Rule 497(e)
File No. 33-39171
AIG LIFE INSURANCE COMPANY
VARIABLE ACCOUNT I
PROSPECTUS SUPPLEMENT
OCTOBER 10,1997
This Supplement amends the Individual Deferred Variable Annuity Contracts
Prospectus dated May 1, 1997, as amended August 15, 1997
. The following language is added to the end of the first paragraph under
the "Summary of Expenses" table:
The table does not reflect the charges applicable to certain death benefit
options offered under the Contracts. (See "Charges and Deductions- Deduction for
Equity Assurance Plan" on page ____; "Charges and Deductions - Deductions for
the Enhanced Equity Assurance Plan on page ____; "Charges and Deductions-
Deductions for the Annual Ratchet Plan" on page__; "Charges and
Deductions- "Deductions for the Accidental Death Benefit" on page ___.)
. The section "Deduction for Accidental Death Benefit" is deleted and the
following three paragraphs are substituted:
Deduction for Equity Assurance Plan
If the Owner has elected the Equity Assurance Plan, the Company deducts monthly
an Equity Assurance Plan Charge equal on an annual basis to .07% of the average
daily net asset value of the Variable Account for Owners attained age 0-59 and
.20% of the average daily net asset value of the Variable Account for Owners
attained age 60-85.
Deduction for Enhanced Equity Assurance Plan
If the Owner has elected the Enhanced Equity Assurance Plan, the Company deducts
monthly an Equity Assurance Plan Charge equal on an annual basis to .17% of the
average daily net asset value of the Variable Account for Owners attained age
0-59 and .30% of the average daily net asset value of the Variable Account for
Owners attained age 60-85.
Deduction for Annual Ratchet Plan
If the Owner has elected the Annual Ratchet Plan, the Company deducts monthly an
Annual Ratchet Plan Charge equal on an annual basis to .10% of the average daily
net asset value of the Variable Account.
Deduction for Accidental Death Benefit
If the Owner has elected the Accidental Death Benefit, the Company deducts
monthly an Accidental Death Benefit Charge equal on an annual basis to .05% of
the average daily net asset value of the Variable Account.
. The section "DEATH BENEFIT" is deleted and the following language is
substituted:
DEATH BENEFIT
Prior to the Annuity Date
In the event of an Your death prior to the Annuity Date, a death benefit is
payable to the Beneficiary. The value of the death benefit will be determined as
of the date We receive proof of death in a form acceptable to Us. If there has
been a change of Owner, the death benefit will equal the Contract Value.
Otherwise, the death benefit will be calculated in accordance with the terms
described below, as designated by the Owner at the time of application.
Standard Death Benefit
Under the standard Death Benefit, We will pay a death benefit equal to the
greatest of:
1. the total of all Premium, reduced proportionately by withdrawals and
surrenders;
2. the Contract Value;
3. the greatest of the Contract Value at the seventh Contract Anniversary
reduced proportionally by any surrenders subsequent to that Contract Anniversary
in the same proportion that the Contract Value was reduced on the date of a
surrender, plus any Premium paid subsequent to that Contract Anniversary.
The standard Death Benefit will be in effect in no other death benefit option is
in effect.
Equity Assurance Plan Option
If at the time of application the Owner has selected a death benefit under the
terms of the Equity Assurance Plan, We will pay a death benefit equal to the
greatest of:
1. the Contract Value; or
2. the greatest Contract Value on any seventh Contract Anniversary plus any
Premiums subsequent to the Contract Anniversary reduced proportionally by any
surrenders subsequent to that Contract Anniversary in the same proportion that
the Contract Value was reduced on the date of a surrender; or
3. an amount equal to a) plus b) where:
a) is equal to the total of all Premiums paid on or before the first Contract
Anniversary following Your 85th birthday, adjusted for surrenders as described
below and then accumulated at the compound interest rates shown below for the
number of complete years, not to exceed 10, from the date of receipt of each
Premium to the earlier of the date of death or the first Contract Anniversary
following Your 85th birthday:
0% per annum if death occurs during the 1st through 24th month from the date of
Premium payment; 2% per annum if death occurs during the 25th through 48th month
from the date of Premium payment; 4% per annum if death occurs during the 49th
through 72nd month from the date of Premium payment; 6% per annum if death
occurs during the 73rd through 96th month from the date of Premium payment; 8%
per annum if death occurs during the 97th through 120th month from the date of
Premium payment; 10% per annum (for a maximum of 10 years) if death occurs more
than 120 months from the date of Premium payment; and
b) is equal to all Premiums paid after the first Contract Anniversary following
Your 85th birthday, adjusted for surrenders as described below.
