ANNUITY ACCOUNT ONE
FEE TABLE

CONTRACT OWNER TRANSACTION EXPENSES

Withdrawal Charge (see Note 2 below) 5% of purchase payment withdrawn

Transfer Fee (see Note 3 below) No charge for first 12 transfers in a
Contract Year; thereafter, the fee is
$25 per transfer or, if less, 2% of
the amount transferred.

Contract Maintenance Charge $30 per contract per year

SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)

Mortality and Expense Risk Premium 1.25%

Administrative Expense Charge .15%
______

TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 1.40%

COVA SERIES TRUST'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Other Expenses
(after expense Total
Management reimbursement - Annual
Portfolio Fees see Note 4 below) Expenses
____________________ ___________ __________________ ________

Growth and Income .60% .09% .69%
Money Market# .00% .11% .11%
Quality Income .50% .10% .60%
High Yield .75% .11% .86%
Stock Index .50% .11% .61%
Select Equity .75% .10% .85%
Small Cap Stock .85% .10% .95%
International Equity .85% .10% .95%
Quality Bond .55% .10% .65%
Bond Debenture .75% .10% .85%

<FN>
# COVA INVESTMENT ADVISORY CORPORATION ("COVA ADVISORY"), THE TRUST'S
INVESTMENT ADVISER, CURRENTLY WAIVES ITS FEES FOR THE MONEY MARKET PORTFOLIO.
ALTHOUGH NOT OBLIGATED TO, COVA ADVISORY EXPECTS TO CONTINUE TO WAIVE ITS FEES
FOR THE MONEY MARKET PORTFOLIO. IN THE FUTURE, COVA ADVISORY MAY CHARGE ITS FEES
ON A PARTIAL OR COMPLETE BASIS. ABSENT THE MANAGEMENT FEE WAIVER, THE TOTAL
MANAGEMENT FEE ON AN ANNUAL BASIS FOR THE MONEY MARKET PORTFOLIO IS .50%. THE
EXAMPLES SHOWN BELOW FOR THE MONEY MARKET PORTFOLIO ARE CALCULATED BASED UPON A
WAIVER OF THE MANAGEMENT FEE.
</TABLE>

LORD ABBETT SERIES FUND, INC.'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)

Management 12b-1 Other Total Annual
Portfolio Fees Fees Expenses Expenses
(After expense
reimbursement -
See Note 4 below
___________________ ___________ _______ _________________ ____________

Growth and Income## .50% .07% .02% .59%
Global Equity### .00% --- .11% .11%

<FN>
## THE EXPENSES FOR THE GROWTH AND INCOME PORTFOLIO OF LORD ABBETT SERIES
FUND, INC. HAVE BEEN RESTATED TO REFLECT A 12b-1 PLAN WHICH PROVIDES FOR
PAYMENTS TO LORD, ABBETT & CO. FOR REMITTANCE TO A LIFE INSURANCE COMPANY FOR
CERTAIN DISTRIBUTION EXPENSES (SEE THE FUND PROSPECTUS). THE 12b-1 PLAN PROVIDES
THAT SUCH REMITTANCES, IN THE AGGREGATE, WILL NOT EXCEED .15%, ON AN ANNUAL
BASIS, OF THE DAILY NET ASSET VALUE OF SHARES OF THE GROWTH AND INCOME
PORTFOLIO. THE 12b-1 PLAN WAS IMPLEMENTED ON OR ABOUT JUNE 28, 1996. THE 12b-1
FEES SHOWN ABOVE HAVE BEEN ESTIMATED FOR THE YEAR ENDING DECEMBER 31, 1996. THE
EXAMPLES BELOW FOR THIS PORTFOLIO REFLECT THE IMPOSITION OF THE ESTIMATED 12b-1
FEES.

### LORD, ABBETT & CO. ("LORD ABBETT"), THE FUND'S INVESTMENT MANAGER,
CURRENTLY WAIVES ITS MANAGEMENT FEE AND REIMBURSES A PORTION OF THE EXPENSES OF
THE GLOBAL EQUITY PORTFOLIO. ALTHOUGH NOT OBLIGATED TO, LORD ABBETT EXPECTS TO
CONTINUE TO WAIVE THE MANAGEMENT FEE FOR THE GLOBAL EQUITY PORTFOLIO. IN THE
FUTURE, LORD ABBETT MAY CHARGE THIS FEE ON A PARTIAL OR COMPLETE BASIS. ABSENT
THE MANAGEMENT FEE WAIVER, THE MANAGEMENT FEE ON AN ANNUAL BASIS FOR THE GLOBAL
EQUITY PORTFOLIO IS .75%. THE EXAMPLES SHOWN BELOW FOR THE GLOBAL EQUITY
PORTFOLIO ARE CALCULATED BASED UPON A WAIVER OF THE MANAGEMENT FEE AND A
REIMBURSEMENT OF EXPENSES.
</TABLE>

EXAMPLES

A Contract Owner would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets:
a) upon surrender at the end of each time period;
b) if the Contract is not surrendered or is annuitized.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TIME PERIODS
1 year 3 years 5 years 10 years
_______ _________ _________ __________

COVA SERIES TRUST
Money Market Portfolio a) $ 66.36 $ 95.62 $ 132.07 $ 188.79
b) $ 16.36 $ 50.62 $ 87.07 $ 188.79

Quality Income Portfolio a) $ 71.29 $ 110.60 $ 157.34 $ 240.77
b) $ 21.29 $ 65.60 $ 112.34 $ 240.77

High Yield Portfolio a) $ 73.90 $ 118.46 $ 170.49 $ 267.24
b) $ 23.90 $ 73.46 $ 125.49 $ 267.24

Growth and Income Portfolio a) $ 72.19 $ 113.33 $ 161.92 $ 250.02
b) $ 22.19 $ 68.33 $ 116.92 $ 250.02

Stock Index Portfolio a) $ 71.39 $ 110.91 $ 157.85 $ 241.80
b) $ 21.39 $ 65.91 $ 112.85 $ 241.80

Select Equity Portfolio a) $ 73.80 $ 118.16
b) $ 23.80 $ 73.16

Small Cap Stock Portfolio a) $ 74.80 $ 121.17
b) $ 24.80 $ 76.17

International Equity Portfolio a) $ 74.80 $ 121.17
b) $ 24.80 $ 76.17

Quality Bond Portfolio a) $ 71.79 $ 112.12
b) $ 21.79 $ 67.12

Bond Debenture Portfolio a) $ 73.80 $ 118.16
b) $ 23.80 $ 73.16

LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio a) $ 70.49 $ 108.17 $ 153.26 $ 232.47
b) $ 20.49 $ 63.17 $ 108.26 $ 232.47

Global Equity Portfolio a) $ 66.36 $ 95.62 $ 132.07 $ 188.79
b) $ 16.36 $ 50.62 $ 87.07 $ 188.79
</TABLE>

EXPLANATION OF FEE TABLE AND EXAMPLES

1. The purpose of the above Table is to assist the Contract Owner in
understanding the various costs and expenses that a Contract Owner will incur,
directly or indirectly. The Table reflects expenses of the Variable Account as
well as of the Eligible Investments. For additional information, see "Charges
and Deductions" in this Prospectus and the Prospectuses for Cova Series Trust
and Lord Abbett Series Fund, Inc.

2. After the first Contract Anniversary, a Contract Owner may, not more
frequently than once annually on a non-cumulative basis, make a withdrawal each
Contract Year of up to ten percent (10%) of the purchase payment free from
Withdrawal Charges provided the Contract Value prior to the withdrawal exceeds
$5,000. The 10% free withdrawal has been factored into the Examples above. In
addition, the Contract Owner may, within thirty (30) days following the fifth
Contract Anniversary and every fifth Contract Anniversary thereafter, make a
withdrawal of all or a portion of the Contract Value free from the Withdrawal
Charge. (See "Charges and Deductions - Deduction for Withdrawal Charge (Sales
Load).")

