CANADA LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT 1, N-4, 1999-02-04

CANADA LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT 1
N-4, 1999-02-04

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<PAGE>

As Filed with the Securities and Exchange Commission on February 4, 1999.

Registration No.
811-5961
- --------------------------------------------------------------------------------
Securities and Exchange Commission
Washington, D.C. 20549
- --------------------------------------------------------------------------------

FORM N-4
Registration Statement Under the Securities Act of 1933 [X]

Pre-Effective Amendment No. [ ]
----
Post-Effective Amendment No. [ ]
----
and/or

Registration Statement Under the Investment Company Act of 1940

Amendment No. 14 [X]
----

- --------------------------------------------------------------------------------

CANADA LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT 1
(Exact Name of Registrant)

CANADA LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)

500 Mamaroneck Avenue
Harrison, New York 10528
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: (914) 835-8400

Paul R. McCadam
500 Mamaroneck Avenue
Harrison, New York 10528
(Name and Address of Agent for Service)

Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill, & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.

Title of Securities Being Registered: Individual Flexible Premium Variable
Annuity Contracts.

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.

<PAGE>

PART A

INFORMATION REQUIRED TO BE IN THE PROSPECTUS
<PAGE>

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

VARIFUND ACCESS(SM)
PROSPECTUS
VARIABLE ANNUITY ACCOUNT 1
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY

This Prospectus describes the flexible premium variable deferred annuity policy
(the Policy) offered by Canada Life Insurance Company of New York (We, Our, Us
or the Company).

The Owner (Policyowner or You) may choose among the 30 divisions (the
Sub-Accounts) of the Canada Life of New York Variable Annuity Account 1 (the
Variable Account) and/or the Fixed Account. Assets in each Sub-Account are
invested in corresponding portfolios of the following fund companies (the
Funds):

The Alger American Fund (Alger American)
Berger Institutional Products Trust (Berger Trust)
Canada Life of America Series Fund, Inc. (CLASF)
The Dreyfus Socially Responsible Growth Fund, Inc. (Dreyfus Socially
Responsible)
Dreyfus Variable Investment Fund (Dreyfus)
Fidelity Investments Variable Insurance Products Fund (Fidelity VIP)
Fidelity Investments Variable Insurance Products Fund II (Fidelity VIP II)
Fidelity Investments Variable Insurance Products Fund III (Fidelity VIP
III)
Goldman Sachs Variable Insurance Trust (Goldman)
The Montgomery Funds III (Montgomery)
Seligman Portfolios, Inc. (Seligman)

The Policy Value will vary according to the investment performance of the
portfolio(s) in which the Sub-Accounts you choose are invested, until the Policy
Value is applied to a payment option. You bear the entire investment risk on
amounts allocated to the Variable Account.

This Prospectus provides basic information that a prospective Policyowner ought
to know before investing. Additional information 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 included on the last page of this
Prospectus. You may obtain a free copy of the Statement of Additional
Information by writing or calling Us at the address or phone number shown above.

Please read this Prospectus carefully before buying a policy and keep it for
future reference. This Prospectus must be accompanied by current prospectuses
for the Funds. The Funds' prospectuses are attached to this Prospectus.

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

The Policies and the Funds are not insured by the FDIC nor any other agency.
They are not deposits or other obligations of any bank and are not bank
guaranteed. The Policy described in this Prospectus is subject to market
fluctuation, investment risk and possible loss of principal.

The date of this Prospectus is , 1999

1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S> <C>
SUMMARY.................................................................... 3
TABLE OF EXPENSES.......................................................... 7
THE COMPANY................................................................ 28
THE VARIABLE ACCOUNT, THE FUND AND THE FIXED ACCOUNT....................... 28
The Variable Account................................................... 28
The Fund............................................................... 29
Seligman Capital Portfolio........................................ 26
Seligman Cash Management Portfolio................................ 26
Seligman Common Stock Portfolio................................... 26
Seligman Communications and Information Portfolio................. 26
Seligman Frontier Portfolio....................................... 26
Seligman Henderson Global Growth Opportunities Portfolio.......... 26
Seligman Henderson Global Smaller Companies Portfolio............. 27
Seligman Henderson Global Technology Portfolio.................... 27
Seligman Henderson International Portfolio........................ 27
Seligman High-Yield Bond Portfolio................................ 27
Seligman Income Portfolio......................................... 27
Seligman Large-Cap Value Portfolio................................ 27
Seligman Small-Cap Value Portfolio................................ 27
Reserved Rights................................................... 28
Change in Investment Objective.................................... 28
The Fixed Account...................................................... 28
Guarantee Amount....................................................... 29
Guarantee Periods...................................................... 29
DESCRIPTION OF ANNUITY POLICY.............................................. 32
Ten Day Right to Examine Policy........................................ 32
Premium................................................................ 33
Initial Premium................................................... 33
Premium Enhancement............................................... 33
Additional Premium................................................ 33
Pre-Authorized Check Agreement Plan............................... 34
Wire Transmittal Privilege........................................ 34
Electronic Data Transmission of Application Information........... 34
Net Premium Allocation............................................ 35
Termination............................................................ 35
Variable Account Value................................................. 35
Units............................................................. 35
Unit Value........................................................ 36
Net Investment Factor............................................. 36
Transfers.............................................................. 36
Transfer Privilege................................................ 36
Telephone Transfer Privilege...................................... 37
Intouch(R) Voice Response System.................................. 37
Dollar Cost Averaging Privilege................................... 37
Transfer Processing Fee........................................... 38
Payment of Proceeds.................................................... 38
Proceeds.......................................................... 38
Proceeds on Annuity Date.......................................... 39
Proceeds on Surrender............................................. 39
Proceeds on Death of Last Surviving Annuitant Before
Annuity Date (The Death Benefit).............................. 40
Proceeds on Death of Any Policyowner Before or After
Annuity Date.................................................. 42
Interest on Proceeds................................................... 42
Partial Withdrawals.................................................... 42
Systematic Withdrawal Privilege................................... 43
Seligman Time Horizon Matrix(SM)....................................... 45
Portfolio Rebalancing (Rebalancing).................................... 45
Loans.................................................................. 45
Payment of Benefits, Partial Withdrawals, Cash Surrenders &
Transfers - Postponement...................................... 46
Charges Against the Policy, Variable Account, and Fund................. 46
Surrender Charge.................................................. 46
Surrender Charge.................................................. 47
Annual Administration Charge...................................... 49
Daily Administration Fee.......................................... 49
Transfer Processing Fee........................................... 49
Annualized Mortality and Expense Risk Charge...................... 50
Waiver of Surrender Charge........................................ 51
Reduction or Elimination of Surrender Charges and Annual
Administration Charges........................................ 52
Reduction or Elimination of Annual Administration Charges......... 52
Taxes............................................................. 53
Other Charges Including Investment Management Fees................ 53
Payment Options........................................................ 54
Election of Options............................................... 54
Description of Payment Options.................................... 54
Payment Dates..................................................... 55
Age and Survival of Payee......................................... 55
Death of Payee.................................................... 55
Other Policy Provisions................................................ 55
Policyowner or Joint Owner........................................ 55
Beneficiary....................................................... 55
Written Notice.................................................... 55
Periodic Reports.................................................. 56
Assignment........................................................ 56
Modification...................................................... 56
YIELDS AND TOTAL RETURNS................................................... 56
TAX DEFERRAL............................................................... 59
FEDERAL TAX STATUS......................................................... 59
Introduction........................................................... 59
The Company's Tax Status............................................... 60
Tax Status of the Policy............................................... 60
Diversification Requirements...................................... 60
Policyowner Control............................................... 60
Required Distributions............................................ 61
Taxation of Annuities.................................................. 61
In General........................................................ 61
Withdrawals/Distributions......................................... 62
Annuity Payments.................................................. 62
Taxation of Death Benefit Proceeds................................ 62
Penalty Tax on Certain Withdrawals................................ 63
Transfers, Assignments, or Exchanges of a Policy....................... 63
Withholding............................................................ 63
Multiple Policies...................................................... 63
Possible Tax Changes................................................... 64
Taxation of Qualified Plans............................................ 64
Individual Retirement Annuities and Simplified Employee
Pensions (SEP/IRAs)........................................... 64
SIMPLE Individual Retirement Annuities............................ 65
ROTH Individual Retirement Annuities.............................. 65
Minimum Distribution Requirements................................. 65
Corporate And Self-Employed (H.R.10 and Keogh) Pension
And Profit-Sharing Plans...................................... 66
Deferred Compensation Plans....................................... 66
Tax-Sheltered Annuity Plans....................................... 67
Other Tax Consequences................................................. 67
DISTRIBUTION OF POLICIES................................................... 68
LEGAL PROCEEDINGS.......................................................... 68
VOTING RIGHTS.............................................................. 68
INSURANCE MARKETPLACE STANDARDS ASSOCIATION................................ 69
PREPARING FOR YEAR 2000.................................................... 69
FINANCIAL STATEMENTS....................................................... 70
DEFINITIONS................................................................ 71
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS.................... 74
APPENDIX A: STATE PREMIUM TAXES............................................ 75
</TABLE>

2
<PAGE>

SUMMARY

This summary provides a brief description of some of the features and charges of
the Policy offered by Us. You will find more detailed information in the rest of
this Prospectus, the Statement of Additional Information and the Policy. Please
keep the Policy and its riders or endorsements, if any, together with the
application. Together they are the entire agreement between You and Us.

HOW DO I PURCHASE A POLICY?

You may purchase a Policy with a premium payment of at least $5,000 (generally
$2,000 if the Policy is an Individual Retirement Annuity (IRA)). You may
purchase a Policy with a premium of $100 (generally $50 if the Policy is an
IRA), if the premium payment is submitted with a pre-authorized check (PAC)
agreement. See "Premiums" and "Pre-Authorized Check Agreement Plan."

CAN I MAKE ADDITIONAL PREMIUM PAYMENTS?

You may make additional premium payments during any Annuitant's lifetime and
before the Annuity Date. Additional premium payments must be at least $1,000 or
$100 per month if paid by PAC (or $50 per month if paid by PAC and the Policy is
an IRA). You must obtain prior approval before Your total premiums paid can
exceed $1,000,000. See "Premiums."

HOW DOES THE TEN DAY RIGHT TO EXAMINE THE POLICY WORK?

You have ten days after You receive the Policy to decide if You would like to
cancel the Policy. We will return the Policy Value (without interest and less
the amount of any partial withdrawals). If the Policy is issued as an IRA and
canceled within 7 days, We will return all premiums if the premiums are greater
than the amount otherwise payable. See "Ten Day Right to Examine Policy."

WHAT IS THE PURPOSE OF THE VARIABLE ACCOUNT?

The Variable Account is a separate investment account that consists of 30
Sub-Accounts. Before the Policy Value is applied to a payment option, amounts in
the Variable Account will vary according to the investment performance of the
portfolios of the Fund(s) in which Your elected Sub-Accounts are invested. You
may allocate Your Net Premiums among the Fixed Account and the 30 Sub-Accounts
of the Variable Account. The assets of each Sub-Account are invested in the
corresponding portfolios of the Funds that are listed on the cover page of this
Prospectus. See "The Variable Account" and "The Funds."

HOW DOES THE FIXED ACCOUNT WORK?

You may allocate all or part of Net Premiums or make transfers from the Variable
Account to the Fixed Account. The Fixed Account is not part of and does not
depend on the investment performance of the Variable Account.

3
<PAGE>

WHEN WILL I RECEIVE PAYMENTS?

After the Policy Value is transferred to a payment option, We will pay proceeds
in equal amounts monthly, quarterly or annually during the payee's lifetime or
for 10 years, whichever is longer, unless You have elected another payment
option. See "Proceeds on Annuity Date."

WHAT HAPPENS IF THE OWNER DIES?

If any Owner dies before the Policy Value is transferred to a payment option, We
will pay the Beneficiary the Policy Value as of the date we receive proof of the
Owner's death. See "Proceeds on Death of Any Policyowner."

WHAT HAPPENS IF THE LAST SURVIVING ANNUITANT DIES?

If the Last Surviving Annuitant dies before the Policy Value is transferred to a
payment option, We will pay the Beneficiary a Death Benefit.

The Death Benefit is the greater of:

1. the premiums paid, adjusted for any partial withdrawals and incurred
taxes; or
2. the Policy Value on the date We receive Due Proof of Death.

For Policyowners who have chosen on the application to pay an additional
Mortality and Expense Risk Charge of 0.15%, the Death Benefit is the greatest
of:

1. item "1." above;
2. item "2." above; or
3. the greatest Policy Value on any Policy Anniversary occurring before
both the date the Last Surviving Annuitant attained age 81 and the
date We receive Due Proof of the Annuitant's death This value will be
adjusted for any partial withdrawals, incurred taxes and premium paid
that occur after such Policy Anniversary.

If on the date the Policy was issued any Annuitant was attained age 81 or older,
either Death Benefit is the Policy Value on the date We receive Due Proof of
Death.

4
<PAGE>

See "Proceeds on Death of Last Surviving Annuitant Before Annuity Date (The
Death Benefit)."

CAN I GET MONEY OUT OF MY POLICY?

You may withdraw part or all of the Cash Surrender Value at any time before the
earlier of the death of the Last Surviving Annuitant, the death of any Owner, or
the date when the value in the Policy is transferred to a payment option,
subject to certain limitations. See "The Fixed Account," "Partial Withdrawals"
and "Proceeds on Surrender." A partial withdrawal or a surrender may incur
federal income tax, including a federal penalty tax. See "FEDERAL TAX STATUS."

WHAT CHARGES WILL I PAY?

Surrender Charge: There are no surrender charges when a partial withdrawal or
cash surrender is made.

Annual Administration Charge: We deduct an Annual Administration Charge of $30
for the prior Policy Year on each Policy Anniversary. 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. If the
Policy Value on the Policy Anniversary is $75,000 or more, We will waive the
Annual Administration Charge for the prior Policy Year. We will also waive the
Annual Administration Charge if the Policy is a Tax-Sheltered Annuity. See
"Annual Administration Charge."

Daily Administration Fee: We also deduct a daily administration fee each day at
an annual rate of 0.30% from the assets of the Variable Account. See "Daily
Administration Fee."

Transfer Processing Fee: The first 12 transfers during each Policy Year are
free. We currently assess a $25 transfer fee for the 13th and each additional
transfer in a Policy Year. See "Transfer Processing Fee."

Mortality and Expense Risk Charge: We deduct a mortality and expense risk charge
each day from the assets of the Variable Account at an annual rate of 1.25%. We
charge an additional 0.15% if You choose on the application to receive an
Enhanced Death Benefit. See "Annualized Mortality and Expense Risk Charge" and
"Proceeds on Death of Last Surviving Annuitant Before Annuity Date (The Death
Benefit)."

Premium taxes: There are currently no premium taxes payable under New York law.

Investment Management Fees: Charges for the investment management services and
operating expenses are deducted daily from each portfolio of each Fund. See
"Other Charges Including Investment Advisory Fees" and the attached Fund
prospectuses.

ARE THERE ANY OTHER POLICY PROVISIONS?

For information concerning the Owner, Beneficiary, Written Notice, periodic
reports, assignment, modification and other important Policy provisions, see
"Other Policy Provisions."

HOW WILL THE POLICY BE TAXED?

5
<PAGE>

For a brief discussion of Our current understanding of the federal tax laws
concerning Us and the Policy see "FEDERAL TAX STATUS."

WHAT IF I HAVE 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.

If You have questions concerning Your investment strategies, please contact Your
registered representative.

6
<PAGE>

TABLE OF EXPENSES

This table is intended to assist You in understanding the various costs and
expenses that You will bear directly or indirectly. It reflects expenses of the
Variable Account as well as the Funds.

EXPENSE DATA

The following information regarding expenses assumes that the entire Policy
Value is in the Variable Account.

<TABLE>
<CAPTION>
POLICYOWNER TRANSACTION EXPENSES
--------------------------------
<S> <C>
Sales load on purchase payments..........................................................................None
Maximum contingent deferred sales charge as a percentage of amount surrendered...........................None

TRANSFER FEE
Current Policy - First 12 transfers each Policy Year................................................No fee
Each transfer thereafter .................................................................$25 per transfer
Transfer fee when using the Intouch(R) Voice Response System........................................No fee

ANNUAL ADMINISTRATION CHARGE
----------------------------
Per Policy per Policy Year:...............................................................................$30
(waived for the prior Policy Year if the Policy Value is $75,000 or more on the Policy
Anniversary or if the Policy is a Tax-Sheltered Annuity)

VARIABLE ACCOUNT ANNUAL EXPENSES
--------------------------------
(as a percentage of average account value)
Mortality and expense risk charges.......................................................................1.25%
Annual rate of daily administration fee..................................................................0.30%
-----
Total Variable Account annual expenses...................................................................1.55%

VARIABLE ACCOUNT ANNUAL EXPENSES (IF ENHANCED DEATH BENEFIT CHOSEN)
--------------------------------
(as a percentage of average account value)
Mortality and expense risk charges.......................................................................1.40%
Annual rate of daily administration fee..................................................................0.30%
-----
Total Variable Account annual expenses...................................................................1.70%

PORTFOLIOS' ANNUAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------------------
(as a percentage of average net assets)
</TABLE>

<TABLE>
<CAPTION>
OTHER EXPENSES Total
MANAGEMENT (AFTER EXPENSE ANNUAL
PORTFOLIO FEES REIMBURSEMENT)** EXPENSES
--------- ---- -------------- --------
<S> <C> <C> <C>
Bond

Capital

International Equity

Managed
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE ANNUAL
PORTFOLIO FEES REIMBURSEMENT)** EXPENSES
--------- ---- ------------- --------
<S> <C> <C> <C>
Money Market
Value Equity
Alger American Growth
Alger American Leveraged AllCap
Alger American MidCap Growth
Alger American Small Capitalization
Berger/BIAM IPT-International
Berger IPT-Small Company Growth
Dreyfus Capital Appreciation
Dreyfus Growth and Income
Dreyfus Socially Responsible
Fidelity VIP Growth
Fidelity VIP High Income
Fidelity VIP Overseas
Fidelity VIP II Asset Manager
Fidelity VIP II Contrafund
Fidelity VIP II Index 500
Fidelity VIP III Growth Opportunities
Goldman Sachs Capital Growth *
Goldman Sachs CORE U.S. Equity *
Goldman Sachs Global Income *
Goldman Sachs Growth and Income *
Montgomery Variable Series: Emerging Markets
Montgomery Variable Series: Growth
Seligman Communications and Information
Seligman Frontier
</TABLE>

* As Goldman Sachs Capital Growth, Goldman Sachs CORE U.S. Equity, Goldman
Sachs Global Income and Goldman Sachs Growth and Income Sub-Accounts did
not commence operations until May 1, 1999, the "Other Expenses" for these
Sub-Accounts are based on estimated amounts for the current fiscal year.

