CANADA LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT 1, 497, 1996-05-13

CANADA LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT 1
497, 1996-05-13

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<PAGE> 1
Filed Pursuant to Rule 497C
Registration No. 33-32199

CANADA LIFE INSURANCE COMPANY OF NEW YORK
HOME OFFICE: 500 Mamaroneck Avenue, Harrison, New York 10528
(914) 835-8400

PROSPECTUS
VARIABLE ANNUITY ACCOUNT 1
SINGLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY*

This Prospectus describes the single premium variable deferred annuity policy
(the "policy") offered by Canada Life Insurance Company of New York ("we,"
"our," or "us"), a stock life insurance company domiciled in New York which is
a wholly-owned subsidiary of The Canada Life Assurance Company. The policy is
designed for use in connection with retirement plans which may or may not
qualify for special federal income tax treatment. The owner ("you") may
allocate net premiums when paid and policy value among the twenty sub-accounts
of the Canada Life of New York Variable Annuity Account 1 (the "Variable
Account") and the Fixed Account. The Fixed Account is part of our general
account. Assets of each sub-account are invested in a corresponding portfolio
of Canada Life of America Series Fund, Inc. ("CLASF"); Fidelity Investments
Variable Insurance Products Fund ("Fidelity"); Fidelity Investments Variable
Insurance Products Fund II ("Fidelity II"); Seligman Portfolios, Inc.
("Seligman"); Dreyfus Variable Investment Fund ("Dreyfus"); The Dreyfus
Socially Responsible Growth Fund, Inc. ("Dreyfus Socially Responsible"); The
Alger American Fund ("Alger American"); or The Montgomery Funds III
("Montgomery"). Each of these Funds is registered with the SEC as an open-end,
diversified management investment company. CLASF has six portfolios which
include: Money Market; Managed; Bond; Value Equity, International Equity; and
Capital. Fidelity has three portfolios available for investment under the
policy: Fidelity Growth; Fidelity High Income; and Fidelity Overseas. Fidelity
II has two portfolios available for investment under the policy: Fidelity Asset
Manager; and Fidelity Index 500. Seligman has two portfolios it offers for
investment under the policy: Communications and Information; and Frontier. The
Dreyfus Corporation offers Dreyfus Growth and Income and Dreyfus Socially
Responsible for investment under the policy. Alger American has four portfolios
available for investment under the policy: Alger American Small Capitalization;
Alger American Growth; Alger American MidCap Growth; and Alger American
Leveraged AllCap. Montgomery has one portfolio available for investment under
the policy: the Montgomery Emerging Markets Portfolio. The policy value prior
to the annuity date, except for amounts in the Fixed Account, will vary
according to the investment performance of the portfolio of the Funds in which
your elected sub-accounts are invested. You bear the entire investment risk on
amounts allocated to the Variable Account.

This Prospectus sets forth basic information about the policy and the Variable
Account that a prospective investor ought to know before investing. Additional
information about the policy and the Variable Account is contained in the
Statement of Additional Information, which has been filed with the Securities
and Exchange Commission. The Statement of Additional Information is dated the
same date as this Prospectus and is incorporated herein by reference. The Table
of Contents for the Statement of Additional Information is on page 41 of this
Prospectus. You may obtain a copy of the Statement of Additional Information
free of charge by writing or calling us at the address or phone number shown
above.

PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE FUND.

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

THE POLICIES AND SHARES OF THE FUNDS ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE
NOT BANK GUARANTEED. THEY ARE SUBJECT TO MARKET FLUCTUATION,
REINVESTMENT RISK AND POSSIBLE LOSS OF PRINCIPAL INVESTED.

* Policies issued prior to January 26, 1996 were issued as flexible premium
variable deferred annuity policies. Additional premium payments
may be made under such policies.

The date of this Prospectus is May 1, 1996.
<PAGE> 2

TABLE OF CONTENTS

PAGE PAGE
---- ----
<S> <C> <C> <C>
DEFINITIONS................................................ 3
SUMMARY.................................................... 4 Transfer Processing Fee............................ 28
TABLE OF EXPENSES.......................................... 8 Annualized Mortality and Expense Risk Charge....... 28
CONDENSED FINANCIAL INFORMATION............................ 11 Reduction or Elimination of Surrender Charges........ 29
THE COMPANY................................................ 12 Reduction or Elimination of Policy
THE VARIABLE ACCOUNT AND THE FUNDS......................... 13 Administration Charge.............................. 29
The Variable Account................................... 13 Taxes................................................ 29
The Funds.............................................. 13 Other Charges Including Investment Advisory Fees..... 29
Money Market....................................... 14 Payment Options........................................ 30
Managed............................................ 14 Election of Options.................................. 30
Bond............................................... 14 Description of Payment Options....................... 30
Value Equity....................................... 14 Payment Dates........................................ 30
International Equity............................... 14 Age and Survival of Payee............................ 30
Capital............................................ 14 Death of Payee....................................... 30
Fidelity Growth.................................... 15 Betterment of Income................................. 31
Fidelity High Income............................... 15 Other Policy Provisions................................ 31
Fidelity Overseas.................................. 15 Owner or Joint Owner................................. 31
Fidelity Asset Manager............................. 15 Beneficiary.......................................... 31
Fidelity Index 500................................. 15 Written Notice....................................... 31
Seligman Communications and Information............ 15 Periodic Reports..................................... 31
Seligman Frontier.................................. 15 Assignment........................................... 32
Dreyfus Growth and Income.......................... 16 Modification......................................... 32
Dreyfus Socially Responsible Growth................ 16 YIELDS AND TOTAL RETURNS................................... 32
Alger American Small Capitalization................ 16 TAX DEFERRAL............................................... 33
Alger American Growth.............................. 16 FEDERAL TAX STATUS......................................... 34
Alger American MidCap Growth....................... 16 Introduction........................................... 34
Alger American Leveraged AllCap.................... 17 The Company's Tax Status............................... 34
Montgomery Emerging Markets........................ 17 Tax Status of the Policy............................... 34
Reserved Rights........................................ 17 Diversification Requirements......................... 34
Change In Investment Policy............................ 17 Required Distributions............................... 35
DESCRIPTION OF ANNUITY POLICY.............................. 17 Taxation of Annuities.................................. 35
Ten Day Right To Examine Policy........................ 17 In General........................................... 35
Premiums............................................... 18 Withdrawals/Distributions............................ 36
Initial Premium.................................... 18 Annuity Payments..................................... 36
Additional Premiums................................ 18 Taxation of Death Benefit Proceeds................... 36
Wire Transmittal Privilege......................... 18 Penalty Tax on Certain Withdrawals................... 36
Electronic Data Transmission Transfers, Assignments, or Exchanges of a Policy....... 37
of Application Information........................ 19 Withholding............................................ 37
Net Premium Allocation............................. 19 Multiple Policies...................................... 37
Termination........................................ 19 Possible Tax Changes................................... 37
Variable Account Value................................. 19 Taxation of Qualified Plans............................ 37
Units.............................................. 20 Individual Retirement Annuities and
Unit Value......................................... 21 Simplified Employee Pensions (SEP/IRAs)............ 38
Net Investment Factor.............................. 21 Minimum Distribution Requirements ("MDR") for IRA's.. 38
Transfers.............................................. 20 Corporate and Self-Employed (H.R.10 and
Transfer Privilege................................. 20 Keogh) Pension and Profit-Sharing Plans............ 38
Telephone Transfer Privilege....................... 21 Deferred Compensation Plans.......................... 39
Dollar Cost Averaging Privilege.................... 21 Tax-Sheltered Annuity Plans.......................... 39
Restrictions on Transfers from Fixed Account....... 21 Other Tax Consequences................................. 39
Transfer Processing Fee............................ 21 DISTRIBUTION OF POLICIES................................... 39
Payment of Proceeds.................................... 22 LEGAL PROCEEDINGS.......................................... 39
Proceeds........................................... 22 VOTING RIGHTS.............................................. 40
Proceeds on Annuity Date or Maturity Date.......... 22 FINANCIAL STATEMENTS....................................... 40
Proceeds on Surrender.............................. 22 STATEMENT OF ADDITIONAL INFORMATION - TABLE
Proceeds on Death of Annuitant Before OF CONTENTS.............................................. 41
Annuity Date or Maturity Date(The Death Benefit).. 23 FIXED ACCOUNT.............................................. 42
Proceeds on Death of Any Owner Before Fixed Account Value.................................... 42
or After Annuity Date or Maturity Date............ 24
Partial Withdrawals.................................... 24
Systematic Withdrawal Privilege.................... 25
Portfolio Rebalancing.................................. 25
Loans.................................................. 25
Payment of Benefits, Partial Withdrawals,
Cash Surrenders and Transfers - Postponement......... 26
Charges Against the Policy, Variable
Account, and Funds................................... 27
Surrender Charge................................... 27
Policy Administration Charge....................... 28
Daily Administration Fee........................... 28

</TABLE>

2
<PAGE> 3
DEFINITIONS

ANNUITANT: Any natural person whose life is used to determine the duration of
any payments made under a payment option involving life contingencies.

ANNUITY DATE: The date you have elected for the commencement of annuity
payments or the date that a lump sum payment is to be made. The annuity date
can be no later than the Maturity Date.

BENEFICIARY: The person to whom we will pay the proceeds payable on your death
or the death of the annuitant.

CASH SURRENDER VALUE: The policy value less: 1) any applicable surrender
charge; and 2) the policy administration charge.

COMPANY: Canada Life Insurance Company of New York.

DUE PROOF OF DEATH: Proof of death that is satisfactory to us. Such proof may
consist of: 1) a certified copy of the death certificate; and/or 2) a certified
copy of the decree of a court of competent jurisdiction as to the finding of
death.

EFFECTIVE DATE: The date the policy is effective is the date we accept your
application and apply your premium.

FIXED ACCOUNT: This account is part of our general account. This account is not
part of and does not depend on the investment performance of the Variable
Account.

FUNDS: The Canada Life of America Series Fund, Inc.; Fidelity Investments
Variable Insurance Products Fund; Fidelity Investments Variable Insurance
Products Fund II; Seligman Portfolios, Inc.; Dreyfus Variable Investment Fund;
The Dreyfus Socially Responsible Growth Fund, Inc.; The Alger American Fund;
and The Montgomery Funds III, are diversified open-end investment companies
that collectively have twenty portfolios of shares in which the corresponding
sub-accounts of the Variable Account are invested.

JOINT OWNER: A term used solely for the purpose of referring to more than one
owner. There is no other distinction between the terms owner and joint owner.

MATURITY DATE: No later that the last surviving annuitant's 85th birthday.

HOME OFFICE: Our office at the address shown on page 1 of the Prospectus. This
is our mailing address.

NET PREMIUMS: The premium paid less any premium tax deducted in the year the
premium is paid. Currently, no premium tax is levied in New York.

NONQUALIFIED POLICY: A policy that is not a "qualified" policy under the
Internal Revenue Code of 1986, as amended (the "Code"). However, any increase
in policy value under a nonqualified policy is not taxable to the owner or
annuitant until received (tax deferred), subject to certain exceptions. See
"FEDERAL TAX STATUS" on page 34.

OWNER: The owner is entitled to exercise all rights and privileges provided the
owner in the policy. The term owner also includes any joint owner.

PAC: Pre-authorized check, including electronic fund transfers.

POLICY: One of the single premium variable deferred annuity policies offered by
this Prospectus.

POLICY VALUE: The sum of the Variable Account value and the Fixed Account
value.

POLICY DATE, YEARS, MONTHS, and ANNIVERSARIES: Are measured from the policy
date shown in the "Policy Details" of the policy.

<PAGE> 4

QUALIFIED POLICY: A policy that is issued in connection with plans that receive
special federal income tax treatment under sections 401, 403(a), 403(b), 408 or
457 of the Code. See "FEDERAL TAX STATUS" on page 34.

SUB-ACCOUNT(S): The Variable Account has twenty sub-accounts: Money Market;
Managed; Bond; Value Equity; International Equity; Capital; Fidelity Growth;
Fidelity High Income; Fidelity Overseas; Fidelity Asset Manager; Fidelity Index
500; Seligman Communications and Information; Seligman Frontier; Dreyfus Growth
and Income; Dreyfus Socially Responsible; Alger American Small Capitalization;
Alger American Growth; Alger American MidCap Growth; Alger American Leveraged
AllCap; and Montgomery Emerging Markets. The assets of these sub-accounts are
invested in the corresponding portfolios of the Funds.

UNIT: A unit is a measurement used in the determination of the policy's
Variable Account value before the annuity date or maturity date.

VALUATION DAY: Each day on which valuation of assets is required by applicable
law, which currently is each day the New York Stock Exchange is open for
trading, except for the business day after Thanksgiving and the business day
after Christmas which are days that we will be closed although the New York
Stock Exchange may be open for trading.

VALUATION PERIOD: The period that starts at the close of business on one
valuation day and ends at the close of business on the next succeeding
valuation day. The close of business is when the New York Stock Exchange closes
(usually at 4:00 p.m. Eastern Time).

VARIABLE ACCOUNT: The Canada Life of New York Variable Annuity Account 1, which
is not part of our general account. The Variable Account has twenty
sub-accounts, the assets of which are invested in the corresponding portfolios
of the Funds.

WE, OUR, and US: Canada Life Insurance Company of New York.

WRITTEN NOTICE: See the "Written Notice" provision on page 31 in the "Other
Policy Provisions" section of this Prospectus.

YOU or YOUR: The owner. See the definitions of "Owner" and "Joint owner" above.

SUMMARY

TEN DAY RIGHT TO EXAMINE POLICY

You have ten days after you receive the policy to decide if the policy meets
your needs, and if the policy does not meet your needs to return the policy to
our Home Office. We will promptly return the Policy Value within seven days.
When the policy is issued as an Individual Retirement Annuity, during the first
seven days of the ten day period, we will return all premiums if this is
greater than the amount otherwise payable.

PREMIUMS

FOR POLICIES ISSUED ON OR AFTER JANUARY 26, 1996:

The minimum single premium is $5,000 ($2,000 if the Policy is an Individual
Retirement Annuity, but we reserve the right to lower or raise the minimum
premium for IRA's). No further premiums are payable. Our prior approval is
required before your total premium paid exceeds $1,000,000. You may allocate
your net premium among the sub-accounts of the Variable Account and the Fixed
Account. See "Premiums" on page 18.

FOR POLICIES ISSUED PRIOR TO JANUARY 26, 1996:

The minimum initial premium is $5,000 ($2,000 if the Policy is an Individual
Retirement Annuity, but we reserve the right to lower or raise the minimum
premium for IRA's). However, the minimum initial premium is $100 ($50 if the
policy is an Individual Retirement Annuity) if submitted with a pre-authorized
check ("PAC") agreement. You may make additional premium payments during the
annuitant's lifetime and before the annuity date or maturity date. The minimum
additional

<PAGE> 5

premium is $1,000, or $100 per month if paid by PAC (or $50 per month if paid by
PAC if the policy is an Individual Retirement Annuity). Our prior approval is
required before your total premiums paid exceed $1,000,000. You may allocate
your net premiums among the sub-accounts of the Variable Account and the Fixed
Account. See "Premiums" on page 18.

THE VARIABLE ACCOUNT

The Variable Account is a separate investment account consisting of twenty
sub-accounts. The policy value before the annuity date or maturity date, except
for amounts in the Fixed Account, will vary according to the investment
performance of the portfolios of the Fund in which your elected sub-accounts
are invested. See "The Variable Account" on page 13.

THE FUNDS

The assets of each sub-account are invested in the corresponding portfolio of
the Funds. The Funds currently have twenty portfolios available for investment:
Money Market; Managed; Bond; Value Equity (formerly known as Equity);
International Equity; Capital; Fidelity Growth; Fidelity High Income; Fidelity
Overseas; Fidelity Asset Manager; Fidelity Index 500; Seligman Communications
and Information; Seligman Frontier; Dreyfus Growth and Income; Dreyfus Socially
Responsible; Alger Small Capitalization; Alger Growth; Alger MidCap Growth;
Alger Leveraged AllCap; and Montgomery Emerging Markets. The Funds are
diversified, open-end investment companies. See "The Funds" on page 13.

THE FIXED ACCOUNT

The Fixed Account is not part of and does not depend on the investment
performance of the Variable Account. We credit interest to amounts in the Fixed
Account at a guaranteed minimum rate of 3% per annum, and we may credit a
higher current interest rate. We will also credit interest to amounts in the
Fixed Account at a guaranteed rate of 4% for contracts issued prior to May 1,
1994, or such later date as applicable regulatory approvals are obtained in the
jurisdiction in which the contracts are offered. See "Fixed Account" on page
42.

TRANSFERS

You may transfer all or part of an amount in a sub-account or the Fixed Account
to another sub-account(s) or the Fixed Account, subject to certain
restrictions. See "Transfers" on page 20.

DEATH BENEFIT

If we receive due proof of death of the annuitant before the annuity date or
maturity date ("such due proof"), we will pay the beneficiary a death benefit.

THE FOLLOWING APPLIES ONLY TO POLICIES ISSUED ON OR AFTER MAY 1, 1996 OR
SUCH LATER DATE AS APPLICABLE REGULATORY APPROVALS ARE OBTAINED IN THE
JURISDICTION IN WHICH THE POLICIES ARE OFFERED:

If we receive such due proof during the first five years, the death benefit
is the greater of:

1. the premiums paid, less: a) any partial withdrawals,
including applicable surrender charges; and b) any incurred
taxes; or
2. the policy value on the date we receive due proof of
the annuitant's death.

If we receive such due proof after the first five policy years, the death
benefit is the greatest of:

5
<PAGE> 6

surrender charges; b) less any incurred taxes; and c) plus any
premiums paid. The 5 policy year periods are measured from the
policy date (i.e., 5, 10, 15, 20, etc.).

If on the date the policy was issued, the annuitant was attained age 80 or
less, then after the annuitant attains age 81, the death benefit is the
greater of items "1" or "2" above. However, if on the date the policy was
issued, the annuitant was attained age 81 or more, then the death benefit
is the policy value.