3. No Transfer Fee will be assessed for a transfer made in connection with
the Dollar Cost Averaging program providing for the automatic transfer of funds
from the Money Market Sub-Account or the General Account to any other
Sub-Account(s). (See "Charges and Deductions - Deduction for Transfer Fee"
and "Purchase Payments and Contract Value - Dollar Cost Averaging".)

4. Since August 20, 1990, the Company has been reimbursing Cova Series
Trust for all operating expenses (exclusive of the management fees) in excess of
approximately .10%. For the year ended December 31, 1995, Lord Abbett reimbursed
a portion of the expenses for the Global Equity Portfolio. The actual expense
percentages for all operating expenses (exclusive of the management fees) for
the Trust and the Fund for the year ended December 31, 1995 were: (i) .25% for
the Quality Income Portfolio, .34% for the High Yield Portfolio, .28% for the
Stock Index Portfolio, .14% for the Money Market Portfolio, .59% for the Cova
Series Trust Growth and Income Portfolio and .83% for the Global Equity
Portfolio.

Absent the expense reimbursement and management fee waiver, the percentages
shown for Total Annual Expenses for the Trust and the Fund (on an annualized
basis) for the year or period ended December 31, 1995 would have been .75% for
the Quality Income Portfolio, 1.09% for the High Yield Portfolio, .64% for the
Money Market Portfolio, .78% for the Stock Index Portfolio, 1.58% for the
Global Equity Portfolio and 1.19% for the Trust's Growth and Income Portfolio.

The Select Equity, Small Cap Stock, International Equity, Quality Bond and
Bond Debenture Portfolios commenced operations on April 1, 1996. Absent
the expense reimbursement, the expenses (exclusive of management fees) for
the period from April 1, 1996 to December 31, 1996 are estimated to:
.64% for the Select Equity Portfolio; .69% for the Small Cap Stock Portfolio;
.66% for the International Equity Portfolio; .55% for the Quality Bond
Portfolio; and .53% for the Bond Debenture Portfolio.

5. Premium taxes are not reflected. Premium taxes may apply. See
"Charges and Deductions - Deduction for Premium Taxes".

6. The assumed single purchase payment is $30,000.

7. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

CONDENSED FINANCIAL INFORMATION

Accumulation Unit Values

The following schedule includes Accumulation Unit Values for the periods
indicated. This data has been extracted from the Variable Account's Financial
Statements. Except for the Financial Statements for the period ended September
30, 1996, the Variable Account's Financial Statements have been audited by
KPMG Peat Marwick LLP, independent certified public accountants, whose report
thereon is included in the Statement of Additional Information. This information
should be read in conjunction with the Variable Account's Financial Statements
and related notes thereto which are included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
For the Year or Year or Year or Year or Year or Year or
Period Period Period Period Period Period Period
Ended Ended Ended Ended Ended Ended Ended
9/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90
_______ _________ _________ __________ __________ ________ ________

COVA SERIES TRUST
Quality Income Sub-Account
Beginning of Period $ 15.33 $ 13.17 $ 13.97 $ 12.75 $ 12.02 $ 10.62 $ 9.97
End of Period $ 15.13 $ 15.33 $ 13.17 $ 13.97 $ 12.75 $ 12.02 $ 10.62
Number of Accum.
Units Outstanding 3,485,260 2,690,633 2,576,412 3,659,656 1,891,499 563,960 564,940

High Yield Sub-Account
Beginning of Period $ 19.52 $ 16.98 $ 18.02 $ 14.99 $ 12.75 $ 10.06 $ 10.02
End of Period $ 20.73 $ 19.52 $ 16.98 $ 18.02 $ 14.99 $ 12.75 $ 10.06
Number of Accum.
Units Outstanding 2,015,197 1,870,232 1,157,642 1,045,815 361,296 298,202 280,854

Money Market Sub-Account
Beginning of Period $ 11.43 $ 10.90 $ 10.61 $ 10.46 $ 10.21 $ 10.00 *
End of Period $ 11.76 $ 11.43 $ 10.90 $ 10.61 $ 10.46 $ 10.21
Number of Accum.
Units Outstanding 2,802,025 2,987,132 6,963,421 617,575 385,448 527,571

Growth and Income Sub-Account
Beginning of Period (5/1/92 - $ 14.61 $ 11.20 $ 11.92 $ 10.47 $ 10.00 * *
commencement of operations)
End of Period $ 15.81 $ 14.61 $ 11.20 $ 11.92 $ 10.47
Number of Accum.
Units Outstanding 1,799,637 1,342,833 977,209 547,643 250,919

Stock Index Sub-Account
Beginning of Period $ 15.77 $ 11.68 $ 11.87 $ 11.05 $ 10.55 $ 10.00 *
End of Period $ 17.67 $ 15.77 $ 11.68 $ 11.87 $ 11.05 $ 10.55
Number of Accum.
Units Outstanding 4,732,539 5,436,980 3,151,443 7,691,151 3,164,251 639,923

Select Equity Sub-Account
Beginning of Period (4/1/96) $ 10.00 ** ** ** ** ** **
End of Period $ 10.10 ** ** ** ** ** **
Number of Accum.
Units Outstanding 1,199,716 ** ** ** ** ** **

Small Cap Stock Sub-Account
Beginning of Period (4/1/96) $ 10.00 ** ** ** ** ** **
End of Period $ 10.60 ** ** ** ** ** **
Number of Accum.
Units Outstanding 759,505 ** ** ** ** ** **

International Equity Sub-Account
Beginning of Period (4/1/96) $ 10.00 ** ** ** ** ** **
End of Period $ 10.36 ** ** ** ** ** **
Number of Accum.
Units Outstanding 838,318 ** ** ** ** ** **

Quality Bond Sub-Account
Beginning of Period (4/1/96) $ 10.00 ** ** ** ** ** **
End of Period $ 10.11 ** ** ** ** ** **
Number of Accum.
Units Outstanding 600,904 ** ** ** ** ** **

Bond Debenture Sub-Account
Beginning of Period (4/1/96) $ 10.00 ** ** ** ** ** **
End of Period $ 10.84 ** ** ** ** ** **
Number of Accum.
Units Outstanding 459,511 ** ** ** ** ** **

LORD ABBETT
SERIES FUND, Inc.
Growth and Income Sub-Account
Beginning of Period $ 21.31 $ 16.64 $ 16.42 $ 14.50 $ 12.73 $ 10.15 $ 10.06
End of Period $ 23.42 $ 21.31 $ 16.64 $ 16.42 $ 14.50 $ 12.73 $ 10.15
Number of Accum.
Units Outstanding 11,249,326 8,947,108 6,875,139 4,994,582 2,560,999 1,426,577 1,041,342

Global Equity Sub-Account
Beginning of Period $ 14.52 $ 13.33 $ 13.29 $ 10.64 $ 10.97 $ 9.79 $ 10.00
End of Period $ 15.37 $ 14.52 $ 13.33 $ 13.29 $ 10.64 $ 10.97 9.79
Number of Accum.
Units Outstanding 167,133 172,206 233,186 273,399 305,314 391,234 262,309

<S> <C>
For the period from
December 11, 1989
(Commencement of
Operations)through
December 31, 1989
____________________

COVA SERIES TRUST
Quality Income Sub-Account
Beginning of Period $ 10.00
End of Period $ 9.97
Number of Accum.
Units Outstanding 253,695

High Yield Sub-Account
Beginning of Period $ 10.00
End of Period $ 10.02
Number of Accum.
Units Outstanding 250,000

Money Market Sub-Account
Beginning of Period *
End of Period
Number of Accum.
Units Outstanding

Growth and Income Sub-Account
Beginning of Period (5/1/92 -
commencement of operations) *
End of Period
Number of Accum.
Units Outstanding

Stock Index Sub-Account
Beginning of Period *
End of Period
Number of Accum.
Units Outstanding

Select Equity Sub-Account
Beginning of Period (4/1/96) **
End of Period **
Number of Accum.
Units Outstanding **

Small Cap Stock Sub-Account
Beginning of Period (4/1/96) **
End of Period **
Number of Accum.
Units Outstanding **

International Equity Sub-Account
Beginning of Period (4/1/96) **
End of Period **
Number of Accum.
Units Outstanding **

Quality Bond Sub-Account
Beginning of Period (4/1/96) **
End of Period **
Number of Accum.
Units Outstanding **

Bond Debenture Sub-Account
Beginning of Period (4/1/96) **
End of Period **
Number of Accum.
Units Outstanding **

LORD ABBETT
SERIES FUND, Inc.
Growth and Income Sub-Account
Beginning of Period $ 10.00
End of Period 10.06
Number of Accum.
Units Outstanding 14,482

Global Equity Sub-Account
Beginning of Period *
End of Period
Number of Accum.
Units Outstanding

<FN>
* The Global Equity Portfolio commenced regular investment operations on
April 9, 1990. The Cova Series Money Market Portfolio commenced regular
investment operations on July 1, 1991. The Stock Index Portfolio commenced
regular investment operations on November 1, 1991, and the Cova Series Trust
Growth and Income Portfolio commenced regular investment operations on May 1,
1992.