The Company deducts monthly an Equity Assurance Plan Charge equal on an annual
basis to .07% of the average daily net asset value of the Variable Account for
Owners attained age 0-59 and .20% of the average daily net asset value of the
Variable Account for Owners attained age 60-85.
Adjustment for surrenders. In the determination of the death benefit, for each
surrender a proportionate reduction will be made to each Premium paid prior to
the surrender. The proportion is determined by dividing the amount of the
Contract Value surrendered by the Contract Value immediately prior to each
surrender.
The Equity Assurance Plan will be in effect if:
1. the Owner elected it on the Application; and
2. the charge for the Equity Assurance Plan is shown on the Contract Schedule.
The Equity Assurance Plan will cease to be in effect upon receipt by the Company
of the Owner's written request to discontinue it.
Enhanced Equity Assurance Plan Option
If at the time of application the Owner has selected a death benefit under the
terms of the Enhanced Equity Assurance Plan, We will pay a death benefit equal
to the greatest of:
1. the Contract Value; or
2. the greatest Contract Value on any Contract Anniversary plus any Premiums
subsequent to the Contract Anniversary reduced proportionally by any surrenders
subsequent to that Contract Anniversary in the same proportion that the Contract
Value was reduced on the date of a surrender; or
3. an amount equal to a) plus b) where:
a) is equal to the total of all Premiums paid on or before the first Contract
Anniversary following Your 85th birthday, adjusted for surrenders as described
below and then accumulated at the compound interest rates shown below for the
number of complete years, not to exceed 10, from the date of receipt of each
Premium to the earlier of the date of death or the first Contract Anniversary
following Your 85th birthday:
0% per annum if death occurs during the 1st through 24th month from the date of
Premium payment; 2% per annum if death occurs during the 25th through 48th month
from the date of Premium payment; 4% per annum if death occurs during the 49th
through 72nd month from the date of Premium payment; 6% per annum if death
occurs during the 73rd through 96th month from the date of Premium payment; 8%
per annum if death occurs during the 97th through 120th month from the date of
Premium payment; 10% per annum (for a maximum of 10 years) if death occurs more
than 120 months from the date of Premium payment; and
b) is equal to all Premiums paid after the first Contract Anniversary following
Your 85th birthday, adjusted for surrenders as described below.
The Company deducts monthly an Enhanced Equity Assurance Plan Charge equal on an
annual basis to .17% of the average daily net asset value of the Variable
Account for Owners attained age 0-59 and .30% of the average daily net asset
value of the Variable Account for Owners attained age 60-85.
Adjustment for surrenders. In the determination of the death benefit, for each
surrender a proportionate reduction will be made to each Premium paid prior to
the surrender. The proportion is determined by dividing the amount of the
Contract Value surrendered by the Contract Value immediately prior to each
surrender.
The Enhance Equity Assurance Plan will be in effect if:
1. the Owner elected it on the Application; and
2. the charge for this Rider is shown on the Contract Schedule.
The Enhanced Equity Assurance Plan will cease to be in effect upon receipt by
the Company on the Owner's written request to discontinue it.
Annual Ratchet Plan Option
If at the time of application, the Owner has selected a death benefit under the
terms of the Annual Ratchet Plan, We will pay a death benefit equal to the
greatest of :
1. The total of all Premiums paid, less surrenders;
2. The Contract Value; or
3. the greatest Contract Value at any Contract Anniversary reduced
proportionately by any surrenders subsequent to that Contract Anniversary in the
same proportion that the Contract Value was reduced on the date of a surrender,
plus any Premium paid subsequent to that Contract Anniversary.