THE FOLLOWING APPLIES ONLY TO POLICIES ISSUED AFTER FROM MAY 1, 1995
THROUGH APRIL 30, 1996, OR SUCH LATER DATE AS REGULATORY APPROVAL IS
OBTAINED:

If we receive such due proof during the first seven policy years, the death
benefit is the greater of:

If we receive such due proof after the first seven policy years, the death
benefit is the greatest of:

1. item "1." above; or
2. item "2." above; or
3. the policy value at the end of the most recent 7 policy year period
preceding the date we receive due proof of the annuitant's death,
adjusted for any of the following items that occur after such last
7 policy year period: a) less any partial withdrawals, including
applicable surrender charges; b) less any incurred taxes; and c)
plus any premiums paid. The 7 policy year periods are measured from
the policy date (i.e., 7, 14, 21, 28, etc.). No further step-ups in
Death Benefits will occur after the age of 80.

THE FOLLOWING APPLIES ONLY TO CONTRACTS ISSUED PRIOR TO MAY 1, 1995 OR SUCH
LATER DATE AS REGULATORY APPROVAL IS OBTAINED:

If we receive such due proof during the first five policy years, the death
benefit is the greater of:

1. the premiums paid, less: a) any partial withdrawals, including
applicable surrender charges; and b) any incurred taxes; or
2. the policy value on the date we receive due proof of the
annuitant's death.

If we receive such due proof after the first five policy years, the death
benefit is the greatest of:

1. item "1" above; or
2. item "2" above; or
3. the policy value at the end of the most recent 5 year policy period
preceding the date we receive due proof of the annuitant's death,
adjusted for any of the following items that occur after such last
5 year policy period: a) less any partial withdrawals, including
applicable surrender charges; b) less any incurred taxes; and c)
plus any premiums paid. The 5 year policy periods are measured from
the policy date (i.e., 5, 10, 15, 20, etc.).

No death benefit is payable if the policy is surrendered before the annuitant's
death.

See "Proceeds on Death of Annuitant Before Annuity Date or Maturity Date " on
page 23.

PARTIAL WITHDRAWALS AND CASH SURRENDERS

You may withdraw part or all of the cash surrender value at any time before the
earlier of the death of the annuitant or the annuity date or maturity date,
subject to certain limitations. See "Partial Withdrawals" on page 24 and
"Proceeds on Surrender" on page 22. Partial withdrawals and cash surrenders may
be subject to federal income tax, including a penalty tax. See "FEDERAL TAX
STATUS" on page 34.

6
<PAGE> 7

POLICY CHARGES

No deduction for a sales charge is made when premiums are paid. However, a
surrender charge (contingent deferred sales charge) will be deducted when
certain partial withdrawals and cash surrenders are made. For the purpose of
determining if any surrender charge applies and the amount of such charge,
partial withdrawals and surrenders are taken according to these rules from
policy value attributable to premiums or investment earnings in the following
order:

SURRENDER CHARGE
----------------
<S> <C>
1. Up to 100% of positive investment earnings of each variable sub-account available
at the time the request is made, once a policy year, PLUS.................................... None

2. Up to 100% of current policy year's interest on the FIXED ACCOUNT at the time the
request for surrender/withdrawal is made, once a policy year, PLUS........................... None

3. Up to 10% of total premiums STILL SUBJECT TO A SURRENDER CHARGE, once a policy
year, PLUS................................................................................... None

4. Up to 100% of those premiums NOT SUBJECT TO A SURRENDER CHARGE, available
at any time.................................................................................. None

5. Premiums subject to a surrender charge:

For policies issued prior to May 1, 1995 or such later date as regulatory
approval is obtained (For 5 years from the date of payment, each premium
is subject to a 6% surrender charge. After the 5th year, no surrender
charge will apply to such payment)................................................... 6%

For policies issued after April 30, 1995 or such later date as regulatory approval
is obtained:
Policy Years Since Premium Was Paid
-----------------------------------
Less than 1................................................................... 6%
At least 1, but less than 2................................................... 6%
At least 2, but less than 3................................................... 5%
At least 3, but less than 4................................................... 5%
At least 4, but less than 5................................................... 4%
At least 5, but less than 6................................................... 3%
At least 6, but less than 7................................................... 2%
At least 7.................................................................... None
</TABLE>

See "Surrender Charge" on page 27.

We deduct a policy administration charge of $30 for the prior policy year on
each policy anniversary. If the policy value on the policy anniversary is
$75,000 or more, we will waive the policy administration charge for the prior
policy year. We will also deduct this charge for the current policy year if the
policy is surrendered for its cash surrender value, unless the surrender occurs
on the policy anniversary. See "Policy Administration Charge" on page 29.

At each valuation period, we also deduct a daily administration fee at an
effective annual rate of 0.15% from the assets of the Variable Account. See
"Daily Administration Fee" on page 28.

The first 12 transfers during each policy year are free. We assess a $25
transfer fee for each additional transfer. See "Transfer Processing Fee" on
page 21.

We deduct a mortality and expense risk charge at each valuation period from the
assets of the Variable Account at an effective annual rate of 1.25%. This
charge is not made after the annuity date or maturity date, or against any
amounts in the Fixed Account. See "Annualized Mortality and Expense Risk
Charge" on page 28.

No premium tax is currently payable under New York law. We reserve the right to
deduct any premium taxes payable in respect of future premiums in the event New
York law should change. See "Taxes" on page 29.

7
<PAGE> 8

Each portfolio of the Funds in which the Variable Account invests is responsible
for its own expenses. In addition, charges for investment advisory services are
charged daily from each portfolio of each fund. See "Other Charges Including
Investment Advisory Fees" on page 29 and the attached "PROSPECTUSES FOR THE
FUNDS."

LOANS

ANNUITY DATE, MATURITY DATE AND PAYMENT OPTIONS

On the annuity date, we will apply the policy value under a Payment Option 1,
unless you have elected to receive the cash surrender value in a lump sum, or
pursuant to a mutually agreed upon payment option, Payment Option 2. Payments
under these payment options do not depend on the Variable Account's investment
performance. The proceeds we will pay on the maturity date is the policy value.
The payment options are: 1) Life Income; and 2) Mutual Agreement. See "Payment
Options" on page 30.

OTHER POLICY PROVISIONS

For information concerning the owner, beneficiary, written notice, periodic
policy reports, assignment, and modification see "Other Policy Provisions" on
page 31.

FEDERAL TAX STATUS

For a brief discussion of our current understanding of the federal tax laws
concerning us and the annuity policies we issue see "FEDERAL TAX STATUS" on
page 34.

QUESTIONS

We will be happy to answer your questions about the policy or our procedures.
Call or write to us at the phone number or address on page 1. All inquiries
should include the policy number, and the names of the owner and the annuitant.

TABLE OF EXPENSES

EXPENSE DATA

The following information regarding expenses assumes that the entire policy
value is in the Variable Account:

<TABLE>
<S> <C>
POLICYOWNER TRANSACTION EXPENSES
--------------------------------
Sales load on premiums.......................................................................................None

Maximum contingent deferred sales charge as a percentage of amount surrendered
10% of total premiums still subject to a surrender charge are free of any sales load
See "Policy Charges" on page 7)................................................................................6%

Transfer fee
Guarantee - First 12 transfers each policy year.......................................................No fee
Each transfer thereafter.................................................................................$25

POLICY ADMINISTRATION CHARGE.......................................................................$30 per policy
----------------------------
(waived for the prior policy year if the policy value is $75,000 or more on the policy anniversary)

</TABLE>

8
<PAGE> 9

VARIABLE ACCOUNT ANNUAL EXPENSES
--------------------------------
(as a percentage of account value)

Mortality and expense risk charges..........................................................................1.25%
Daily Administration Fee*...................................................................................0.15%
-----
Total Variable Account annual expenses......................................................................1.40%
=====
</TABLE>

<TABLE>

FUND'S ANNUAL EXPENSES**
----------------------
(as a percentage of average net assets)

<CAPTION>
OTHER EXPENSES
MANAGEMENT AFTER EXPENSE TOTAL ANNUAL
FEES REIMBURSEMENT*** EXPENSES
---------- ---------------- ------------
<S> <C> <C> <C>
Money Market 0.50% 0.25% 0.75%
Managed 0.50% 0.40% 0.90%
Bond 0.50% 0.38% 0.88%
Value Equity 0.50% 0.40% 0.90%
International Equity 0.80% 0.40% 1.20%
Capital 0.50% 0.38% 0.88%
Fidelity Growth 0.61% 0.09% 0.70%
Fidelity High Income 0.60% 0.11% 0.71%
Fidelity Overseas 0.76% 0.15% 0.91%
Fidelity Asset Manager 0.71% 0.08% 0.79%
Fidelity Index 500 0.00% 0.28% 0.28%
Seligman Communications and Information 0.75% 0.20% 0.95%
Seligman Frontier 0.75% 0.20% 0.95%
Dreyfus Growth and Income 0.72% 0.20% 0.92%
Dreyfus Socially Responsible 0.69% 0.58% 1.27%
Alger American Small Capitalization 0.85% 0.07% 0.92%
Alger American Growth 0.75% 0.10% 0.85%
Alger American MidCap Growth 0.80% 0.10% 0.90%
Alger American Leveraged AllCap 0.85% 0.71% 1.56%
Montgomery Emerging Markets 1.25% 0.50% 1.75%
</TABLE>

* The Daily Administration Fee is imposed only under contracts issued after
May 1, 1994, or such later date as applicable regulatory approvals are
obtained in the jurisdiction in which the contracts are offered. We do not
assess the Daily Administration Fee under contracts issued prior to May 1,
1994.

** Certain of the unaffiliated investment advisers reimburse us for
administrative costs incurred in connection with administering the funds
as variable funding options. These reimbursements are paid out of the
advisers' investment advisory fees as a percentage of assets under
management and/or past profits of an adviser.

*** The above table is intended to assist the policyowner in understanding
the costs and expenses that will be borne, directly or indirectly. These
include the expenses of CLASF. Prior to May 1, 1995, we were reimbursing
CLASF for expenses that exceeded 0.50% of the Managed, Bond, Value Equity
and Capital Portfolios, and 0.25% of the average daily net assets of the
Money Market Portfolio; subsequent to this date, we increased the
reimbursement amount to cover the expenses that exceeded 0.40% of the
average daily net assets of Managed, Bond, Value Equity, Capital and
International Equity Portfolios and 0.25% of the Money Market Portfolio.
Absent such reimbursement, the "Other Expenses" for the Money Market
Portfolio would have been 0.64% and for the International Equity Portfolio
0.74%. "Other Expenses" for the Managed, Bond, Value Equity, and Capital
Portfolios did not exceed the reimbursement level of 0.40%. Between May 1,
1996 and April 30, 1997 we will reimburse CLASF for expenses that exceed
0.40% of the average daily net assets of the Managed, Bond, Value Equity,
Capital, and International Equity Portfolios, and 0.25% of the average
daily net assets of the Money Market Portfolio.

A portion of the brokerage commissions Fidelity and Fidelity II paid was
used to reduce its expenses. Without this reduction, total operating
expenses would have been: for High Income: 0.71% (please note - there were
brokerage commissions paid, but it did not affect the ratio); and for Asset
Manager 0.81%.

<PAGE> 10

Fidelity and Fidelity II's expenses were voluntarily reduced by the fund's
investment adviser. Absent reimbursement, Management Fee, Other Expenses
and Total Annual Expenses for the Index 500 Portfolio would have been
0.28%, 0.19% and 0.47% respectively.

Management of Dreyfus Growth and Income and Dreyfus Socially Responsible,
in their sole discretion, may waive some or all of their fees and/or
voluntarily assume certain expenses for these Funds. For the fiscal year
ended December 31, 1995, a portion of the management fee for each of
Dreyfus Growth and Income and Dreyfus Socially Responsible was waived.
Without such fee waivers, the Management Fees, Other Expenses and Total
Annual Expenses would have been 0.75%, 0.20% and 0.95%, respectively, for
Dreyfus Growth and Income, and 0.75%, 0.58% and 1.33%, respectively, for
Dreyfus Socially Responsible. There is no guarantee that any fee waivers or
expense reimbursements will continue in the future.

Included in the other expenses of the Alger American Leveraged AllCap
Portfolio is 0.06% of interest expense. The figures shown above for the
Montgomery Emerging Markets Portfolio are based on estimated expenses for
fiscal year 1996 (as a percentage of each portfolio's average net assets
after expense reimbursement). The expense figures shown reflect anticipated
voluntary waivers of a portion of the management fees and/or assumption of
expenses. The maximum Management Fees, Other Expenses and Total Annual
Expenses absent voluntary waivers were 0.85%, 3.07%, and 3.92%,
respectively for the Alger American Leveraged AllCap Portfolio and are
anticipated to be 1.25%, 0.95%, and 2.20%, respectively for the Montgomery
Emerging Markets Portfolio. See "Charges Against The Policy, Variable
Account, And Funds," page 27, and the Funds Prospectus.

EXAMPLES

A policyowner would pay the following expenses on a $1,000 investment, assuming
a 5% annual return on assets:

1. If the policy is surrendered at the end of the applicable time period:

SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market $77 $116 $157 $260
Managed $78 $120 $165 $275
Bond $78 $120 $164 $273
Value Equity $78 $120 $165 $275
International Equity $81 $129 $180 $305
Capital $78 $120 $164 $273
Fidelity Growth $76 $114 $155 $255
Fidelity High Income $77 $115 $155 $256
Fidelity Overseas $79 $121 $165 $276
Fidelity Asset Manager $77 $117 $159 $264
Fidelity Index 500 $72 $102 $133 $211
Seligman Communications and Information $79 $122 $167 $280
Seligman Frontier $79 $122 $167 $280
Dreyfus Growth and Income $79 $121 $166 $277
Dreyfus Socially Responsible $82 $131 $183 $312
Alger American Small Capitalization $79 $121 $166 $277
Alger American Growth $78 $119 $162 $270
Alger American MidCap Growth $78 $120 $165 $275
Alger American Leveraged AllCap $85 $140 $197 $339
Montgomery Emerging Markets $87 $146 $207 $356
</TABLE>

2. If the policy is annuitized or not surrendered at the end of the
applicable time period:

SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market $23 $71 $121 $260
Managed $24 $75 $129 $275
Bond $24 $75 $128 $273
Value Equity $24 $75 $129 $275
International Equity $27 $84 $144 $305
Capital $24 $75 $128 $273
Fidelity Growth $22 $69 $119 $255

</TABLE>

<PAGE> 11

<TABLE>

<S> <C> <C> <C> <C>
Fidelity High Income $23 $70 $119 $256
Fidelity Overseas $25 $76 $129 $276
Fidelity Asset Manager $23 $72 $123 $264
Fidelity Index 500 $18 $57 $97 $211
Seligman Communications and Information $25 $77 $131 $280
Seligman Frontier $25 $77 $131 $280
Dreyfus Growth and Income $25 $76 $130 $277
Dreyfus Socially Responsible $28 $86 $147 $312
Alger American Small Capitalization $25 $76 $130 $277
Alger American Growth $24 $74 $126 $270
Alger American MidCap Growth $24 $75 $129 $275
Alger American Leveraged AllCap $31 $95 $161 $339
Montgomery Emerging Markets $33 $101 $171 $356
</TABLE>

The examples represent expenses incurred in connection with a 7 year surrender
charge period. Policies issued with a 5 year maximum surrender charge period
would be subject to lower expenses.

The examples provided above assume that no transfer charges have been assessed.
The examples also reflect a policy administration charge of 0.12% of assets,
determined by dividing the total policy administration charges collected by
the total average net assets of the sub-accounts of the Variable Account.

THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. THE
ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESSER
THAN THE ASSUMED AMOUNT.

CONDENSED FINANCIAL INFORMATION

The following condensed financial information is derived from the financial
statements of the Variable Account. The data should be read in conjunction with
the financial statements, related notes and other financial information
included in the Statement of Additional Information. See the "FINANCIAL
STATEMENTS" section on page 40 concerning financial statements contained in the
Statement of Additional Information.

The table below sets forth certain information regarding the sub-accounts for a
policy for the period from December 31, 1991 through December 31, 1995.
Accumulation Unit Values will not be provided for any date prior to the
inception of the Variable Account. The Capital Sub-Account commenced operations
on May 1, 1993, and the Fidelity Growth, Fidelity High Income, Fidelity
Overseas, and Fidelity Asset Manager, sub-accounts were offered beginning on
May 1, 1994. The International Equity, Seligman Communications and Information,
and Seligman Frontier sub-accounts commenced operations on May 1, 1995. As of
December 31, 1995, the Fidelity Index 500, Dreyfus Growth & Income, Dreyfus
Socially Responsible, Alger American Small Capitalization, Alger American
Growth, Alger American MidCap Growth, Alger American Leveraged AllCap; and
Montgomery Emerging Markets sub-accounts had not commenced operations in the
Canada Life product. Accordingly, condensed financial information is not
available for those sub-accounts.

ACCUMULATION UNIT
VALUE*

AS OF AS OF AS OF AS OF AS OF
SUB-ACCOUNT 12/31/95 12/31/94 12/31/93 12/31/92 04/29/92
- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Money Market $11.93 $11.50 $11.27
Managed $16.56 $13.75 $13.97 $13.07 $10.00
Bond $14.98 $12.98 $13.69 $12.57 $10.00
Value Equity $17.34 $14.21 $14.11 $13.56 $10.00
International Equity** ---
Capital $13.96 $10.54 $11.14
Fidelity Growth $31.96 $23.62
Fidelity High Income --- $22.97
Fidelity Overseas $16.68 $15.33
Fidelity Asset Manager $18.12 $15.56
Seligman Communications
and Information $14.23
Seligman Frontier $13.89
</TABLE>

* Accumulation Unit Values prior to 1994 do not reflect the .15% Daily
Administration Fee imposed after May 1, 1994. Accumulation Unit Values for
year ended 12/31/94 reflect the .15% Daily Administration Fee.