** We currently reimburse CLASF for expenses that exceed % of the average
daily net assets of Managed, Bond, Value Equity, Capital and
International Equity Portfolios, and % of the Money Market Portfolio.
Absent such reimbursement, the "Other Expenses" for the Money Market
Portfolio would have been %, for

<PAGE>

the Bond Portfolio %, and for the International Equity Portfolio %.
"Other Expenses" for the Managed, Value Equity, and Capital Portfolios
did not exceed the reimbursement level of %.

A portion of the brokerage commissions that certain Fidelity VIP Growth
Portfolio, Fidelity VIP Overseas Portfolio and Fidelity VIP II Asset
Manager Portfolio Funds pay was used to reduce Fund expenses. In
addition, certain Funds have entered into arrangements with their
custodian and transfer agent whereby interest earned on uninvested cash
balances was used to reduce custodian and transfer agent expenses.
Including these reductions, the total operating expenses presented in
the table would have been % for Fidelity VIP Growth Portfolio, %
for Fidelity VIP Overseas Portfolio, and % for Fidelity VIP II Asset
Manager Portfolio. Fidelity VIP II Index 500 fund expenses were
voluntarily reduced by the Funds' investment adviser. Absent
reimbursement, the management fee, other expenses, and total expenses
would have been %, %, and % respectively.

The Manager of the Montgomery Variable Series: Emerging Markets Fund
and the Montgomery Variable Series: Growth Fund has agreed to reduce
some or all of its management fees if necessary to keep total annual
operating expenses, expressed on an annualized basis, for the Emerging
Markets Fund and the Growth Fund at or below % and %,
respectively, of average net assets. The Manager also may voluntarily
reduce additional amounts to increase the return to policyowners
investing in the Montgomery Variable Series: Emerging Markets Fund
and/or the Montgomery Variable Series: Growth Fund. The Manager may
terminate these voluntary reductions at any time. Any reductions made
by the Manager in its fees are subject to reimbursement by the
Montgomery Variable Series: Emerging Markets Fund and the Montgomery
Variable Series: Growth Fund within the following three years, provided
the Portfolios are able to effect such reimbursement and remain in
compliance with applicable expense limitations. The Management Fees,
Other Expenses and Total Annual Expenses absent voluntary
reimbursements for the Montgomery Variable Series: Growth Fund were %,
% and %; and %, %, and % for the Montgomery Variable
Series: Emerging Markets Fund. For the Montgomery Variable Series:
Emerging Markets Fund and Montgomery Variable Series: Growth Fund, the
applicable expense limitation for the current fiscal year is % and
%, respectively, and total expenses for the Montgomery Variable
Series: Emerging Markets Fund and Montgomery Variable Series: Growth
Fund are expected to be % and %, respectively.

The Managers of the Berger/BIAM IPT-International Fund and Berger
IPT-Small Company Growth Fund have voluntarily agreed to waive their
management fees and expect to voluntarily reimburse the Funds for
additional expenses to the extent that the Funds' total annual expenses
exceed % and %, respectively.

There is no assurance that these waiver or reimbursement policies will
be continued in the future. If any of these policies are discontinued,
it will be reflected in an updated prospectus.

The data with respect to the Portfolios' annual expenses have been provided to
us by the Funds and we have not independently verified such data.

For a more complete description of the various costs and expenses, see "Charges
Against The Policy, Variable Account, And Funds," and the Funds' prospectuses.
In addition to the expenses listed above, premium taxes may be applicable,
although no premium tax is currently payable under New York law.

EXAMPLES

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

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS
----------- ------ -------
<S> <C> <C>
Bond
Capital
International Equity
Managed
Money Market
</TABLE>

9
<PAGE>

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS
----------- ------ -------
<S> <C> <C>
Value Equity
Alger American Growth
Alger American Leveraged AllCap
Alger American MidCap Growth
Alger American Small Capitalization
Berger/BIAM IPT - International
Berger IPT-Small Company Growth
Dreyfus Capital Appreciation
Dreyfus Growth and Income
Dreyfus Socially Responsible
Fidelity VIP Growth
Fidelity VIP High Income
Fidelity VIP Overseas
Fidelity VIP II Asset Manager
Fidelity VIP II Contrafund
Fidelity VIP II Index 500
Fidelity VIP III Growth Opportunities
Goldman Sachs Capital Growth
Goldman Sachs CORE U.S. Equity
Goldman Sachs Global Income
Goldman Sachs Growth and Income
Montgomery Variable Series: Emerging Markets
Montgomery Variable Series: Growth
Seligman Communications and Information
Seligman Frontier
</TABLE>

2. If the enhanced Death Benefit with a higher mortality and expense charge has
been chosen, the Policyowner would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets:

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS
----------- ------ -------
<S> <C> <C>
Bond
Capital
International Equity
Managed
Money Market
Value Equity
Alger American Growth
Alger American Leveraged AllCap
Alger American MidCap Growth
Alger American Small Capitalization
Berger/BIAM IPT - International
Berger IPT-Small Company Growth
Dreyfus Capital Appreciation
Dreyfus Growth and Income
Dreyfus Socially Responsible
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS
----------- ------ -------
<S> <C> <C>
Fidelity VIP Growth
Fidelity VIP High Income
Fidelity VIP Overseas
Fidelity VIP II Asset Manager
Fidelity VIP II Contrafund
Fidelity VIP II Index 500
Fidelity VIP III Growth Opportunities
Goldman Sachs Capital Growth
Goldman Sachs CORE U.S. Equity
Goldman Sachs Global Income
Goldman Sachs Growth and Income
Montgomery Variable Series: Emerging Markets
Montgomery Variable Series: Growth
Seligman Communications and Information
Seligman Frontier
</TABLE>

These Examples are based, with respect to all of the Portfolios, on an estimated
average account value of $ .The Examples assume that no transfer charge has been
assessed. The Examples also reflect an Annual Administration Charge of % of
assets, determined by dividing the total Annual Administration Charge collected
by the total average net assets of the Sub-Accounts of the Variable Account.

THESE 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.

THE COMPANY

We are a stock life insurance company with assets as of December 31, 1998 of
approximately $ million (U.S. dollars). We were incorporated under New York law
on June 7, 1971, and Our Home Office is located at 500 Mamaroneck Avenue,
Harrison, New York 10521. We are principally engaged in issuing and reinsuring
annuity 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 and Our ratings from
Standard & Poor's Corporation, Duff & Phelps Inc., and/or Moody's Investors
Service for claims paying ability. These ratings relate to Our financial ability
to meet Our contractual obligations under Our insurance contracts. They do not
take into account deductibles, surrender or cancellation penalties, or
timeliness of claim payment. They also do not address the suitability of a
Policy for a particular purchaser, or relate to Our ability 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. The
Canada Life Assurance Company commenced insurance operations in 1847 and has
been actively operating in the United States since

11
<PAGE>

1889. It is one of the largest life insurance companies in North America with
consolidated assets as of December 31, 1998 of approximately $ 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 Insurance Bureau,
as well as the laws and regulations of all jurisdictions in which We are
authorized to do business.

THE VARIABLE ACCOUNT, THE FUNDS AND THE FIXED ACCOUNT

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. 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. However, the SEC does not supervise the management,
investment policies or practices of the Variable Account.

The Variable Account currently is divided into 30 Sub-Accounts. Each Sub-Account
invests its assets in shares of the corresponding portfolio of the Funds
described below.

THE FUNDS

The Variable Account invests in shares of:

12
<PAGE>

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 policies. 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 certain Funds are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the Funds,
however, may differ from the results of such other portfolios. There can be no
assurance, and no representation is made, that the investment results of any of
the Funds will be comparable to the investment results of any other portfolio,
even if the other portfolios have the same investment adviser or manager.

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.

CANADA LIFE OF AMERICA SERIES FUND, INC.

CLASF is a diversified open-end investment company incorporated in Maryland.
CLASF has six portfolios which use the investment advisory services of CL
Capital Management, Inc., a Georgia corporation: Bond, Capital, International
Equity, Managed, Money Market; and Value Equity. Three portfolios, International
Equity, the equity portion of Managed and Value Equity, use the sub-investment
advisory services of INDAGO Capital Management Inc. of Toronto, Ontario, Canada,
an SEC-registered investment adviser. The Capital Portfolio uses the sub-
investment advisory services of J. & W. Seligman & Co. Incorporated, an
unaffiliated Delaware investment manager. CL Capital Management, Inc. is a
wholly owned subsidiary of our Company. INDAGO Capital Management Inc. is a
subsidiary of The Canada Life Assurance Company.

The Canada Life of America Series Fund, Inc., (CLASF) currently has six
portfolios: Bond; Capital; International Equity; Managed; Money Market; and
Value Equity. The following is a brief description of the investment objectives
of each of the current portfolios of CLASF.

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.

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.

INTERNATIONAL EQUITY PORTFOLIO

13
<PAGE>

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.

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.

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.

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.

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 the Company,
Canada Life Insurance Company of New York, 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.

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; its shares also may
be offered to qualified pension and retirement plans. Each Portfolio has
distinct investment objectives and policies. Further information regarding the
investment practices of each of the Portfolios is set forth below.

ALGER AMERICAN GROWTH PORTFOLIO

The Alger American Growth Portfolio seeks long-term capital appreciation by
investing, except during temporary defensive periods, in a diversified, actively
managed portfolio of equity securities, primarily of companies that, at the time
of purchase, have total market capitalization of $1 billion or greater.

ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO

The Alger American Leveraged AllCap Portfolio seeks long-term capital
appreciation by investing primarily in a diversified, actively managed portfolio
of equity securities, except during temporary defensive periods. 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

14
<PAGE>

activities.

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.

ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO

The investment objective of the Alger American Small Capitalization 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 or the S&P SmallCap 600 Index, updated quarterly. Both indexes are broad
indexes of small capitalization stocks. 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 this combined range, and in
excess of that amount (up to 100% of its assets) during temporary defensive
periods.

BERGER INSTITUTIONAL PRODUCTS TRUST

The Berger Institutional Products Trust (Berger Trust) is intended to be a
funding vehicle for variable annuity contracts and variable life insurance
policies offered by the separate accounts of certain life insurance companies;
and its shares may also be offered to qualified pension and retirement plans.
The Berger Trust is an open-end investment company and each of its portfolios
has distinct investment objectives and policies. Further information regarding
the investment practices of the portfolios available under this Policy is set
forth below.

BERGER/BIAM IPT-INTERNATIONAL FUND

The portfolio is advised by BBOI Worldwide LLC, which has delegated daily
management of the portfolio to Bank of Ireland Asset Management (U.S.) Limited.
The investment objective of the Berger/BIAM IPT-International Fund is long-term
capital appreciation. The portfolio seeks to achieve this objective by investing
primarily in common stocks of well established companies located outside the
United States. The portfolio intends to diversify its holdings among several
countries and to have, under normal market conditions, at least 65% of the
portfolio's total assets invested in the securities of companies located in at
least five countries, not including the United States.

BERGER IPT-SMALL COMPANY GROWTH FUND

The portfolio is advised by Berger Associates, Inc. The investment objective of
the Berger IPT-Small Company Growth Fund is capital appreciation. The portfolio
seeks to achieve this objective by investing primarily in common stocks of small
companies and other securities with equity features. Under normal circumstances,
the portfolio invests at least 65% of its assets in equity securities of
companies with market capitalizations of less than $1 billion a the time of
initial purchase. The balance

15
<PAGE>

of the portfolio may be invested in larger companies, government securities or
other short-term investments.

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.

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. Two of the Fund's portfolios are available under this
Policy, the Dreyfus Growth and Income Portfolio and Dreyfus Capital Appreciation
Portfolio.

DREYFUS CAPITAL APPRECIATION PORTFOLIO

The Capital Appreciation Portfolio seeks to provide long-term capital growth
consistent with the preservation of capital; current income is a secondary goal.
The Portfolio invests in common stocks of domestic and foreign companies. The
Portfolio generally will seek investment opportunities in large capitalization
companies.

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.

FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND

The Fidelity Investments Variable Insurance Products Fund (Fidelity VIP) acts as
one of the funding vehicles for the Policy with three Portfolios available under
the Policy: Fidelity VIP Growth; Fidelity VIP High Income; and Fidelity VIP
Overseas. Fidelity VIP is managed by Fidelity Management & Research Company
(Investment Manager).

FIDELITY VIP GROWTH PORTFOLIO

The Fidelity VIP 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.

16
<PAGE>

FIDELITY VIP HIGH INCOME PORTFOLIO

The Fidelity VIP 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 VIP OVERSEAS PORTFOLIO

The Fidelity VIP 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 VIP II)
acts as one of the funding vehicles for the Policy with the VIP II Asset
Manager, VIP II Contrafund and VIP II Index 500 Portfolios available under the
Policy. Fidelity VIP II is managed by Fidelity Management & Research Company
(Investment Manager).

FIDELITY VIP II ASSET MANAGER PORTFOLIO

The Fidelity VIP II 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 money market instruments.

FIDELITY VIP II CONTRAFUND PORTFOLIO

The Fidelity VIP II Contrafund Portfolio seeks capital appreciation by investing
in securities of companies whose value the Investment Manager believes is not
fully recognized by the public.

FIDELITY VIP II INDEX 500 PORTFOLIO

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

FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND III

The Fidelity Investments Variable Insurance Products Fund III (Fidelity VIP III)
acts as one of the funding vehicles for the Policy with the VIP III Growth
Opportunities Portfolio available under the Policy. Fidelity VIP III is managed
by Fidelity Management & Research Company (Investment Manager).

FIDELITY VIP III GROWTH OPPORTUNITIES PORTFOLIO

The Fidelity VIP III Growth Opportunities Portfolio seeks capital growth by
investing primarily in common stocks and securities convertible into common
stocks.

17
<PAGE>

GOLDMAN SACHS VARIABLE INSURANCE TRUST

The Goldman Sachs Variable Insurance Trust is an open-end, management investment
company offering the following portfolios: Goldman Sachs Capital Growth
Portfolio, Goldman Sachs CORE U.S. Equity Portfolio, Goldman Sachs Global Income
Portfolio and Goldman Sachs Growth and Income Portfolio.

GOLDMAN SACHS CAPITAL GROWTH PORTFOLIO

This portfolio seeks long-term growth of capital through diversified investments
in equity securities of companies that are considered to have long-term capital
appreciation potential.

GOLDMAN SACHS CORE U.S. EQUITY PORTFOLIO

This portfolio seeks long-term growth of capital and dividend income through a
broadly diversified portfolio of large cap and blue chip equity securities
representing all major sectors of the U.S. economy.

GOLDMAN SACHS GLOBAL INCOME PORTFOLIO

This portfolio seeks a high total return, emphasizing current income and, to a
lessor extent, providing opportunities for capital appreciation. The Fund
invests primarily in a portfolio of high quality fixed-income securities of U.S.
foreign issuers and foreign currencies.

GOLDMAN SACHS GROWTH AND INCOME PORTFOLIO

This portfolio seeks long-term growth of capital and growth of income through
investments in equity securities that are considered to have favorable prospects
for capital appreciation and/or dividend paying ability.

THE MONTGOMERY FUNDS III

Shares of Montgomery Variable Series: Emerging Markets Fund and Montgomery
Variable Series: Growth Fund, portfolios of The Montgomery Funds III
(Montgomery), an open-end investment company, are available under this Policy.

MONTGOMERY VARIABLE SERIES: EMERGING MARKETS FUND

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.

MONTGOMERY VARIABLE SERIES: GROWTH FUND

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 the
equity securities of domestic companies. In addition to capital appreciation,
the Montgomery Variable Series: Growth Fund emphasizes value.

18
<PAGE>

SELIGMAN PORTFOLIOS, INC.

Seligman Portfolios, Inc. (Seligman) currently has fourteen portfolios, two of
which are available under the Policy: Communications and Information; and
Frontier. Seligman is a diversified open-end investment company incorporated in
Maryland which uses the investment management services of J. & W. Seligman & Co.
Incorporated, a Delaware corporation.

SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO

The investment objective of this Portfolio is to produce capital gain. Income is
not an objective. The Portfolio seeks to achieve its objective 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. The Portfolio invests primarily in equity securities of
companies selected for their growth prospects.

RESERVED RIGHTS

We reserve the right to substitute shares of another portfolio of the Funds or
shares of another registered open-end investment company if, in our judgment,
investment in shares of a current portfolio(s) is no longer appropriate. This
decision will be based on a legitimate reason, such as a change in investment
objective, a change in the tax laws, or the shares are no longer available for
investment. We will first obtain SEC approval, if such approval is required by
law.

When permitted by law, We also reserve the right to:

. create new separate accounts;
. combine separate accounts, including the Canada Life of New York
Variable Annuity Account 2;
. remove, combine or add Sub-Accounts and make the new Sub-Accounts
available to Policyowners at Our discretion;
. add new portfolios of the Funds or of other registered investment
companies;
. 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 OBJECTIVE

The investment objective of a Sub-Account may not be changed unless the change
is approved, if required, by the New York Insurance Bureau. A statement of such
approval will be filed, if required, with the insurance department of the state
in which the Policy is delivered.