** The Select Equity, Small Cap Stock, International Equity, Quality Bond
and Bond Debenture Sub-Accounts commenced regular investment operations on
April 1, 1996.
</TABLE>

THE COMPANY

Cova Financial Services Life Insurance Company (the "Company") was originally
incorporated on August 17, 1981 as Assurance Life Company, a Missouri
Corporation and changed its name to Xerox Financial Services Life Insurance
Company in 1985.On June 1, 1995 a wholly-owned subsidiary of General American
Life Insurance Company ("General American") purchased the Company from Xerox
Financial Services, Inc. ("XFS"). The acquisition of the Company included
related companies ("Acquisition"). On June 1, 1995, the Company changed its name
to Cova Financial Services Life Insurance Company. The Company presently is
licensed to do business in the District of Columbia and all states except
California, Maine, New Hampshire, New York and Vermont.

General American is a St. Louis-based mutual company with more than $250 billion
of life insurance in force and approximately $15 billion in assets. It provides
life and health insurance, retirement plans, and related financial services to
individuals and groups.

In conjunction with the Acquisition, the Company entered into a financing
reinsurance transaction that caused OakRe Life Insurance Company ("OakRe"), a
Missouri licensed insurer and a wholly-owned XFS subsidiary, to assume the
benefits and risks of existing single premium deferred annuity deposits (SPDAs)
which aggregated to $3,059 million at December 31, 1994. In exchange, the
Company transferred specifically identified assets to OakRe which had a carrying
value of $3,150.4 million at December 31, 1994. Ownership of OakRe was retained
by XFS subsequent to the Acquisition. The receivable from OakRe to the Company
that was created by this transaction will be liquidated over the remaining
crediting rate guaranty periods (which will be substantially all expired in five
years) by the transfer of cash in the amount of the then current account value,
less a recapture fee to OakRe on policies retained beyond their 30-day no-fee
surrender window by the Company, upon the next crediting reset date of each
annuity policy. The Company may then retain and assume the benefits and risks of
those deposits thereafter.

All of the Company's deposit obligations are fully guaranteed by General
American and the receivable from OakRe equal to the SPDA obligations is
guaranteed by OakRe's parent, XFS. In the event that both OakRe and XFS default
on the receivable, the Company may draw funds from a standby bank irrevocable
letter of credit established by XFS in the amount of $500 million.

In substance, the structure of the Acquisition allowed the seller, XFS, to
retain substantially all of the existing financial benefits and risks of the
existing business, while General American obtained the corporate licenses,
marketing and administrative capabilities of the Company, and access to the
retention of the policyholder deposit base that persists beyond the next
crediting rate reset date.

THE VARIABLE ACCOUNT

The Board of Directors of the Company adopted a resolution to establish a
segregated asset account pursuant to Missouri insurance law on February 24,
1987. This segregated asset account has been designated Cova Variable Annuity
Account One (the "Variable Account"). The Company has caused the Variable
Account to be registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940.

The assets of the Variable Account are the property of the Company. However, the
assets of the Variable Account, equal to the reserves and other contract
liabilities with respect to the Variable Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. Income,
gains and losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard to
other income, gains or losses of the Company. The Company's obligations arising
under the Contracts are general obligations.

The Variable Account meets the definition of a "separate account" under the
federal securities laws.

The Variable Account is divided into Sub-Accounts, with the assets of each
Sub-Account invested in one Portfolio of Cova Series Trust or Lord Abbett Series
Fund, Inc. There is no assurance that the investment objective of any of the
Portfolios will be met. Contract Owners bear the complete investment risk for
purchase payments allocated to a Sub-Account. Contract Values will fluctuate
in accordance with the investment performance of the Sub-Account(s) to which
purchase payments are allocated, and in accordance with the imposition of the
fees and charges assessed under the Contracts.

COVA SERIES TRUST

Cova Series Trust ("Trust") has been established to act as one of the funding
vehicles for the Contracts offered. Prior to May 1, 1996, the Trust was known as
Van Kampen Merritt Series Trust. The Trust is managed by Cova Investment
Advisory Corporation ("Investment Adviser"), which is an affiliate of the
Company. The Investment Adviser has retained Sub-Advisers to make investment
decisions and to place orders for the Portfolios. Prior to May 1, 1996, Van
Kampen American Capital Investment Advisory Corp. served as the investment
adviser to the Trust. The Trust is an open-end management investment company.
See the Trust prospectus for a discussion of the investment objectives and the
potential risks involved in investing in the Trust portfolios. Additional
Prospectuses and the Statement of Additional Information can be obtained by
calling or writing the Company's Marketing and Executive Office. Purchasers
should read the Trust prospectus carefully before investing.

The following is a list of the available Portfolios and the Sub-Adviser for each
Portfolio:

Van Kampen American Capital Investment Advisory Corp. is the Sub-Adviser for
the following Portfolios:

Growth and Income
Money Market
Quality Income
High Yield
Stock Index

J.P. Morgan Investment Management Inc. is the Sub-Adviser for the following
Portfolios:

Select Equity
Small Cap Stock
International Equity
Quality Bond

Lord, Abbett & Co. is the Sub-Adviser for the following Portfolio:

Bond Debenture

LORD ABBETT SERIES FUND, INC.

Lord Abbett Series Fund, Inc. ("Fund") has been established to act as one of
the funding vehicles for the Contracts offered. The Fund is managed by Lord,
Abbett & Co. ("Investment Manager"). The Fund is a diversified open-end
management investment company. See the Fund prospectus for a discussion of the
investment objectives and the potential risks involved in investing in the
Fund portfolios. Additional Prospectuses and the Statement of Additional
Information can be obtained by calling or writing the Company's Marketing and
Executive Office. Purchasers should read the Fund prospectus carefully before
investing.

The following Portfolios are available:

Growth and Income
Global Equity (not available for new purchases)

Additional Portfolios and/or Eligible Investments may be made available to
Contract Owners.

VOTING RIGHTS

In accordance with its view of present applicable law, the Company will vote the
shares of the Trust and the Fund held in the Variable Account at special
meetings of the shareholders in accordance with instructions received from
persons having the voting interest in the Variable Account. The Company will
vote shares for which it has not received instructions, as well as shares
attributable to it, in the same proportion as it votes shares for which it has
received instructions. Neither the Trust nor the Fund holds regular meetings of
shareholders.

The number of shares which a person has a right to vote will be determined as of
a date to be chosen by the Company not more than sixty (60) days prior to a
shareholder meeting of the Trust and not more than ninety (90) days prior to a
shareholder meeting of the Fund. Voting instructions will be solicited by
written communication at least ten (10) days prior to the meeting.

SUBSTITUTION OF SECURITIES

If the shares of the Trust or Fund (or any Portfolio within the Trust or Fund or
any other Eligible Investment), are no longer available for investment by the
Variable Account or, if in the judgment of the Company, further investment in
the shares should become inappropriate in view of the purpose of the Contracts,
the Company may substitute shares of another Eligible Investment (or
Portfolio) for shares already purchased or to be purchased in the future
by purchase payments under the Contracts. No substitution of securities
may take place without prior approval of the Securities and Exchange
Commission and under the requirements it may impose.