<PAGE> 12

NUMBER OF UNITS
OUTSTANDING AT
END OF PERIOD
AS OF AS OF AS OF AS OF
SUB-ACCOUNT 12/31/95 12/31/94 12/31/93 12/31/92
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Money Market 193 195 4,393
Managed 9,125 13,982 12,645 4,766
Bond 517 517 1,203 403
Value Equity 5,798 6,262 8,387 1,017
International Equity** -----
Capital 9,744 10,013 7,094
Fidelity Growth 3,259 1,752
Fidelity High Income 0 1,206
Fidelity Overseas 63 594
Fidelity Asset Manager 6,880 7,647
Seligman Communications
and Information 18,611
Seligman Frontier 2,237
</TABLE>

** The International Equity sub-account commenced operations on May 1, 1995,
and had no activity as of December 31, 1995.

THE COMPANY

Canada Life Insurance Company of New York ("we," "our," and "us") is a stock
life insurance company with assets as of December 31, 1995 of approximately
$232.4 million. We were incorporated under New York law on June 7, 1971, and
our Home Office is located at 500 Mamaroneck Avenue, Harrison, New York 10528.
We currently are principally engaged in issuing annuity and life insurance
policies in the State of New York.

We share our A.M. Best rating with our parent company, The Canada Life
Assurance Company. From time to time, we will quote this rating, our rating
from Standard & Poor's Corporation, Duff & Phelps Inc., and/or Moody's
Investors Service for claims paying ability. These ratings address the
financial ability of these companies to meet their contractual obligations in
accordance with the terms of their insurance contracts. They do not take into
account deductibles, surrender or cancellation penalties, or timeliness of
claim payment, nor do they address the suitability of the policy for a
particular purchaser. Also, these evaluations do not refer to the ability of
these companies to meet non-policy obligations.

We are a wholly owned subsidiary of The Canada Life Assurance Company, a
Canadian life insurance company headquartered in Toronto, Ontario, Canada, with
a U.S. Home Office in Atlanta, Georgia. The Canada Life Assurance Company:
commenced insurance operations in 1847, and has been actively operating in the
United States since 1889; and is one of the largest life insurance companies in
North America with consolidated assets as of December 31, 1995 of approximately
$20.8 billion (U.S. dollars).

Obligations under the policies are obligations of Canada Life Insurance Company
of New York.

We are subject to regulation and supervision by the New York State Insurance
Department, as well as the applicable laws and regulations of New York.

12
<PAGE> 13
THE VARIABLE ACCOUNT AND THE FUNDS

THE VARIABLE ACCOUNT

We established the Canada Life of New York Variable Annuity Account 1 (the
"Variable Account") as a separate investment account on September 23, 1989,
under New York law. Although we own the assets in the Variable Account, these
assets are held separately from our other assets and are not part of our
general account. The income, gains or losses, whether or not realized, from the
assets of the Variable Account are credited to or charged against the Variable
Account in accordance with the policies without regard to our other income,
gains or losses.

The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be charged with
liabilities that arise from any other business that we conduct and will be held
in the Variable Account. We have the right to transfer to our general account
any assets of the Variable Account which are in excess of such reserves and
other liabilities.

The Variable Account is registered with the Securities and Exchange Commission
(the "SEC") as a unit investment trust under the Investment Company Act of 1940
(the "1940 Act") and meets the definition of a "separate account" under the
federal securities laws. A unit investment trust is a type of investment
company that invests its assets in specified securities, such as the shares of
one or more investment companies. Registration under the 1940 Act does not
involve the supervision by the SEC of the management or investment policies or
practices of the Variable Account.

The Variable Account currently has twenty sub-accounts: Money Market; Bond;
Value Equity; Managed; International Equity; Capital; Fidelity Growth; Fidelity
High Income; Fidelity Overseas; Fidelity II Asset Manager; Fidelity Index 500;
Seligman Communications and Information; Seligman Frontier; Dreyfus Growth and
Income; Dreyfus Socially Responsible; Alger American Small Capitalization;
Alger American Growth; Alger American MidCap Growth; Alger American Leveraged
AllCap; and Montgomery Emerging Markets. The assets of each sub-account are
invested in shares of the corresponding portfolio of the Funds. Shares of a
portfolio are purchased and redeemed for a sub-account at their net asset
value. Any amounts of income, dividends and gains distributed from the shares
of a portfolio will be reinvested in additional shares of that portfolio at
their net asset value. The Prospectus for each Fund defines the net asset value
of portfolio shares. There is, of course, no assurance that the investment
objective of any portfolio will be achieved.

THE FUNDS

The Variable Account invests in shares of CLASF, Fidelity, Fidelity II,
Seligman, Dreyfus, The Dreyfus Socially Responsible, Alger American and
Montgomery. The Funds are management investment companies of the series type
with one or more investment portfolios. Each Fund is registered with the SEC as
an open-end, management investment company. Such registration does not involve
supervision of the management or investment practices or policies of the
Company or the portfolios by the SEC.

The Funds may, in the future, create additional portfolios that may or may not
be available as investment options under the Contracts. Each portfolio has its
own investment objectives and the income and losses for each portfolio are
determined separately for that portfolio.

The investment objectives and policies of each portfolio are summarized below.
THERE IS NO ASSURANCE THAT ANY PORTFOLIO WILL ACHIEVE ITS STATED OBJECTIVES.
More detailed information, including a description of risks and expenses, may
be found in the prospectuses for the Funds which must accompany or precede this
prospectus and which should be read carefully and retained for future
reference.

CANADA LIFE OF AMERICA SERIES FUND, INC. ("CLASF")

The Canada Life of America Series Fund, Inc., ("CLASF") currently has six
portfolios: Money Market; Managed; Bond; Value Equity; International Equity;
and Capital.

CLASF is a diversified open-end investment company incorporated in Maryland.
CLASF has four portfolios which use the investment advisory services of CL
Capital Management, Inc., a Georgia corporation: Money Market; Managed; Bond;
and Value Equity. CLASF has one portfolio, the International Equity Portfolio,
which uses the sub-investment advisory

<PAGE> 14

services of Canada Life Investment Management Limited, a Toronto, Ontario,
Canada SEC-registered investment adviser. CLASF also has one portfolio, the
Capital Portfolio, which uses the sub-investment advisory services of J. & W.
Seligman & Co. Incorporated, an unaffiliated investment manager that is a
Delaware Corporation. CL Capital Management, Inc. is a wholly owned subsidiary
of Canada Life Insurance Company of America. Canada Life Investment Management
Limited is a wholly owned subsidiary of The Canada Life Assurance Company. The
following is a brief description of the investment objectives of each of the
current portfolios of CLASF.

MONEY MARKET PORTFOLIO

The Money Market Portfolio seeks the highest possible level of current income
consistent with preservation of capital and liquidity by investing in money
market instruments maturing in thirteen months or less.

MANAGED PORTFOLIO

The Managed Portfolio seeks as high a level of return as possible through
capital appreciation and income consistent with prudent investment risk and
preservation of capital, by investing in equities, fixed income debt
instruments and money market instruments.

BOND PORTFOLIO

The Bond Portfolio seeks as high a level of current income and capital
appreciation as is consistent with preservation of principal, by investing
primarily in fixed income debt instruments.

VALUE EQUITY PORTFOLIO

The Value Equity Portfolio seeks long-term growth and income by investing in
common stocks and other equity securities which are believed to have
appreciation potential.

INTERNATIONAL EQUITY PORTFOLIO

The International Equity Portfolio seeks long-term capital appreciation by
investing in equity or equity-type securities of companies located outside of
the United States.

CAPITAL PORTFOLIO

The Capital Portfolio seeks capital appreciation, not current income, by
investing in common stocks and securities convertible into or exchangeable for
common stocks, in common stock purchase warrants, in debt securities and in
preferred stocks believed to provide capital appreciation opportunities.

Since CLASF may be available to other separate accounts, including registered
separate accounts for variable annuity and variable life products, and
non-registered separate accounts for group annuity products, of Canada Life
Insurance Company of New York, Canada Life Insurance Company of America, and
The Canada Life Assurance Company, it is possible that material conflicts may
arise between the interests of the Variable Account and one or more other
separate accounts investing in CLASF. CLASF's board of directors will monitor
events to identify any irreconcilable material conflict. Upon being advised of
such a conflict, we will take any steps we believe necessary to resolve the
matter, including removing the assets of the Variable Account from one or more
portfolios.

FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND

The Fidelity Investments Variable Insurance Products Fund ("Fidelity") has been
established to act as one of the funding vehicles for the policy offered and
three Portfolios are available under this policy: Fidelity Growth; Fidelity
High Income; and Fidelity Overseas. Fidelity is managed by Fidelity Management
& Research Company ("Investment Manager"). The Investment Manager is not
affiliated with the Company. Fidelity is a diversified open-end investment
company.

14
<PAGE> 15

FIDELITY GROWTH PORTFOLIO

The Fidelity Growth Portfolio seeks to achieve capital appreciation. The
Portfolio normally purchases common stocks, although its investments are not
restricted to any one type of security.

FIDELITY HIGH INCOME PORTFOLIO

The Fidelity High Income Portfolio seeks to obtain a high level of current
income by investment primarily in high yielding, lower-rated, fixed income
securities, while also considering growth of capital. Please refer to the
accompanying Fidelity prospectus for a description and explanation of the
unique risks associated with investing in high risk, high yielding, lower-rated
fixed income securities.

FIDELITY OVERSEAS PORTFOLIO

The Fidelity Overseas Portfolio seeks long term growth of capital primarily
through investments in foreign securities. This portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.

FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND II

The Fidelity Investments Variable Insurance Products Fund II ("Fidelity II")
has been established to act as one of the funding vehicles for the policy
offered and the Asset Manager and Index 500 Portfolios are available under this
policy. Fidelity II is managed by Fidelity Management & Research Company
("Investment Manager"). The Investment Manager is not affiliated with the
Company. Fidelity II is a diversified open-end management investment company.

FIDELITY ASSET MANAGER PORTFOLIO

The Fidelity Asset Manager Portfolio seeks high total return with reduced risk
over the long-term by allocating its assets among domestic and foreign stocks,
bonds and short-term fixed-income instruments.

FIDELITY INDEX 500 PORTFOLIO

The Fidelity Index 500 Portfolio seeks a total return which corresponds to that
of the Standard & Poor's Composite Index of 500 Stocks.

SELIGMAN PORTFOLIOS, INC.

Seligman Portfolios, Inc. ("Seligman") currently has twelve portfolios, two of
which are available for this policy: Communications and Information; and
Frontier. Seligman is a diversified open-ended investment company incorporated
in Maryland which uses the investment management services of J. & W. Seligman &
Co. Incorporated, a Delaware corporation. The Investment Manager is not
affiliated with the Company. The following is a brief description of the
investment objectives of the Communications and Information, and Frontier
Portfolios.

SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO

The investment objective of this Portfolio is to produce capital gain, not
income, by investing primarily in securities of companies operating in the
communications, information and related industries.

SELIGMAN FRONTIER PORTFOLIO

The investment objective of this Portfolio is to produce growth in capital
value; income may be considered but will be only incidental to the Portfolio's
investment objective. In general, securities owned are likely to be those
issued by small-to- medium-sized companies selected for their growth potential.

<PAGE> 16

DREYFUS VARIABLE INVESTMENT FUND

Dreyfus Variable Investment Fund is an open-end, management investment company,
that is intended to be a funding vehicle for variable annuity and variable life
insurance contracts. One of the Fund's portfolios is available under this
policy, the Dreyfus Growth and Income Portfolio.

DREYFUS GROWTH AND INCOME PORTFOLIO

The Growth and Income Portfolio seeks long-term capital growth, current income
and growth of income, consistent with reasonable investment risk. The Portfolio
invests primarily in equity and debt securities and money market instruments of
domestic and foreign issuers. The proportion of the Portfolio's assets invested
in each type of security will vary from time to time in accordance with The
Dreyfus Corporation's assessment of economic conditions and investment
opportunities.

THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.

The Dreyfus Socially Responsible Growth Fund, Inc. ("Dreyfus Socially
Responsible") is an open-end, diversified, management investment company fund,
that is intended to be a funding vehicle for variable annuity contracts and
variable life insurance policies to be offered by the separate accounts of
various life insurance companies.

Dreyfus Socially Responsible seeks to provide capital growth by investing
principally in common stocks, or securities convertible into common stock, of
companies which, in the opinion of the Fund's management, not only meet
traditional investment standards, but also show evidence that they conduct
their business in a manner that contributes to the enhancement of the quality
of life in America. Current income is a secondary goal.

THE ALGER AMERICAN FUND

The Alger American Fund ("Alger American") is intended to be a funding vehicle
for variable annuity contracts and variable life insurance policies to be
offered by the separate accounts of certain life insurance companies; and its
shares may also be offered to qualified pension and retirement plans. Each
Portfolio has distinct investment objectives and policies. Further information
regarding the investment practices of the Portfolios is set forth under the
caption "Investment Objectives and Policies" in this Prospectus and in the
Statement of Additional Information.

ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO

The investment objective of the Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65%
of its total assets in equity securities of companies that, at the time of
purchase of the securities, have total market capitalization within the range
of companies included in the Russell 2000 Growth Index, updated quarterly. The
Portfolio may invest up to 35% of its total assets in equity securities of
companies that, at the time of purchase, have total market capitalization
outside the range of companies included in the Russell 2000 Growth Index and in
excess of that amount (up to 100% of its assets) during temporary defensive
periods.

ALGER AMERICAN GROWTH PORTFOLIO

The Alger American Growth Portfolio seeks long-term capital appreciation by
investing in a diversified, actively managed portfolio of equity securities,
primarily of companies with total market capitalization of $1 billion or
greater.

ALGER AMERICAN MIDCAP GROWTH PORTFOLIO

The investment objective of the Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65%
of its total assets in equity securities of companies that, at the time of
purchase of the securities, have total market capitalization within the range
of companies included in the S&P MidCap 400 Index, updated quarterly. The
Portfolio may invest up to 35% of its total assets in equity securities of
companies that, at the time of purchase, have total market capitalization
outside the range of companies included in the S&P MidCap 400 Index and in
excess of that amount (up to 100% of its assets) during temporary defensive
periods.

16
<PAGE> 17

ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO

The Alger American Leveraged AllCap Portfolio seeks long-term capital
appreciation by investing in a diversified, actively managed portfolio of
equity securities. The Portfolio may engage in leveraging (up to 33 1/3% of its
assets) and options and futures transactions, which are deemed to be
speculative and which may cause the Portfolio's net asset value to be more
volatile than the net asset value of a fund that does not engage in these
activities.

THE MONTGOMERY FUNDS III

Shares of Montgomery Variable Series: Emerging Markets Fund, a portfolio of The
Montgomery Funds III ("Montgomery"), an open-end investment company, are
offered by this policy. Shares of the Fund are sold only to insurance company
separate accounts ("Accounts") to fund the benefits of variable life insurance
policies or variable annuity contracts ("Variable Contract") owned by their
respective policy holders, or contract holders, and to qualified pension and
retirement plans. The investment objective of this portfolio is capital
appreciation, which under normal conditions it seeks by investing at least 65%
of its total assets in equity securities of companies in countries having
emerging markets. For these purposes, the portfolio defines an emerging market
country as having an economy that is or would be considered by the World Bank
or the United Nations to be emerging or developing.

RESERVED RIGHTS

We reserve the right to substitute shares of another portfolio of CLASF,
Fidelity, Fidelity II, Seligman, Dreyfus, Dreyfus Socially Responsible, Alger
American, or Montgomery or shares of another registered open-end investment
company if, in the judgment of our management, investment in shares of one or
more portfolios is no longer appropriate for any legitimate reason, including:
a change in investment policy; or a change in the tax laws; or the shares are
no longer available for investment. However, we will obtain the approval of the
SEC before we make a substitution of shares, if such approval is required by
law.

When permitted by law, we also reserve the right to: create new variable
accounts; combine variable accounts, including the Canada Life of New York
Variable Annuity Account 1; remove, combine or add sub-accounts and make the
new sub-accounts available to policyowners at our discretion; add new
portfolios to CLASF; deregister the Variable Account under the 1940 Act if
registration is no longer required; make any changes required by the 1940 Act;
and operate the Variable Account as a managed investment company under the 1940
Act or any other form permitted by law.

If a change is made, we will send you a revised Prospectus and any notice
required by law.

CHANGE IN INVESTMENT POLICY

The investment policy of a sub-account of the Variable Account may not be
changed unless the change is approved, if required, by the New York State
Insurance Department.

DESCRIPTION OF ANNUITY POLICY

TEN DAY RIGHT TO EXAMINE POLICY

You have ten days after you receive the policy to decide if the policy meets
your needs, and if the policy does not meet your needs to return the policy to
our Home Office. We will promptly return the Policy Value. When the policy is
issued as an Individual Retirement Annuity, during the first seven days of the
ten day period, we will return all premiums if this is greater than the amount
otherwise payable.

<PAGE> 18

PREMIUMS

INITIAL PREMIUM

A prospective owner must submit a properly completed application along with a
check made payable to us for the premium. The minimum premium is $5,000 ($2,000
if the Policy is an Individual Retirement Annuity, but we reserve the right to
lower or raise the minimum premium for IRAs). However, for policies issued
prior to January 26, 1996, the minimum initial premium is $100 ($50 if the
Policy is an Individual Retirement Annuity) when a prospective owner has
enclosed a completed pre-authorized check ("PAC") agreement for additional
premiums to be automatically withdrawn monthly from the owner's bank account.

The application is subject to our underwriting standards. If the application is
properly completed and is accompanied by all the information necessary to
process it, including the initial premium, we will normally accept the
application and apply the initial net premium within two valuation days of
receipt at our Home Office. However, we may retain the premium for up to five
valuation days while we attempt to complete the processing of an incomplete
application. If this cannot be achieved within five valuation days, we will
inform the prospective owner of the reasons for the delay and immediately return
the premium, unless the prospective owner specifically consents to our retaining
the premium until the application is made complete. If the prospective owner
consents to our retaining the premium, we will apply the initial net premium
within two valuation days of when the application is complete.

ADDITIONAL PREMIUMS

NO ADDITIONAL PREMIUMS ARE PAYABLE ON POLICIES ISSUED ON OR AFTER JANUARY 26,
1996.