19
<PAGE>

THE FIXED ACCOUNT

You may allocate some or all of the Net Premium and/or make transfers from the
Variable Account to the Fixed Account. The Fixed Account pays interest at a
guaranteed rate (Guaranteed Interest Rate). The principal, after deductions, is
also guaranteed.

Policyowners allocating Net Premium and/or Policy Value to the Fixed Account do
not participate in the investment performance of assets of the Fixed Account.
The Fixed Account value is calculated by:

. adding the Net Premium and/or Policy value allocated to it;
. adding the Guaranteed Interest Rate credited on amounts in it; and
. subtracting any charges imposed on amounts in it in accordance with
the terms of the Policy

The following also applies to the Fixed Account:

. The Fixed Account is part of Our general account. We assume the risk
of investment gain or loss on this amount. All assets in the general
account are subject to Our general liabilities from business
operations. The Fixed Account is not affected by the investment
performance of the Variable Account.
. Interests issued by Us in connection with the Fixed Account have not
been registered under the Securities Act of 1933 (the 1933 Act). Also,
neither the Fixed Account nor the general account has been registered
as an investment company under the 1940 Act. So, neither the Fixed
Account nor the general account is generally subject to regulation
under either Act. However, certain disclosures may be subject to
generally applicable provisions of the federal securities laws
regarding the accuracy of statements made in a registration statement.

GUARANTEE AMOUNT

The Guarantee Amount is the portion of the Policy Value allocated to the Fixed
Account. The Guarantee Amount includes:

. Net Premium allocated to the Fixed Account;
. Policy Value transferred to the Fixed Account;
. interest credited to the Policy Value in the Fixed Account; and
. charges assessed in connection with the Policy.

The Guarantee Amount is guaranteed to accumulate at a minimum effective annual
interest rate of 3%.

20
<PAGE>

Dollar Cost Averaging. From time to time We may offer a special Guarantee
Period, not to exceed one year, whereby You may elect to automatically transfer
specified additional premium from this account to any Sub-Account(s) and/or
the Fixed Account on a periodic basis, for a period not to exceed twelve
months. This special Guarantee Period is subject to Our administrative
procedures and the restrictions disclosed in the "Transfer Privilege" section. A
special interest rate may be offered for this Guarantee Period, which may differ
from that offered for the Fixed Account. The available interest rate will always
be an effective annual interest rate of at least 3%. This Guarantee Period is
used solely in connection with the "dollar cost averaging" privilege (see
"Dollar Cost Averaging Privilege").

21
<PAGE>

DESCRIPTION OF ANNUITY POLICY

TEN DAY RIGHT TO EXAMINE POLICY

You have ten days after You receive the Policy to decide if You would like to
cancel the Policy.

If the Policy does not meet Your needs, return it to Our Home Office. Within
seven days of receipt of the Policy, We will return the Policy Value. When the
Policy is issued as an IRA and canceled within seven days, We will return all
premiums if the premiums are greater than the amount otherwise payable.

PREMIUM

INITIAL PREMIUM

You must submit a complete application and check made payable to Us for the
initial premium. The following chart outlines the minimum initial premium
accepted.

<TABLE>
<CAPTION>
MINIMUM INITIAL
TYPE OF POLICY PREMIUM ACCEPTED*
<S> <C>
Policy is an IRA............................................................................. $2,000
Policy is not an IRA......................................................................... $5,000
Policy is IRA and PAC agreement** for additional premiums submitted.......................... $50
Policy is not an IRA and PAC agreement for additional premiums submitted..................... $100
</TABLE>

* We reserve the right to lower or raise the minimum initial premium.

22
<PAGE>

** For more information on PAC agreements, see "Pre-Authorized Check Agreement
Plan."

The application must meet Our underwriting standards. The application must be
properly completed and 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 hold the premium for up to five Valuation Days while We
attempt to complete the processing of an incomplete application. If this cannot
be done within five Valuation Days, We will inform You of the reasons for the
delay and immediately return the premium, unless You specifically consent to Our
keeping the premium until the application is made complete. We will then apply
the initial Net Premium within two Valuation Days of when the application is
correctly completed.

ADDITIONAL PREMIUM

You may make additional premium payments at any time during any Annuitant's
lifetime and before the Annuity 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 apply additional Net Premium as
of receipt at Our Home Office. We will give You a receipt for each additional
premium payment.

The following chart outlines the minimum additional premium accepted.

<TABLE>
<CAPTION>
MINIMUM ADDITIONAL
TYPE OF POLICY PREMIUM ACCEPTED*
<S> <C>
Policy is an IRA.......................................................................... $1,000
Policy is not an IRA...................................................................... $1,000
Policy is IRA and PAC agreement** for additional premiums submitted....................... $50
Policy is not an IRA and PAC agreement for additional premiums submitted.................. $100
</TABLE>

* We reserve the right to lower or raise the minimum additional premium.
** For more information on PAC agreements, see "Pre-Authorized Check Agreement
Plan."

PRE-AUTHORIZED CHECK AGREEMENT PLAN

You may choose to have monthly premiums automatically collected from Your
checking or savings account pursuant to a pre-authorized check agreement plan
(PAC). This plan may be terminated by You or Us after 30 days Written Notice, or
at any time by Us if a payment has not been paid by Your bank. This option is
not available on the 29th, 30th or 31st day of each month. There is no charge
for this feature.

ELECTRONIC DATA TRANSMISSION OF APPLICATION INFORMATION

Subject to regulatory approval, we may accept electronic data transmission of
application information accompanied by a wire transfer of the initial premium.

Upon receipt of the electronic data and wire transmittal, We will process the
information and allocate the premium payment according to Your instructions. We
will then send a Policy and verification letter to You to sign.

23
<PAGE>

During the period from receipt of the initial premium until the signed
verification letter is received, no financial transactions may be executed under
the Policy, unless You request such transactions in writing and provide a
signature guarantee.

WIRE TRANSMITTAL PRIVILEGE

We may accept transmittal of premium by wire order from Your broker/dealer to
Our financial institution. A copy of the transmittal must be simultaneously
sent, by telephone facsimile, to Our Administrative Office. The transmittal must
contain the information required to process the application and/or to allocate
the premium.

Normally, initial Premium is applied within two Valuation Days after receipt. If
incomplete information is sent, We may hold Your wire order for up to five
Valuation Days while We try to obtain the missing information. If this
information is not obtained within five Valuation Days, We will inform Your
broker/dealer of the reasons for the delay and immediately return the premium.
Your broker/dealer will return the full premium paid to You. However, if We
receive, within such five Valuation Days, Your written consent, We will keep the
premium until We receive the required information via facsimile transmission.

Our acceptance of the wire order and facsimile does not create a contract
between Us until We receive and accept a properly completed original
application. If We do not receive one within ten Valuation Days of receipt of
the initial wire order premium, We will return the premium to the broker/dealer,
who will return the full premium paid to You.

If the allocation instructions in Your application are inconsistent with the
instructions in the facsimile transmission, the Policy Value will be reallocated
in accordance with the instructions in the application at the price which was
next determined after receipt of the application.

NET PREMIUM ALLOCATION

You elect in Your application how You want Your initial Net Premium to be
allocated among the Sub-Accounts and the Fixed Account. Any additional Net
Premium will be allocated in the same manner unless, at the time of payment, We
have received Your Written Notice to the contrary.

We cannot guarantee that a Sub-Account or shares of a portfolio will always be
available. If You request that all or part of a premium be allocated to a
Sub-Account or underlying portfolio that is not available, We will immediately
return that portion of the premium to You, unless You specify otherwise.

CASH SURRENDER VALUE

The Cash Surrender Value is the Policy Value less any applicable Annual
Administration Charge.

POLICY VALUE

The Policy Value is the sum of the Variable Account value and the Fixed Account
value.

VARIABLE ACCOUNT VALUE

To calculate the Variable Account value before the Annuity Date, multiply (a) by
(b), where:

24
<PAGE>

a) is the number of Units credited to the Policy for each Sub-Account;
and
b) is the current Unit Value of these Units.

UNITS

We credit Net Premium in the form of Units. The number of Units credited to the
Policy for each Sub-Account is (a) divided by (b), where:

a) is the Net Premium allocated to that Sub-Account; and
b) is the Unit Value for that Sub-Account (at the end of the Valuation
Period during which We receive the premium).

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 occurs:

. the Annual Administration Charge is assessed;
. the date We receive and file Your Written Notice for a partial
withdrawal or surrender;
. the date of a systematic withdrawal;
. the Annuity Date; or
. the date We receive Due Proof of Your death or the Last Surviving
Annuitant's death.

UNIT VALUE

The Unit Value for each Sub-Account's first Valuation Period is set at a fixed
amount, generally $10. After that, the Unit Value is determined by multiplying
the Unit Value at the end of the immediately preceding Valuation Period by the
Net Investment Factor for the current Valuation Period.

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 1.

The Net Investment Factor for each Sub-Account for a Valuation Period equals 1
plus the rate of return earned by the portfolio in which the Sub-Account You
selected invests, adjusted for taxes charged or credited to the Sub-Account, the
mortality and expense risk charge, and the daily administration fee.

To find the rate of return of each portfolio in which the Sub-Accounts invest,
divide (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.

25
<PAGE>

TRANSFERS

TRANSFER PRIVILEGE

You may transfer all or a part of an amount in a Sub-Account(s) to another Sub-
Account(s) or to the Fixed Account. You also can transfer an amount in Fixed
Account to a Sub-Account(s). Transfers are subject to the following
restrictions:

1. the Company's minimum transfer amount, currently $250; 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 the 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. This
request will not be counted as a transfer for purposes of determining the number
of free transfers executed in a year. The Company reserves the right to change
its minimum transfer amount requirements.

Excessive trading (including short-term "market timing" trading) may adversely
affect the performance of the Sub-Accounts. If a pattern of excessive trading by
a Policyowner or the Policyowner's agent develops, We reserve the right not to
process the transfer request. If Your request is not processed, it will not be
counted as a transfer for purposes of determining the number of free transfers
executed.

TELEPHONE TRANSFER PRIVILEGE

We can process Your transfer request by phone if You have completed Our
administrative form or initialed the authorization box on Your application. The
authorization will remain effective until We receive Your written revocation or
We 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 recording telephone calls and obtaining personal security
codes and contract number before effecting any transfers.

We can not accept or process transfer requests left on Our voice mail system,
although transfers through Our Intouch(R) Voice Response System are acceptable.

INTOUCH(R) VOICE RESPONSE SYSTEM

The Intouch(R) Voice Response System is our interactive voice response system
which You can access through Your touch tone telephone. Use of this service
allows you to:

. obtain current Sub-Account balances;
. obtain current Policy and Unit Values; and
. obtain the current Fixed Account interest rate;
. change Your Sub-Account allocation; and

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<PAGE>

. effect transfers between Sub-Accounts or to the Fixed Account.

Your Policy number and Personal Identification Number, issued by Us to ensure
security, are required for any transfers and/or allocation changes.

When using the Intouch Voice Response System, You will not be assessed a
transfer processing fee regardless of the number of transfers made per Policy
Year.

DOLLAR COST AVERAGING PRIVILEGE

You may choose to automatically transfer specified amounts FROM ANY Sub-Account
or the Fixed Account (either one a disbursement account) TO ANY OTHER Sub-
Account(s) or Fixed Account on a periodic basis. Transfers are subject to Our
administrative procedures and the restrictions in "Transfer Privilege." This
privilege is intended to allow You to utilize "Dollar Cost Averaging" (DCA), 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. You should first discuss this (as you would all other
investment strategies) with Your registered representative.

To initiate DCA, We must receive Your Written Notice on Our form. Once elected,
transfers will be processed until one of the following occurs:

. the entire value of the Sub-Account or the 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.

This option is not available on the 29th, 30th or 31st day of each month. There
is no charge for this feature.

TRANSFER PROCESSING FEE

There is no limit to the number of transfers that You can make between
Sub-Accounts or the Fixed Account. The first 12 transfers during each Policy
Year are currently free. The Company currently assesses a $25 transfer fee for
the 13th and each additional transfer in a Policy Year. For the purposes of
assessing the fee, each transfer request (which includes a Written Notice or
telephone call, but does not include automatic transfers) is considered to be
one transfer, regardless of the number of Sub-Accounts affected by the transfer.
The processing fee will be charged proportionately to the receiving Sub-
Account(s) and/or the Fixed Account. The $25 transfer fee is waived when using
the Intouch(R) Voice Response System.

PAYMENT OF PROCEEDS

PROCEEDS

Proceeds means the amount We will pay when the first of the following events
occurs:

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<PAGE>

. the Annuity Date;
. the Policy is surrendered;
. We receive Due Proof of Death of any Owner;
. We receive Due Proof of Death of the Last Surviving Annuitant.

If death occurs prior to the Annuity Date, proceeds are paid in one of the
following ways:

. lump sum;
. within 5 years of the Owner's death, as required by federal tax laws
(see "Proceeds on Death of Any Policyowner"); or
. by a mutually agreed upon payment option. See "Election of Options."

The Policy ends when We pay the proceeds.

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

PROCEEDS ON ANNUITY DATE

If Payment Option 1 is in effect on the Annuity Date, We will pay the Policy
Value. See "Payment Options."

You may annuitize at any time, and 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; and
2. The requested Annuity Date must be a date that is at least 30 days
after We receive Your Written Notice.

The proceeds paid will be the Policy Value if paid on the first day of the month
after any Annuitant's 100th birthday.

PROCEEDS ON SURRENDER

If You surrender the Policy, We will pay the Cash Surrender Value. The Cash
Surrender Value will be determined on the date We receive Your Written Notice
for surrender and Your Policy at Our Home Office.

You may elect to have the Cash Surrender Value paid in a single sum or under a
payment option. See "Payment Options." The Policy ends when We pay the Cash
Surrender Value.

The surrender proceeds may be subject to federal income tax, including a penalty
tax. See "FEDERAL TAX STATUS."

PROCEEDS ON DEATH OF LAST SURVIVING ANNUITANT BEFORE ANNUITY DATE (THE DEATH
BENEFIT)

If the Last Surviving Annuitant dies before the Policy Value is transferred to a
payment option, We will pay the Beneficiary a Death Benefit.

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<PAGE>

The Death Benefit is the greater of:

1. the premiums paid less any partial withdrawals and incurred taxes; or
2. the Policy Value on the date We receive Due Proof of Death.

For Policyowners who have chosen on the application to pay an additional
Mortality and Expense Risk Charge of 0.15%. The Death Benefit is the greatest
of:

1. item "1." above;
2. item "2." above;
3. the greatest Policy Value the Policy has had on any Policy Anniversary
occurring before both the date the Last Surviving Annuitant attained
age 81 and the date We receive Due Proof of the Annuitant's death.
This value will be adjusted for any partial withdrawals, premiums paid
and incurred taxes that occur after such Policy Anniversary.

If on the date the Policy was issued any Annuitant was attained age 81 or older,
either Death Benefit is the Policy Value on the date We receive Due Proof of
Death.

If You are the Last Surviving Annuitant who dies before the Annuity Date, the
Death Benefit proceeds must be distributed pursuant to the rules set forth below
in "Proceeds on Death of Any Policyowner."

PROCEEDS ON DEATH OF ANY POLICYOWNER

If any Policyowner dies before the Annuity Date, the following rules apply:

. If You (the deceased Policyowner) were not the Last Surviving
Annuitant and We receive Due Proof of Your death before the Annuity
Date, We will pay the Beneficiary the Policy Value as of the date We
receive Due Proof of Your death.

. If You were Last Surviving Annuitant and We receive Due Proof of Your
death before the Annuity Date, We will pay the Beneficiary the Death
Benefit described in "Proceeds on the Death of Last Surviving
Annuitant Before Annuity Date."

. As required by federal tax law, regardless of whether You were the
Annuitant, the entire interest in the Policy will be distributed to
the Beneficiary:

a) within five years of Your death; or
b) over the life of the Beneficiary or over a period not
extending beyond the life expectancy of that Beneficiary,
with payments beginning within one year of Your death.

However, if your spouse is the Beneficiary the Policy may be
continued. If this occurs and You were the only Annuitant, Your spouse
will become the Annuitant.

If any Policyowner dies on or after the Annuity Date but before all proceeds
payable under the Policy have been distributed, We will continue payments to the
designated payee (or, if the deceased Policyowner was the Annuitant, to the
Beneficiary) under the payment option in effect on the date of the deceased
Policyowner's death.

For purposes of this section, if any Policyowner is not an individual, the death
or change of any Annuitant will be treated as the death of a Policyowner, and We
will pay the Beneficiary the Cash Surrender Value.

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<PAGE>

This section shall, in all events, be construed in a manner consistent with
section 72(s) of the Internal Revenue Code of 1986, as amended. If anything in
the Policy conflicts with the provisions of this section, this section will
control.

PARTIAL WITHDRAWALS

You may withdraw part of the Cash Surrender Value, subject to the following:

1. the Company's minimum partial withdrawals currently $250;
2. the maximum partial withdrawal is the amount that would leave a Cash
Surrender Value of $2,000; and
3. a partial withdrawal request which would reduce the amount in a Sub-
Account below $500 will be treated as a request for a full withdrawal
of the amount in that Sub-Account.

On the date We receive at Our Home Office Your Written Notice for a partial
withdrawal, We will withdraw the partial withdrawal from the 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 the Fixed Account in which You are
invested. If You do provide this information to us, but the amount in the
designated Sub-Accounts and/or the Fixed Account is inadequate to comply with
Your withdrawal request, We will first withdraw from the specified Sub-Accounts
and the Fixed Account. The remaining balance will be withdrawn proportionately
from the other Sub-Accounts and the Fixed Account in which You are invested.

Any partial or systematic withdrawal may be included in the Policyowner'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). The Code restricts certain distributions under Tax-Sheltered
Annuity Plans and other qualified plans. See "FEDERAL TAX STATUS."