PROPOSED SUBSTITUTION TRANSACTION

Subject to its authority described above, the Company has filed an application
with the Securities and Exchange Commission requesting an order approving the
substitution of shares of the International Equity Portfolio of Cova Series
Trust for shares of the Global Equity Portfolio of Lord Abbett Series Fund, Inc.
(the "Substitution"). Within five days after the Substitution, the Company will
send to Contract Owners a written notice ("Notice") informing them that the
Substitution was carried out. The Notice will also provide that Contract Owners
have the right to make transfers from the International Equity Sub-Account to
any other Sub-Account for a period of 30 days from the date of the Notice
without the transfers counting toward the limit on the annual number of free
transfers. The Company will effect the Substitution by simultaneously placing
orders to redeem all shares of the Global Equity Portfolio and to purchase
shares of the International Equity Portfolio equal in value to the shares
redeemed. The net asset values of all affected shares will be determined as of
the close of the business day immediately before the date of these orders. The
Company will bear the expenses of the Substitution. The Company believes, based
on its review of existing federal income tax laws and regulations, that the
Substitution will not have any tax consequences to Contract Owners. Fur further
information regarding the Substitution, please contact the Company at (800)
343-8496.

CHARGES AND DEDUCTIONS

Various charges and deductions are made from Contract Values and the Variable
Account. These charges and deductions are:

DEDUCTION FOR WITHDRAWAL CHARGE (SALES LOAD)

If all or a portion of the Contract Value (see "Withdrawals") is withdrawn,
a Withdrawal Charge (sales load) will be calculated at the time of each
withdrawal and will be deducted from the Contract Value. This Charge
reimburses the Company for expenses incurred in connection with the promotion,
sale and distribution of the Contracts. The Withdrawal Charge is 5% of the
purchase payment withdrawn.

After the first Contract Anniversary, a Contract Owner may, not more frequently
than once annually on a non-cumulative basis, make a withdrawal each Contract
Year of up to ten percent (10%) of the purchase payment free from the Withdrawal
Charge provided the Contract Value prior to the withdrawal exceeds $5,000.

Additionally, the Contract Owner may, within thirty (30) days following the
fifth Contract Anniversary and every fifth Contract Anniversary thereafter, make
a withdrawal of all or a portion of the Contract Value free from the Withdrawal
Charge.

For a partial withdrawal, the Withdrawal Charge will be deducted from the
remaining Withdrawal Value, if sufficient; otherwise it will be deducted from
the amount withdrawn. The amount deducted from the Contract Value will be
determined by subtracting values from the General Account and/or cancelling
Accumulation Units from each applicable Sub-Account in the ratio that the value
of each Account bears to the total Contract Value. The Contract Owner must
specify in writing in advance which Accumulation Units are to be cancelled from
each Sub-Account and/or whether values are to be deducted from the General
Account if other than the above method of cancellation is desired.

Commissions will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions up to an amount equal to 5.5% of
purchase payments. During the initial period in which the Contracts are offered,
the Company may pay an additional .5% commission. In addition, under certain
circumstances, the Company may pay certain broker-dealers a persistency bonus
which will take into account, among other factors, the length of time purchase
payments have been held under the Contract and Contract Values. To the extent
that the Withdrawal Charge is insufficient to cover the actual cost of
distribution, the Company may use any of its corporate assets, including
potential profit which may arise from the Mortality and Expense Risk Premium
(see below), to provide for any difference.

REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE

The amount of the Withdrawal Charge on the Contracts may be reduced or
eliminated when sales of the Contracts are made to individuals or to a group of
individuals in a manner that results in savings of sales expenses. The
entitlement to a reduction of the Withdrawal Charge will be determined by the
Company after examination of all the relevant factors such as:

(1) The size and type of group to which sales are to be made will be
considered. Generally, the sales expenses for a larger group are less than for a
smaller group because of the ability to implement large numbers of Contracts
with fewer sales contacts.

(2) The total amount of purchase payments to be received will be
considered. Per Contract sales expenses are likely to be less on larger purchase
payments than on smaller ones.

(3) Any prior or existing relationship with the Company will be considered.
Per Contract sales expenses are likely to be less when there is a prior existing
relationship because of the likelihood of implementing the Contract with fewer
sales contacts.

(4) There may be other circumstances, of which the Company is not presently
aware, which could result in reduced sales expenses.

If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction or elimination of the Withdrawal Charge.

The Withdrawal Charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Company or any of its affiliates. In no
event will reductions or elimination of the Withdrawal Charge be permitted where
reductions or elimination will be unfairly discriminatory to any person.

DEDUCTION FOR MORTALITY AND EXPENSE RISK PREMIUM

The Company deducts on each Valuation Date, both prior to the Annuity Date and
during the Annuity Period, a Mortality and Expense Risk Premium which is equal,
on an annual basis, to 1.25% of the daily net asset value of the Variable
Account. The mortality risks assumed by the Company arise from its contractual
obligation to make annuity payments after the Annuity Date for the life of the
Annuitant and to waive the Withdrawal Charge in the event of the death of the
Contract Owner. The expense risk assumed by the Company is that all actual
expenses involved in administering the Contracts, including Contract maintenance
costs, administrative costs, mailing costs, data processing costs, legal fees,
accounting fees, filing fees and the costs of other services may exceed the
amount recovered from the Contract Maintenance Charge and the Administrative
Expense Charge.

If the Mortality and Expense Risk Premium is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount deducted
proves more than sufficient, the excess will be a profit to the Company. The
Company expects a profit from this charge.

The Mortality and Expense Risk Premium is guaranteed by the Company and cannot
be increased.

DEDUCTION FOR ADMINISTRATIVE EXPENSE CHARGE

The Company deducts on each Valuation Date, both prior to the Annuity Date and
during the Annuity Period, an Administrative Expense Charge which is equal, on
an annual basis, to .15% of the daily net asset value of the Variable Account.
This charge, together with the Contract Maintenance Charge (see below), is to
reimburse the Company for the expenses it incurs in the establishment and
maintenance of the Contracts and the Variable Account. These expenses include
but are not limited to: preparation of the Contracts, confirmations, annual
reports and statements, maintenance of Contract Owner records, maintenance of
Variable Account records, administrative personnel costs, mailing costs, data
processing costs, legal fees, accounting fees, filing fees, the costs of other
services necessary for Contract Owner servicing and all accounting, valuation,
regulatory and reporting requirements. Since this charge is an asset-based
charge, the amount of the charge attributable to a particular Contract may have
no relationship to the administrative costs actually incurred by that Contract.
The Company does not intend to profit from this charge. This charge will be
reduced to the extent that the amount of this charge is in excess of that
necessary to reimburse the Company for its administrative expenses. Should this
charge prove to be insufficient, the Company will not increase this charge and
will incur the loss.

DEDUCTION FOR CONTRACT MAINTENANCE CHARGE

The Company deducts an annual Contract Maintenance Charge of $30 from the
Contract Value on each Contract Anniversary. (In South Carolina the Contract
Maintenance Charge is the lesser of $30 each Contract Year or 2% of the Contract
Value on the Contract Anniversary.) This charge is to reimburse the Company for
its administrative expenses. This charge is deducted by subtracting values from
the General Account and/or cancelling Accumulation Units from each applicable
Sub-Account in the ratio that the value of each Account bears to the total
Contract Value. When the Contract is withdrawn for its full Withdrawal Value, on
other than the Contract Anniversary, the Contract Maintenance Charge will be
deducted at the time of withdrawal. If the Annuity Date is not a Contract
Anniversary, a prorata portion of the annual Contract Maintenance Charge will be
deducted. After the Annuity Date, the Contract Maintenance Charge will be
collected on a monthly basis and will result in a reduction of each Annuity
Payment. The Company has set this charge at a level so that, when considered in
conjunction with the Administrative Expense Charge (see "Deduction for
Administrative Expense Charge"), it will not make a profit from the
charges assessed for administration.