The Company deducts monthly an a daily charge for the Annual Ratchet Plan Charge
which is equal on an annual basis to .10% of the average daily net asset value
of the Variable Account.
The Annual Ratchet Plan will be in effect if:
1. the Owner designates this option on the Application; and
2. the Annual Ratchet Plan charge is shown on the Contract Schedule.
The Annual Ratchet Plan will cease to be in effect upon receipt by the Company
of the Owner's written request to discontinue it.
Accidental Death Benefit
The Owner may select the Accidental Death Benefit in addition to any of the
forms of death benefit. If at the time of application the Owner selected the
Accidental Death Benefit, the accidental death benefit payable under this option
will be equal to the lesser of:
1. the Contract Value as of the date the death benefit is determined; or
2. $250,000.
The Company deducts monthly a daily charge for the Accidental
Death Benefit which is equal on an annual basis to .05% of the average daily net
asset value of the Variable Account.
The Accidental Death Benefit is payable if the death of the primary Owner occurs
prior to the Contract Anniversary next following his/her 75th birthday as a
result of an injury. The death must also occur before the Annuity Date and
within 365 days of the date of the accident which caused the injury.
The Accidental Death Benefit will not be paid for any death caused by or
resulting in whole or in part from the following:
1. suicide or attempted suicide while sane or insane;
2. intentionally self-inflicted injuries;
3. sickness, disease or bacterial infection of any kind, except
pyogenic infections which occur as a result of an injury or
bacterial infections which result from the accidental
ingestion of contaminated substances;
4. injury sustained as a consequence of riding in, including
boarding or alighting from, any vehicle or device used for
aerial navigation except if the Owner is a passenger on any
aircraft licensed for the transportation of passengers;
5. declared or undeclared war or any act thereof; or
6. service in the military, naval or air service of any country.
The Accidental Death Benefit will be in effect if Accidental Death
Benefit charge is shown on the Contract Schedule.
The Accidental Death Benefit will cease to be in effect upon receipt by the
Company the Owner's written request to discontinue it.
Payment to Beneficiary
Upon the death of the Owner prior to the Annuity Date, the
Beneficiaries may elect the death benefit to be paid as follows:
1. payment of the entire death benefit within 5 years of the date of the
Owner's death; or
2. payment over the lifetime of the designated Beneficiary with distribution
beginning within 1 year of the date of death of the Owner (see Annuity
Options section of this contract); or
3. if the designated Beneficiary is Your spouse, he/she can continue the
contract in his/her own name.
If no payment option is elected within 60 days of Our receipt of proof of the
Owner's death, a single sum settlement will be made at the end of the sixty (60)
day period following such receipt. Upon payment of the death benefit, this
contract will end.
After the Annuity Date
If the Owner is a person other than the Annuitant, and if the Owner's death
occurs on or after the Annuity Date, no death benefit will be payable under this
contract. Any guaranteed payments remaining unpaid will continue to be paid to
the Annuitant pursuant to the Annuity Option in force at the date of the Owner's
death. If the Owner is not an individual, the Annuitant shall be treated as the
Owner and any change of such first named Annuitant, will be treated as if the
Owner died.
Death of the Annuitant
If the Annuitant is a person other than the Owner, and if the Annuitant
dies before the Annuity Date, a new Annuitant may be named by the Owner. If no
new Annuitant is named within sixty days of Our receipt of proof of the
Annuitant's death, the Owner will be deemed the new Annuitant.
If an Annuitant dies after the Annuity Date, the remaining payments, if any
will be as specified in the Annuity Option elected. We will require as specified
in the Annuity Option elected. We will require proof of the Annuitant's death.
Death benefits, if any, will be paid to the designated Beneficiary at least as
rapidly as under the method of distribution in effect at the Annuitant's death.