SYSTEMATIC WITHDRAWAL PRIVILEGE

You may elect to use the Systematic Withdrawal Privilege (SWP) to withdraw a
fixed-level amount from the Sub-Account(s) and the Fixed Account on a monthly,
quarterly, semi-annual or annual basis, beginning 30 days after the Effective
Date, if We receive Your Written Notice on Our administrative form.

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<PAGE>

Once an amount has been selected for withdrawal, it will remain fixed until the
earlier of the next Policy Anniversary or termination of the privilege. A
written request to change the withdrawal amount for the following Policy Year
must be received no later than 7 days prior to the Policy Anniversary date. The
Systematic Withdrawal Privilege will end at the earliest of the date:

. when the Sub-Account(s) and/or Fixed Account You specified for
those withdrawals has no remaining amount to withdraw;
. the Cash Surrender Value is reduced to $2,000*;
. You elect to pay premiums by pre-authorized check;
. We receive Your Written Notice to end this privilege; or
. We elect to discontinue this privilege upon 30 days Written Notice to
You.

References to partial withdrawals in other provisions of this Prospectus include
systematic withdrawals. If applicable, a charge for premium taxes may be
deducted from each systematic withdrawal payment. This option is not available
on the 29th, 30th or 31st day of each month. The Company reserves the right to
change its minimum systematic withdrawal amount requirements or terminate this
privilege.

In certain circumstances, amounts withdrawn pursuant to a systematic withdrawal
option may be included in a Policyowner's gross income and may be subject to
penalty taxes.

* If the Cash Surrender Value is reduced to $2,000, Your Policy may terminate.
See "Termination."

PORTFOLIO REBALANCING

Portfolio rebalancing (Rebalancing) is an investment strategy in which Your
Policy Value, in the Sub-Accounts only, is reallocated back to its original
portfolio allocation. Rebalancing is performed regardless of changes in
individual portfolio values from the time of the last rebalancing. It is
executed on a quarterly, semi-annual or annual basis. 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 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. This option is not available on
the 29th, 30th or 31st day of each month. There is no charge for this feature.

POSTPONEMENT OF PAYMENT

We will usually pay any proceeds payable, amounts partially withdrawn, or the
Cash Surrender Value within seven calendar days after:

1. we receive Your Written Notice for a partial withdrawal or a cash
surrender;
2. the date chosen for any systematic withdrawal; or
3. we receive Due Proof of Death of the Owner or the Last Surviving
Annuitant.

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<PAGE>

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;
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.

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

ANNUAL ADMINISTRATION CHARGE

To cover the costs of providing certain administrative services such as
maintaining Policy records, communicating with Policyowners, and processing
transactions, We deduct an Annual Administration Charge of $30 for the prior
Policy Year on each Policy Anniversary. We will also deduct this charge if the
Policy is surrendered for its Cash Surrender Value, unless the Policy is
surrendered on a Policy Anniversary.

If the Policy Value on the Policy Anniversary is $75,000 or more, We will waive
the Annual Administration Charge for the prior Policy Year. We will also waive
the Annual Administration Charge if the Policy is a Tax-Sheltered Annuity.

The charge will be assessed proportionately from any Sub-Accounts in which
You are invested, and the Fixed Account. If the charge is obtained from a Sub-
Account(s), 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 annual rate
of 0.30% from the 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.

TRANSFER PROCESSING FEE

The first 12 transfers during each Policy Year are currently free, although We
reserve the right to change this procedure. The Company currently assesses a $25
transfer fee for the 13th and each additional transfer in a Policy Year.
Transfer requests include Written Notices and telephone call, but do not include
automatic transfers. Such requests are considered to be one transfer, regardless
of the number of Sub-Accounts effected by the transfer. The processing fee will
be deducted proportionately from the receiving Sub-Account(s) and/or the Fixed
Account. See "Transfers" for the rules concerning transfers.

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<PAGE>

MORTALITY AND EXPENSE RISK CHARGE

We assess an annual mortality and expense risk charge, deducted at each
Valuation Period from the assets of the Variable Account. This charge:

. is an annual rate of 1.25% of the average daily value of the net
assets in the Variable Account;
. is assessed during the Accumulation Period, but is not charged after
the Annuity Date;
. consists of approximately 0.75% to cover the mortality risk and
approximately 0.50% to cover the expense risk;
. is guaranteed not to increase for the duration of the Policy;.

If You have chosen on the application to receive the Enhanced Death Benefit, the
mortality and expense charge will be increased by 0.15%. This increase covers an
increase in the mortality risk. See "Proceeds on Death of Last Surviving
Annuitant Before Annuity Date (The Death Benefit)."

The mortality risk We assume arises from Our obligation to make annuity payments
(determined in accordance with the annuity tables and other provisions contained
in the Policy) for the full life of all Annuitants regardless of how long each
may live. This means:

. Mortality risk is the risk that Annuitants may live for a longer
period of time than We estimated when We established Our guarantees in
the Policy.
. Each Annuitant is assured that neither his or her longevity, nor an
improvement in life expectancy generally, will have any adverse effect
on the annuity payments received under the Policy.
. The Annuitant will not outlive the funds accumulated for retirement.
. We guarantee to pay a Death Benefit if the Last Surviving Annuitant
dies before the Annuity Date (see "Proceeds on Death of Last Surviving
Annuitant Before Annuity Date (The Death Benefit)").

The expense risk We assume is the risk that the Annual Administration Charge,
daily administration fee, and transfer fees may be insufficient to cover Our
actual future expenses.

If the mortality and expense charges are sufficient to cover such costs and
risks, any excess will be profit to the Company and may be used to reimburse Us
for distribution expenses. However, if the amounts deducted prove to be
insufficient, the loss will be borne by us.

REDUCTION OR ELIMINATION OF THE ANNUAL ADMINISTRATION CHARGE

The Annual Administration Charge may be reduced or eliminated when some or all
of the policies are to be sold to an individual or a group of individuals. In
determining whether to reduce or eliminate this charge, We will consider certain
factors, including:

1. the size and type of group to which the administrative services are to
be provided and the sales are to be made . Generally, sales and
administrative expenses for a larger group are smaller than for a
smaller group because large numbers of sales may result in fewer sales
contacts.
2. the total amount of premiums. 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. Policy sales
expenses are likely to be less when there is a prior or existing
relationship because there is a likelihood of more sales with fewer
sales contacts.

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<PAGE>

4. the level of commissions paid to selling broker/dealers. For example,
certain broker/dealers may offer policies in connection with financial
planning programs 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 it is determined that there will be a reduction or elimination in sales
expenses and/or administration expenses, the Company will provide a reduction in
or elimination of the Annual Administration Charge. This charge may also be
eliminated when a Policy is issued to an officer, director, employee, registered
representative or relative thereof of: the Company; The Canada Life Assurance
Company; J. & W. Seligman & Co. Incorporated; any selling Broker/Dealer; or any
of their affiliates. In no event will reduction or elimination of the Annual
Administration Charge be permitted where such reduction or elimination will be
discriminatory to any person.

In addition, if the Policy Value on the Policy Anniversary is $75,000 or more,
We will waive the Annual Administration Charge for the prior Policy Year.

TAXES

No premium tax is currently payable under New York law. We reserve the right to
deduct any premium taxes payable in respect or future premium 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 in which You are invested, and the Fixed
Account.

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,
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).

PAYMENT OPTIONS

The Policy ends when We pay the proceeds on the Annuity Date. We will apply the
Policy Value under Payment Option 1 unless You have an election on file at Our
Administrative Office to receive another mutually agreed upon payment option
(Payment Option 2). The proceeds will be the Policy Value if the Annuity Date is
the first day of the month after any Annuitant's 100th birthday. See "Proceeds
on Annuity Date." We require the surrender of Your Policy so that We may issue a
supplemental contract for the applicable payment option. The term "payee" means
a person who is entitled to receive payments under this section.

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<PAGE>

ELECTION OF OPTIONS

You may elect, revoke or change a payment option at any time before the Annuity
Date and while the Annuitant(s) is living. If an election is not in effect at
the Last Surviving Annuitant's death, or if payment is to be made in one lump
sum under an existing election, the Beneficiary may elect one of the options.
This election must be made within one year after the Last Surviving 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 at least 30 days before the Annuity Date.

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

1. the amount to be applied under the option is less than $1,000; or
2. any periodic payment under the election would be less than $50.

DESCRIPTION OF PAYMENT OPTIONS

Payment Option 1: Life Income With Payments for 10 Years Certain

We will pay the proceeds in equal amounts each month, quarter, or year, during
the Annuitant's lifetime or for 10 years, whichever is longer.

The amount of each payment will be determined from the tables in the Policy
which apply to Payment Option 1, using the Annuitant'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 ANNUITANT

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

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<PAGE>

OTHER POLICY PROVISIONS

POLICYOWNER

During any Annuitant's lifetime and before the Annuity Date, You have all of the
ownership 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 any Annuitant's lifetime and before the Annuity Date, You may also name,
change or revoke a Policyowner(s), Beneficiary(ies), Payee(s), or Annuitant(s)
by giving Us Written Notice. Any change of Policyowner(s) or Annuitant(s) must
be approved by Us.

A change of any Policyowner may result in resetting the Death Benefit to an
amount equal to the Policy Value as of the date of the change.

With respect to Qualified Policies generally, however:

. the contract may not be assigned (other than to us);
. Joint Ownership is not permitted; and
. the Policyowner must be the Annuitant.

BENEFICIARY

We will pay the Beneficiary any proceeds payable on Your death or the death of
the Last Surviving Annuitant. During any Annuitant's lifetime and before the
Annuity 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 or the Last Surviving Annuitant dies, or if none has been
appointed, the proceeds will be paid to You or Your estate.

TERMINATION

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 two 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 the 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 such date. This
additional premium must be at least the minimum amount specified in "Additional
Premium."

Qualified contracts may be subject to distribution restrictions. See "FEDERAL
TAX STATUS."

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<PAGE>

WRITTEN NOTICE

Written Notice must be signed and dated by You. It must be of a form and content
acceptable to us. Your Written Notice will not be effective until We receive and
file it. However, any change provided in Your Written Notice will be effective
as of the date You signed the Written Notice:

1. subject to any payments or other actions We take prior to receiving
and filing Your Written Notice; and
2. whether or not You or the Last Surviving 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, 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
Annuity Date and during any Annuitant's lifetime. Your rights and the rights of
any Beneficiary will be affected by an assignment. 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 Administrative Office. We are not responsible for the
validity of any assignment.

An assignment of a Nonqualified Policy may result in certain tax consequences to
the Policyowner. See "Transfers, Assignment or Exchanges of a Policy."

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 state 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.

NOTIFICATION OF DEATH

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<PAGE>

The death of the Annuitant(s) and/or the Owner(s) must be reported to Us
immediately, and We will require Due Proof of Death. We will pay the proceeds
based upon the date recorded in the Due Proof of Death. However, we are entitled
to immediately recover any overpayments made because of a failure to notify Us
of any such death. We are also not responsible for any mispayments which result
from a failure to notify Us.

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 portfolios of the Funds. The Funds'
performance in part reflects the Funds' expenses. See the attached prospectuses
for the Funds.

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 average annual total return quotations of a Sub-Account 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 average annual 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 of the measuring period to the end of that period, usually 1, 5
and 10 years or since the inception of the Sub-Account. Average annual total
return reflects all historical investment results, less all charges and
deductions applied against the Sub-Account (excluding any deductions for premium
taxes).

We may, in addition, advertise performance information computed on a different
basis. We may present non-standardized total return information computed on the
same basis as described above.

We may compare the performance of each Sub-Account in advertising and sales
literature to the performance of other variable annuity issuers in general. We
may also compare the performance of particular types of variable annuities
investing in mutual funds, or investment series of mutual funds with investment
objectives similar to each of the Sub-Accounts. Lipper Analytical Services, Inc.
(Lipper)

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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 an Annuitant until received, subject to certain exceptions. See "FEDERAL
TAX STATUS." 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 law. 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.

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<PAGE>

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 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, 408A or 457 of the Code. The ultimate effect of federal income
taxes on the amounts held under a Policy, or annuity payments, and on the
economic benefit to the Policyowner, an 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. We, however, reserve the right in the
future to make a charge 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 the Funds

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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 the Funds 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.

POLICYOWNER CONTROL

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 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 Policyowner 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 Policyowners 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 than 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 Policyowner
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 Policyowner's death; and (b) if any Policyowner dies
prior to the Annuity Date, the entire interest in the Policy will be distributed
within five years after the date of the Policyowner's death. These requirements
will be considered satisfied as to any portion of the Policyowner'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 Policyowner's death. The
Policyowner's "Designated Beneficiary" is the person designated by such
Policyowner as a Beneficiary and to whom proceeds of the Policy passes by reason
of death and must be a natural person. However, if the Policyowner's "Designated
Beneficiary" is the surviving spouse of the Policyowner, the Policy may be
continued with the surviving spouse as the new Policyowner.

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<PAGE>

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."

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
a Policyowner 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 withdrawals and 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 Policyowner 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 Policyowner that is not a
natural person may wish to discuss these with a tax adviser.

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 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.

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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 a Policyowner
or the Last Surviving 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
surrender of the Policy; or
2. if distributed under a payment option, they are taxed in the same
manner as annuity payments.

For these purposes, the investment in the Policy is not affected by a
Policyowner or Annuitant's death. That is the investment in the Policy remains
the amount of any purchase payments paid which were not excluded from gross
income.

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 a Policyowner (or if the Policyowner is
not an individual, the death of the primary Annuitant);
3. attributable to the Policyowner 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, and other circumstances.

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<PAGE>

TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A POLICY

A transfer of ownership, the designation of an Annuitant or other Beneficiary
who is not also the Policyowner, the designation of certain annuity starting
dates, or the exchange of a Policy may result in certain tax consequences to the
Policyowner that are not discussed herein. A Policyowner 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. "Eligible rollover distributions" from section 401(a) plans and
section 403(b) tax-sheltered annuities are subject to a mandatory federal income
tax withholding of 20%. An eligible rollover distribution is the taxable portion
of any distribution from such a plan, except certain distributions such as
distributions required by the Code or distributions in a specified annuity form.
The 20% withholding does not apply, however, if the Policyowner chooses a
"direct rollover" from the plan to another tax-qualified plan or IRA.

MULTIPLE POLICIES

Section 72(e)(11) of the Code treats all nonqualified deferred annuity policies
entered into after June 21, 1988 that are issued by Us (or Our affiliates) to
the same Policyowner 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 effect 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 Policyowner.
Accordingly, a Policyowner should consult a tax adviser before purchasing more
than one annuity contract.

POSSIBLE TAX CHANGES

Although the likelihood of legislative change is uncertain, there is always the
possibility that the tax treatment of the polices could change by legislation or
other means. It is also possible that any change could be retroactive (that is,
effective prior to the date of the change). A tax adviser should be consulted
with respect to legislative developments and their effect on the Policy.

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; 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, the
Annuitants, and beneficiaries are

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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. Policyowners 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.

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 disclosure 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 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.

SIMPLE INDIVIDUAL RETIREMENT ANNUITIES

Certain small employers may establish SIMPLE plans as provided by Section 408(p)
of the Code, under which employees may elect to defer a percentage of
compensation up to $6,000 (as increased for cost of living adjustments). The
sponsoring employer is required to make matching or non-elective contributions
on behalf of employees. Distributions from SIMPLE IRAs are subject to the same
restrictions that apply to IRA distributions and are taxed as ordinary income.
Subject to certain exceptions, premature distributions prior to age 59 1/2 are
subject to a 10 percent penalty tax, which is increased to 25 percent if the
distribution occurs within the first two years after the commencement of the
employee's participation in the plan.

ROTH INDIVIDUAL RETIREMENT ANNUITIES

Effective January 1, 1998, section 408A of the Code permits certain eligible
individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are
subject to certain limitations, are not deductible and must be made in cash or
as a rollover or transfer from another Roth IRA or other IRA. A rollover from or
conversion of an IRA to a Roth IRA may be subject to tax and other special rules
may apply. You may wish to consult a tax adviser before combining any converted
amounts with any other Roth

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<PAGE>

IRA contributions, including any conversion amounts from other tax years.
Distributions from a Roth IRA generally are not taxed, except that, once
aggregate distributions exceed contributions to the Roth IRA, income tax and a
10 percent penalty tax may apply to distributions made (1) before age 59 1/2
(subject to certain exceptions) and/or (2) during the five taxable years
starting with the year in which the first contribution is made to the Roth IRA.
A 10% penalty tax may apply to amounts attributable to a conversion from an IRA
if they are distributed during the five taxable years beginning with the year in
which the conversion was made.

MINIMUM DISTRIBUTION REQUIREMENTS

The Code requires that minimum distributions from an IRA begin no later than
April 1 of the year following the year in which the Policyowner attains age
70 1/2. Failure to do so results in a federal tax 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 minimum withdrawal
amount of $250.

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 Incidental Benefit Requirement).

No minimum distributions are required from a Roth IRA during Your life, although
upon Your death certain distribution requirements apply.

The Code Minimum Distribution Requirements also apply to distribution from
qualified plans other than IRAs. For qualified plans under section 401(a),
401(k), 403(a), 403(b), and 457, the Code requires that distributions generally
must commence no later than the later of April 1 of the calendar year following
the calendar year in which the Policyowner (or plan participant) (i) reaches age
70 1/2 or (ii) retires, and must be made in a specified form or manner. If the
plan participant is a "5% Owner" (as defined in the Code), distributions
generally must begin no later than the date described in (i). 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

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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.

The Policy includes a Death Benefit that in some cases may exceed the greater of
the premium payments or the Policy Value. The Death Benefit could be
characterized as an incidental benefit, the amount of which is limited in any
pension or profit-sharing plan. Because the Death Benefit may exceed this
limitation, employers using the Policy in connection with such plans should
consult their tax adviser.