DEDUCTION FOR PREMIUM TAXES

Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the Contract Values. Some states assess premium taxes at
the time purchase payments are made; others assess premium taxes at the time
annuity payments begin. The Company currently intends to advance any premium
taxes due at the time purchase payments are made and then deduct premium taxes
from a Contract Owner's Contract Value at the time annuity payments begin or
upon withdrawal if the Company is unable to obtain a refund. The Company,
however, reserves the right to deduct premium taxes when incurred. Premium taxes
generally range from 0% to 4%.

DEDUCTION FOR INCOME TAXES

While the Company is not currently maintaining a provision for federal income
taxes with respect to the Variable Account, the Company has reserved the right
to establish a provision for income taxes if it determines, in its sole
discretion, that it will incur a tax as a result of the operation of the
Variable Account. The Company will deduct for any income taxes incurred by it as
a result of the operation of the Variable Account whether or not there was a
provision for taxes and whether or not it was sufficient.

DEDUCTION FOR TRUST AND FUND EXPENSES

There are other deductions from and expenses paid out of the assets of the Trust
and Fund which are described in the accompanying Trust and Fund prospectuses.

DEDUCTION FOR TRANSFER FEE

Prior to the Annuity Date, a Contract Owner may transfer all or a part of an
Account without the imposition of any fee or charge if there have been no more
than 12 transfers made in the Contract Year. If more than 12 transfers have been
made in the Contract Year, the Company will deduct a transfer fee of $25 per
transfer or, if less, 2% of the amount transferred. If the Contract Owner is
participating in the Dollar Cost Averaging program providing for the automatic
transfer of funds from the Money Market Sub-Account or the General Account to
any other Sub-Account(s), such transfers are not taken into account in
determining any transfer fee. (See "Purchase Payments and Contract Value -Dollar
Cost Averaging".)

THE CONTRACTS
OWNERSHIP

The Contract Owner has all rights and may receive all benefits under the
Contract. Prior to the Annuity Date, the Contract Owner is the person designated
in the Application, unless changed. On and after the Annuity Date, the Annuitant
is the Contract Owner. On and after the death of the Annuitant, the Beneficiary
is the Contract Owner.

The Contract Owner may change the Contract Owner at any time. A change of
Contract Owner will automatically revoke any prior designation of Contract
Owner. A request for change must be: (1) made in writing; and (2) received at
the Company. The change will become effective as of the date the written request
is signed. A new designation of Contract Owner will not apply to any payment
made or action taken by the Company prior to the time it was received.

ANNUITANT

The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated in the Application, unless changed.

ASSIGNMENT

The Contract Owner may, at any time during his or her lifetime, assign his or
her rights under the Contract. The Company will not be bound by any assignment
until written notice is received by the Company. The Company is not responsible
for the validity of any assignment. The Company will not be liable as to any
payment or other settlement made by the Company before receipt of the
assignment.

If the Contract is issued pursuant to a retirement plan which receives favorable
tax treatment under the provisions of Sections 401, 403(b) or 408 of the
Code, it may not be assigned, pledged or otherwise transferred except as may be
allowed under applicable law.

BENEFICIARY

The Beneficiary is named in the Application, unless changed, and is entitled to
receive the benefits to be paid at the death of the Contract Owner.

Unless the Contract Owner provides otherwise, the Death Benefit will be paid in
equal shares or all to the survivor as follows:

(1) to the primary Beneficiaries who survive the Contract Owner's death;
or if there are none,

(2) to the contingent Beneficiaries who survive the Contract Owner's
death; or if there are none,

(3) to the estate of the Contract Owner.

CHANGE OF BENEFICIARY

Subject to the rights of any irrevocable Beneficiary, the Contract Owner may
change the Beneficiary or contingent Beneficiary. A change may be made by filing
a written request with the Company. The change will take effect as of the date
the notice is signed. The Company will not be liable for any payment made or
action taken before it records the change.

TRANSFERS OF CONTRACT VALUES DURING THE ACCUMULATION PERIOD

Prior to the Annuity Date, the Contract Owner may transfer all or part of an
Account without the imposition of any fee or charge if there have been no more
than 12 transfers made in the Contract Year. If more than 12 transfers have been
made in the Contract Year, the Company will deduct a transfer fee. If the
Contract Owner is participating in the Dollar Cost Averaging program providing
for the automatic transfer of funds from the Money Market Sub-Account or the
General Account to the Variable Account, such transfers are not taken into
account in determining any transfer fee. (See "Charges and Deductions -Deduction
for Transfer Fee" and "Purchase Payments and Contract Value - Dollar Cost
Averaging".) After the Annuity Date, the Contract Owner may make a transfer
once in each Contract Year. All transfers are subject to the following:

(1) the deduction of any transfer fee that may be imposed (no charge for
first 12 transfers in a Contract Year; thereafter, the fee is $25 per transfer
or, if less, 2% of the amount transferred). The transfer fee will be deducted
from the Account from which the transfer is made. However, if the entire
interest in the Account is being transferred, the transfer fee will be deducted
from the amount which is transferred.

(2) The minimum amount which may be transferred is the lesser of (i) $1000;
or (ii) the Contract Owner's entire interest in the Account.

(3) Transfers will be effected during the Valuation Period next following
receipt by the Company of a written transfer request (or by telephone, if
authorized) containing all required information. However, no transfer may be
made effective within seven (7) calendar days of the Annuity Date.

(4) Any transfer direction must clearly specify the amount which is to be
transferred and the Accounts which are to be affected.

(5) The Company reserves the right at any time and without prior notice to
any party including, but not limited to, the circumstances described in the
Suspension of Payments or Transfers provision, to terminate, suspend or modify
the transfer privileges described above.

A Contract Owner may elect to make transfers by telephone. If there are joint
owners, unless the Company is informed to the contrary, instructions will be
accepted from either one of the joint owners. The Company will use reasonable
procedures to confirm that instructions communicated by telephone are genuine.
If it does not, the Company may be liable for any losses due to unauthorized or
fraudulent instructions. The Company tape records all telephone instructions.

DEATH OF THE ANNUITANT

Upon death of the Annuitant prior to the Annuity Date, the Contract Owner must
designate a new Annuitant. If no designation is made within 30 days of the death
of the Annuitant, the Contract Owner will become the Annuitant. However, if the
Contract Owner is a non-natural person, then the death or change of the
Annuitant will be treated as the death of the Contract Owner. (See "Death of the
Contract Owner".)

Upon death of the Annuitant after the Annuity Date, the Death Benefit, if any,
will be as specified in the Annuity Option elected.

DEATH OF THE CONTRACT OWNER

Upon death of the Contract Owner prior to the Annuity Date, the Death Benefit
will be paid to the Beneficiary designated by the Contract Owner. The Death
Benefit will be the greater of:

(1) the purchase payment less any withdrawals and any applicable
Withdrawal Charge; or

(2) the Contract Value; or

(3) the Contract Value on the fifth Contract Anniversary or, if later,
every fifth Contract Anniversary thereafter less any withdrawals and any
applicable Withdrawal Charge made since the last fifth Contract Anniversary.

The Death Benefit will be determined and paid as of the Valuation Period next
following the date of receipt by the Company of both due proof of death and an
election for a single sum payment or election under an Annuity Option as of the
date of death.

If a single sum payment is requested, the proceeds will be paid within seven (7)
days of receipt of proof of death and the election. Payment under an Annuity
Option may be elected during the sixty-day period beginning with the date of
receipt of proof of death or a single sum payment will be made to the
Beneficiary at the end of the sixty-day period.

The entire Death Benefit must be paid within five (5) years of the date of death
unless:

(1) the Beneficiary is the spouse of the Contract Owner, in which event the
Beneficiary will become the Contract Owner and may elect that the Contract
remain in effect; or

(2) the Beneficiary is not the spouse of the Contract Owner, in which event
the Death Benefit is payable under an Annuity Option over the lifetime of the
Beneficiary beginning within one year of the date of death.

The Contract can be held by joint owners. Any joint owner must be the spouse of
the other owner. Upon the death of either joint owner, the surviving spouse will
be the designated Beneficiary. Any other Beneficiary designated in the
Application or as subsequently changed will be treated as a contingent
Beneficiary unless otherwise indicated.