The minimum additional premium is $600. However, the minimum additional premium
paid by PAC is $50 per month. We will apply additional net premiums as of
receipt at our Home Office.

You may make additional premium payments at any time during the annuitant's
lifetime and before the earlier of the annuity date or maturity date. Our prior
approval is required before we will accept an additional premium which,
together with the total of other premiums paid, would exceed $1,000,000. We
will give you a receipt for each additional premium payment.

WIRE TRANSMITTAL PRIVILEGE

If a written agreement between us and broker/dealers who use wire transmittals
is in effect, as a privilege to you we will accept transmittal of the initial
premium and for policies issued prior to January 26, 1996, additional premiums)
by wire order from the broker/dealer to our designated financial institution. A
copy of such transmittal must be simultaneously sent to our Home Office via a
telephone facsimile transmission that also contains the essential information we
require to begin application processing and/or to allocate the net premium. We
will normally apply the initial net premium within two valuation days of receipt
at our Home Office of the facsimile transmission that contains a copy of the
wire order and such required essential information. We may retain such wire
orders for up to five valuation days while an attempt is made to obtain such
required information that we do not receive via such facsimile transmission. If
such required information is not obtained within five valuation days, we will
inform the broker/dealer, on behalf of the prospective owner, of the reasons for
the delay and immediately return the premium wired to us to the broker/dealer
who will return the full premium paid to the prospective owner, unless we
receive within such five valuation days the prospective owner's specific written
consent to our retaining the premium until we receive such required information
via facsimile transmission.

Our acceptance of the wire order and facsimile does not create a contractual
obligation with us until we receive and accept a properly completed original
application. If we do not receive a properly completed original application
within ten valuation days of receipt of the initial premium via wire order, we
will return the premium wired to us to the broker/dealer who will return the
full premium paid to the prospective owner. If the allocation instructions in
the properly completed original application are inconsistent with such
instructions contained in the facsimile transmission, the policy value will be
reallocated in accordance with the allocation instructions in the application
at the price which was next determined after receipt of the wire order.

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<PAGE> 19

ELECTRONIC DATA TRANSMISSION OF APPLICATION INFORMATION

In certain states, we will also accept, by agreement with broker-dealers who
use electronic data transmissions of application information, wire transmittals
of initial premium payments from the broker-dealer to the Company for purchase
of the policy. Contact us to find out about state availability.

Upon receipt of the electronic data and wire transmittal, we will process the
information and allocate the premium payment according to the policyowner's
instructions. Based on the information provided, we will generate a policy and
a verification letter to be forwarded to the policyowner for signature.

During the period from receipt of the initial premium until the signed
verification letter is received, the policyowner may not execute any financial
transactions with respect to the policy unless such transactions are requested
in writing by the owner and signature guaranteed.

NET PREMIUM ALLOCATION

You elect in your application how you want your net premium to be allocated
among the sub-accounts and the Fixed Account. Any additional net premiums (for
policies issued prior to January 26, 1996) will be allocated in the same
manner, unless at the time of payment we have received your written notice to
the contrary. The total allocation must equal 100%.

We cannot guarantee that a sub-account or shares of a portfolio will always be
available. If an owner requests that all or part of a premium be allocated to a
sub-account at a time when the sub-account or underlying portfolio is not
available, we will immediately return that portion of the premium to you,
unless you specify otherwise.

TERMINATION

THE FOLLOWING APPLIES TO POLICIES ISSUED ON OR AFTER JANUARY 26, 1996:

We may pay you the policy value and terminate the policy if before the
annuity date the policy value is less than $2,000.

THE FOLLOWING APPLIES ONLY TO POLICIES ISSUED PRIOR TO JANUARY 26, 1996:

We may pay you the cash surrender value and terminate the policy if before
the annuity date all of these events simultaneously exist:

1. you have not paid any premiums for at least three years;
2. the policy value is less than $2,000; and
3. the total premiums paid, less any partial withdrawals, is less than
$2,000.

We will mail you a notice of our intention to terminate this policy at least
six months in advance. The policy will automatically terminate on the date
specified in the notice, unless we receive an additional premium before the
termination date specified in the notice. This additional premium must be at
least the minimum amount specified in "Additional Premiums."

We will mail you a notice of our intention to terminate this policy at least
six months in advance. The policy will automatically terminate on the date
specified in the notice.

VARIABLE ACCOUNT VALUE

The Variable Account value before the annuity date or maturity date is
determined by multiplying the number of units credited to this policy for each
sub-account by the current unit value of these units.

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<PAGE> 20

UNITS

We credit net premiums in the form of units. The number of units credited to
the policy for each sub-account is determined by dividing the net premium
allocated to that sub-account by the unit value for that sub-account at the end
of the valuation period during which we receive the premium at our Home Office.

We will credit units for the initial net premium on the effective date of the
policy. We will adjust the units for any transfers in or out of a sub-account,
including any transfer processing fee.

We will cancel the appropriate number of units based on the unit value at the
end of the valuation period in which any of the following events occurs: the
policy administration charge of $30 is assessed; the date we receive and file
your written notice for a partial withdrawal or a cash surrender; the date of a
systematic withdrawal; the earlier of the annuity date or maturity date; or the
date we receive due proof of your death or the annuitant's death.

UNIT VALUE

The unit value for each sub-account's first valuation period is set at $10. The
unit value for each subsequent valuation period is determined by multiplying
the unit value at the end of the immediately preceding valuation period by the
net investment factor for the valuation period for which the value is being
determined.

The unit value for a valuation period applies to each day in that period. The
unit value may increase or decrease from one valuation period to the next.

NET INVESTMENT FACTOR

The net investment factor is an index that measures the investment performance
of a sub-account from one valuation period to the next. Each sub-account has a
net investment factor, which may be greater than or less than one.

The net investment factor for each sub-account for a valuation period equals 1
plus the rate of return earned by the relevant portfolio, adjusted for the
effect of taxes charged or credited to the sub-account and the mortality and
expense risk charge.

The rate of return of the relevant portfolio is equal to the fraction obtained
by dividing (a) by (b) where:

(a) is the net investment income and net gains, realized and unrealized,
credited during the current valuation period; and
(b) is the value of the net assets of the relevant portfolio at the end of
the preceding valuation period, adjusted for the net capital
transactions and dividends declared during the current valuation
period.

TRANSFERS

TRANSFER PRIVILEGE

You may transfer all or a part of an amount in the sub-account(s) to another
sub-account(s) or to the Fixed Account, or transfer a part of an amount in the
Fixed Account to the sub-account(s), subject to these general restrictions and
the additional restrictions in the "Restrictions On Transfers From Fixed
Account":

1. the Company's minimum transfer amount is the lesser of $250 or the
entire amount in that sub-account or Fixed Account; and
2. a transfer request that would reduce the amount in that sub-account or
the Fixed Account below $500 will be treated as a transfer request for
the entire amount in that sub-account or the Fixed Account.

We cannot guarantee that a sub-account or shares of a portfolio will always be
available. If you request an amount in a sub-account or Fixed Account be
transferred to a sub-account at a time when the sub-account or underlying
portfolio is unavailable, we will not process your transfer request, and this
request will not be counted as a transfer for purposes of determining the
number of free transfers executed. The Company reserves the right to change its
minimum transfer amount requirements.

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<PAGE> 21

TELEPHONE TRANSFER PRIVILEGE

You may direct us to act on transfer instructions given by telephone, subject
to our procedures, by initialing the authorization on the application or by
subsequently completing our administrative form. The authorization will
continue in effect until we receive your written revocation or we discontinue
this privilege. We reserve the right to change our procedures and to
discontinue this privilege.

We will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. If we do not employ such reasonable procedures, we
may be liable for any losses due to unauthorized or fraudulent instructions.
These procedures may include, but are not limited to, possible recording of
telephone calls and obtaining appropriate personal security codes and contract
number before effecting any transfers.

DOLLAR COST AVERAGING PRIVILEGE ("DCA")

You may elect to have us automatically transfer specified amounts FROM ANY ONE
variable sub-account or the Fixed Account (either one a "disbursement" account)
TO ANY OTHER variable sub-account(s) or the Fixed Account on a periodic basis,
subject to our administrative procedures and the restrictions in "Transfer
Privilege" above. This privilege is intended to allow you to utilize "Dollar
Cost Averaging," a long-term investment method which provides for regular,
level, investments over time. We make no representation or guarantee that DCA
will result in a profit or protect against loss.

When the Fixed Account is selected as the disbursement account, we require a
minimum distribution period of 18 months. During this period, surrenders and/or
transfers from the Fixed Account are not permitted.

To initiate DCA, we must receive your written notice on our form. Once elected,
such transfers will be processed until the entire value of the sub-account or
Fixed Account is completely depleted; or we receive your written revocation of
such monthly transfers; or we discontinue this privilege. We reserve the right
to change our procedures or to discontinue the DCA privilege upon 30 days
written notice to you.

RESTRICTIONS ON TRANSFERS FROM FIXED ACCOUNT

Other than transfers made pursuant to DCA, you may transfer an amount from the
Fixed Account to the sub-account(s) of the Variable Account, subject to these
additional restrictions:

1. we allow only one transfer each year and this transfer must be within
the period that is 30 days before and 30 days after the policy
anniversary, and an unused transfer option does not carry over to the
next year; and
2. the maximum transfer amount is 50% of the Fixed Account value on the
date of the transfer, unless the balance after the transfer is less
than $5000, in which case you may transfer the entire value.

Under our current procedures, the transfer will be made on the valuation date
that occurs on or next following the date we receive your transfer request at
our Home Office.

TRANSFER PROCESSING FEE

There is no limit to the number of transfers that you can make between
sub-accounts or to the Fixed Account. However, we only allow one transfer each
year from the Fixed Account (see "Restrictions on Transfers from Fixed Account"
on page 21). The first 12 transfers during each policy year are free. Any
unused free transfers do not carry over. We will assess a $25 processing fee
for each additional transfer. For the purposes of assessing the fee, each
transfer request (which includes a written notice or telephone call, but does
not include dollar cost averaging automatic transfers) is considered to be one
transfer, regardless of the number of sub-accounts or the Fixed Account
affected by the transfer. The processing fee will be charged proportionately to
the receiving sub-account(s) and/or the Fixed Account.

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<PAGE> 22
PAYMENT OF PROCEEDS

PROCEEDS

Proceeds means the amount we will pay under your policy when the first of the
following events occurs: the annuity date or maturity date; or the policy is
surrendered; or we receive due proof of death of the annuitant or any owner. We
will pay any proceeds in a single sum that may be payable due to death before
the annuity date or maturity date, unless an election is made for a payment
option. See "Election of Options" on page 30. The policy ends when we pay the
proceeds.

"Due Proof of Death" is proof of death that is satisfactory to us. Such proof
may consist of: 1) a certified copy of the death certificate; and/or 2) a
certified copy of the decree of a court of competent jurisdiction as to the
finding of death.

We will deduct any applicable premium tax from the proceeds described below,
unless we already deducted the tax from the premiums when paid.

For any annuity benefit with payments of five years or more, such annuity
benefits at the time the policy value is applied under a payment option will
not be less than those that would be provided by the application of an amount
to purchase any single premium immediate annuity policy offered by us at the
time to the same class of annuitants. Such amount shall be the greater of the
cash surrender value or 95% of what the cash surrender value would be if there
were no surrender charge.

PROCEEDS ON ANNUITY DATE OR MATURITY DATE

If Payment Option 1 is in effect on the annuity date, we will pay the policy
value as described in the Definitions. See "Payment Options" on page 30. If the
proceeds are paid in a lump sum, we will pay the cash surrender value, as
described in the Definitions.

An option may not be elected and we will pay the proceeds in a lump sum if the
amount to be applied under a payment option is less than $2,000 or any periodic
payment under the payment option would be less than $20.

You may change the annuity date, subject to these limitations:

1. we must receive your written notice at our Home Office at least 30 days
before the current annuity date;
2. the requested annuity date must be a date that is at least 30 days
after we receive your written notice; and
3. the requested annuity date should be no later than the maturity date.

The proceeds on the Maturity Date will be the policy value. The Maturity Date
is the first day of the annuitant's 85th birthday.

PROCEEDS ON SURRENDER

If you surrender the policy before the annuity date, the proceeds we will pay
is the cash surrender value. No death benefit is payable if the policy is
surrendered before the last surviving annuitant's death. The cash surrender
value is the policy value, less any applicable surrender charge. The cash
surrender value will be determined on the date we receive your written notice
for surrender and this policy at our Home Office.

You may surrender the policy for its cash surrender value at any time before
the earlier of the death of the annuitant, the annuity date or maturity date.
However, the surrender proceeds may be subject to a federal income tax,
including a penalty tax. See "FEDERAL TAX STATUS" on page 34.

You may elect to have the cash surrender value paid in a single sum or under a
payment option. See "Payment Options" on page 30. The policy ends when we pay
the cash surrender value.

PROCEEDS ON DEATH OF ANNUITANT BEFORE ANNUITY DATE OR MATURITY DATE (THE DEATH
BENEFIT)

If we receive due proof of death of the annuitant before the annuity date or
maturity date ("such due proof"), the proceeds we will pay to the beneficiary
is the death benefit.

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<PAGE> 23

THE FOLLOWING APPLIES ONLY TO POLICIES ISSUED ON OR AFTER MAY 1, 1996 OR SUCH
LATER DATE AS APPLICABLE REGULATORY APPROVALS ARE OBTAINED IN THE JURISDICTION
IN WHICH THE POLICIES ARE OFFERED:

If we receive such due proof during the first five years, the death benefit
is the greater of:

1. the premiums paid, less: a) any partial withdrawals, including
applicable surrender charges; and b) any incurred taxes; or
2. the policy value on the date we receive due proof of the
annuitant's death.

If we receive such due proof after the first five policy years, the death
benefit is the greatest of:

1. item "1" above; or
2. item "2" above; or
3. the policy value at the end of the most recent 5 policy year period
preceding the date we receive due proof of the annuitant's death,
adjusted for any of the following items that occur after such last
5 policy year period: a) less any partial withdrawals, including
applicable surrender charges; b) less any incurred taxes; and c)
plus any premiums paid. The 5 policy year periods are measured from
the policy date (i.e., 5, 10, 15, 20, etc.).

THE FOLLOWING APPLIES ONLY TO POLICIES ISSUED FROM MAY 1, 1995 THROUGH
APRIL 30, 1996, OR SUCH LATER DATE AS APPLICABLE REGULATORY APPROVALS ARE
OBTAINED IN THE JURISDICTIONS IN WHICH THE CONTRACTS ARE OFFERED.

If we receive such due proof during the first seven policy years, the death
benefit is the greater of:

1. the premiums paid, less: a) any partial withdrawals, including
applicable surrender charges; and b) any incurred taxes; or
2. the policy value on the date we receive due proof of the
annuitant's death.

If we receive such due proof after the first seven policy years, the death
benefit is the greatest of:

THE FOLLOWING APPLIES ONLY TO CONTRACTS ISSUED PRIOR TO MAY 1, 1995 OR SUCH
LATER DATE AS REGULATORY APPROVAL IS OBTAINED:

If we receive such due proof during the first five policy years, the death
benefit is the greater of:

1. the premiums paid, less: a) any partial withdrawals, including
applicable surrender charges; and b) any incurred taxes; or
2. the policy value on the date we receive due proof of the
annuitant's death.

If we receive such due proof after the first five policy years, the death
benefit is the greatest of:

1. item "1" above; or
2. item "2" above; or
3. the policy value at the end of each 5 year policy period preceding
the date we receive due proof of the annuitant's death, adjusted
for any of the following items that occur after such last 5 year
policy period: a) less any partial withdrawals, including
applicable surrender charges; b) less any incurred taxes; and c)
plus any premiums paid. The 5 year policy periods are measured from
the policy date (i.e., 5, 10, 15, 20, etc.).

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<PAGE> 24

No death benefit is payable if the policy is surrendered before the annuitant's
death.

PROCEEDS ON DEATH OF ANY OWNER BEFORE OR AFTER ANNUITY DATE OR MATURITY DATE

If you are not the annuitant, and we receive due proof of your death before the
annuity date or maturity date we will pay the beneficiary the policy value as
of the date we receive due proof of your death. If you are the annuitant, and
we receive due proof of your death before the annuity date or maturity date we
will pay the beneficiary the death benefit described in "Proceeds on Death of
Annuitant Before Annuity Date or Maturity Date." If any owner dies before the
annuity date, Federal tax law requires the policy value be distributed within
five years after the date of such owner's death regardless of whether such
owner is or is not an annuitant, unless such owner's spouse is the designated
beneficiary, in which case the policy may be continued with the surviving
spouse as the new owner. All such distributions will be made in accordance with
the requirements of the Investment Company Act of 1940.

A "designated beneficiary" is the person designated by you as a beneficiary and
to whom the benefits of the policy pass by reason of an owner's death and must
be a natural person.

If any owner dies on or after the earlier of the annuity date or maturity date,
any remaining payments must be distributed at least as rapidly as under the
payment option in effect on the date of such owner's death.

The distribution requirements described above will be considered satisfied as
to any portion of the proceeds:

1. payable to or for the benefit of a designated beneficiary; and
2. which is distributed over the life (or period not exceeding the life
expectancy) of that beneficiary, provided that the beneficiary is a
natural person and such distributions begin within one year of the
owner's death.

If you are not a natural person, the primary annuitant as determined in
accordance with Section 72(s) of the Code (i.e., the individual the events in
the life of whom are of primary importance in effecting the timing or amount of
the payout under the policy) will be treated as an owner for purposes of these
distribution requirements, and any change in the primary annuitant will be
treated as the death of an owner.

PARTIAL WITHDRAWALS

You may withdraw part of the cash surrender value at any time before the
earlier of the death of the annuitant, the annuity date or maturity date,
subject to these limits:

1. the Company's minimum partial withdrawal is $250;
2. the maximum partial withdrawal is the amount that would leave a cash
surrender value of $5,000; and
3. a partial withdrawal request which would reduce the amount in a
sub-account or the Fixed Account below $500 will be treated as a
request for a full withdrawal; and
4. a partial withdrawal request for an amount exceeding $10,000 must be
accompanied by a guarantee of the owner's signature by a commercial
bank, trust company or a savings and loan.