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. Except for
governmental plans, 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. The Policy includes a Death Benefit that in some
cases may exceed the greater of the premium payments or the Policy Value. The
Death Benefit could be characterized as an incidental benefit, the amount of
which is limited in any tax-sheltered annuity under section 403(b). Because the
Death Benefit may exceed this limitation, employers using the Policy in
connection with such plans should consult their tax adviser. 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 Policyowner or
recipient of the distribution. A tax adviser should be consulted for further
information.

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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, an affiliate of our
Company. 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. CLAFS will pay distribution
compensation to selling broker/dealers in varying amounts which, under normal
circumstances, is not expected to exceed 6.5% of premium payments under the
policies. We may from time to time pay additional compensation pursuant to
promotional contracts. In some circumstances, we may provide reimbursement of
certain sales and marketing expenses. CLAFS will pay a promotional agent fee for
providing marketing support for the distribution of the contracts.

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

Certain affiliates of the Company, like other life insurance companies, are
involved in lawsuits, including class action lawsuits. In some class action and
other lawsuits involving insurers, substantial damages have been sought and/or
material settlement payments have been made. Although the outcome of any
litigation cannot be predicted with certainty, the Company believes that at the
present time there are no pending or threatened lawsuits that are reasonably
likely to have a material adverse impact on the Variable Account or the Company.

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<PAGE>

VOTING RIGHTS

To the extent deemed to be required by law and as described in the prospectuses
for the Funds, portfolio shares held in the Variable Account and in Our general
account will be voted by Us at regular and special shareholder meetings of the
Funds 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 portfolio 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.

The number of votes of a portfolio 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 of the Funds. Voting instructions will
be solicited by written communication prior to such meeting in accordance with
procedures established by the Funds.

Fund 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 portfolios.

INSURANCE MARKETPLACE STANDARDS ASSOCIATION

Canada Life Insurance Company of New York is a member of the Insurance
Marketplace Standards Association (IMSA) and as such may include the IMSA logo
and information about IMSA membership in its advertisements and sales
literature. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuity products.

PREPARING FOR YEAR 2000

Like all financial services providers, the Company utilizes systems that may be
affected by Year 2000 transition issues and it relies on service providers,
including the Funds, that also may be affected. The Company and its affiliates
have developed, and are in the process of implementing, a Year 2000 transition
plan, and are confirming that its service providers are also so engaged. The
resources that are being devoted to this effort are substantial. It is difficult
to predict with precision whether the amount of resources ultimately devoted, or
the outcome of these efforts, will have any negative impact on the Company.
However, as of the date of this Prospectus, it is not anticipated that
Policyowners will experience negative effects on their investment, or on the
services provided in

49
<PAGE>

connection therewith, as a result of Year 2000 transition implementation. The
Company currently anticipates that its systems will be Year 2000 compliant prior
to the end of 1999, but there can be no assurance that the Company will be
successful, or that interaction with other service providers will not impair the
Company's services at that time.

FINANCIAL STATEMENTS

Our balance sheets as of December 31, 1998 and 1997, and the related statements
of operations, accumulated surplus (deficit), and cash flows for each of the
three years in the period ended December 31, 1998, as well as the Report of
Independent Auditors, are contained in the Statement of Additional Information.
The Variable Account's statement of net assets as of December 31, 1998, and the
related statements of operations and changes in net assets for the periods
indicated therein, 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.

50
<PAGE>

DEFINITIONS

ANNUITANT(S): Any natural person(s) whose life is used to determine the duration
of any payments made under a payment option involving a life contingency. The
term Annuitant(s) also includes any Joint Annuitant(s), a term used solely to
refer to more than one Annuitant. There is no other distinction between the
terms Annuitant(s) and Joint Annuitant(s). A Joint Annuitant is not allowed
under a Qualified Policy and any designation of a Joint Annuitant under a
Qualified Policy will be of no effect.

ANNUITY DATE: The date when the proceeds will be paid under an annuity payment
option or on the first day of the month after any Annuitant reaches age 100,
whichever occurs first.

BENEFICIARY(IES): The person(s) to whom We will pay the proceeds payable on Your
death or on the death of the Last Surviving Annuitant.

CASH SURRENDER VALUE: The Policy Value less any applicable Annual Administration
Charge.

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; or 2) a certified copy
of the decree of a court of competent jurisdiction as to the finding of death.

EFFECTIVE DATE: The date We accept Your completed application and apply Your
initial premium.

FIXED ACCOUNT: Part of Our general account that provides a Guaranteed Interest
Rate. This account is not part of and does not depend on the investment
performance of the Variable Account.

GUARANTEE AMOUNT: Before the Annuity Date, the amount equal to that part of any
Net Premium allocated to, or Policy Value transferred to, the Fixed Account
(including interest) less any withdrawals (including any premium tax charges) or
transfers.

GUARANTEED INTEREST RATE: The applicable effective annual rate of interest that
We will pay on a Guarantee Amount. The Guaranteed Interest Rate will be at least
three percent per year.

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

LAST SURVIVING ANNUITANT(S): The Annuitant(s) or Joint Annuitant(s) that
survives the other.

NET PREMIUM: The premium(s) paid less any premium tax deducted in the year the
premium is paid.

51
<PAGE>

NONQUALIFIED POLICY: A Policy that is not a "qualified" Policy under the
Internal Revenue Code of 1986, as amended (Code).

OWNER(S): The individual(s), trust(s), corporation(s), or any other entity(ies)
entitled to exercise ownership rights and privileges under the Policy. The term
Owner(s) also includes any Joint Owner(s), a term used solely for the purpose of
referring to more than one Owner. There is no other distinction between the
terms Owner(s) and Joint Owner(s).

POLICY: The flexible premium variable deferred annuity Policy offered by this
Prospectus.

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

POLICY DATE: The date the Policy goes into effect.

POLICY YEARS, MONTHS, AND ANNIVERSARIES: Starts on the same month and day as the
Policy Date.

QUALIFIED POLICY: A Policy issued in connection with plans that receive special
federal income tax treatment under sections 401, 403(a), 403(b), 408, 408A, or
457 of the Code.

UNIT: A measurement used in the determination of the Policy's Variable Account
value before the Annuity Date.

VALUATION DAY: Each day the New York Stock Exchange is open for trading.

VALUATION PERIOD: The period beginning at the close of business on a Valuation
Day and ending 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).

52
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS

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

PRINCIPAL UNDERWRITER............................................................. 3

CALCULATION OF YIELDS AND TOTAL RETURNS........................................... 3
Cash Management Yields........................................................ 3
Other Sub-Account Yields...................................................... 4
Total Returns................................................................. 5
Effect of the Annual Administration Charge on Performance Data................ 7

SAFEKEEPING OF ACCOUNT ASSETS..................................................... 7

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

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

LEGAL MATTERS..................................................................... 8

EXPERTS........................................................................... 8

OTHER INFORMATION................................................................. 8

FINANCIAL STATEMENTS............................................................. 8
</TABLE>

53
<PAGE>

PART B

INFORMATION REQUIRED TO BE IN THE

STATEMENT OF ADDITIONAL INFORMATION
<PAGE>

CANADA LIFE INSURANCE COMPANY OF NEW YORK
HOME OFFICE: 500 MAMARONECK AVENUE, HARRISON, NY 10528
PHONE: (914) 835-8400

VARIFUND ACCESS/SM/

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 and the
underlying Funds. The Funds are:

The Alger American Fund
the Berger Institutional Products Trust
Canada Life of America Series Fund, Inc.
The Dreyfus Socially Responsible Growth Fund, Inc.
Dreyfus Variable Investment Fund
Fidelity Investments Variable Insurance Products Fund
Fidelity Investments Variable Insurance Products Fund II
Fidelity Investments Variable Insurance Products Fund III
Goldman Sachs Variable Insurance Trust
The Montgomery Funds III
Seligman Portfolios, Inc.

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 , 1999.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS

ADDITIONAL POLICY PROVISIONS............................................... 4
Contract.............................................................. 4
Incontestability...................................................... 4
Misstatement Of Age or Sex............................................ 4
Currency.............................................................. 4
Place Of Payment...................................................... 4
Non-Participation..................................................... 4
Our Consent........................................................... 4

PRINCIPAL UNDERWRITER...................................................... 4

CALCULATION OF YIELDS AND TOTAL RETURNS.................................... 5
Money Market Yields................................................... 5
Other Sub-Account Yields.............................................. 6
Total Returns......................................................... 7
A. Standardized "Average Annual Total Returns"................... 7
B. Adjusted Historic Fund Performance............................ 12
EFFECT OF THE ANNUAL ADMINISTRATION CHARGE ON PERFORMANCE DATA............. 16

SAFEKEEPING OF ACCOUNT ASSETS.............................................. 16

STATE REGULATION........................................................... 16

RECORDS AND REPORTS........................................................ 16

LEGAL MATTERS.............................................................. 16

EXPERTS.................................................................... 17

OTHER INFORMATION.......................................................... 17

FINANCIAL STATEMENTS....................................................... 17

3
<PAGE>

ADDITIONAL POLICY PROVISIONS

CONTRACT

The entire contract is made up of the Policy, the application for the Policy and
any riders or endorsements. 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

Other than misstatement of age or sex (see below), we will not contest the
Policy after it has been in force during any annuitant's lifetime for two years
from the date of issue of the Policy.

MISSTATEMENT OF AGE OR SEX

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

If we make an overpayment because of an error in age or sex, 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 or sex, any annuity
payments will be recalculated at the correct age or sex, 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.

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, Vice President,
Secretary or Actuary.

PRINCIPAL UNDERWRITER

Canada Life of America Financial Services, Inc. (CLAFS), an affiliate of Canada
Life Insurance Company of New York (CLNY), is the principal underwriter of the
variable annuity policies described

4
<PAGE>

herein. The offering of the policies is continuous, and CLNY does not
anticipate discontinuing the offering of the policies. However, CLNY does
reserve the right to discontinue the offering of the policies.

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, or income other than investment income, 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, and
exclusive of income other than investment income) 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 annual administration charge; 2) the daily
administration fee; and 3) the mortality and expense risk charge. The yield
calculation reflects an average per unit annual 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, and exclusive of income other than
investment income) 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, 1998 was %.

If you have chosen on the application to receive an enhanced death benefit which
has an increased mortality and expense charge of 0.15%, the current yield for
the 7 day period ended December 31, 1998 was %.

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:

5
<PAGE>

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, 1998 was %.

If you have chosen on the application to receive an enhanced death benefit which
has an increased mortality and expense charge of 0.15%, the effective yield for
the 7 day period ended December 31, 1998 was %.

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 (except the Money Market 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 annual administration charge, 2)
the daily administration fee, and 3) the mortality and expense risk charge. The
yield calculation reflects an annual 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 annual 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.

6
<PAGE>

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.

Total Returns

A. STANDARDIZED "AVERAGE ANNUAL TOTAL RETURNS"

We may, from time to time, also quote in sales literature or advertisements
total returns, including standardized average annual total returns calculated in
a manner prescribed by the Securities and Exchange Commission, and other total
returns. We will always include quotes of standardized 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 standardized average annual total return for these periods
will be provided.

Standardized 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.

Standardized 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 annual administration
charge of $30 per year per Policy deducted at the end of each policy year. For
purposes of calculating standardized average annual total return, an average per
dollar annual administration charge attributable to the hypothetical account for
the period is used. The standardized average annual total return will then be
calculated according to the following formula:

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

TR = the standardized 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.

7
<PAGE>

P = a hypothetical initial payment of $1,000.

N = the number of years in the period.

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

Standardized average annual total returns may be calculated either taking into
account or not taking into account the impact of choosing an enhanced death
benefit, which has an additional mortality and expense charge of 0.15%.

Currently, there are no standardized average annual total returns for this
product.

8
<PAGE>

B. ADJUSTED HISTORIC FUND PERFORMANCE

Sales literature or advertisements may quote nonstandardized "adjusted" total
returns for the Funds since their inception reduced by some or all of the fees
and charges under the Policy. Such adjusted historic fund performance includes
data that precedes the inception dates of the Sub-Accounts. This data is
designed to show the performance that would have resulted if the Policy had been
in existence during that time.

When the standardized performance data for the Sub-Accounts is available,
nonstandardized Sub-Account and adjusted historic Fund performance data will be
disclosed together with the standardized performance data for the required
periods.

The Funds have provided the total return information, which includes the
adjusted historic Fund total return information used to calculate the adjusted
historic total returns of the Funds for periods prior to the inception of the
Sub-Accounts.

Adjusted historic Fund average annual total returns are shown on the following
page.

12
<PAGE>

Adjusted historic Fund average annual total returns, assuming a 1.20% mortality
and expense charge, for the periods shown below were:
<TABLE>
<CAPTION>

1 YEAR RETURN 5 YEAR RETURN 10 YEAR RETURN FROM FUND
YEAR ENDED YEAR ENDED YEAR ENDED INCEPTION DATE FUND
Sub-Account 12/31/98 12/31/98 12/31/98 TO 12/31/98 INCEPTION DATE
- --------------------------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Bond *** 12/04/89
Capital *** 04/23/93
International Equity ** *** 04/24/95
Managed *** 12/04/89
Money Market *** 12/04/89
Value Equity *** 12/04/89
Alger American Growth *** 01/08/89
Alger American Leveraged AllCap ** *** 01/25/95
Alger American MidCap Growth *** 05/03/93
Alger American Small 09/20/88
Capitalization
Berger/BIAM IPT-International ** *** 05/01/97
Berger IPT-Small Company Growth * ** *** 05/05/98
Dreyfus Capital Appreciation * ** *** 05/05/98
Dreyfus Growth and Income ** *** 05/02/94
Dreyfus Socially Responsible *** 10/07/93
Fidelity VIP Growth 10/09/86
Fidelity VIP High Income 09/19/85
Fidelity VIP Overseas 01/28/87
Fidelity VIP II Asset Manager *** 09/06/89
Fidelity VIP II Contrafund * ** *** 05/05/98
Fidelity VIP III Growth * ** *** 05/05/98
Opportunities
Fidelity VIP II Index 500 *** 08/27/92
Goldman Sachs Capital Growth * ** *** **** 05/01/99
Goldman Sachs CORE US Equity * ** *** **** 05/01/99
Goldman Sachs Global Income * ** *** **** 05/01/99
Goldman Sachs Growth and Income * ** *** **** 05/01/99
Montgomery Variable Series: ** ***
Emerging Markets 02/02/96

Montgomery Variable Series: ** *** 02/09/96
Growth
Seligman Communications and ** *** 10/11/94
Information
Seligman Frontier ** *** 10/11/94
</TABLE>

13
<PAGE>

Adjusted historic Fund average annual total returns, assuming a 1.40% mortality
and expense charge, for the periods shown below were:
<TABLE>
<CAPTION>

Montgomery Variable Series: ** *** 02/09/96
Growth
Seligman Communications and ** *** 10/11/94
Information
</TABLE>
14

<PAGE>

* These Sub-Accounts invest in portfolios that have not been in operation one
year as of December 31, 1998, and accordingly, no one year adjusted
historic Fund average annual total return is available.

** These Sub-Accounts invest in portfolios that have not been in operation
five years as of December 31, 1998, and accordingly, no five year adjusted
historic Fund average annual total return is available.

*** These Sub-Accounts invest in portfolios that have not been in operation ten
years as of December 31, 1998, and accordingly, no ten year adjusted
historic Fund average annual total return is available.

**** As of December 31, 1998, these Sub-Accounts had not commenced operations.
Accordingly, we have not provided standardized average annual total return
information for these Sub-Accounts.

<PAGE>

EFFECT OF THE ANNUAL ADMINISTRATION CHARGE ON PERFORMANCE DATA

The Policy provides for a $30 annual administration charge to be assessed
annually on each policy anniversary proportionately from any Sub-Accounts or
Fixed Account in which the Policy is invested. If the Policy Value on the
policy anniversary is $35,000 or more, we will waive the annual administration
charge for the prior policy year. We will also waive the annual administration
charge for Tax-Sheltered Annuity Policies. For purposes of reflecting the
annual 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 all the jurisdictions
where we are licensed to operate. The availability of certain Policy rights and
provisions depends on state approval and/or filing and review processes. The
policies will be modified to comply with the requirements of each applicable
jurisdiction.

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 Charles MacPhaul. Sutherland, Asbill &

16
<PAGE>

Brennan LLP of Washington, DC, has provided advice on certain matters relating
to the federal securities laws.

EXPERTS

Our balance sheets as of December 31, 1998 and 1997, and the related statements
of operations, accumulated surplus (deficit), and cash flows for each of the
three years in the period ended December 31, 1998, 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, 1998, and the related
statements of operations and changes in net assets for the periods indicated
therein included in this Statement of Additional Information and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, of
Atlanta, Georgia, as set forth in their reports thereon appearing elsewhere
herein and in the Registration Statement, and are included 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 of December 31, 1998, and the
related statements of operations and changes in net assets for the periods
indicated therein, as well as the Report of Independent Auditors, are contained
herein. Ernst & Young LLP, independent auditors, serves as independent auditors
for the Variable Account.

Our balance sheets as of December 31, 1998 and 1997, and the related statements
of operations, accumulated surplus (deficit), and cash flows for each of the
three years in the period ended December 31, 1998, as well as the Report of
Independent Auditors, 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.

17
<PAGE>

PART C

OTHER INFORMATION
<PAGE>

PART C OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements
All required financial statements are included in Part B of this
registration statement.

(b) Exhibits

(1) Resolution of the Board of Directors of Canada Life Insurance
Company of New York (CLNY) authorizing establishment of the
Variable Account/1/

(2) Not applicable.