ANNUITY PROVISIONS

ANNUITY DATE AND ANNUITY OPTION

The Contract Owner selects an Annuity Date and Annuity Option at the time of the
Application. The Annuity Date must always be the first day of a calendar month
and must be at least one month after the Issue Date. The Annuity Date may not be
later than the first day of the first calendar month following the Annuitant's
85th birthday. If no Annuity Option is elected, Option 2 with 10 years
guaranteed will automatically be applied.

CHANGE IN ANNUITY DATE AND ANNUITY OPTION

Prior to the Annuity Date, the Contract Owner may, upon at least thirty (30)
days prior written notice to the Company, change the Annuity Date. The Annuity
Date must always be the first day of a calendar month. The Annuity Date may not
be later than the first day of the first calendar month following the
Annuitant's 85th birthday.

The Contract Owner may, upon at least thirty (30) days prior written notice to
the Company, at any time prior to the Annuity Date, change the Annuity Option.

ALLOCATION OF ANNUITY PAYMENTS

If all of the Contract Value on the seventh calendar day before the Annuity Date
is allocated to the General Account, the annuity will be paid as a Fixed
Annuity. If all of the Contract Value on that date is allocated to the Variable
Account, the annuity will be paid as a Variable Annuity. If the Contract Value
on that date is allocated to both the General Account and the Variable Account,
the Annuity will be paid as a combination of a Fixed Annuity and a Variable
Annuity to reflect the allocation between the Accounts.

TRANSFERS DURING THE ANNUITY PERIOD

During the Annuity Period, payees under the Contract may transfer, by written
request, Contract Values among the Accounts subject to the following:

(1) the Contract Owner may make a transfer once each Contract Year between
Sub-Accounts of the Variable Account.

(2) During the Annuity Period, the payee(s) may, by written notice to the
Company, convert Variable Annuity Payments to Fixed Annuity Payments. The
payee(s) may not convert Fixed Annuity Payments to Variable Annuity Payments.
The amount converted to Fixed Annuity Payments from a Sub-Account is subject to
certain procedures set out in the General Account provisions.

ANNUITY OPTIONS

The actual dollar amount of Variable Annuity Payments is dependent upon (i) the
Contract Value on the Annuity Date, (ii) the annuity table specified in the
Contract, (iii) the Annuity Option selected, and (iv) the investment performance
of the Sub-Account selected.

The annuity tables contained in the Contract are based on a three percent (3%)
assumed investment rate. If the actual net investment rate exceeds three percent
(3%), Annuity Payments will increase. Conversely, if the actual rate is less
than three percent (3%), Annuity Payments will decrease. If a higher assumed
investment rate was used, the initial payment would be higher, but the
actual net investment rate would have to be higher in order for Annuity
Payments to increase.

Variable Annuity Payments will reflect the investment performance of the
Variable Account in accordance with the allocation of the Contract Value to the
Sub-Account(s) on the Annuity Date. Thereafter, allocations may not be changed
except as provided in Transfers During the Annuity Period, above. The total
dollar amount of each Annuity Payment is the sum of the Variable Annuity Payment
and the Fixed Annuity Payment reduced by the Contract Maintenance Charge (except
in Oregon where the Fixed Annuity Payment is not reduced by the Contract
Maintenance Charge).

The amount payable under the Contract may be made under one of the following
options or any other option acceptable to the Company:

OPTION 1. LIFE ANNUITY. An annuity payable monthly during the lifetime
of the Annuitant. Payments cease at the death of the Annuitant.

OPTION 2. LIFE ANNUITY WITH 5, 10 OR 20 YEARS GUARANTEED. An
annuity payable monthly during the lifetime of the Annuitant with the
guarantee that, if at the death of the Annuitant, payments have been made for
less than the selected guaranteed period, payments will be continued to the
Beneficiary for the remainder of the guaranteed period. If the Beneficiary does
not desire payments to continue for the remainder of the guaranteed period, he
or she may elect to have the present value of the guaranteed Annuity Payments
remaining, as of the date notice of death is received by the Company, commuted
at the assumed investment rate.

OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. An annuity payable
monthly during the joint lifetime of the Annuitant and another person. At the
death of either Payee, Annuity Payments will continue to be made to the
survivor Payee. The survivor's Annuity Payments will be equal to 100%, 66 2/3%
or 50% of the amount payable during the joint lifetime, as chosen.

FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS

Annuity Payments will be paid as monthly installments. However, if the net
amount available to apply under any Annuity Option is less than $5,000 ($2,000
in Massachusetts and Texas), the Company has the right to pay the amount in one
single lump sum. In addition, if the payments provided for would be or become
less than $100 ($20 in Texas), the Company has the right to change the frequency
of payments to provide payments of at least $100 ($20 in Texas).

PURCHASE PAYMENTS AND CONTRACT VALUE

PURCHASE PAYMENTS

The Contracts are purchased under a single purchase payment plan. The single
purchase payment is due on the Issue Date and must be at least $5,000. Prior
Company approval must be obtained for any purchase payment in excess of
$1,000,000. The Company reserves the right to decline any Application or
purchase payment.

ALLOCATION OF PURCHASE PAYMENT

The purchase payment is allocated to the General Account or appropriate
Sub-Account(s) within the Variable Account as elected by the Contract Owner. For
each Sub-Account, the purchase payment is converted into Accumulation Units. The
number of Accumulation Units credited to the Contract is determined by dividing
the purchase payment allocated to the Sub-Account by the value of the
Accumulation Unit for the Sub-Account. A purchase payment allocated to the
General Account is credited in dollars.

For the single purchase payment, if the Application for a Contract is in good
order, the Company will apply the purchase payment to the Variable Account and
credit the Contract with Accumulation Units and/or to the General Account and
credit the Contract with dollars within two business days of receipt. If the
Application for a Contract is not in good order, the Company will attempt to get
it in good order or the Company will return the Application and the purchase
payment within five (5) business days. The Company will not retain a purchase
payment for more than five (5) business days while processing an incomplete
Application unless it has been so authorized by the purchaser.

DOLLAR COST AVERAGING

Dollar Cost Averaging is a program which, if elected, permits a Contract Owner
to systematically transfer each month amounts from the Money Market Sub-Account
or the General Account to any Sub-Account(s). By allocating amounts on a
regularly scheduled basis as opposed to allocating the total amount at one
particular time, a Contract Owner may be less susceptible to the impact of
market fluctuations. The minimum amount which may be transferred is $500. A
Contract Owner must have a minimum of $6,000 of Contract Value in the Money
Market Sub-Account or the General Account, or the amount required to complete
the Contract Owner's designated program, in order to participate in the Dollar
Cost Averaging program.

All Dollar Cost Averaging transfers will be made on the 15th of each month (or
the next Valuation Date if the 15th of the month is not a Valuation Date). If
the Contract Owner is participating in the Dollar Cost Averaging program, such
transfers are not taken into account in determining any transfer fee. Under
certain circumstances, there may be restrictions with respect to a Contract
Owner's ability to participate in the Dollar Cost Averaging program.

DISTRIBUTOR

Cova Life Sales Company ("Life Sales"), One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644, acts as the distributor of the Contracts. Life
Sales is an affiliate of the Company. The Contracts are offered on a continuous
basis.

CONTRACT VALUE

The value of the Contract is the sum of the values for each Sub-Account and the
value in the General Account. The value of each Sub-Account is determined by
multiplying the number of Accumulation Units attributable to the Sub-Account by
the value of an Accumulation Unit for the Sub-Account.

ACCUMULATION UNIT

Purchase payments allocated to the Variable Account and amounts transferred to
or within the Variable Account are converted into Accumulation Units. This is
done by dividing each purchase payment by the value of an Accumulation Unit for
the Valuation Period during which the purchase payment is allocated to the
Variable Account or the transfer is made. The Accumulation Unit value for each
Sub-Account was arbitrarily set initially at $10. The Accumulation Unit value
for any later Valuation Period is determined by subtracting (b) from (a) and
dividing the result by (c) where:

(a) is the net result of

(1) the assets of the Sub-Account; i.e., the aggregate value of the
underlying Eligible Investment shares held at the end of such Valuation Period,
plus or minus

(2) the cumulative charge or credit for taxes reserved which is
determined by the Company to have resulted from the operation of the
Sub-Account;

(b) is the cumulative unpaid charge for the Mortality and Expense Risk
Premium and for the Administrative Expense Charge (see "Charges and
Deductions"); and

The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.

