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Rule 497(e)
File No. 33-39171
AIG LIFE INSURANCE COMPANY
VARIABLE ACCOUNT I
PROSPECTUS SUPPLEMENT
August 15, 1997
Supplement to the Individual Deferred Variable Annuity Contracts
Prospectus dated May 1, 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 Annual Ratchet Plan" on page ___;
"Charges and Deductions - Deduction for Accidental Death Benefit"
on page ___; "Death Benefit" on page ___.)
. The section "Deduction for Accidental Death Benefit" is
deleted and the following two paragraphs are substituted:
Deduction for Annual Ratchet Plan
If the Owner has elected the Annual Ratchet Plan, the Company
deducts for each Valuation Period 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 for each Valuation Period an Accidental Death
Benefit Charge equal on an annual basis to .05% of the average
daily net asset value of the Variable Account.
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. The section "DEATH BENEFIT" is deleted and the following
language is substituted:
DEATH BENEFIT
Prior to the Annuity Date
In the event of an Owner s 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 of one or more of the options described below, as
designated by the Owner at the time of application.
Option I - Traditional Death Benefit
Under the Traditional 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; or
3. the greatest of the Contract Value at the seventh Contract
Anniversary if attained prior to Owner's attained age 76
o r at the Contract Anniversary every seven years
thereafter, plus any Premium paid and less any surrenders
subsequent to that Contract Anniversary.
The Traditional Death Benefit will be in effect if:
1. the Owner designates this option on the Application; or
2. no method of settlement has been selected by the Owner.
Option II - Annual Ratchet Plan
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 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,
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p l us any Premium paid subsequent to that Contract
Anniversary.
The Company deducts for each Valuation Period a daily charge for
the Annual Ratchet Plan 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 a written request by the Owner to discontinue
this option.
Option III - Accidental Death Benefit
If at the time of application, the Owner has selected the
Accidental Death Benefit, We will pay a death benefit 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 for each Valuation Period 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 infection which results from the
accidental ingestion of contaminated substances;
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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
a n y a ircraft 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:
1. the Owner designates this option on the Application; and
2. the 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 of a written request by the Owner to
discontinue this option.
Payment to Beneficiary
Beneficiaries under the Traditional Death Benefit, the Annual
Ratchet Plan and the Accidental Death Benefit described above 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;
2. payment over the lifetime of the designated Beneficiary
with distribution beginning within 1 year of the date of
death of the Owner; 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, a single sum settlement will be
made at the end of the sixty (60) day period following receipt of
proof of death. Upon payment of a death benefit, the 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 the Contract, except that 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
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Annuitant shall be treated as the Owner and any change of such
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
(60) 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
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.
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