(3) (a) Form of Distribution Agreement/1/
(b) Form of Selling Agreement/3/

(4) (a) Form of Annuity Policy
(b) Riders and Endorsements/3/

(5) Form of Application

(6) (a) Certificate of Incorporation of CLNY/1/
(b) By-Laws of CLNY/1/
(c) Amendment to the By-Laws of Canada Life Insurance Company
of New York passed by the Board on November 19, 1993/1/
(d) Amendment to the By-Laws of Canada Life Insurance Company
of New York passed by the Board on September 4, 1997/2/

(7) Not applicable

(8) (a)(a) Participation Agreement Between Canada Life Series Fund and
Canada Life Insurance Company of New York/1/
(a)(b) Participation Agreement Between Dreyfus Corporation and
Canada Life Insurance Company of New York/1/
(a)(c) Participation Agreement Between Montgomery Asset
Management, L.P. and Canada Life Insurance Company of
New York/1/
(a)(d) Participation Agreement Between Fred Alger and Company,
Inc. and Canada Life Insurance Company of New York/1/
(a)(e) Participation Agreement Among Variable Insurance Products
Fund, Fidelity Distributors Corporation and Canada Life
Insurance Company of New York/2/
(a)(f) Participation Agreement Among Berger Institutional Products
Trust and Canada Life Insurance Company of New York/1/
(a)(g) Participation Agreement Among Variable Insurance Products
Fund II, Fidelity Distributors Corporation and Canada Life
Insurance Company of New York/2/
(a)(h) Participation Agreement Among Variable Insurance Products
Fund III, Fidelity Distributors Corporation and Canada Life
Insurance Company of New York/2/
(a)(i) Participation Agreement Among Berger Institutional Products
Trust, Berger Associates, Inc. and Canada Life Insurance
Company of New York/2/
(a)(j) Participation Agreement Between Canada Life Insurance
Company of New York and The Dreyfus Socially Responsible
Growth Fund, Inc./2/
(a)(k) Participation Agreement Between Canada Life Insurance
Company of New York and Dreyfus Variable Investment Fund/2/

-2-

<PAGE>

(a)(l) Amendment to Participation Agreement Among Variable
Insurance Products Fund, Fidelity Distributors Corporation
and Canada Life Insurance Company of New York/2/
(a)(m) Amendment to Participation Agreement Among Variable
Insurance Products Fund II, Fidelity Distributors
Corporation and Canada Life Insurance Company of New
York/2/
(a)(n) Amendment to Participation Agreement By and Among Canada
Life Insurance Company of New York and Montgomery Funds III
and Montgomery Asset Management, L.P./2/
(a)(o) Participation Agreement By and Between Canada Life
Insurance Company of New York and Goldman Sachs, Inc./3/

(b) Service Agreement/1/

(9) Opinion and Consent of Counsel

(10) (a) Consent of Counsel/3/
(b) Consent of Independent Counsel/3/
(c) Consent of Independent Auditors/3/

(11) No financial statements were omitted from Item 23.

(12) Not applicable

(13) Sample Performance Data Calculation/3/

- ---------------------
/1/ Incorporated herein by reference to exhibits filed with the Post-
Effective Amendment No. 11 to the Registration Statement on Form N-4 for
Variable Account 1 of Canada Life Insurance Company of New York (File
No.33-32199), filed on April 29, 1997.
/2/ Incorporated herein by reference to exhibits filed with the Post-
Effective Amendment No. 12 to the Registration Statement on Form N-4 for
Variable Account of Canada Life Insurance Company of New York (File
No.33-32199), filed on April 30, 1998.
/3/ To be filed by amendment.
-3-
<PAGE>

Item 25. Directors and Officers of the Depositor

<TABLE>
<CAPTION>
Name and Principal
Business Address Positions and Offices with Depositor
------------------ ------------------------------------
<C> <S>
David A. Nield (1) Chairman & Director
Ron E. Beettam (2) President & Director
Paul R. McCadam (3) Vice-President and Chief Operating Officer
Dr. Robert W. Lund (2) Medical Director
Donald K. Cooper (3) Director of Marketing
William S. McIlwaine (2) Group Sales Vice-President
Gary M. Haddow (2) Administrative Officer
Kenneth T. Ledwos (2) Actuary
Sergio Benedetti (2) Marketing Actuary
Janet G. Deskins (2) Illustration Actuary
John W. Pratt (2) Actuarial Associate
Jane W. Elliott (2) Internal Auditor
Roy W. Linden (1) Assistant Secretary
George N. Isaac (1) Assistant Treasurer
Edward P. Ovsenny (1) Assistant Treasurer
Brian J. Lynch (1) Assistant Treasurer
Wendy M. Michaud (3) Chief Underwriter
Gordon N. Farquhar (4) Director
Christopher T. Green (5) Director
Alfred F. Kelly (7) Director
D. Allen Loney (1) Director
William B. Morris (8) Director
Harry Van Benschoten (9) Director
Julius Vogel (10) Director
Alan R. Wentzel (6) Director
Robert R. Beck (3) Director of Marketing
Kevin A. Phelan (1) Assistant Treasurer
Henry A. Rachfalowski (1) Treasurer
</TABLE>

(1) The business address is 330 University Avenue, Toronto, Ontario, Canada
M5G 1R8.
(2) The business address is 6201 Powers Ferry Road, NW, Suite 600, Atlanta,
GA, USA 30339.
(3) The business address is 500 Mamaroneck Avenue, Harrison, New York, USA
10528.
(4) The business address is 43 Meadow Avenue, Weekapaug, Rhode Island, USA
02891
(5) The business address is 1000 Cathedral Place, 298 Main Street, Buffalo,
New York, USA 14202
(6) The business address is 320 Park Avenue, New York, NY, USA 10022-6815
(7) The business address is 232 Crestwood Avenue, Tuckahoe, New York,
10707-2214
(8) The business address is Apt. 10K, 315 East 70th Street, New York, New
York, 100721
(9) The business address is 105 Seminary Street, New Canaan, Connecticut, USA
06840
(10) The business address is 72 Colt Road, Summit, New Jersey, USA 07901

-4-
<PAGE>

Item 26. Persons Controlled by or Under Common Control With the Depositor
or Registrant

<TABLE>
<CAPTION>
NAME JURISDICTION PERCENT OF PRINCIPAL
- ---- ------------
VOTING SECURITIES OWNED BUSINESS
----------------------- --------
<S> <C> <C> <C>
The Canada Life Assurance Company Canada Mutual Company Life and Health
Insurance

Canada Life Insurance Company of New York Ownership of voting securities through Life and Health
New York Canada Life Insurance

Adason Properties Limited Canada Ownership of all voting securities Property
through Canada Life Management

Canada Life Irish Operations Limited England Ownership of all voting securities Life and Health
through Canada Life Insurance

Canada Life Unit Trust Managers England Ownership of all voting securities Unit Trust
Limited through Canada Life Irish Operations Management

Canada Life Mortgage Services Ltd. Canada Ownership of all voting securities Mortgage
through Canada Life Portfolios

The CLGB Property Company Limited England Ownership of all voting securities Real Estate
through Canada Life Irish Operations Investment

CLASSCO Benefit Services Limited Canada Ownership of all voting securities Administrative
through Canada Life Services

Canada Life Casualty Insurance Canada Ownership of all voting securities Property and
Company through Canada Life Insurance Casualty
Insurance

INDAGO Capital Management Inc. Canada Ownership of 50% of voting securities Investment
through INDAGO Capital Management Inc. Counseling
and 50% by the executive employees

Sherway Centre Limited Canada Ownership of all voting securities Real Estate
through Canada Life Broker

The Canada Life Assurance Company Rep. of Ireland Ownership of all voting securities Life and Health
of Ireland Limited through Canada Life Irish Operations Insurance

Canlife - IBI Investment Services Rep. of Ireland Ownership of 50% of voting securities Unit Trust
Limited through Canada Life Ass. ( Ireland) Management
Limited and 50% by the Investment Bank
of Ireland

Canada Life Financial England Ownership of all voting securities Life
</TABLE>

-5-
<PAGE>

<TABLE>
<CAPTION>
NAME JURISDICTION PERCENT OF PRINCIPAL
- ---- ------------
VOTING SECURITIES OWNED BUSINESS
----------------------- --------
<S> <C> <C> <C>
Services Company Limited through Canada Life Irish Operations Insurance

F.S.D. Investments Ltd. Rep. of Ireland Ownership of all voting securities Unit Fund Sales
through Canada Life Assurance (Ireland) and Management
Limited

Canada Life Insurance Company of US Canada Life Life and Health
America Insurance

Canada Life of America Financial Georgia Ownership of all voting securities Broker Dealer
Services Inc. through CLICA

Canada Life of America Series Maryland Ownership of all voting securities Mutual Fund
Fund, Inc. through CLICA

CLMS Realty Ltd. Canada 99% of the common shares and 100% of the Realtor
convertible preference shares are owned
by Canada Life

Canada Life Pension & Annuities Rep. of Ireland Ownership of all voting securities Life Assurance
(Ireland) Limited through Canada Life Assurance (Ireland)
Limited

CLAI Limited Rep. of Ireland Ownership of all voting securities Holding,
through Canada Life Ireland Holdings Service,
Limited Management, and
Investment Company

The Canada Life Assurance (Ireland) Rep. of Ireland Ownership of all voting securities Life Insurance,
Limited through CLAI Limited and the Canada Life Pension, and
Assurance Company of Ireland Annuity
CL Capital Management, Inc. Georgia Ownership of all voting securities Investment
through CLICA Advisor

Canada Life Capital Corporation Inc. Canada Ownership of all voting securities External
through Canada Life Sources of
Capital

Canada Life Securing Corporation Inc. Canada Ownership of all voting securities Holding Company
through Canada Life

The Canada Life Group (UK) Limited England Ownership of all voting securities Holding Company
through Canada life

Canada Life Holdings (UK) Limited England The Canada Life Group (UK) Limited Holding Company

The Canada Life Assurance Company of England The Canada Life Group (UK) Limited Life and Health
Great Britain Limited
</TABLE>

-6-
<PAGE>

<TABLE>
<CAPTION>
NAME JURISDICTION PERCENT OF PRINCIPAL
- ---- ------------
VOTING SECURITIES OWNED BUSINESS
----------------------- --------
<S> <C> <C> <C>
Canada Life Management (UK) Limited England The Canada Life Group (UK) Limited Unit Trust
Sales &
Management

Canada Life Group Services (UK) England The Canada Life Group (UK) Limited Administrative
Limited Services

Canada Life Trustee Services (UK) England The Canada Life Group (UK) Limited Trustee Services
Limited

Canada Life Ireland Holdings Limited Ireland Canada Life Irish Operations Limited Holding Company
MetLife (UK) Limited England Ownership of all voting securities Holding Company
through Canada Life

MetLife Group Services Limited England Ownership of all voting securities Administrative Services
through MetLife (UK) Limited

Metropolitan Unit Trust Managers England Ownership of all voting securities Unit Trust Services
Limited through MetLife (UK) Limited

Albany International Assurance Limited England Ownership of all voting securities Unit Investment Products
through MetLife (UK) Limited

Albany Life Assurance Company Limited England Ownership of all voting securities Unit Life and Pension
through MetLife (UK) Limited Insurance

Albany Pension Managers and Trustees England Ownership of all voting securities Trustee Services
Limited through Albany Life Assurance Company
Limited
Crown Life
</TABLE>

-7-
<PAGE>

Item 27. Number of Policy Owners

- -------------------------------------------------------------------------------
As of February 1, 1999, there were no owners of Nonqualified Policies and no
owners of Qualified Policies.
- -------------------------------------------------------------------------------

Item 28. Indemnification

Canada Life Insurance Company of New York's By-Laws provide in Article II,
Section 10 as follows:

In addition to and without limiting the generality of Subsections A and B of
this Section 10, the Corporation shall indemnify each director and each person
whose testator or intestate was a director made or threatened to be made a party
to any action or proceeding, including an action or proceeding by or in the
right of the Corporation by reason of the fact that he is or was a director or
that his testator or intestate was a director, against judgments, fines, amounts
paid in settlement, and reasonable expenses, including attorneys' fees actually
and necessarily incurred by him in connection with the defense or settlement of
such action or proceeding unless the judgement or other final adjudication
adverse to the director or to the person whose testator or intestate was a
director in such action or proceeding establishes that the director's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that the director
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.

In addition, expenses incurred in defending a civil or criminal action or
proceeding may be paid by the corporation in advance of the final disposition of
such action or proceeding upon receipt of an undertaking by or on behalf of such
director, officer or employee to repay such amount as, and to the extent
required by paragraph(a) of Section 725 of the New York Business Corporation
Law.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the questions whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.

-8-
<PAGE>

Item 29. Principal Underwriter

Canada Life of America Financial Services, Inc. (CLAFS) is the principal
underwriter of the Policies as defined in the Investment Company Act of 1940.

The following table provides certain information with respect to each director
and officer of CLAFS.

NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
- ---------------- ----------------
S. Benedetti** Chairman and Director
D.V. Rough* Treasurer
C.H. MacPhaul** Assistant Secretary
K.T. Ledwos** Administrative Officer and Director
S. Benedetti** President and Director
K.J. Fillman** Administrative Officer

___________________
* The business address is 330 University Avenue, Toronto, Ontario, Canada
M5G1RS.
** The business address is 6201 Powers Ferry Road, N.W., Suite 600, Atlanta,
Georgia 30339.

Item 30. Location of Accounts and Records

All accounts and records required to be maintained by Section 31(a) of the 1940
Act and the rules under it are maintained by CLNY at its Executive Office at
330 university Avenue, Toronto, Canada M5G1R8 and at 500 Mamaroneck Avenue,
Harrison, New York 10528.

Item 31. Management Services

All management contracts are discussed in Part A or Part B.

Item 32

Undertakings

(a) Registrant undertakes that it will file a post effective amendment to this
registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.

(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that
an applicant can check to request a Statement of Additional Information,
or (2) a post card or similar written communication affixed to or included
in the Prospectus that the applicant can remove to send for a Statement of
Additional Information.

(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to CLNY at the address or phone
number listed in the Prospectus.

-9-
<PAGE>

(d) Depositor undertakes to preserve on behalf of itself and Registrant the
books and records required to be preserved by such companies pursuant to
Rule 31a-2 under the Investment Company Act of 1940 and to permit
examination of such books and records at any time or from time to time
during business hours by examiners or other representatives of the
Securities and Exchange Commission, and to furnish to said Commission at
its principal office in Washington, D.C., or at any regional office of
said Commission specified in a demand made by or on behalf of said
Commission for copies of books and records, true, correct, complete, and
current copies of any or all, or any part, of such books and records.

(e) The Registrant is relying on a letter issued by the staff of the
Securities and Exchange Commission to the American Council of Life
Insurance on November 28, 1988 (Ref. No. IP-6-88) stating that it would
not recommend to the Commission that enforcement action be taken under
Section 22(e), 27(c)(1), or 27(d) of the Investment Company Act of 1940 if
the Registrant, in effect, permits restrictions on cash distributions from
elective contributions to the extent necessary to comply with Section
403(b)(11) of the Internal Revenue Code of 1986 in accordance with the
following conditions:

(1) include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including
the prospectus, used in connection with the offer of the policy;

(2) include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection
with the offer of the policy;

(3) instruct sales representatives who may solicit individuals to purchase
the policies specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of such individuals;

(4) obtain from each owner who purchases a Section 403(b) policy, prior to
or at the time of such purchase, a signed statement acknowledging the
owner's understanding of (i) the redemption restrictions imposed by
Section 403(b)(11), and (ii) the investment alternatives available under
the employer's Section 403(b) arrangement, to which the owner may elect to
transfer his or her policy value.

The Registrant is complying, and shall comply, with the provisions of
paragraphs (1)-(4) above.

(f) Canada Life Insurance Company of New York hereby represents that the fees
and changes deducted under the Policy, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by Canada Life Insurance Company of New York.

-10-
<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement, and has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and the State of New York on this 4th day
of February, 1999.

CANADA LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY ACCOUNT 1

By /s/ R. E. Beettam
----------------------------------------
R. E. Beettam, President
Canada Life Insurance Company of New York

CANADA LIFE INSURANCE COMPANY OF NEW YORK

By /s/ R. E. Beettam
----------------------------------------
R. E. Beettam, President

As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ D. A. Nield Chairman and Director January 20, 1999
----------------------- ----------------
D. A. Nield

/s/ R. E. Beettam President and Director February 1, 1999
----------------------- ----------------
R. E. Beettam

/s/ G. N. Farquhar Director February 1, 1999
----------------------- ----------------
G. N. Farquhar

/s/ C. T. Greene Director January 16, 1999
----------------------- ----------------
C. T. Greene

/s/ A. F. Kelly Director January 16, 1999
----------------------- ----------------
A. F. Kelly

/s/ D. A. Loney Director January 20, 1999
----------------------- ----------------
D. A. Loney

/s/ W. B. Morris Director January 24, 1999
----------------------- ----------------
W. B. Morris

/s/ H. Van Benschoten Director January 15, 1999
----------------------- ----------------
H. Van Benschoten

/s/ A. R. Wentzel Director January 20, 1999
----------------------- ----------------
A. R. Wentzel

/s/ H. A. Rachfalowski Treasurer January 21, 1999
----------------------- ----------------
H. A. Rachfalowski

<PAGE>

EXHIBIT INDEX

EXHIBIT DESCRIPTION OF EXHIBIT
- ------- ----------------------

4 (a) Form of Annuity Policy

5 Form of Application

9 Opinion and Consent of Counsel

<PAGE>

EXHIBIT 4 (A)

FORM OF ANNUITY POLICY
<PAGE>

POLICY NUMBER: 000 000
OWNER: JOHN DOE

CANADA LIFE INSURANCE COMPANY OF NEW YORK
HARRISON, NEW YORK

HOME AND MAILING OFFICE ADDRESS: 500 MAMARONECK AVENUE, HARRISON, NY 10528

If You (the Policyowner) have any questions or complaints about this Policy, You
may call Us toll free at 1-914-885-8400

We, Canada Life Insurance Company of New York, are pleased to issue this Policy
to You.

We agree to pay the proceeds as described in this Policy, subject to its
provisions.

