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Rule 497(e)
File No. 33-58504
AIG LIFE INSURANCE COMPANY
VARIABLE ACCOUNT I
PROSPECTUS SUPPLEMENT
August 15, 1997
Supplement to the Individual and Group Single Premium
and Flexible Premium 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 ___.)
. Under the section "Charges and Deductions," insert the following two
paragraphs:
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 or 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, plus any Premium paid
subsequent to that Contract Anniversary.
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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;
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
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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 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
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designated Beneficiary at least as rapidly as under the method of
distribution in effect at the Annuitant s death.
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