On the date we receive your written notice for a partial withdrawal at our Home
Office, we will withdraw the amount of the partial withdrawal from the policy
value, and we will then deduct any applicable surrender charge from the
remaining policy value. The Company reserves the right to change its minimum
partial withdrawal amount requirements.

You may specify the amount to be withdrawn from certain sub-accounts or the
Fixed Account. If you do not provide this information to us, we will withdraw
proportionately from the sub-accounts and Fixed Account in which you are
invested. If you do provide this information to us, but the amount in the
designated sub-accounts and the Fixed Account is inadequate to comply with your
withdrawal request, we will first withdraw from the specified sub-accounts and
Fixed Account. The remaining balance will be withdrawn proportionately from the
other sub-accounts and Fixed Account in which you are invested.

Any partial or systematic withdrawal may be included in the owner's gross
income in the year in which the withdrawal occurs, and may be subject to
federal income tax, including a penalty tax equal to 10% of the amount treated
as taxable income, and the Code restricts certain distributions under
Tax-Sheltered Annuity Plans and other qualified plans. See "FEDERAL TAX STATUS"
on page 34.

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<PAGE> 25

SYSTEMATIC WITHDRAWAL PRIVILEGE ("SWP")

You may elect to withdraw a fixed-level amount from the sub-account(s) on a
monthly, quarterly, or semi-annual basis beginning 30 days after the Effective
Date, if we receive your written notice on our form and the policy meets the
Company's minimum premium, currently $25,000, and in accordance with "Partial
Withdrawals" above (when surrender charges are applicable). No minimum is
necessary when Surrender Charges are not applicable. While Surrender Charges
are applicable, each year you may withdraw as follows:

1. Up to 100% of positive investment earnings of each variable sub-account
available at the time the SWP is executed/processed; PLUS
2. Up to 100% of current policy year's interest on FIXED ACCOUNT available
at the time the SWP is executed/processed; PLUS
3. Up to 10% of total premiums still subject to a surrender charge; PLUS
4. Up to 100% of total premiums NOT SUBJECT TO A SURRENDER CHARGE.

When no Surrender Charges are applicable, the entire policy is available for
systematic withdrawal. The Systematic Withdrawal Privilege will end at the
earliest of the date: when the sub-account(s) you specified for these
withdrawals has no remaining amount to withdraw; or the cash surrender value is
reduced to $5,000; or you elect to pay premiums by pre-authorized check (for
policies issued prior to May 1, 1995, or such later date as regulatory approval
is obtained); or we receive your written notice to end this privilege; or we
elect to discontinue this privilege upon 30 days written notice to you. Use of
this privilege during a policy year counts as your first 10% free withdrawal of
total premiums under the "Surrender Charge" provision. References to partial
withdrawals in other provisions of this Prospectus include systematic
withdrawals. The Company reserves the right to change its minimum systematic
withdrawal amount requirements.

PORTFOLIO REBALANCING ("REBALANCING")

Portfolio Rebalancing is an investment strategy in which, on a quarterly,
semi-annual or annual basis, your policy value in the sub-accounts only is
reallocated back to its original portfolio allocation, regardless of changes in
individual portfolio values from the time of the last Rebalancing. We make no
representation or guarantee that Rebalancing will result in a profit, protect
you against loss or ensure that you meet your financial goals.

To initiate Rebalancing, we must receive your written notice on our form.
Participation in Rebalancing is voluntary and can be modified or discontinued
at any time by you in writing on our form. Portfolio Rebalancing is not
available for amounts invested and earnings thereon in the Fixed Account.

Once elected, we will continue to perform Rebalancing until we are instructed
otherwise. We reserve the right to change our procedures or discontinue
offering Rebalancing upon 30 days written notice to you.

LOANS

The Company may in the future offer a loan privilege to owners of policies
issued in connection with Section 403(b) qualified plans that are not subject
to Title I of ERISA. If offered, owners of such policies may obtain loans using
the policy as the only security for the loan. Loans are subject to provisions
of the Code and to applicable retirement program rules (collectively, "loan
rules"). Tax advisers and retirement plan fiduciaries should be consulted prior
to exercising loan privileges. Policy loans that satisfy certain requirements
with respect to loan amount and repayment are not treated as taxable
distributions. If these requirements are not satisfied, or if the policy
terminates while a loan is outstanding, the loan balance will be treated as a
taxable distribution and may be subject to penalty tax, and the treatment of
the policy under Section 403(b) may be adversely affected.

If loans are offered, the following will apply:

Under the terms of the policy, qualified policies have a maximum loan value
equal to 80% of the policy value, although loan rules may serve to reduce such
maximum loan value in some cases. The amount available for a loan at any given
time is the loan value less any outstanding debt. Debt equals the amount of
any loans plus accrued interest. Loans will be made only upon written request
from the owner. The Company will make loans within seven days of receiving a
properly completed loan application (applications are available from the

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<PAGE> 26

Company), subject to postponement under the same circumstances that payment of
withdrawals may be postponed. See "Partial Withdrawals" on page 24.

When an owner requests a loan, the Company will reduce the owner's investment
in the investment accounts and transfer the amount of the loan to the loan
account, a part of the Company's general account. The owner may designate the
investment accounts from which the loan is to be withdrawn. Absent such a
designation, the amount of the loan will be withdrawn from the investment
accounts in accordance with the rules for making partial withdrawals. See
"Partial Withdrawals" on page 24. The policy provides that owners may repay
policy debt at any time. Under applicable loan rules, loans generally must be
repaid within five years, repayments must be made at least quarterly and
repayments must be made in substantially equal amounts. When a loan is repaid,
the amount of the repayment will be transferred from the loan account to the
investment accounts. The owner may designate the investment accounts to which
a repayment is to be allocated. Otherwise, the repayment will be allocated in
the same manner as the owner's initial premium (for policies issued after
April 30, 1995, or such later date as regulatory approval is obtained), or
most recent premium (for policies issued prior to May 1, 1995, or such later
date as regulatory approval is obtained). On each policy anniversary, the
Company will transfer from the investment accounts to the loan account the
amount by which the debt on the policy exceeds the balance in the loan
account.

The Company charges interest of 6% per year on policy loans. Loan interest
is payable in arrears and, unless paid in cash, the accrued loan interest
is added to the amount of the debt and bears interest at 6% as well. The
Company credits interest with respect to amounts held in the loan account
at a rate of 4% per year. Consequently, the net cost of loans under the
policy is 2%. If on any date debt under a policy exceeds the policy value,
the policy will be in default. In such case the owner will receive a
notice indicating the payment needed to bring the policy out of default
and will have a thirty-one day grace period within which to pay the
default amount. If the required payment is not made within the grace
period, the policy will be foreclosed (terminated without value).

The amount of any debt will be deducted from the minimum death benefit.
See "Proceeds on Death of Annuitant Before Annuity Date or Maturity Date"
on page 23. In addition, debt, whether or not repaid, will have a
permanent effect on the policy value because the investment results of the
investments accounts will apply only to the unborrowed portion of the policy
value. The longer debt is outstanding, the greater the effect is likely to be.
The effect could be favorable or unfavorable. If the investment results are
greater than the rate being credited on amounts held in the loan account while
the debt is outstanding, the policy value will not increase as rapidly as it
would have if no debt were outstanding. If investment results are below that
rate, the policy value will be higher than it would have been had no debt been
outstanding.

PAYMENT OF BENEFITS, PARTIAL WITHDRAWALS, CASH SURRENDERS AND TRANSFERS -
POSTPONEMENT

We will usually pay any proceeds payable, amounts partially withdrawn, or the
cash surrender value within seven calendar days after:

1. we receive and process your written notice for a partial withdrawal or
a cash surrender; or
2. the date chosen for any systematic withdrawal; or
3. we receive and process due proof of your death or the death of the
annuitant.

However, we can postpone the payment of proceeds, amounts withdrawn, the cash
surrender value, or the transfer of amounts between sub-accounts if:

1. the New York Stock Exchange is closed, other than customary weekend and
holiday closings, or trading on the exchange is restricted as
determined by the SEC; or
2. the SEC permits by an order the postponement for the protection of
policyowners; or
3. the SEC determines that an emergency exists that would make the
disposal of securities held in the Variable Account or the
determination of the value of the Variable Account's net assets not
reasonably practicable.

If the cash surrender value payable at a surrender, partial withdrawal or in a
lump sum on the annuity date or maturity date is not mailed or delivered within
ten working days after we receive the documentation necessary to complete the
transaction, we will add interest from the date we receive the necessary
documentation, unless the amount of such

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<PAGE> 27

interest is less than $25. The rate of interest we will apply is the rate the
company pays for dividends on deposit in our whole life insurance portfolio. We
guarantee that the interest rate will never be less than 2.5%.

We have the right to defer payment of any partial withdrawal, cash surrender,
or transfer from the Fixed Account for up to six months from the date we
receive your written notice for a withdrawal, surrender or transfer.

CHARGES AGAINST THE POLICY, VARIABLE ACCOUNT, AND FUNDS

SURRENDER CHARGE

No deduction for a sales charge is made when premiums are paid. However, a 6%
surrender charge (contingent deferred sales charge) will be deducted when
certain partial withdrawals and cash surrenders are made to at least partially
reimburse us for certain expenses relating to the sale of the policy, including
commissions to registered representatives and other promotional expenses. A
surrender charge may also be applied to the proceeds paid on the annuity date,
unless the proceeds are applied under Payment Option 1.

For the purpose of determining if any surrender charge applies and the amount
of such charge, partial withdrawals and surrenders are taken according to these
rules from policy value attributable to premiums or investment earnings in the
following order:

SURRENDER CHARGE
----------------
<S> <C>
1. Up to 100% of positive investment earnings of each variable sub-account available at the time the
request is made, once a policy year, PLUS.............................................................None

2. Up to 100% of current policy year's interest on the FIXED ACCOUNT at the time the
request for surrender/withdrawal is made, once a policy year, PLUS....................................None

3. Up to 10% of total premiums STILL SUBJECT TO A SURRENDER CHARGE, once a policy
year, PLUS............................................................................................None

4. Up to 100% of those premiums NOT SUBJECT TO A SURRENDER CHARGE, available
at any time...........................................................................................None

5. Premiums subject to a surrender charge:

For policies issued after April 30, 1995 or such later date as regulatory approval
is obtained:
Policy Years Since Premium Was Paid
-----------------------------------
Less than 1...............................................................................6%
At least 1, but less than 2...............................................................6%
At least 2, but less than 3...............................................................5%
At least 3, but less than 4...............................................................5%
At least 4, but less than 5...............................................................4%
At least 5, but less than 6...............................................................3%
At least 6, but less than 7...............................................................2%
At least 7..............................................................................None
</TABLE>

Any surrender charge will be deducted proportionately from the sub-account(s) or
Fixed Account being surrendered or partially withdrawn in relation to the
amount(s) withdrawn. If the amount remaining in a sub-account or the Fixed
Account after the withdrawal is insufficient to cover the proportionate
surrender charge deduction, the balance of the surrender charge will be assessed
proportionately from any other sub-account and the Fixed Account in which you
are invested.

27
<PAGE> 28

POLICY ADMINISTRATION CHARGE

To cover the costs of providing certain administrative services attributable to
the policies and the operations of the Variable Account, including policy
records, communicating with policyowners, and processing transactions, we
deduct a policy administration charge of $30 for the prior policy year on each
policy anniversary. If the policy value on the policy anniversary is $75,000 or
more, we will waive the policy administration charge for the prior policy year.
We will also deduct this charge for the current policy year if the policy is
surrendered for its cash surrender value, unless the policy is surrendered on a
policy anniversary. We do not anticipate any profit from this charge. Even
though our administrative expenses may increase, we guarantee that we will not
increase this charge.

The charge will be assessed proportionately from any sub-accounts and the Fixed
Account in which you are invested. If the charge is obtained from one of the
sub-accounts, we will cancel the appropriate number of units credited to this
policy based on the unit value at the end of the valuation period when the
charge is assessed.

DAILY ADMINISTRATION FEE

At each valuation period, we deduct a daily administration fee at an effective
annual rate of 0.15% from the net assets of each sub-account of the Variable
Account. This daily administration fee is intended to reimburse us for other
administrative costs under the policies. There is no necessary relationship
between the daily administration fee and the amount of expenses that may be
attributable to any one policy. We do not anticipate realizing any profit from
this fee, which is guaranteed not to increase for the duration of your policy.

TRANSFER PROCESSING FEE

The first 12 transfers during each policy year are free. We will assess a $25
processing fee for each additional transfer. For the purposes of assessing the
fee, each transfer request (which includes a written notice or telephone call,
but does not include dollar cost averaging automatic transfers) is considered
to be one transfer, regardless of the number of sub-accounts or the Fixed
Account affected by the transfer. The processing fee will be charged
proportionately to the receiving sub-account(s) and/or the Fixed Account. We do
not expect a profit from this fee. See "Transfers" on page 20 for the rules
concerning transfers.

ANNUALIZED MORTALITY AND EXPENSE RISK CHARGE

The mortality risk we assume is the risk that annuitants may live for a longer
period of time than we estimated when we established our guarantees in the
policy. Because of these guarantees, each annuitant is assured that their
longevity will not have an adverse effect on the annuity payments they receive.
The mortality risk we assume also includes our guarantee to pay a death benefit
if the annuitant dies before the annuity date or maturity date. The expense
risk we assume is the risk that the surrender charges, policy administration
charge, daily administration fee, and transfer fees may be insufficient to
cover our actual future expenses.

The annual mortality and expense risk charge is deducted at each valuation
period from the assets of the Variable Account at an effective annual rate of
1.25% of the value of the net assets in the Variable Account. We guarantee that
the rate of this charge will never increase. This charge is not made after the
earlier of the annuity date or maturity date, and this charge is not made
against any Fixed Account value. This charge consists of approximately 0.85% to
cover the mortality risk, and approximately 0.40% to cover the expense risk. If
this charge is insufficient to cover our actual costs of mortality and expense
risks, we will bear the loss. However, if this charge exceeds our actual costs
of mortality and expense risks, the excess will be a profit to us and will be
available for any proper corporate purpose including, among other things,
payment of distribution expenses, since we anticipate that the surrender
charges will be insufficient to cover the costs of our actual distribution
expenses. We currently anticipate a profit from this charge.

REDUCTION OR ELIMINATION OF SURRENDER CHARGES

The amount of the surrender charge on a policy may be reduced or eliminated
when some or all of the policies are to be sold to a group of individuals in
such a manner that results in savings of sales expenses. In determining whether
to reduce the surrender charge, the Company will consider certain factors
including the following:

28
<PAGE> 29

1. The size and type of group to which the sales are to be made will be
considered. Generally, sales expenses for a larger group are smaller
than for a smaller group because of the ability to implement large
numbers of sales with fewer sales contacts.
2. The total amount of premiums to be received will be considered. Per
dollar sales expenses are likely to be less on larger premiums than
on smaller ones.
3. Any prior or existing relationship with the Company will be considered.
Policy sales expenses are likely to be less when there is a prior or
existing relationship because of the likelihood of implementing more
sales with fewer sales contacts.
4. The level of commissions paid to selling broker-dealers will be
considered. Certain broker-dealers may offer policies in connection
with financial planning programs offered on a fee for service basis. In
view of the financial planning fees, such broker-dealers may elect to
receive lower commissions for sales of the policies, thereby reducing
the Company's sales expenses.

If, after consideration of the foregoing factors, it is determined that there
will be a reduction in sales expenses, the Company will provide a reduction in
the surrender charge. The surrender charge will be eliminated when a policy is
issued to an officer, director, employee, or relative thereof of: the Company;
The Canada Life Assurance Company; J. & W. Seligman Co., Incorporated; or any
of their affiliates. In no event will reduction or elimination of the surrender
charge be permitted where such reduction or elimination will be discriminatory
to any person.

REDUCTION OR ELIMINATION OF POLICY ADMINISTRATION CHARGE

The amount of the policy administration charge on a policy may be reduced or
eliminated when some or all of the policies are to be sold to a group of
individuals in such a manner that results in savings of administration
expenses. In addition, if the policy value on the policy anniversary is $75,000
or more, we will waive the policy administration charge for the prior policy
year. In determining whether to reduce or eliminate the administration charges,
the Company will consider certain factors including the following:

1. The size and type of group to which administrative services are to be
provided will be considered.
2. The total amount of premiums to be received will be considered.

If, after consideration of the foregoing factors, it is determined that there
will be a reduction or elimination of administration expenses, the Company will
provide a reduction in the policy administration charge. In no event will
reduction or elimination of the administration charge be permitted where such
reduction or elimination will be discriminatory to any person.

TAXES

No premium tax is currently payable under New York law. We reserve the right to
deduct any premium taxes payable in respect of future premiums in the event New
York law should change.

When any tax is deducted from the policy value, it will be deducted
proportionately from the sub-accounts and the Fixed Account in which you are
invested.

We reserve the right to charge or provide for any taxes levied by any
governmental entity, including:

1. taxes that are against or attributable to premiums, policy values or
annuity payments; or
2. taxes that we incur which are attributable to investment income or
capital gains retained as part of our reserves under the policies or
from the establishment or maintenance of the Variable Account.

OTHER CHARGES INCLUDING INVESTMENT ADVISORY FEES

Each portfolio is responsible for all of its operating expenses. In addition,
fees for investment advisory services are charged monthly from each portfolio
at an annual rate of the monthly net assets of the portfolio. The Prospectus
and Statement of Additional Information for each Fund provides more information
concerning the investment advisory fee, other charges assessed against the
portfolio(s) each Fund offers, and the investment advisory services provided to
such portfolio(s).