WITHDRAWALS

While the Contract is in force and before the Annuity Date, the Company will,
upon written request to the Company by the Contract Owner, allow the withdrawal
of all or a portion of the Contract for its Withdrawal Value. Withdrawals will
result in the cancellation of Accumulation Units from each applicable
Sub-Account of the Variable Account or a reduction in the General Account Value
in the ratio that the Sub-Account Value and/or the General Account Value bears
to the total Contract Value. The Contract Owner must specify in writing in
advance which units are to be cancelled or values are to be reduced if other
than the above mentioned method of cancellation is desired. The Company will pay
the amount of any withdrawal within seven (7) days of receipt of a request,
unless the Suspension of Payments or Transfers provision is in effect (see
"Suspension of Payments or Transfers").

The Withdrawal Value is the Contract Value for the Valuation Period next
following the Valuation Period during which a written request for withdrawal is
received at the Company reduced by the sum of:

(1) any applicable taxes not previously deducted;

(2) any applicable Contract Maintenance Charge; and

(3) any applicable Withdrawal Charge.

Each partial withdrawal must be for an amount which is not less than $1,000 or,
if smaller, the remaining value in the Sub-Account or General Account. The
remaining value in each Sub-Account or General Account from which a partial
withdrawal is requested must be at least $1,000 after the partial withdrawal is
completed.

Certain tax withdrawal penalties and restrictions may apply to withdrawals from
Contracts. (See "Tax Status".) For Contracts purchased in connection with 403(b)
plans, the Code limits the withdrawal of amounts attributable to contributions
made pursuant to a salary reduction agreement (as defined in Section 403(b)
(11) of the Code) to circumstances only when the Contract Owner: (1) attains
age 59 1/2; (2) separates from service; (3) dies; (4) becomes disabled
(within the meaning of Section 72(m)(7) of the Code); or (5) in the case of
hardship.

However, withdrawals for hardship are restricted to the portion of the Contract
Owner's Contract Value which represents contributions made by the Contract Owner
and does not include any investment results. The limitations on withdrawals
became effective on January 1, 1989 and apply only to salary reduction
contributions made after December 31, 1988, to income attributable to such
contributions and to income attributable to amounts held as of December 31,
1988. The limitations on withdrawals do not affect rollovers or transfers
between certain Qualified Plans. Contract Owners should consult their own tax
counsel or other tax adviser regarding any distributions.

TEXAS OPTIONAL RETIREMENT PROGRAM

A Contract issued to a participant in the Texas Optional Retirement Program
("ORP") will contain an ORP endorsement that will amend the Contract as follows:
A) If for any reason a second year of ORP participation is not begun, the total
amount of the State of Texas' first-year contribution will be returned to the
appropriate institute of higher education upon its request. B) No benefits will
be payable, through surrender of the Contract or otherwise, until the
participant dies, accepts retirement, terminates employment in all Texas
institutions of higher education or attains the age of 70 1/2. The value of the
Contract may, however, be transferred to other contracts or carriers during the
period of ORP participation. A participant in the ORP is required to obtain a
certificate of termination from the participant's employer before the value of a
Contract can be withdrawn.

SUSPENSION OF PAYMENTS OR TRANSFERS

The Company reserves the right to suspend or postpone payments for any period
when:

(1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings);

(2) trading on the New York Stock Exchange is restricted;

(3) an emergency exists as a result of which disposal of securities held in
the Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets; or

(4) during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners; provided that
applicable rules and regulations of the Securities and Exchange Commission will
govern as to whether the conditions described in (2) and (3) exist.

The Company reserves the right to defer payment for a withdrawal or transfer
from the General Account for the period permitted by law but not for more than
six months after written election is received by the Company.

PERFORMANCE INFORMATION

MONEY MARKET PORTFOLIO

From time to time, the Money Market Sub-Account of the Variable Account may
advertise its yield and effective yield. Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
yield of the Money Market Sub-Account refers to the income generated by Contract
Values in the Money Market Sub-Account over a seven-day period (which period
will be stated in the advertisement). This income is annualized. That is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
Contract Values in the Money Market Sub-Account. The effective yield is
calculated similarly. However, when annualized, the income earned by Contract
Values is assumed to be reinvested. This results in the effective yield being
slightly higher than the yield because of the compounding effect of the assumed
reinvestment. The yield figure will reflect the deduction of any asset-based
charges and any applicable Contract Maintenance Charge, but will not reflect the
deduction of any Withdrawal Charge. The deduction of any Withdrawal Charge would
reduce any percentage increase or make greater any percentage decrease.

OTHER PORTFOLIOS

From time to time, the Company may advertise performance data for the various
other Portfolios under the Contract. Such data will show the percentage change
in the value of an Accumulation Unit based on the performance of a Portfolio
medium over a period of time, usually a calendar year, determined by dividing
the increase (decrease) in value for that Unit by the Accumulation Unit value at
the beginning of the period. This percentage figure will reflect the deduction
of any asset-based charges and any applicable Contract Maintenance Charges under
the Contracts, but will not reflect the deduction of any Withdrawal Charge. The
deduction of any Withdrawal Charge would reduce any percentage increase or make
greater any percentage decrease.

Any advertisement will also include average annual total return figures
calculated as described in the Statement of Additional Information. The total
return figures reflect the deduction of any applicable Contract Maintenance
Charges and Withdrawal Charges, as well as any asset-based charges.

The Company may make available yield information with respect to some of the
Portfolios. Such yield information will be calculated as described in the
Statement of Additional Information. The yield information will reflect the
deduction of any applicable Contract Maintenance Charge as well as any
asset-based charges.

The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.

In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the Portfolios against
established market indices such as the Standard & Poor's 500 Stock Index, the
Dow Jones Industrial Average or other management investment companies which have
investment objectives similar to the Portfolio being compared. The Standard &
Poor's 500 Composite Stock Price Index is an unmanaged, unweighted average of
500 stocks, the majority of which are listed on the New York Stock Exchange.
The Dow Jones Industrial Average is an unmanaged, weighted average of thirty
blue chip industrial corporations listed on the New York Stock Exchange. Both
the Standard & Poor's 500 Composite Stock Price Index and the Dow Jones
Industrial Average assume quarterly reinvestment of dividends.

The Company may also distribute sales literature which compares the performance
of the Accumulation Unit values of the Contracts issued through the Variable
Account with the unit values of variable annuities issued through the separate
accounts of other insurance companies. Such information will be derived from the
Lipper Variable Insurance Products Performance Analysis
Service or from the VARDS Report.

The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data which
currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges. The Company's sales literature utilizing these rankings will
indicate whether or not such charges have been deducted. Where the charges have
not been deducted, the sales literature will indicate that if the charges had
been deducted, the ranking might have been lower.

The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges.

TAX STATUS

GENERAL

NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY
OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED IN THIS PROSPECTUS MAY BE APPLICABLE IN CERTAIN SITUATIONS.
MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX
LAWS.

Section 72 of the Code governs taxation of annuities in general. A Contract
Owner is not taxed on increases in the value of a Contract until distribution
occurs, either in the form of a lump sum payment or as annuity payments under
the Annuity Option selected. For a lump sum payment received as a total
withdrawal (total surrender), the recipient is taxed on the portion of the
payment that exceeds the cost basis of the Contract. For Non-Qualified
Contracts, this cost basis is generally the purchase payments, while for
Qualified Contracts there may be no cost basis. The taxable portion of the lump
sum payment is taxed at ordinary income tax rates.