PLEASE READ THIS POLICY CAREFULLY, SINCE IT IS A LEGAL CONTRACT BETWEEN YOU AND
US.

THE DOLLAR AMOUNTS OF ACCUMULATION BENEFITS AND VALUES OF THIS POLICY PROVIDED
BY THE VARIABLE ACCOUNT MAY INCREASE OR DECREASE DAILY, DEPENDING ON THE
INVESTMENT PERFORMANCE OF THE PORTFOLIOS OF THE FUNDS IN WHICH YOUR ELECTED SUB-
ACCOUNTS ARE INVESTED, AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS. NO
MINIMUM AMOUNT OF POLICY VALUE IS GUARANTEED, EXCEPT FOR ANY AMOUNTS IN THE
FIXED ACCOUNT.

TEN DAY RIGHT TO EXAMINE POLICY

YOU HAVE TEN DAYS AFTER YOU RECEIVE THIS POLICY TO DECIDE IF IT MEETS YOUR
NEEDS. IF IT DOES NOT, YOU MAY RETURN IT TO OUR ADMINISTRATIVE OFFICE OR TO THE
AGENT FROM WHOM YOU BOUGHT IT. WE SHALL CANCEL THE POLICY AND PROMPTLY REFUND
THE POLICY VALUE. THE REFUND WILL INCLUDE ANY FEES AND OR CHARGES THAT WERE
DEDUCTED FROM THAT POLICY VALUE, LESS ANY PARTIAL WITHDRAWALS. THE POLICY WILL
BE VOID FROM THE BEGINNING.

/s/ signature illegible /s/ signature illegible
Secretary President

VARIFUND ACCESS/SM/
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
Flexible premium as stated in the Additional Premium Provision.
Accumulation benefits and values are variable, except for amounts in the Fixed
Account.
After the Annuity Date, payment options are on a guaranteed basis.
Death Benefit payable upon death of the Last Surviving Annuitant before the
Annuity Date.
Non-participating - Not eligible for dividends.
XXXXX

Page 1
<PAGE>

TABLE OF CONTENTS

POLICY DETAILS 4
DEFINITIONS 5
GENERAL PROVISIONS 7
ANNUITY DATE 7
ASSIGNMENT 7
BENEFICIARY 7
CONFORMITY WITH LAWS 7
CONSTRUCTION OF TERMS 7
CONTRACT 7
CURRENCY 8
INCONTESTABILITY 8
MISSTATEMENT OF AGE OR SEX 8
MODIFICATION 8
NON-PARTICIPATION 8
NOTIFICATION OF DEATH 8
OUR CONSENT 8
OWNER 9
PERIODIC REPORTS 9
PLACE OF PAYMENT 9
TERMINATION 9
WRITTEN NOTICE 10
PREMIUM 10
INITIAL PREMIUM 10
ADDITIONAL PREMIUM 10
NET PREMIUM ALLOCATION AMONG SUB-ACCOUNTS AND FIXED ACCOUNT 10
THE VARIABLE ACCOUNT 11
VARIABLE ACCOUNT 11
SUB-ACCOUNTS 11
VARIABLE ACCOUNT VALUE 11
UNITS 12
UNIT VALUE 12
NET INVESTMENT FACTOR 12
RESERVED RIGHTS 13
CHANGE IN INVESTMENT POLICY 13
THE FIXED ACCOUNT 13
FIXED ACCOUNT 13
MARKET VALUE ADJUSTMENT 15
POLICY VALUES 16
POLICY VALUE 16
CASH SURRENDER VALUE 16
PARTIAL WITHDRAWALS 16
ANNUAL ADMINISTRATION CHARGE 16

Page 2
<PAGE>

BASIS OF VALUES 17
TRANSFERS 17
TRANSFER PRIVILEGE 17
TRANSFER PROCESSING FEE 17
PAYMENT OF PROCEEDS 17
PROCEEDS 17
PROCEEDS ON ANNUITY DATE 18
PROCEEDS ON SURRENDER 18
PROCEEDS ON DEATH OF THE LAST SURVIVING ANNUITANT BEFORE
ANNUITY DATE (THE DEATH BENEFIT) 18
PROCEEDS ON DEATH OF ANY OWNER 19
INTEREST ON PROCEEDS 19
POSTPONEMENT OF PAYMENT 19
PAYMENT OPTIONS 20
ELECTION OF PAYMENT OPTIONS 20
PAYMENT DATES 20
AGE AND SURVIVAL OF ANNUITANT 21
APPENDIX - TABLE OF PAYMENTS ON BASIS OF $1,000 NET PROCEEDS 22

Page 3
<PAGE>

POLICY DETAILS

POLICY NUMBER 000 000

ANNUITANT John Doe

JOINT ANNUITANT

ANNUITANT AGE*

JOINT ANNUITANT AGE*

ANNUITANT SEX

JOINT ANNUITANT SEX

POLICY DATE May 1, 1999

EFFECTIVE DATE May 1, 1999

ANNUITY DATE May 1, 2049

OWNER John Doe

JOINT OWNER

OWNER AGE*

JOINT OWNER AGE*

INITIAL PREMIUM $5,000

ANNUAL ADMINISTRATION CHARGE** $30.00

ANNUALIZED MORTALITY AND
EXPENSE CHARGE 1.25%
[ANNUALIZED MORTALITY AND
EXPENSE CHARGE
IF ENHANCED DEATH BENEFIT CHOSEN 1.40%]

ANNUALIZED RATE OF DAILY
ADMINISTRATIVE FEE 0.30%

* Age is at Date of Issue.

** If the Policy Value on the Policy Anniversary is $75,000 or higher, We will
waive the Annual Administration Charge for the prior Policy Year. We will
also waive the Annual Administration Charge if the Policy is a Tax-Sheltered
Annuity.

THE DATE OF ISSUE OF THIS POLICY IS MAY 1, 1999.

Page 4
<PAGE>

DEFINITIONS

ANNUITANT(S): As shown on the Policy Details page, any natural person(s) whose
life is used to determine the duration of any payments made under a payment
option involving a life contingency. The term Annuitant(s) also includes any
Joint Annuitant(s), a term used solely to refer to more than one Annuitant.
There is no other distinction between the terms Annuitant(s) and Joint
Annuitant(s). A Joint Annuitant is not allowed under a Qualified Policy and any
designation of a Joint Annuitant under a Qualified Policy will be of no effect.

ANNUITY DATE: The date when the proceeds will be paid under an annuity payment
option or on the first day of the month after any Annuitant reaches age 100,
whichever occurs first.

BENEFICIARY(IES): The person(s) designated by You in the application to receive
any proceeds payable on Your death or on the death of the Last Surviving
Annuitant.

CONTINGENT BENEFICIARY(IES): The person(s) designated by You in the application
to receive any proceeds payable in the event no primary Beneficiary(ies) is
alive on the date of death of the Last Surviving Annuitant.

DATE OF ISSUE: As shown on the Policy Details page, the date on which the Policy
is issued at Our Administrative Office. The Date of Issue may be different than
the Policy Date.

EFFECTIVE DATE: As shown on the Policy Details Page, the date We accept Your
completed application and apply Your initial premium.

FIXED ACCOUNT: Part of Our general account that provides a Guaranteed Interest
Rate for a specified Guarantee Period. This account is not part of and does not
depend on the investment performance of the Variable Account.

GUARANTEE AMOUNT: Before the Annuity Date, the amount equal to that part of any
Net Premium allocated to, or Policy Value transferred to, the Fixed Account for
a designated Guarantee Period with a particular expiration date (including
interest) less any withdrawals (including any Market Value Adjustments and
premium tax charges) or transfers (including any applicable Market Value
Adjustments) .

GUARANTEE PERIOD: A specific number of years for which We agree to credit a
particular effective annual rate of interest. We currently offer Guarantee
Periods of one, three, five, seven and ten years.

GUARANTEED INTEREST RATE: The applicable effective annual rate of interest that
We will pay on a Guarantee Amount. The Guaranteed Interest Rate will be at least
three percent per year.

LAST SURVIVING ANNUITANT(S): The Annuitant(s) or Joint Annuitant(s) that
survives the other.

MARKET VALUE ADJUSTMENT: A positive or negative adjustment assessed upon the
surrender, withdrawal, or transfer of any portion of a Guarantee Amount before
the expiration of its Guarantee Period.

NET PREMIUM: The premium(s) paid less any premium tax deducted in the year the
premium is paid.

NONQUALIFIED POLICY: A Policy that is not a "qualified" Policy under the
Internal Revenue Code of 1986, as amended (Code).

Page 5
<PAGE>

POLICYOWNER(S): As shown on the Policy Details page, the individual(s),
trust(s), corporation(s), or any other entity(ies) entitled to exercise
ownership rights and privileges under the Policy. The term Policyowner(s) also
includes any Joint Policyowner(s), a term used solely for the purpose of
referring to more than one Policyowner. There is no other distinction between
the terms Policyowner(s) and Joint Policyowner(s).

Policy: This Flexible Premium Variable Deferred Annuity contract.

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

POLICY DATE: As shown on the Policy Details page, the date this Policy goes into
effect.

POLICY YEARS, MONTHS, and ANNIVERSARIES: Starts on the same month and day as the
Policy Date.

QUALIFIED POLICY: A Policy issued in connection with plans that receive special
federal income tax treatment under sections 401, 403(a), 403(b), 408, 408A, or
457 of the Code.

UNIT: A measurement used in the determination of the Policy's Variable Account
value before the Annuity Date.

VALUATION DAY: Each day the New York Stock Exchange is open for trading.

Page 6
<PAGE>

GENERAL PROVISIONS

ANNUITY DATE

You may annuitize at any time, and may change the Annuity Date, subject to these
limitations:

1. We must receive Your Written Notice at Our Administrative 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 first day of the
month following any Annuitant's 100th birthday.

ASSIGNMENT

BENEFICIARY

CONFORMITY WITH LAWS

To the extent this Policy conflicts with any applicable federal or state law,
rules or regulations, or the requirements of the Internal Revenue Service
concerning distributions on death, this Policy shall be deemed to conform with
said law, regulation or ruling and administrated accordingly.

CONSTRUCTION OF TERMS

Singular terms shall be construed to include the plural.

CONTRACT

We have issued this Policy in consideration of Your application and Your payment
of the initial premium. The entire contract is made up of this Policy, which
includes the Policy Details Page, the attached copy of the application, and any
riders and endorsements. We rely on all statements made in the application. The
statements made in the application are deemed representations and not
warranties. Neither You nor We can use any statement in defense to a claim or
to void this Policy unless it is contained in the application and a copy of the
application is attached to the Policy at issue.

Page 7
<PAGE>

Only Our President, Vice President, Secretary or Actuary may modify this Policy
or waive any of Our rights or requirements. Any change in this Policy must be in
writing. The change must bear the signature, or a reproduction of the
signature, of one or more of the above officers.

CURRENCY

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

INCONTESTABILITY

Other than misstatement of age or sex (see below), We will not contest this
Policy after it has been in force during any Annuitant's lifetime for two years
from the Date of Issue.

MISSTATEMENT OF AGE OR SEX

Proof of date of birth and sex of each Annuitant is required before any annuity
payment will be made, if such payment involves a life contingency. If the age
or sex of any annuitant has been misstated, we will pay the amount which the
proceeds would have purchased at the correct age or for the correct sex.

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 state 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.

NON-PARTICIPATION

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

NOTIFICATION OF DEATH

The death of the Annuitant(s) and/or the Owner(s) must be reported to Us
immediately, and We will require Due Proof of Death. We will pay the proceeds
based upon the date recorded in the Due Proof of Death. However, we are
entitled to immediately recover any overpayments made because of a failure to
notify Us of any such death. We are also not responsible for any mispayments
which result from a failure to notify Us.

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, Vice President,
Secretary or Actuary.

Page 8
<PAGE>

OWNER

A change of any Policyowner may result in resetting the Death Benefit to an
amount equal to the Policy Value as of the date of the change.

With respect to Qualified Policies generally, however:

. the contract may not be assigned (other than to us);
. Joint Ownership is not permitted; and
. the Policyowner must be the Annuitant.

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, 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.

PLACE OF PAYMENT

All amounts payable by Us will be payable at Our Administrative Office.

TERMINATION

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 two 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.

Qualified contracts may be subject to distribution restrictions.

Page 9
<PAGE>

WRITTEN NOTICE

1. subject to any payments or other actions We take prior to receiving and
filing Your Written Notice; and
2. whether or not You or the Last Surviving Annuitant are alive when We receive
and file Your Written Notice.

PREMIUM

INITIAL PREMIUM

The initial premium is payable on or before the Effective Date.

ADDITIONAL PREMIUM

You may make additional premium payments at any time during any Annuitant's
lifetime and before the Annuity 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 apply additional Net Premium as
of receipt at Our Administrative Office. We will give You a receipt for each
additional premium payment.

The following chart outlines the minimum additional premium accepted.
<TABLE>
<CAPTION>

MINIMUM ADDITIONAL
Type of Policy PREMIUM ACCEPTED*
<S> <C>
Policy is an IRA.......................................................... $1,000
Policy is not an IRA...................................................... $1,000
Policy is IRA and PAC agreement** for additional premiums submitted....... $ 50
Policy is not an IRA and PAC agreement for additional premiums submitted.. $ 100
</TABLE>
* We reserve the right to lower or raise the minimum additional premium.
** Pre-authorized check agreement plan.

NET PREMIUM ALLOCATION AMONG SUB-ACCOUNTS AND FIXED ACCOUNT

We cannot guarantee that a Sub-Account or shares of a portfolio will always be
available. If You request that all or part of a premium be allocated to a Sub-
Account or underlying portfolio that is not available, We will immediately
return that portion of the premium to You, unless You specify otherwise.

Page 10
<PAGE>

THE VARIABLE ACCOUNT

VARIABLE ACCOUNT

We established the Canada Life of America Variable Annuity Account 1(the
Variable Account) as a separate investment account on July 22, 1988, under
Michigan 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.

SUB-ACCOUNTS

The Variable Account consists of the Sub-Accounts shown in the current
prospectus You received. Each Sub-Account invests in shares of portfolios of
various funds offered as investment choices (Funds). You may refer, at any
time, to the prospectus for detailed fund information. 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 its net
asset value. The Funds' prospectuses, which is part of the prospectus You
received, defines the net asset value and describes the portfolios of the Funds.

The dollar amounts of accumulation values and benefits of this Policy provided
by the Variable Account depend on the investment performance of the portfolios
of the Funds in which Your elected Sub-Accounts are invested. We do not
guarantee the investment performance of the portfolios. You bear the full
investment risk for amounts applied to the elected Sub-Accounts.

VARIABLE ACCOUNT VALUE

To calculate the Variable Account value before the Annuity Date, multiply (a) by
(b), where:

a) is the number of Units credited to the Policy for each Sub-Account; and
b) is the current Unit Value of these Units.

UNITS

We credit Net Premium in the form of Units. The number of Units credited to the
Policy for each Sub-Account is (a) divided by (b), where:

a) is the Net Premium allocated to that Sub-Account; and
b) is the Unit Value for that Sub-Account (at the end of the Valuation Period
during which We receive the premium).

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.

Page 11
<PAGE>

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 occurs:

. the Annual Administration Charge is assessed;
. the date We receive and file Your Written Notice for a partial withdrawal or
surrender;
. the date of a systematic withdrawal;
. the Annuity Date; or
. the date We receive Due Proof of Your death or the Last Surviving Annuitant's
death.

UNIT VALUE

The Unit Value for each Sub-Account's first Valuation Period is generally set at
$10. After that, the Unit Value is determined by multiplying the Unit Value at
the end of the immediately preceding Valuation Period by the Net Investment
Factor for the current Valuation Period.

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

To find the rate of return of each portfolio in which the Sub-Accounts invest
divide (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.

RESERVED RIGHTS

We reserve the right to substitute shares of another portfolio of the Fund or
shares of another registered open-end investment company if, in our judgment,
investment in shares of a current portfolio(s) is no longer appropriate. This
decision will be based on a legitimate reason, such as a change in investment
objective, a change in the tax laws, or the shares are no longer available for
investment. We will first obtain SEC approval , if such approval is required by
law.

When permitted by law, We also reserve the right to:

. create new separate accounts;
. combine separate accounts, including the Canada Life of America 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 of the Fund or of other registered investment companies;
. deregister the Variable Account under the 1940 Act if registration is no
longer required;
. make any changes required by the 1940 Act; and

Page 12
<PAGE>

. 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 objective of a Sub-Account may not be changed unless the change
is approved, if required, by the Michigan Insurance Bureau. A statement of such
approval will be filed, if required, with the insurance department of the state
in which the Policy is delivered.

THE FIXED ACCOUNT

FIXED ACCOUNT

You may allocate some or all of the Net Premium and/or make transfers from the
Variable Account to the Fixed Account. The Fixed Account pays interest at
declared rates (Guaranteed Interest Rates) guaranteed for selected periods of
time (Guarantee Periods). The principal, after deductions, is also guaranteed.

Policyowners allocating Net Premium and/or Policy Value to the Fixed Account do
not participate in the investment performance of assets of the Fixed Account.
The Fixed Account value is calculated by:

. adding the Net Premium and Policy/or Value allocated to it;
. adding the Guaranteed Interest Rate credited on amounts in it; and
. subtracting any charges or Market Value Adjustments imposed on amounts in it
in accordance with the terms of the Policy

The following also applies to the Fixed Account:

. Interests issued by Us in connection with the Fixed Account have not been
registered under the Securities Act of 1933 (the 1933 Act). Also, neither the
Fixed Account nor the general account has been registered as an investment
company under the 1940 Act. So, neither the Fixed Account nor the general
account is generally subject to regulation under either Act. However, certain
disclosures may be subject to generally applicable provisions of the federal
securities laws regarding the accuracy of statements made in a registration
statement.