<PAGE> 30

PAYMENT OPTIONS

The policy ends when we pay the proceeds on the earlier of the annuity date or
maturity date. On the annuity date, we will apply the policy value under
Payment Option 1, unless you have an election of a payment option on file at
our Home Office to receive the cash surrender value in a single sum, or to
receive a mutually agreed upon payment option (Payment Option 2). See "Proceeds
on Annuity Date or Maturity Date" on page 22. We require the surrender of your
policy so that we may pay the cash surrender value or issue a supplemental
contract for the applicable payment option. The term "payee" means a person who
is entitled to receive payment under this section.

ELECTION OF OPTIONS

You may elect an option or revoke or change your election while the annuitant
is living and before the annuity date or maturity date. If an election is not
in effect at the annuitant's death or if payment is to be made in a lump sum
under an existing election, the beneficiary may elect one of the options. This
election must be made within one year after the annuitant's death and before
any payment has been made.

An election of an option and any revocation or change must be made in a written
notice. It must be filed with our Home Office with the written consent of any
irrevocable beneficiary or assignee.

An option may not be elected and we will pay the proceeds in a lump sum if
either of the following conditions exist:

1. the amount to be applied under the option is less than $2,000; or
2. any periodic payment under the election would be less than $20.

DESCRIPTION OF PAYMENT OPTIONS

Payment Option 1: Life Income

We will pay the proceeds in equal amounts at the beginning of each month,
during the payee's lifetime.

The amount of each payment will be determined from the tables in the policy
which apply to Payment Option 1, using the payee's age. Age will be determined
from the nearest birthday at the due date of the first payment.

Payment Option 2: Mutual Agreement

We will pay the proceeds according to other terms, if those terms are mutually
agreed upon.

PAYMENT DATES

The payment dates of the options will be calculated from the date on which the
proceeds become payable.

AGE AND SURVIVAL OF PAYEE

We have the right to require proof of age of the payee(s) before making any
payment. When any payment depends on the payee's survival, we will have the
right, before making the payment, to require proof satisfactory to us that the
payee is alive.

DEATH OF PAYEE

At the death of the payee, or the last survivor of the payees, any amount
remaining to be paid under this section will become payable in one sum.

BETTERMENT OF INCOME

The annuity benefits at the time the policy value is applied under a payment
option will not be less than those that would be provided by the application of
an amount defined in the policy to purchase any single premium annuity policy
offered by us at the time to the same class of annuitants. Such amount will be
the greater of the cash surrender value or 95% of what the cash surrender value
would be if there were no surrender charge.

<PAGE> 31

OTHER POLICY PROVISIONS

OWNER OR JOINT OWNER

During the annuitant's lifetime and before the earlier of the annuity date or
maturity date, you have all the rights and privileges granted by the policy. If
you appoint an irrevocable beneficiary or assignee, then your rights will be
subject to those of that beneficiary or assignee.

During the annuitant's lifetime and before earlier of the annuity date or
maturity date, you may name a new owner, joint owner or annuitant by giving us
written notice.

With respect to Qualified Policies generally, however, the contract may not be
assigned (other than to us), joint ownership is not permitted, and the Owner
must be the annuitant.

BENEFICIARY

We will pay the beneficiary any proceeds payable on your death or the death of
the annuitant. During the annuitant's lifetime and before the earlier of the
annuity date or maturity date, you may name and change one or more
beneficiaries by giving us written notice. However, we will require written
notice from any irrevocable beneficiary or assignee specifying their consent to
the change.

We will pay the proceeds under the beneficiary appointment in effect at the
date of death. If you have not designated otherwise in your appointment, the
proceeds will be paid to the surviving beneficiary(ies) equally. If no
beneficiary is living when you die or the annuitant dies, or if none has been
appointed, the proceeds will be paid to you or to your estate.

WRITTEN NOTICE

Written Notice must be signed by you, dated, and of a form and content
acceptable to us. Your written notice will not be effective until we receive it
at our Home Office. However, the change provided in your written notice to name
or change the owner or beneficiary will then be effective as of the date you
signed the written notice:

1. subject to any payments made or other action we take before we receive
and file your written notice; and
2. whether or not you or the annuitant are alive when we receive and file
your written notice.

PERIODIC REPORTS

We will mail you a report showing the following items about your policy:

1. the number of units credited to the policy and the dollar value of a
unit;
2. the policy value;
3. any premiums paid (for policies issued prior to January 26, 1996),
withdrawals, and charges made since the last report; and
4. any other information required by law.

The information in the report will be as of a date not more than two months
before the date of the mailing. We will mail the report to you:

1. at least annually, or more often as required by law; and
2. to your last address known to us.

ASSIGNMENT

You may assign a nonqualified policy or an interest in it at any time before
the earlier of the annuity date or maturity date during the annuitant's
lifetime. An assignment must be in a written notice acceptable to us. It will
not be binding on us until we receive and file it at our Home Office. We are
not responsible for the validity of any assignment. Your rights and the rights
of any beneficiary will be affected by an assignment.

31
<PAGE> 32

An assignment of a nonqualified policy may result in certain tax consequences
to the owner. See "Transfers, Assignment or Exchanges of a Policy" on page 37.

MODIFICATION

Upon notice to you, we may modify the policy, but only if such modification:

1. is necessary to make the policy or the Variable Account comply with any
law or regulation issued by a governmental agency to which we are
subject; or
2. is necessary to assure continued qualification of the policy under the
Code or other federal or New York laws relating to retirement annuities
or variable annuity policies; or
3. is necessary to reflect a change in the operation of the Variable
Accounts; or
4. provides additional variable account and/or fixed accumulation options.

In the event of any such modification, we may make any appropriate endorsement
to the policy.

YIELDS AND TOTAL RETURNS

From time to time, we may advertise yields, effective yields, and total returns
for the sub-accounts. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT
INDICATE OR PROJECT FUTURE PERFORMANCE. Each sub-account may, from time to
time, advertise performance relative to certain performance rankings and
indices compiled by independent organizations. More detailed information as to
the calculation of performance information, as well as comparisons with
unmanaged market indices, appears in the Statement of Additional Information.

Effective yields and total returns for the sub-accounts are based on the
investment performance of the corresponding portfolio of the Funds. The Funds'
performance in part reflects the Funds' expenses. CLASF's expenses in excess of
0.40% (0.25% for the Money Market Portfolio), other than the advisory fee, may
be reimbursed. Fidelity's expenses in excess of those stated, other than the
individual fund fee, may be reimbursed. Effective yields and total returns for
the sub-accounts prior to May 1, 1994, do not reflect the deduction of a 0.15%
Daily Administration Fee. See the Prospectuses for CLASF, Fidelity, Fidelity
II, and Seligman.

The yield of the Money Market Sub-Account refers to the annualized income
generated by an investment in the Sub-Account over a specified 7 day period.
The yield is calculated by assuming that the income generated for that 7 day
period is generated each 7 day period over a 52 week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Sub-Account is
assumed to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.

The yield of a sub-account (except the Money Market Sub-Account) refers to the
annualized income generated by an investment in the sub-account over a
specified 30 day or one month period. The yield is calculated by assuming that
the income generated by the investment during that 30 day or one month period
is generated each period over a 12 month period and is shown as a percentage of
the investment.

The total return of a sub-account refers to return quotations assuming an
investment under a policy has been held in the sub-account for various periods
of time including, but not limited to, a period measured from the date the
sub-account commenced operations. When a sub-account has been in operation for
1, 5, and 10 years, respectively, the total return for these periods will be
provided.

The average annual total return quotations represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a policy to the redemption value of that investment as of the last day of
each of the periods for which total return quotations are provided. Average
annual total return information shows the average percentage change in the
value of an investment in the sub-account from the beginning date of the
measuring period to the end of that period. This standardized version of
average annual total return reflects all historical investment results, less
all charges and deductions applied against the sub-account (including any
surrender charge that would apply if an Owner terminated the policy at the end
of each period indicated, but excluding any deductions for premium taxes).

We may, in addition, advertise total return performance information computed on
a different basis. We may present total return information computed on the same
basis as described above, except deductions will not include the surrender

32
<PAGE> 33

charge. This presentation assumes that the investment in the policy persists
beyond the period when the surrender charge applies, consistent with the
long-term investment and retirement objectives of the policy.

We may compare the performance of each sub-account in advertising and sales
literature to the performance of other variable annuity issuers in general or
to the performance of particular types of variable annuities investing in
mutual funds, or investment portfolios of mutual funds with investment
objectives similar to each of the sub-accounts. Lipper Analytical Services,
Inc. ("Lipper") and the Variable Annuity Research Data Service ("VARDS") are
independent services which monitor and rank the performances of variable
annuity issuers in each of the major categories of investment objectives on an
industry-wide basis. Other services or publications may also be cited in our
advertising and sales literature.

Lipper's rankings include variable life issuers as well as variable annuity
issuers. VARDS rankings compare only variable annuity issuers. The performance
analysis prepared by Lipper and VARDS each rank such issuers on the basis of
total return, assuming reinvestment of distributions, but do not take sales
charges, redemption fees or certain expense deductions at the separate account
level into consideration. In addition, VARDS prepares risk adjusted rankings,
which consider the effects of market risk on total return performance. This
type of ranking provides data as to which funds provide the highest total
return within various categories of funds defined by the degree of risk
inherent in their investment objectives.

We may also compare the performance of each sub-account in advertising and
sales literature to the Standard & Poor's composite index of 500 common stocks,
a widely used index to measure stock market performance. This unmanaged index
does not reflect any "deduction" for the expense of operating or managing an
investment portfolio. We may also make comparison to Lehman Brothers
Government/Corporate Bond Index, an index that includes the Lehman Brothers
Government Bond and Corporate Bond Indices. These indices are total rate of
return indices. The Government Bond Index includes the Treasury Bond Index
(public obligations of the U.S. Treasury) and the Agency Bond Index (publicly
issued debt of U.S. Government agencies, quasi-federal corporations, and
corporate debt guaranteed by the U.S. Government). The Corporate Bond Index
includes publicly issued, fixed rate, nonconvertible Investment grade
dollar-denominated, SEC registered corporate debt. All issues have at least a
one-year maturity, and all returns are at market value inclusive of accrued
interest. Other independent indices such as those prepared by Lehman Brothers
Bond Indices may also be used as a source of performance comparison.

We may also compare the performance of each sub-account in advertising and
sales literature to the Dow Jones Industrial Average, a stock average of 30
blue chip stock companies that does not represent all new industries. Other
independent averages such as those prepared by Dow Jones & Company, Inc. may
also be used as a source of performance comparison. Day-to-day changes may not
be reflective of the overall market when an average is composed of a small
number of companies.

TAX DEFERRAL

Under current tax laws any increase in policy value is generally not taxable to
you or the annuitant until received, subject to certain exceptions. See
"FEDERAL TAX STATUS" on page 34. This deferred tax treatment may be beneficial
to you in building assets in a long-range investment program.

We may also distribute sales literature or other information including the
effect of tax-deferred compounding on a sub-account's investment returns, or
returns in general, which may be illustrated by tables, graphs, charts or
otherwise, and which may include a comparison, at various points in time, of
the return from an investment in a policy (or returns in general) on a
tax-deferred basis (assuming one or more tax rates) with the return on a
currently taxable basis where allowed by state laws. All income and capital
gains derived from sub-account investments are reinvested and compound
tax-deferred until distributed. Such tax-deferred compounding can result in
substantial long-term accumulation of assets, provided that the investment
experience of the underlying portfolios of the Funds is positive.

<PAGE> 34
FEDERAL TAX STATUS

THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE

INTRODUCTION

This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the annuity policy we issue. Any person concerned about
these tax implications should consult a tax adviser before initiating any
transaction. This discussion is based upon our general understanding of the
present Federal income tax laws. No representation is made as to the likelihood
of the continuation of the present Federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws.

The policy may be purchased on a nonqualified tax basis ("Nonqualified Policy")
or purchased and used in connection with plans qualifying for favorable tax
treatment ("Qualified Policy"). The Qualified Policy was designed for use by
individuals whose premium payments are comprised of proceeds from and/or
contributions under retirement plans which are intended to qualify as plans
entitled to special income tax treatment under Sections 401(a), 401(k), 403(a),
403(b), 408 or 457 of the Code. The ultimate effect of Federal income tax on
the amounts held under a policy, or annuity payments, and on the economic
benefit to the owner, the annuitant, or the beneficiary depends on the type of
retirement plan, on the tax and employment status of the individual concerned
and on our tax status. In addition, certain requirements must be satisfied in
purchasing a Qualified Policy with proceeds from a tax-qualified plan and
receiving distributions from a Qualified Policy in order to continue receiving
favorable tax treatment. Therefore, purchasers of Qualified Policies should
seek legal and tax advice regarding the suitability of a policy for their
situation, the applicable requirements, and the tax treatment of the rights and
benefits of a policy. The following discussion assumes that Qualified Policies
are purchased with proceeds from and/or contributions under retirement plans
that receive the intended special Federal income tax treatment.

THE COMPANY'S TAX STATUS

The Variable Account is not separately taxed as a "regulated investment
company" under Subchapter M of the Code. The operations of the Variable Account
are a part of and taxed with our operations. We are taxed as a life insurance
company under Subchapter L of the Code.

At the present time, we make no charge for any Federal, state or local taxes
(other than premium taxes) that we incur which may be attributable to the
Variable Account or to the policies. However, we do reserve the right to make a
charge in the future for any such tax or other economic burden resulting from
the application of the tax laws that we determine to be properly attributable
to the Variable Account or to the policies.

TAX STATUS OF THE POLICY

DIVERSIFICATION REQUIREMENTS

Section 817(h) of the Code provides that separate account investments
underlying a policy must be "adequately diversified" in accordance with
Treasury regulations in order for the policy to qualify as an annuity policy
under Section 72 of the Code. The Variable Account, through each portfolio of
CLASF, Fidelity, Fidelity II, Seligman, Dreyfus, Dreyfus Socially Responsible,
Alger American, and Montgomery intends to comply with the diversification
requirements prescribed in regulations under Section 817(h) of the Code, which
affect how the assets in the various divisions of the Accounts may be invested.
Although we do not have control over CLASF, Fidelity, Fidelity II, Seligman,
Dreyfus, Dreyfus Socially Responsible, Alger American, or Montgomery, in which
the Variable Account invests, we believe that each portfolio in which the
Variable Account owns shares will meet the diversification requirements and that
therefore the Policy will be treated as an annuity under the Code.

In certain circumstances, variable annuity policyowners may be considered the
owners, for Federal income tax purposes, of the assets of the separate account
used to support their policies. In those circumstances, income and gains from
the separate account assets would be includable in the variable annuity
policyowner's gross income. Several years ago, the IRS stated in published
rulings that a variable policyowner will be considered the owner of separate
account assets if the

34
<PAGE> 35

policyowner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. More recently, the
Treasury Department announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular sub-accounts without being treated as owners of the
underlying assets."

The ownership rights under the policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
owner of the policy has the choice of more subdivisions to which to allocate
premiums and policy values then such rulings, has a choice of investment
strategies different from such rulings, and may be able to transfer among
subdivisions more frequently than in such rulings. These differences could
result in the policyowner being treated as the owner of the assets of the
Variable Account. In addition, we do not know what standards will be set forth
in the regulations or rulings which the Treasury Department has stated it
expects to issue. We therefore reserve the right to modify the policy as
necessary to attempt to prevent the policyowner from being considered the owner
of the assets of the Variable Account.

REQUIRED DISTRIBUTIONS

In addition to the requirements of Section 817(h) of the Code, in order to be
treated as an annuity policy for Federal income tax purposes, Section 72(s) of
the Code requires any Nonqualified Policy to provide that (a) if any owner dies
on or after the annuity date but prior to the time the entire interest in the
Policy has been distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of distribution being used
as of the date of that owner's death; and (b) if any owner dies prior to the
annuity commencement date, the entire interest in the Policy will be
distributed within five years after the date of the owner's death. These
requirements will be considered satisfied as to any portion of the owner's
interest which is payable to or for the benefit of a "designated beneficiary"
and which is distributed over the life of such "designated beneficiary" or over
a period not extending beyond the life expectancy of that beneficiary, provided
that such distributions begin within one year of that owner's death. The
owner's "designated beneficiary" is the person designated by such owner as a
beneficiary and to whom proceeds of the Policy passes by reason of death and
must be a natural person. However, if the owner's "designated beneficiary" is
the surviving spouse of the owner, the Policy may be continued with the
surviving spouse as the new owner.

The Nonqualified Policies contain provisions which are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code Section 72(s) when clarified by regulation or otherwise.

Other rules may apply to Qualified Policies [see "Minimum Distribution
Requirements ("MDR") for IRA's, page 38].

The following discussion assumes that the policies will qualify as annuity
contracts for Federal income tax purposes.

TAXATION OF ANNUITIES

IN GENERAL

Section 72 of the Code governs taxation of annuities in general. We believe that
an owner who is a natural person generally is not taxed on increases in the
value of a policy until distribution occurs by withdrawing all or part of the
accumulation value (e.g., partial withdrawal or surrenders) or as annuity
payments under the annuity option elected. For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the accumulation value
(and in the case of a Qualified Policy, any portion of an interest in the
qualified plan) generally will be treated as a distribution. The taxable portion
of a distribution (in the form of a single sum payment or an annuity) is taxable
as ordinary income.

The owner of any annuity policy who is not a natural person generally must
include in income any increase in the excess of the policy's accumulation value
over the policy's "investment in the contract" during the taxable year. There
are some exceptions to this rule and a prospective owner that is not a natural
person may wish to discuss these with a tax adviser.

35
<PAGE> 36

The following discussion generally applies to policies owned by natural
persons.

WITHDRAWALS/DISTRIBUTIONS

In the case of a distribution under a Qualified Policy (other than a Section
457 plan), under Section 72(e) of the Code a ratable portion of the amount
received is taxable, generally based on the ratio of the "investment in the
contract" to the participant's total accrued benefit or balance under the
retirement plan. The "investment in the contract" generally equals the portion,
if any, of any premium payments paid by or on behalf of any individual under a
Policy which was not excluded from the individual's gross income. For policies
issued in connection with qualified plans, the "investment in the contract" can
be zero. Special tax rules may be available for certain distributions from
Qualified Policies.