For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion
amount for payments based on a variable annuity option is determined by
dividing the cost basis of the Contract (adjusted for any period certain or
refund guarantee) by the number of years over which the annuity is expected
to be paid. Payments received after the investment in the Contract has been
recovered (i.e. when the total of the excludable amount equals the investment
in the Contract) are fully taxable. The taxable portion is taxed at ordinary
income tax rates. For certain types of Qualified Plans there may be no cost
basis in the Contract within the meaning of Section 72 of the Code. Contract
Owners, Annuitants and Beneficiaries under the Contracts should seek competent
financial advice about the tax consequences of any distributions.

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

DIVERSIFICATION

Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in imposition of federal income tax
to the Contract Owner with respect to earnings allocable to the Contract prior
to the receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consists of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.

On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg.
1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.

The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."

The Company intends that all Portfolios underlying the Contracts will be managed
in such a manner as to comply with these diversification requirements.

The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investment of the Variable Account will cause the Contract Owner to be
treated as the owner of the assets of the Variable Account, thereby resulting
in the loss of favorable tax treatment for the Contract. At this time, it
cannot be determined whether additional guidance will be provided and what
standards may be contained in such guidance.

The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published
rulings issued by the Internal Revenue Service in which it was held that the
policy owner was not the owner of the assets of the separate account. It is
unknown whether these differences, such as the Contract Owner's ability to
transfer among investment choices or the number and type of investment choices
available, would cause the Contract Owner to be considered as the owner of the
assets of the Variable Account resulting in the imposition of federal income
tax to the Contract Owner with respect to earnings allocable to the Contract
prior to receipt of payments under the Contract.

In the event any forthcoming guidance or ruling is considered to set forth
a new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to
set forth a new position, it may be applied retroactively resulting in the
Contract Owners being retroactively determined to be the owners of the
assets of the Variable Account.

Due to the uncertainty in this area, the company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.

CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS

Under Section 72(u) of the Code, the investment earnings on premiums
for the Contracts will be taxed currently to the Contract Owner if the Contract
Owner is a non-natural person, e.g., a corporation or certain other entities.
Such Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to a Contract held by a trust
or other entity as agent for a natural person nor to Contracts held by
Qualified Plans. Purchasers should consult their own tax counsel or tax
adviser before purchasing a Contract to be owned by a non-natural person.

MULTIPLE CONTRACTS

The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Contract Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.

TAX TREATMENT OF ASSIGNMENTS

An assignment or pledge of a Contract may be a taxable event. Contract Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.

INCOME TAX WITHHOLDING

All distributions or the portion thereof which is includible in the gross income
of the Contract Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Contract Owner, in most
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.

Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or for a specified period of 10
years or more; b) distributions which are required minimum distributions;
or c) the portion of the distributions not includible in gross income (i.e.
returns of after-tax contributions). Participants should consult their own
tax counsel or other tax adviser regarding withholding requirements.

TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS

Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death
of the Contract Owner; (c) if the taxpayer is totally disabled (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (d) in a series
of substantially equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the taxpayer or for the joint lives (or
joint life expectancies) of the taxpayer and his or her Beneficiary; (e) under
an immediate annuity; or (f) which are allocable to purchase payments made prior
to August 14, 1982.

The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts".)

QUALIFIED PLANS

The Contracts offered by this Prospectus are designed to be suitable for use
under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and terms and conditions of each
specific plan. Contract Owners, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the plan regardless of the terms and conditions of the Contracts issued pursuant
to the plan. Some retirement plans are subject to distribution and other
requirements that are not incorporated into the Company's administrative
procedures. Contract Owners, participants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law. Following are general
descriptions of the types of Qualified Plans with which the Contracts may be
used. Such descriptions are not exhaustive and are for general informational
purposes only. The tax rules regarding Qualified Plans are very complex and
will have differing applications depending on individual facts and
circumstances. Each purchaser should obtain competent tax advice prior to
purchasing a Contract issued under a Qualified Plan.

Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described in
this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts".)

On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.

A. H.R. 10 PLANS

Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" plans. Contributions made to the Plan for the benefit of
the employees will not be included in the gross income of the employees until
distributed from the Plan. The tax consequences to participants may vary
depending upon the particular plan design. However, the Code places limitations
and restrictions on all Plans including on such items as: amount of allowable
contributions; form, manner and timing of distributions; transferability
of benefits; vesting and nonforfeitability of interests; nondiscrimination in
eligibility and participation; and the tax treatment of distributions,
withdrawals and surrenders. (See "Tax Treatment of Withdrawals - Qualified
Contracts".) Purchasers of Contracts for use with an H.R. 10 Plan should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.

B. TAX-SHELTERED ANNUITIES

Section 403(b) of the Code permits the purchase of "tax-sheltered annuities"
by public schools and certain charitable, educational and scientific
organizations described in Section 501(c)(3) of the Code. These qualifying
employers may make contributions to the Contracts for the benefit of their
employees. Such contributions are not includible in the gross income of the
employees until the employees receive distributions from the Contracts. The
amount of contributions to the tax-sheltered annuity is limited to certain
maximums imposed by the Code. Furthermore, the Code sets forth additional
restrictions governing such items as transferability, distributions,
nondiscrimination and withdrawals. (See "Tax Treatment of Withdrawals -
Qualified Contracts" and "Tax-Sheltered Annuities - Withdrawal Limitations".)
Any employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.

C. INDIVIDUAL RETIREMENT ANNUITIES

Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts".) Under
certain conditions, distributions from other IRAs and other Qualified Plans may
be rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.

D. CORPORATE PENSION AND PROFIT-SHARING PLANS

Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These retirement
plans may permit the purchase of the Contracts to provide benefits under the
Plan. Contributions to the Plan for the benefit of employees will not be
includible in the gross income of the employees until distributed from the Plan.
The tax consequences to participants may vary depending upon the particular plan
design. However, the Code places limitations and restrictions on all plans
including on such items as: amount of allowable contributions; form, manner and
timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals - Qualified Contracts".)
Purchasers of Contracts for use with Corporate Pension or Profit-Sharing Plans
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.

TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS

In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension
and Profit-Sharing Plans), 403(b) (Tax-Sheltered Annuities) and 408(b)
(Individual Retirement Annuities). To the extent amounts are not includible
in gross income because they have been rolled over to an IRA or to another
eligible Qualified Plan, no tax penalty will be imposed. The tax penalty
will not apply to the following distributions: (a) if distribution is made
on or after the date on which the Contract Owner or Annuitant (as applicable)
reaches age 59 1/2; (b) distributions following the death or disability
of the Contract Owner or Annuitant (as applicable) (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of substantially equal
periodic payments made not less frequently than annually for the life (or
life expectancy) of the Contract Owner or Annuitant (as applicable) or
the joint lives (or joint life expectancies) of such Contract Owner or Annuitant
(as applicable) and his or her designated Beneficiary; (d) distributions to
a Contract Owner or Annuitant (as applicable) who has separated from service
after he has attained age 55; (e) distributions made to the Contract
Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; and (f) distributions made to an alternate payee pursuant
to a qualified domestic relations order. The exceptions stated in (d), (e) and
(f) above do not apply in the case of an Individual Retirement Annuity. The
exception stated in (c) above applies to an Individual Retirement Annuity
without the requirement that there be a separation from service.

Generally, distributions from a qualified plan must commence no later than April
1 of the calendar year, following the year in which the employee attains age
70 1/2. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required maximum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.

TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS

The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Contract Owner: (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions made by the Contract Owner and
does not include any investment results. The limitations on withdrawals became
effective on January 1, 1989 and apply only to salary reduction contributions
made after December 31, 1988, to income attributable to such contributions and
to income attributable to amounts held as of December 31, 1988. The limitations
on withdrawals do not affect rollovers and transfers between certain Qualified
Plans. Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.

FINANCIAL STATEMENTS

The consolidated financial statements of the Company and the Variable Account
have been included in the Statement of Additional Information.

LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Variable Account,
the Distributor or the Company is a party.

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

PAGE

Company 3
Experts 3
Legal Opinions 3
Distributor 3
Yield Calculation For Money Market Sub-Account 3
Performance Information 4
Annuity Provisions 5
Variable Annuity 5
Fixed Annuity 6
Annuity Unit 6
Net Investment Factor 6
Mortality and Expense Guarantee 6
Financial Statements 6