In the case of a withdrawal/distribution (e.g. surrender, partial withdrawal or
systematic withdrawal) under a Nonqualified Policy before the annuity
commencement date, under Code Section 72(e) amounts received are generally
first treated as taxable income to the extent that the accumulation value
immediately before the withdrawal exceeds the "investment in the contract" at
that time. Any additional amount withdrawn is not taxable.

ANNUITY PAYMENTS

Although tax consequences may vary depending on the annuity option elected
under an annuity policy, under Code Section 72(b), generally gross income does
not include that part of any amount received as an annuity under an annuity
policy that bears the same ratio to such amount as the investment in the
contract bears to the expected return at the annuity starting date. For
variable income payments, in general, the taxable portion (prior to recovery of
the investment in the contract) is determined by a formula which establishes
the specific dollar amount of each annuity payment that is not taxed. The
dollar amount is determined by dividing the "investment in the contract" by the
total number of expected periodic payments. For fixed income payments (prior to
recovery of the investment in the contract), in general, there is no tax on the
amount of each payment which represents the same ratio that the "investment in
the contract" bears to the total expected value of the annuity payments for the
term of the payments; however, the remainder of each income payment is taxable.
In all cases, after the "investment in the contract" is recovered, the full
amount of any additional annuity payments is taxable.

TAXATION OF DEATH BENEFIT PROCEEDS

Amounts may be distributed from a policy because of the death of the owner or
an annuitant. Generally, such amounts are includable in the income of the
recipient as follows:

1. if distributed in a lump sum, they are taxed in the same manner as a
full surrender of the policy; or
2. If distributed under a payment option, they are taxed in the same
manner as annuity payments.

PENALTY TAX ON CERTAIN WITHDRAWALS

In the case of a distribution pursuant to a Nonqualified Policy, there may be
imposed a Federal penalty tax equal to 10% of the amount treated as taxable
income. In general, however, there is no penalty tax on distributions:

1. made on or after the taxpayer reaches age 59 1/2;
2. made on or after the death of an owner (or if the owner is not an
individual, the death of the primary annuitant);
3. attributable to the owner becoming disabled;
4. as part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and beneficiary;
5. made under an annuity policy that is purchased with a single premium
when the annuity starting date is no later than a year from purchase of
the annuity and substantially equal periodic payments are made, not
less frequently than annually, during the annuity period; and
6. made under certain annuities issued in connection with structured
settlement agreements.

Other tax penalties may apply to certain distributions under a Qualified
Policy, as well as to certain contributions, loans and other circumstances.

<PAGE> 37

TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A POLICY

A transfer of ownership, the designation of an annuitant or other beneficiary
who is not also the owner, the designation of certain annuity starting dates,
or the exchange of a policy may result in certain tax consequences to the owner
that are not discussed herein. An owner contemplating any such transfer,
assignment, designation, or exchange of a policy should contact a tax adviser
with respect to the potential tax effects of such a transaction.

WITHHOLDING

Pension and annuity distributions generally are subject to withholding for the
recipient's Federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Effective January 1, 1993, withholding is mandatory for certain
distributions from Qualified contracts.

MULTIPLE POLICIES

Section 72(e)(11) of the Code treats all nonqualified deferred annuity policies
entered into after October 21, 1988, that are issued by us (or our affiliates)
to the same owner during any calendar year as one annuity policy for purposes
of determining the amount includable in gross income under Code Section 72(e).
The effects of this rule are not yet clear; however, it could affect the time
when income is taxable and the amount that might be subject to the 10% penalty
tax described above. In addition, the Treasury Department has specific
authority to issue regulations that prevent the avoidance of Section 72(e)
through the serial purchase of annuity contracts or otherwise. There may also
be other situations in which the Treasury may conclude that it would be
appropriate to aggregate two or more annuity contracts purchased by the same
owner. Accordingly, a policyowner should consult a tax adviser before
purchasing more than one annuity contract.

POSSIBLE TAX CHANGES

In recent years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is
credited to the annuity. Although as of the date of this prospectus Congress is
not considering any legislation regarding the taxation of annuities, there is
always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, and
judicial decisions). Moreover, it is also possible that any legislative change
could be retroactive (that is, effective prior to the date of such change).

TAXATION OF QUALIFIED PLANS

The policies are designed for use with several types of qualified plans. The
tax rules applicable to participants in these qualified plans vary according to
the type of plan and the terms and conditions of the plan itself. Special
favorable tax treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in excess
of specified limits, distributions prior to age 59 1/2 (subject to certain
exceptions), distributions that do not conform to specified commencement and
minimum distribution rules, aggregate distributions in excess of a specified
annual amount, and in certain other circumstances. Therefore, no attempt is
made to provide more than general information about the use of the policies
with the various types of qualified retirement plans. Policyowners, annuitants,
and beneficiaries are cautioned that the rights of any person to any benefits
under these qualified retirement plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the policy, but we shall not be bound by the terms and conditions of such plans
to the extent such terms contradict the policy, unless we consent. Some
retirement plans are subject to distribution and other requirements that are not
incorporated in the administration of the policies. Owners are responsible for
determining that contributions, distributions and other transactions with
respect to the policies satisfy applicable law. Brief descriptions follow of the
various types of qualified retirement plans in connection with which we will
issue a policy. We will amend the policy as instructed to conform it to the
applicable legal requirements for such plan.

<PAGE> 38

INDIVIDUAL RETIREMENT ANNUITIES AND SIMPLIFIED EMPLOYEE PENSIONS (SEP/IRAS)

Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity" or
"IRA". These IRAs are subject to limits on the amount that may be contributed,
the persons who may be eligible and on the time when distributions may
commence. Also, distributions from certain other types of qualified retirement
plans may be "rolled over" on a tax-deferred basis into an IRA. Sales of the
policy for use with IRAs may be subject to special requirements of the Internal
Revenue Service.

Section 408(k) of the Code allows employers to establish simplified employee
pension plans for their employees, using an IRA for such purpose, if certain
criteria are met. Under these plans the employer may, within specified limits,
make deductible contributions on behalf of the employee to an IRA. Employers
intending to use the policy in connection with such plans should seek advice.

Purchasers of a policy for use with IRAs will be provided with supplemental
information required by the Internal Revenue Service or other appropriate
agency. Such purchasers will have the right to revoke their purchase within
seven days of the earlier of the establishment of the IRA or their purchase.
Purchasers should seek competent advice as to the suitability of the policy for
use with IRAs. The Internal Revenue Service has not reviewed the Policy for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
policy comports with IRA qualification requirements.

MINIMUM DISTRIBUTION REQUIREMENTS ("MDR") FOR IRAS

The Code requires that minimum distribution from an IRA begin no later than
April 1 of the year following the year in which the owner attains age 70.
Failure to do so results in a penalty of 50% of the amount not withdrawn. This
penalty is in addition to normal income tax. We will calculate the MDR only for
funds invested in this Policy and subject to our administrative guidelines,
including but not limited to: 1) minimum withdrawal amount of $250; 2) while
surrender charges are applicable, up to 10% of total premium plus 100% of any
sub-account earnings and 100% of current policy year's Fixed Account interest
may be withdrawn; and 3) use of MDR counts as the once a policy year free
withdrawal.

As an administrative practice, we will calculate and distribute an amount from
an IRA using the method contained in the Code's minimum distribution
requirements. The annual distribution is determined by dividing the prior
December 31st value for the policy by a life expectancy factor. The factor will
be based on either your life or the life expectancies of your life and your
designated beneficiary, as directed by you, and based on tables found in the
IRS' regulations. Factors are redetermined for each year's distribution. The
value of the policy to be used in this calculation is the policy value on the
December 31st prior to the year for which each subsequent payment is made. The
life expectancy factor is determined by using the appropriate IRS chart based
on one of the following circumstances:

1. Your life expectancy (Single Life Expectancy);
2. Joint life expectancy between you and your designated beneficiary
(Joint Life and Last Survivor Expectancy); or
3. Your life expectancy and a non-spouse beneficiary more than 10 years
younger than you (Minimum Distribution Incident Benefit Requirement).

The Code Minimum Distribution Requirements also apply to distribution from
qualified plans other than IRA's. You are responsible for ensuring that
distributions from such plans satisfy the Code minimum distribution
requirements.

CORPORATE AND SELF-EMPLOYED (H.R.10 AND KEOGH) PENSION AND PROFIT-SHARING PLANS

Sections 401(a), 401(k) and 403(a) of the Code permit corporate employers to
establish various types of tax-favored retirement plans for employees. The
Self-Employed Individual Tax Retirement Act of 1962, as amended, commonly
referred to as "H.R.10" or "Keogh", permits self-employed individuals also to
establish such tax-favored retirement plans for themselves and their employees.
Such retirement plans may permit the purchase of the policies in order to
accumulate retirement savings under the plans. Adverse tax consequences to the
plan, to the participant or to both may result if this policy is assigned or
transferred to any individual as a means to provide benefit payments. Employers
intending to use the policy in connection with such plans should seek advice.

38
<PAGE> 39

DEFERRED COMPENSATION PLANS

Section 457 of the Code provides for certain deferred compensation plans. These
plans may be offered with respect to service for state governments, local
governments, political subdivisions, agencies, instrumentalities and certain
affiliates of such entities, and tax exempt organizations. The plans may permit
participants to specify the form of investment for their deferred compensation
account. All distributions are taxable as ordinary income. All investments are
owned by the sponsoring employer and are subject to the claims of the general
creditors of the employer.

TAX-SHELTERED ANNUITY PLANS

Section 403(b) of the Code permits public school systems and certain tax-exempt
organizations specified in Section 501(c)(3) to make payments to purchase
annuity policies for their employees. Such payments are excludable from the
employee's gross income (subject to certain limitations), but may be subject to
FICA (Social Security) taxes. Under Code requirements, Section 403(b) annuities
generally may not permit distribution of: 1) elective contributions made in
years beginning after December 31, 1988; 2) earnings on those contributions;
and 3) earnings on amounts attributed to elective contributions held as of the
end of the last year beginning before January 1, 1989. Under Code requirements,
distributions of such amounts will be allowed only: 1) upon the death of the
employee; or 2) on or after attainment of age 59 1/2; or 3) separation from
service; or 4) disability; or 5) financial hardship, except that income
attributable to elective contributions may not be distributed in the case of
hardship. With respect to these restrictions, the Company is relying upon a
no-action letter dated November 28, 1988, from the staff of the SEC to the
American Council of Life Insurance, the requirements for which have been or
will be complied with by the Company.

OTHER TAX CONSEQUENCES

As noted above, the foregoing comments about the Federal tax consequences under
these policies are not exhaustive and special rules are provided with respect
to other tax situations not discussed in this Prospectus. Further, the Federal
income tax consequences discussed herein reflect our understanding of current
law and the law may change. Federal estate and state and local estate,
inheritance, and other tax consequences of ownership or receipt of
distributions under a Policy depend on the individual circumstances of each
owner or recipient of the distribution. A tax adviser should be consulted for
further information.

DISTRIBUTION OF POLICIES

The policies will be offered to the public on a continuous basis, and we do not
anticipate discontinuing the offering of the policies. However, we reserve the
right to discontinue the offering. Applications for policies are solicited by
agents who are licensed by applicable state insurance authorities to sell our
variable annuity policies and who are also registered representatives of Canada
Life of America Financial Services, Inc. ("CLAFS"). CLAFS is a wholly owned
subsidiary of Canada Life Insurance Company of America, a Michigan corporation.
CLAFS, a Georgia corporation organized on January 18, 1988, is registered with
the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. The policies may
also be sold through other broker-dealers registered under the Securities
Exchange Act of 1934 whose representatives are authorized by applicable law to
sell variable annuity policies. The commissions paid to agents are no greater
than 4% of premiums. We may pay an additional commission to the general agent.

CLAFS acts as the principal underwriter, as defined in the Investment Company
Act of 1940, of the policies for the Variable Account pursuant to a
distribution agreement involving CLAFS and us. CLAFS is not obligated to sell
any specific number of policies. CLAFS principal business address is 6201
Powers Ferry Road, NW, Atlanta, Georgia.

LEGAL PROCEEDINGS

There are at present no legal proceedings to which the Variable Account is a
party or the assets of the Variable Account are subject. We are not involved in
any litigation that is of material importance in relation to our total assets
or that relates to the Variable Account.

39
<PAGE> 40
VOTING RIGHTS

To the extent deemed to be required by law and as described in the Prospectuses
for the Funds, shares held in the Variable Account and in our general account
will be voted by us at regular and special shareholder meetings in accordance
with instructions received from persons having voting interests in the
corresponding sub-accounts. If however, the Investment Company Act of 1940 or
any regulation thereunder should be amended, or if the present interpretation
thereof should change, or if we determine that we are allowed to vote the
shares in our own right, we may elect to do so.

The number of votes which are available to you will be calculated separately
for each sub-account of the Variable Account, and may include fractional votes.
The number of votes attributable to a sub-account will be determined by
applying your percentage interest, if any, in a particular sub-account to the
total number of votes attributable to that sub-account. You hold a voting
interest in each sub-account to which the Variable Account value is allocated.
You only have voting interest prior to the annuity date or maturity date.

The number of votes which are available to you will be determined as of the
date coincident with the date established for determining shareholders eligible
to vote at the relevant meeting. Voting instructions will be solicited by
written communication prior to such meeting in accordance with established
procedures.

Shares as to which no timely instructions are received and shares held by us in
a sub-account as to which you have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
policies participating in that sub-account. Voting instructions to abstain on
any item to be voted upon will be applied to reduce the total number of votes
cast on such item.

Each person having a voting interest in a sub-account will receive proxy
materials, reports, and other material relating to the appropriate portfolio.

FINANCIAL STATEMENTS

The audited balance sheets of Canada Life Insurance Company of New York as at
December 31, 1995 and 1994, and the statements of operations, accumulated
surplus, and cash flows for each of the years in the three year period ended
December 31, 1995, as well as the Report of Independent Auditors and the
Actuary's Report thereon are contained in the Statement of Additional
Information. The Variable Account's statement of net assets as at December 31,
1995 and the related statement of operations for the year then ended, and the
statements of changes in net assets for each of the years ended December 31,
1995 and December 31, 1994, as well as the Report of Independent Auditors, are
contained in the Statement of Additional Information.

The financial statements of the Company included in the Statement of Additional
Information should be considered only as bearing on the ability of the Company
to meet its obligations under the policies. They should not be considered as
bearing on the investment performance of the assets held in the Variable
Account.

40
<PAGE> 41

STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS

<TABLE>
<S> <C>
ADDITIONAL POLICY PROVISIONS
Contract...................................................................2
Incontestability...........................................................2
Misstatement of Age........................................................2
Currency...................................................................2
Place of Payment...........................................................3
Non-Participation..........................................................3
Our Consent................................................................3
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Yields........................................................3
Other Sub-Account Yields...................................................4
Total Returns..............................................................4
Effect of the Policy Administration Charge on Performance Data.............6
SAFEKEEPING OF ACCOUNT ASSETS...................................................6
STATE REGULATION................................................................7
RECORDS AND REPORTS.............................................................7
LEGAL MATTERS...................................................................7
EXPERTS.........................................................................7
OTHER INFORMATION...............................................................7
FINANCIAL STATEMENTS............................................................7

</TABLE>

41
<PAGE> 42

THE FIXED ACCOUNT

DUE TO EXEMPTIVE AND EXCLUSIONARY PROVISIONS, OUR GENERAL ACCOUNT, INCLUDING
THE FIXED ACCOUNT, IS NOT SUBJECT TO OR REGISTERED UNDER THE SECURITIES ACT OF
1933, AND IS NOT SUBJECT TO OR REGISTERED AS AN INVESTMENT COMPANY UNDER THE
1940 ACT. THEREFORE, THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.
HOWEVER, DISCLOSURES ABOUT THE GENERAL ACCOUNT AND THE FIXED ACCOUNT MAY BE
SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF FEDERAL SECURITIES LAWS
CONCERNING THE ACCURACY AND COMPLETENESS OF STATEMENTS IN PROSPECTUSES.

The Fixed Account is not part of and does not depend on the investment
performance of the Variable Account. Amounts in the Fixed Account are part of
our general account. We credit interest to amounts in the Fixed Account at
rates we determine. We guarantee the interest rate will not be less than 3% per
annum. We will also credit interest to amounts in the Fixed Account at a
guaranteed rate of 4% for contracts issued prior to May 1, 1994, or such later
date as applicable regulatory approvals are obtained in the jurisdiction in
which the contracts are offered. At our sole discretion, we may credit a higher
current interest rate. Each net premium allocated to the Fixed Account will be
credited with a specified interest rate which will remain in effect for 12
calendar months. After such 12 month period, the net premium and any earnings
accumulated thereon will be credited with the rate of interest currently
credited to new monies allocated to the Fixed Account. This means that if you
allocate monies to the Fixed Account on a monthly basis, over the course of 12
months, those monies may be credited with 12 different interest rates. We will
establish a new interest rate the first business day of each calendar month.

You may allocate all or a portion of initial and any additional net premiums to
the Fixed Account. See "Net Premium Allocation" on page 19. You may transfer
all or a part of an amount in the sub-account(s) to the Fixed Account. You may
transfer a part of an amount in the Fixed Account to the sub-account(s),
subject to these restrictions, and except for transfers made pursuant to DCA
(see page 21):

1. we allow only one transfer each year and this transfer must be within the
period that is 30 days before and 30 days after the policy anniversary,
and an unused transfer option does not carry over to the next year; and
2. the maximum transfer amount is 50% of the Fixed Account value on the date
of the transfer, unless the balance after the transfer is less than
$5,000, in which case you have the option to transfer the entire value.

Transfers to and from the Fixed Account may be subject to a transfer fee, and
are also subject to other restrictions. See "Transfers" on page 20.

A portion or all of the policy administration charge will be deducted from
amounts in the Fixed Account to the extent that amounts in the sub-accounts are
insufficient to cover the charge. See "Policy Administration Charge" on page
28. A fee for taxes may also be deducted from amounts in the Fixed Account. See
"Taxes" on page 29.

You may withdraw all or a part of your Fixed Account value. See "Partial
Withdrawals" on page 24 and "Proceeds on Surrender" on page 22. Upon a partial
withdrawal or a cash surrender, you may incur a surrender charge. See
"Surrender Charge" on page 27. We have the right to defer payment of any cash
surrender value or partial withdrawal from the Fixed Account for up to six
months from the date we receive your written notice for surrender. See "Payment
of Benefits, Withdrawals, Cash Surrenders and Transfers - Postponement" on page
26.

FIXED ACCOUNT VALUE

The Fixed Account value before the annuity date or maturity date is:

1. the sum of the net premiums allocated to the Fixed Account; plus
2. any amounts transferred to the Fixed Account from a sub-account of the
Variable Account; minus
3. any cash surrender value withdrawn or amounts transferred from the Fixed
Account; minus
4. any policy administration charge deducted from the amount in the Fixed
Account; plus
5. interest credited to the amount in the Fixed Account.

42
<PAGE> 43
CANADA LIFE INSURANCE COMPANY OF NEW YORK
HOME OFFICE: 500 Mamaroneck Avenue, Harrison, New York 10528
(914) 835-8400

STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY ACCOUNT 1
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY

This Statement of Additional Information contains information in addition to
the information described in the Prospectus for the flexible premium variable
deferred annuity policy (the "policy") offered by Canada Life Insurance Company
of New York. This Statement of Additional Information is not a Prospectus, and
it should be read only in conjunction with the Prospectuses for the policy;
Canada Life of America Series Fund, Inc.; Fidelity Investments Variable
Insurance Products Fund; Fidelity Investments Variable Insurance Products Fund
II; Seligman Portfolios, Inc.; Dreyfus Variable Investment Fund; The Dreyfus
Socially Responsible Growth Fund, Inc.; The Alger American Fund; and The
Montgomery Funds III. The Prospectuses are dated the same date as this
Statement of Additional Information. You may obtain copies of the Prospectuses
by writing or calling us at our address or phone number shown above.

The date of this Statement of Additional Information is May 1, 1996.

<PAGE> 44

STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS

<TABLE>
<S> <C>
ADDITIONAL POLICY PROVISIONS
Contract.................................................................2
Incontestability.........................................................2
Misstatement Of Age......................................................2
Currency.................................................................2
Place Of Payment.........................................................3
Non-Participation........................................................3
Our Consent..............................................................3

CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Yields......................................................3
Other Sub-Account Yields.................................................4
Total Returns............................................................4
Effect Of The Policy Administration Charge On Performance Data...........6

SAFEKEEPING OF ACCOUNT ASSETS.................................................6

STATE REGULATION..............................................................7

RECORDS AND REPORTS...........................................................7

LEGAL MATTERS.................................................................7

EXPERTS.......................................................................7

OTHER INFORMATION.............................................................7

FINANCIAL STATEMENTS..........................................................7
</TABLE>

ADDITIONAL POLICY PROVISIONS

CONTRACT

The entire contract is made up of the policy and the application for the
policy. The statements made in the application are deemed representations and
not warranties. We cannot use any statement in defense of a claim or to void
the policy unless it is contained in the application and a copy of the
application is attached to the policy at issue.

INCONTESTABILITY

We will not contest the policy after it has been in force during the
annuitant's lifetime for two years from the date of issue of the policy.

MISSTATEMENT OF AGE

If the age of the annuitant has been misstated, we will pay the amount which
the proceeds would have purchased at the correct age.

If we make an overpayment because of an error in age, the overpayment plus
interest at 3% compounded annually will be a debt against the policy. If the
debt is not repaid, future payments will be reduced accordingly.

If we make an underpayment because of an error in age, any annuity payments
will be recalculated at the correct age, and future payments will be adjusted.
The underpayment with interest at 3% compounded annually will be paid in a
single sum.

CURRENCY

All amounts payable under the policy will be paid in United States currency.

<PAGE> 45

PLACE OF PAYMENT

All amounts payable by us will be payable at our Home Office at the address
shown on page one of this Statement of Additional Information.

NON-PARTICIPATION

The policy is not eligible for dividends and will not participate in our
divisible surplus.

OUR CONSENT

If our consent is required, it must be given in writing. It must bear the
signature, or a reproduction of the signature, of our President, Secretary or
Actuary.

CALCULATION OF YIELDS AND TOTAL RETURNS

MONEY MARKET YIELDS

We may, from time to time, quote in advertisements and sales literature the
current annualized yield of the Money Market Sub-Account for a 7 day period in
a manner which does not take into consideration any realized or unrealized
gains or losses on shares of the Money Market Portfolio or on its portfolio
securities. This current annualized yield is computed by determining the net
change (exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) at the end of the 7 day period in the
value of a hypothetical account under a policy having a balance of 1 unit of
the Money Market Sub-Account at the beginning of the period, dividing such net
change in account value by the value of the account at the beginning of the
period to determine the base period return, and annualizing this quotient on a
365 day basis. The net change in account value reflects: 1) net income from the
Portfolio attributable to the hypothetical account; and 2) charges and
deductions imposed under the policy which are attributable to the hypothetical
account. The charges and deductions include the per unit charges for the
hypothetical account for: 1) the policy administration charge; 2) the daily
administration fee; and 3) the mortality and expense risk charge. The yield
calculation reflects an average per unit policy administration charge of $30 per
year per policy deducted at the end of each policy year. Current Yield will be
calculated according to the following formula:

Current Yield = ((NCS-ES)/UV) X (365/7)

Where:

NCS = the net change in the value of the Portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized
appreciation and depreciation) for the 7 day period attributable to
a hypothetical account having a balance of 1 Sub-Account unit.
ES = per unit expenses of the Sub-Account for the 7 day period.
UV = the unit value on the first day of the 7 day period.

The current yield for the 7 day period ended December 31, 1995 was 3.76%.

We may also quote the effective yield of the Money Market Sub-Account for the
same 7 day period, determined on a compounded basis. The effective yield is
calculated by compounding the unannualized base period return according to the
following formula:

365/7
Effective Yield = (1+((NCS-ES)/UV)) -1

Where:

NCS = the net change in the value of the Portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized
appreciation and depreciation) for the 7 day period attributable
to a hypothetical account having a balance of 1 Sub-Account unit.
ES = per unit expenses of the Sub-Account for the 7 day period.
UV = the unit value for the first day of the 7 day period.

The effective yield for the 7 day period ended December 31, 1995 was 3.83%.

3
<PAGE> 46

Because of the charges and deductions imposed under the policy, the yield for
the Money Market Sub-Account will be lower than the yield for the Money Market
Portfolio.

The yields on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio, the types and quality of portfolio securities held by
the Money Market Portfolio of the Fund, and the Money Market Portfolio's'
operating expenses.

OTHER SUB-ACCOUNT YIELDS

We may, from time to time, quote in sales literature and advertisements the
current annualized yield of one or more of the sub-accounts (except the Money
Market Sub-Account) for a policy for 30 day or one month periods. The
annualized yield of a sub-account refers to income generated by the sub-account
over a specific 30 day or one month period. Because the yield is annualized,
the yield generated by a sub-account during the 30 day or one month period is
assumed to be generated each period over a 12 month period. The yield is
computed by: 1) dividing the net investment income of the portfolio
attributable to the sub-account units less sub-account expenses for the period;
by 2) the maximum offering price per unit on the last day of the period
multiplied by the daily average number of units outstanding for the period; by
3) compounding that yield for a 6 month period; and by 4) multiplying that
result by 2. Expenses attributable to the sub-account include 1) the policy
administration charge; 2) the daily administration fee; and 3) the mortality
and expense risk charge. The yield calculation reflects a policy administration
charge of $30 per year per policy deducted at the end of each policy year. For
purposes of calculating the 30 day or one month yield, an average policy
administration charge per dollar of policy value in the Variable Account is
used to determine the amount of the charge attributable to the sub-account for
the 30 day or one month period as described below. The 30 day or one month
yield is calculated according to the following formula:

6
Yield = 2 x ((((NI-ES)/(U x UV)) + 1) - 1)
Where:

NI = net income of the portfolio for the 30 day or one month period
attributable to the sub-account's units.
ES = expenses of the sub-account for the 30 day or one month period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last day in the 30
day or one month period.

Because of the charges and deductions imposed under the policies, the yield for
the sub-account will be lower than the yield for the corresponding portfolio.

The yield on the amounts held in the sub-accounts normally will fluctuate over
time. Therefore, the disclosed yield for any given past period is not an
indication or representation of future yields or rates of return. The
sub-account's actual yield is affected by the types and quality of portfolio
securities held by the portfolio, and its operating expenses.

Yield calculations do not take into account the surrender charge under the
policy. The surrender charge is equal to 6% of premiums paid during that
current policy year and the previous 4 policy years on certain amounts
surrendered or withdrawn under the policy as described in the Prospectus. A
surrender charge will not be imposed on the first withdrawal in any policy year
on an amount up to 10% of the premiums paid during that current policy year and
the previous 4 policy years, if the systematic withdrawal privilege is not
elected in that policy year.

TOTAL RETURNS

We may, from time to time, also quote in sales literature or advertisements
total returns, including average annual total returns for one or more of the
sub-accounts for various periods of time. We will always include quotes of
average annual total return for the period measured from the date the
sub-account commenced operations. When a sub-account has been in operation for
1, 5, and 10 years, respectively, the average annual total return for these
periods will be provided.

Average annual total returns for other periods of time may, from time to time,
also be disclosed. Average annual total returns represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a policy to the redemption value of that investment as of the last day of
each of the periods. The ending date for each period for which total return
quotations are provided will be for the most recent month-end practicable,
considering the type and media of the communication and will be stated in the
communication.

4
<PAGE> 47

Average annual total returns will be calculated using sub-account unit values
which we calculate on each valuation day based on the performance of the
sub-account's underlying portfolio, and the deductions for the mortality and
expense risk charge, daily administration fee and the policy administration
charge of $30 per year per policy deducted at the end of each policy year. For
purposes of calculating total return, an average per dollar policy
administration charge attributable to the hypothetical account for the period
is used. The total return will then be calculated according to the following
formula:

1/N
TR = ((ERV/P) )-1

Where:

TR = the average annual total return net of sub-account recurring
charges.
ERV = the ending redeemable value of the hypothetical account at the
end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.

The total returns assume that the maximum fees and charges are imposed for
calculations.

Average annual total returns for the periods shown below for the sub-accounts
were:

1 Year Return 5 Year Return Cumulative from
Year Ended 12/31/90 to Inception Date*
12/31/95 12/31/95 to 12/31/95
------------- ------------- ---------------
<S> <C> <C> <C>
Money Market (1.91)% ** 0.58%
Managed 14.68% ** 7.56%
Bond 9.66% ** 5.60%
Value Equity 16.27% ** 15.01%
International Equity**** N/A% ** N/A%
Capital 26.65% ** 2.11%
Fidelity Growth*** 27.98% 18.76% 13.18%
Fidelity High Income*** 13.42% 16.91% 10.20%
Fidelity Overseas*** 2.52% 6.09% 5.74%
Fidelity Asset Manager*** 9.83% 10.75% 9.62%
Seligman Communications and Information 31.37% ** 28.52%
Seligman Frontier 25.97% ** 25.90%

</TABLE>

* The Inception Dates of the Sub-Accounts are as follows: Money Market,
Managed, Bond and Value Equity 4/29/92; Capital 5/1/93; Fidelity Growth
10/9/86; Fidelity High Income 9/19/85; Fidelity Overseas 1/28/87; Fidelity
Asset Manager 9/6/89; International Equity, Seligman Communications and
Information, and Seligman Frontier 5/1/95.

** These Sub-Accounts invest in portfolios that have not been in operation
five years as of December 31, 1995, and accordingly, no five year average
annual total return is available.

*** The date of inception for the Fidelity Growth, High Income, Overseas, and
Asset Manager Sub-Accounts was May 1, 1994. The total return values
reflected in the middle column reflect performance of the sub-accounts if
they had existed for a five year period.

**** The International Equity sub-account commenced operations on May 1, 1995,
and had no activity as of December 31, 1995.

As of December 31, 1995, the Fidelity Index 500, Dreyfus Growth and Income,
Dreyfus Socially Responsible, Alger American Small Capitalization, Alger
American Growth, Alger American MidCap Growth, Alger American Leveraged AllCap,
and Montgomery Emerging Markets Sub-Accounts had not commenced operations in
the Canada Life product. Accordingly, average annual total return information
is not shown for these sub-accounts.

We may, from time to time, also quote in sales literature or advertisements,
total returns that do not reflect the surrender charge. These are calculated in
exactly the same way as average annual total returns described above, except
that the ending redeemable value of the hypothetical account for the period is
replaced with an ending value for the period that does not take into account
any charge on amounts surrendered or withdrawn.

5
<PAGE> 48

Average annual total returns without a surrender charge for the periods shown
below for the sub-accounts (except the Fidelity Index 500, Dreyfus Growth and
Income, Dreyfus Socially Responsible, Alger American Small Capitalization,
Alger American Growth, Alger American MidCap Growth, Alger American Leveraged
AllCap, and Montgomery Emerging Markets Sub-Accounts) were:

1 Year Return 5 Year Return Cumulative from
Year Ended 12/31/90 to Inception Date*
12/31/95 12/31/95 to 12/31/95
------------- ------------- ---------------
<S> <C> <C> <C>
Money Market 3.49% ** 2.00%
Managed 20.08% ** 8.75%
Bond 15.06% ** 6.85%
Value Equity 21.67% ** 16.01%
International Equity N/A% ** 6.91%
Capital 32.05% ** 4.03%
Fidelity Growth*** 33.38% 19.03% 13.18%
Fidelity High Income*** 18.82% 17.20% 10.20%
Fidelity Overseas*** 7.92% 6.51% 5.74%
Fidelity Asset Manager*** 15.23% 11.10% 9.62%
Seligman Communications and Information 36.42% ** 32.60%
Seligman Frontier 31.02% ** 30.00%
</TABLE>

** These Sub-Accounts invest in portfolios that have not been in operation
five years as of December 31, 1995, and accordingly, no five year average
annual total return is available.

EFFECT OF THE POLICY ADMINISTRATION CHARGE ON PERFORMANCE DATA

The policy provides for a $30 policy administration charge to be assessed
annually on each policy anniversary proportionately from any sub-accounts or
Fixed Account in which you are invested. If the policy value on the policy
anniversary is $75,000 or more, we will waive the policy administration charge
for the prior policy year. For purposes of reflecting the policy administration
charge in yield and total return quotations, we will convert the annual charge
into a per-dollar per-day charge based on the average policy value in the
Variable Account of all policies on the last day of the period for which
quotations are provided. The per-dollar per-day average charge will then be
adjusted to reflect the basis upon which the particular quotation is
calculated.

SAFEKEEPING OF ACCOUNT ASSETS

We hold the title to the assets of the Variable Account. The assets are kept
physically segregated and held separate and apart from our general account
assets and from the assets in any other separate account we have.

Records are maintained of all purchases and redemptions of portfolio shares
held by each of the sub-accounts.

Our officers and employees are covered by an insurance company blanket bond
issued by America Home Assurance Company to The Canada Life Assurance Company,
our parent Company, in the amount of $25 million. The bond insures against
dishonest and fraudulent acts of officers and employees.

STATE REGULATION

We are subject to the insurance laws and regulations of the State of New York.
Quarterly Statements are filed with the New York Superintendent of Insurance
covering our operations and reporting on our financial condition. Periodically,
the New York Superintendent of Insurance examines our financial condition, which
examination includes the liabilities and reserves of the Variable Account and
other separate accounts of which we are the depositor.

6
<PAGE> 49

RECORDS AND REPORTS

We will maintain all records and accounts relating to the Variable Account. As
presently required by the Investment Company Act of 1940 and regulations
promulgated thereunder, reports containing such information as may be required
under the Act or by any other applicable law or regulation will be sent to you
semi-annually at your last address known to us.

LEGAL MATTERS

All matters relating to New York law pertaining to the policies, including the
validity of the policies and our authority to issue the policies, have been
passed upon by David A. Hopkins. Sutherland, Asbill & Brennan of Washington,
D.C., has provided advice on certain matters relating to the federal securities
laws.

EXPERTS

The balance sheets of Canada Life Insurance Company of New York as at December
31, 1995 and 1994, and the statements of operations, accumulated surplus, and
cash flows for each of the years in the three year period ended December 31,
1995, included in this Statement of Additional Information and Registration
Statement, as well as the Variable Account's statement of net assets as of
December 31, 1995 and the related statement of operations for the year then
ended, and the statements of changes in net assets for the years ended December
31, 1995 and December 31, 1994 included in this Statement of Additional
Information and Registration Statement have been audited by our Independent
Auditors--Ernst & Young, Chartered Accountants, of Toronto, Canada, as set
forth in their reports thereon appearing elsewhere herein and in the
Registration Statement and are included herein in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.

OTHER INFORMATION

A registration statement has been filed with the SEC under the Securities Act
of 1933 as amended, with respect to the policies discussed in this Statement of
Additional Information. Not all of the information set forth in the
registration statement, amendments and exhibits thereto has been included in
this Statement of Additional Information. Statements contained in this
Statement of Additional Information concerning the content of the policies and
other legal instruments are intended to be summaries. For a complete statement
of the terms of these documents, reference should be made to the instruments
filed with the SEC.

FINANCIAL STATEMENTS

The Variable Account's statement of net assets as at December 31, 1995, and the
statement of operations for the year then ended, and the statements of changes
in net assets for each of the years ended December 31, 1995 and December 31,
1994, as well as the Auditors' Report, are contained herein. Ernst & Young,
Chartered Accountants, serve as independent auditors for the Variable Account.

The audited balance sheets of Canada Life Insurance Company of New York as at
December 31, 1995 and 1994 and the statements of operations, accumulated
surplus, and cash flows for each of the years in the three year period ended
December 31, 1995, are contained herein. The financial statements of the
Company should be considered only as bearing on our ability to meet our
obligations under the policies. They should not be considered as bearing on the
investment performance of the assets held in the Variable Account.