GUARANTEE AMOUNT

The Guarantee Amount is the portion of the Policy Value allocated to the Fixed
Account. The Guarantee Amount includes:

. Net Premium allocated to Guarantee Periods;
. Policy Value transferred to Guarantee Periods; and
. interest credited to the Policy Value in the Guarantee Periods;
. charges assessed in connection with the Policy.

If the Guarantee Amount in a Guarantee Period remains until the end of the
Guarantee Period, the value will be equal to the amount originally placed in the
Guarantee Period increased by its Guaranteed Interest Rate (compounded
annually). If a Guarantee Amount is surrendered, withdrawn,

Page 13
<PAGE>

or transferred prior to the end of the Guarantee Period, it may be subject to a
Market Value Adjustment, as described below. This may result in the payment of a
Guarantee Amount greater or less than the Guarantee Amount at the time of the
transaction.

The Guarantee Amount is guaranteed to accumulate at a minimum effective annual
interest rate of 3%.

GUARANTEE PERIODS

Guarantee Periods are specific intervals of time over which the Guarantee Amount
is credited with interest at a specific Guaranteed Interest Rate. We currently
offer Guarantee Periods of one, three, five, seven and ten years. We will always
offer a Guarantee Period of one year. Since the specific Guarantee Periods
available may change periodically, please contact Our Administrative Office to
determine the Guarantee Periods currently being offered. Guarantee Periods may
not be available in all states.

Beginning and Ending of Guarantee Periods. Guarantee Periods begin on the date a
Net Premium is allocated to, or a portion of the Policy Value is transferred to,
the Guarantee Period. Guarantee Periods end on the last calendar day of the
month when the number of years in the Guarantee Period chosen (measured from the
end of the month in which the amount was allocated or transferred to the
Guarantee Period) has elapsed.

Guaranteed Interest Rates. Once an amount has been allocated or transferred to a
Guarantee Period, the applicable Guaranteed Interest Rate will not change during
that Guarantee Period. However, Guaranteed Interest Rates for different
allocations and transfers may differ, depending on the timing of the allocation
and transfer.

Expiration of Guarantee Period. During the 30 day period following the end of a
Guarantee Period (30 day window), a Policyowner may transfer the Guarantee
Amount to a new Guarantee Period or to a Sub-Account(s). A Market Value
Adjustment will not apply if the Guarantee Amount is surrendered, withdrawn, or
transferred during the 30 day window. During the 30 day window, the Guarantee
Amount will generally accrue interest at an annual effective rate of 3%.
However, if the Guarantee Amount is placed in another Guarantee Period You will
receive the interest rate for that Guarantee Period.

Prior to the expiration date of any Guarantee Period, We will notify You of
available Guarantee Periods and their corresponding Guaranteed Interest Rates.

. A new Guarantee Period of the same length as the previous Guarantee Period
will begin automatically on the first day following the expired Guarantee
Period, unless We receive Written Notice, prior to the end of the 30 day
window, containing instructions to transfer all or a portion of the expiring
Guarantee Amount to a Sub-Account(s) or a Guarantee Period.

. If We do not receive such Written Notice and are not offering a Guarantee
Period of the same length as the expiring Guarantee Period, then a new
Guarantee Period of one year will begin automatically on the first day
following the end of the expired Guarantee Period.

. A Guarantee Period of one year will also begin automatically if renewal of the
expiring Guarantee Period would continue the Policy beyond its Annuity Date.

Reserved Rights. To the extent permitted by law, We reserve the right at any
time to:

1. offer Guarantee Periods that differ from those available when a
Policyowner's Policy was issued; and
2. stop accepting Net Premium allocations or transfers of Policy Value to a
particular Guarantee Period.

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<PAGE>

MARKET VALUE ADJUSTMENT

A Market Value Adjustment compares:

(i) the Guaranteed Interest Rate applied to the Guarantee Period from which a
Guarantee Amount is surrendered, withdrawn, or transferred; and
(ii) the current Guaranteed Interest Rate that is credited for an equal
Guarantee Period.

If an equal Guarantee Period is not offered, We will use the linear
interpolation of the Guaranteed Interest Rates for the Guarantee Periods closest
in duration that are offered. Any surrender, withdrawal, or transfer of a
Guarantee Amount is subject to a Market Value Adjustment, unless:

. the Effective Date of the surrender, withdrawal, or transfer is within 30
days after the end of a Guarantee Period;
. the surrender, withdrawal or transfer is from the one year Guarantee Period;
or
. the surrender, withdrawal or transfer is to provide death benefits, nursing
home benefits, terminal illness benefits or annuitization.

The Market Value Adjustment will be applied after deducting any Annual
Administration Charge or transfer fees, but before deducting any taxes incurred.
The Market Value Adjustment will never invade principal nor reduce earnings on
amounts allocated to the Fixed Account to less than 3% per year.

On the date the Market Value Adjustment is to be applied, one of the following
will happen:

. If the Guaranteed Interest Rate for the selected Guarantee Period, less
0.50%, is less than the Guaranteed Interest Rate currently being offered for
new Guarantee Periods of equal length, the Market Value Adjustment will
result in the payment of an amount less than the Guarantee Amount (or portion
thereof) being surrendered, withdrawn, or transferred.

. If the Guaranteed Interest Rate for the selected Guarantee Period is greater
than 0.50% plus the Guaranteed Interest Rate currently being offered for new
Guarantee Periods of equal length, the Market Value Adjustment will result in
the payment of an amount greater than the Guarantee Amount (or portion
thereof) being surrendered, withdrawn, or transferred.

The Market Value Adjustment is computed by multiplying the amount being
surrendered, withdrawn, or transferred by the Market Value Adjustment Factor.
The Market Value Adjustment Factor is calculated as follows:

Market Value Adjustment Factor = Lesser of (a) (1 + i) n/12
----------------- - 1
(1 +r + .005)n/12

or (b) .05

where:

"i" is the Guaranteed Interest Rate currently being credited to the amount
being surrendered, withdrawn, or transferred;

"r" is the Guaranteed Interest Rate that is currently being offered for a
Guarantee Period of duration equal to the Guarantee Period for the
Guarantee Amount from which the amount being surrendered, withdrawn, or
transferred is taken; and

Page 15
<PAGE>

"n" is the number of months remaining to the expiration of the Guarantee
Period for the Guarantee Amount from which the amount being surrendered,
withdrawn, or transferred is taken.

POLICY VALUES

POLICY VALUE

The Policy Value is the sum of the Variable Account Value and the Fixed Account
Value.

CASH SURRENDER VALUE

The Cash Surrender Value is the Policy Value less any applicable Annual
Administration Charge and Market Value Adjustment.

PARTIAL WITHDRAWALS

You may withdraw part of the Cash Surrender Value at any time before the earlier
of the death of the Last Surviving Annuitant or the Annuity Date, subject to the
following:

1. the Company's minimum partial withdrawal is currently $250;
2. the maximum partial withdrawal is the amount that would leave a Cash
Surrender Value of $2,000; and
3. a partial withdrawal request which would reduce the amount in a Sub-Account
or a Guarantee Period under the Fixed Account below $500 will be treated as
a request for a full withdrawal of the amount in that Sub-Account or
Guarantee Period.

On the date We receive at Our Administrative Office Your Written Notice for a
partial withdrawal, We will withdraw the partial withdrawal from the 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
Guarantee Periods. If You do not provide this information to us, We will
withdraw proportionately from the Sub-Accounts and the Guarantee Periods in
which You are invested. If You do provide this information to us, but the amount
in the designated Sub-Accounts and/or Guarantee Periods is inadequate to comply
with Your withdrawal request, We will first withdraw from the specified Sub-
Accounts and the Guarantee Periods. The remaining balance will be withdrawn
proportionately from the other Sub-Accounts and Guarantee Periods in which You
are invested.

ANNUAL ADMINISTRATION CHARGE

The charge will be assessed proportionately from any Sub-Accounts and the
Guarantee Periods under the Fixed Account in which You are invested. If the
charge is obtained from a Sub-Account(s), 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.

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<PAGE>

BASIS OF VALUES

Any paid up annuity cash surrender or death benefits that may be available are
at least equal to the minimum required by law in the state in which this Policy
is delivered. A detailed statement of the method used to compute the minimum
values has been filed, where required, with the insurance officials of the
jurisdiction in which this Policy is delivered.

TRANSFERS

TRANSFER PRIVILEGE

You may transfer all or a part of an amount in a Sub-Account(s) to another Sub-
Account(s) or to a Guarantee Period(s). You also can transfer an amount in a
Guarantee Period(s) to a Sub-Account(s) or another Guarantee Period(s).
Transfers are subject to the following restrictions:

1. the Company's minimum transfer amount, currently $250;
2. a transfer request that would reduce the amount in that Sub-Account or
Guarantee Period below $500 will be treated as a transfer request for the
entire amount in that Sub-Account or Guarantee Period; and
3. transfers from the Guarantee Periods, except from the one year Guarantee
Period, may be subject to a Market Value Adjustment.

TRANSFER PROCESSING FEE

There is no limit to the number of transfers that You can make between Sub-
Accounts or the Guarantee Periods. The first 12 transfers during each Policy
Year are currently free. The Company currently assesses a $25 transfer fee for
the 13th and each additional transfer in a Policy Year. For the purposes of
assessing the fee, each transfer request (which includes a Written Notice or
telephone call, but does not include automatic transfers) is considered to be
one transfer, regardless of the number of Sub-Accounts or Guarantee Periods
affected by the transfer. The processing fee will be charged proportionately to
the receiving Sub-Account(s) and/or Guarantee Periods.

PAYMENT OF PROCEEDS

PROCEEDS

Proceeds means the amount We will pay when the first of the following events
occurs:

. the Annuity Date;
. the Policy is surrendered;
. We receive Due Proof of Death of any Owner;
. We receive Due Proof of Death of the Last Surviving Annuitant.

If death occurs prior to the Annuity Date, proceeds are paid in one of the
following ways:

. lump sum;
. within 5 years of the Owner's death, as required by federal tax laws (see
"Proceeds on Death of Any Policyowner"); or
. by a mutually agreed upon payment option. See "Election of Options."

Page 17
<PAGE>

The Policy ends when We pay the proceeds.

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

PROCEEDS ON ANNUITY DATE

If Payment Option 1 is in effect on the Annuity Date, We will pay the Policy
Value. See "Payment Options."

The proceeds paid will be the Policy Value if paid on the first day of the month
after any Annuitant's 100th birthday.

PROCEEDS ON SURRENDER

If You surrender the Policy We will pay the Cash Surrender Value. The Cash
Surrender Value will be determined on the date We receive Your Written Notice
for surrender and Your Policy at Our Administrative Office.

You may elect to have the Cash Surrender Value paid in a single sum or under a
payment option. See "Payment Options." The Policy ends when We pay the Cash
Surrender Value.

Surrender proceeds may be subject to federal income tax, including a penalty
tax.

PROCEEDS ON DEATH OF THE LAST SURVIVING ANNUITANT BEFORE ANNUITY DATE (THE DEATH
BENEFIT)

If the Last Surviving Annuitant dies before the Policy Value is transferred to a
payment option, We will pay the Beneficiary a Death Benefit.

The Death Benefit is the greater of:

1. the premiums paid, less any partial withdrawals and incurred taxes; or
2. the Policy Value on the date We receive Due Proof of Death.

For Policyowners who have chosen on the application to pay an additional
Mortality and Expense Risk Charge of 0.15%, the Death Benefit is the greatest
of:

1. item "1" above;
2. item "2" above; or
3. the greatest Policy Value occurring before both the date the Last Surviving
Annuitant attained age 81 and the date We receive Due Proof of the
Annuitant's death This value will be adjusted for any partial withdrawals,
incurred taxes, and premiums paid that occur after such Policy Anniversary.

If on the date the Policy was issued any Annuitant was attained age 81 or older,
either Death Benefit is the Policy Value on the date We receive Due Proof of
Death.

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<PAGE>

PROCEEDS ON DEATH OF ANY OWNER

If any Policyowner dies before the Annuity Date, the following rules apply:

. If You (the deceased Policyowner) were not the Last Surviving Annuitant and We
receive Due Proof of Your death before the Annuity Date, We will pay the
Beneficiary the Policy Value as of the date We receive Due Proof of Your
death.

. If You were Last Surviving Annuitant and We receive Due Proof of Your death
before the Annuity Date, We will pay the Beneficiary the Death Benefit
described in "Proceeds on the Death of Last Surviving Annuitant Before Annuity
Date."

. As required by federal tax law, regardless of whether You were the Annuitant,
the entire interest in the Policy will be distributed to the Beneficiary:

a) within five years of Your death; or
b) over the life of the Beneficiary or over a period not extending beyond the
life expectancy of that Beneficiary, with payments beginning within one year
of Your death.

However, if your spouse is the Beneficiary the Policy may be continued. If this
occurs and You were the only Annuitant, Your spouse will become the Annuitant.

For purposes of this section, if any Policyowner is not an individual, the death
or change of any Annuitant will be treated as the death of a Policyowner.

INTEREST ON PROCEEDS

We will pay interest on proceeds if We do not pay the proceeds in a single sum
or begin paying the proceeds under a payment option:

1. within 30 days after the proceeds become payable; or
2. within the time required by the applicable jurisdiction, if less than 30
days.

This interest will accrue from the date the proceeds become payable to the date
of payment, but not for more than one year, at an annual rate of 3%, or the rate
and time required by law, if greater.

POSTPONEMENT OF PAYMENT

We will usually pay any proceeds payable, amounts partially withdrawn, or the
Cash Surrender Value within seven calendar days after:

1. we receive Your Written Notice for a partial withdrawal or a cash surrender;
2. the date chosen for any systematic withdrawal; or
3. we receive Due Proof of Death of the Owner or the Last Surviving Annuitant.

However, We can postpone the payment of proceeds, amounts withdrawn, the Cash
Surrender Value, or the transfer of amounts between Sub-Accounts if:

Page 19
<PAGE>

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;
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.

PAYMENT OPTIONS

The Policy ends when We pay the proceeds on the Annuity Date. We will apply the
Policy Value under Payment Option 1 unless You have an election on file at Our
Administrative Office to receive another mutually agreed upon payment option
(Payment Option 2). The proceeds We will pay will be the Policy Value if paid on
the first day of the month after any Annuitant's 100th birthday. See "Proceeds
on Annuity Date." We require the surrender of Your Policy so that We may issue
a supplemental contract for the applicable payment option. The term "payee"
means a person who is entitled to receive payments under this section.

ELECTION OF PAYMENT OPTIONS

An election of an option and any revocation or change must be made in a Written
Notice. It must be filed with Our Administrative Office with the written consent
of any irrevocable Beneficiary or assignee at least 30 days before the Annuity
Date.

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

1. the amount to be applied under the option is less than $1,000; or
2. any periodic payment under the election would be less than $50.

PAYMENT OPTION 1: LIFE INCOME WITH PAYMENTS FOR 10 YEARS CERTAIN

We will pay the proceeds in equal amounts each month, quarter, or year during
the Annuitant's lifetime or for 10 years, whichever is longer.

The amount of each payment will be determined from the Table of Payment on Basis
of $1,000 Net Proceeds (see Appendix A), using the Annuitant'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.

Page 20
<PAGE>

AGE AND SURVIVAL OF ANNUITANT

Page 21
<PAGE>

APPENDIX - TABLE OF PAYMENTS ON BASIS OF $1,000 NET PROCEEDS

OPTION 1 - LIFE INCOME WITH PAYMENTS FOR 10 YEARS CERTAIN

<TABLE>
<CAPTION>
AGE MONTHLY AGE MONTHLY
<S> <C> <C> <C>
25 64
30 65
35 66
40 67
45 68
46 69
47 70
48 71
49 72
50 73
51 74
52 75
53 76
54 77
55 78
56 79
57 80
58 81
59 82
60 83
61 84
62 85
63
</TABLE>

The Table is based on the following assumptions: 1983(a) Projection G, 100%
female, YOP = 1995, Interest = 3%, and 3% Load. The monthly payment for ages
not shown in the Table will be calculated on the same basis as these shown and
will be quoted on request.

Page 22
<PAGE>

CANADA LIFE INSURANCE COMPANY OF AMERICA
LANSING, MICHIGAN

ADMINISTRATIVE OFFICE: 6201 POWERS FERRY ROAD N.W. ATLANTA, GA 30339

MAILING ADDRESS: P.O. BOX 105662 ATLANTA, GA 30348-5662

VariFund AdvisorSM
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
Flexible premium as stated in the Additional Premium Provision.
Accumulation benefits and values are variable, except for amounts in the Fixed
Account.
Guarantee Periods under the Fixed Account may be subject to a Market Value
Adjustment.
After the Annuity Date, payment options are on a guaranteed basis.
Death Benefit payable upon death of the Last Surviving Annuitant before the
Annuity Date.
Non-participating - Not eligible for dividends.

<PAGE>

EXHIBIT 5

FORM OF APPLICATION
<PAGE>

CANADA LIFE VARIFUND ACCESS/sm/
INSURANCE COMPANY OF NEW YORK APPLICATION FOR
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
===================================== =========================================
1. Owner's (Applicants) 4. Replacement
===================================== =========================================
Name*________________________________ Will this Annuity replace or change any
First Middle Last other insurance or annuity?
[_]No [_]Yes Company____________________
Policy No._________________
(Please attach replacement forms.)
========================================
Address______________________________ 5. Annultants (if different from Owner)
Street ========================================
_____________________________________ Name____________________________________
City State Zip First Middle Last

Sex [_]M [_]F [_]Other Address_________________________________
Date of Birth _______________________ Street
Month Day Year ________________________________________
City State Zip
Daytime Phone Number ( )____________ Sex [_]M [_]F

__ __ __ __ __ __ __ __ __ Date of Birth___________________________
Social Security Number or Month Day Year

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __
Tax ID Number Social Security Number
Client Brokerage Acct.:#
(If applicable)______________________
=====================================
Joint Owner (Optional) =====================================
Name_________________________________ Joint-Annultant (Optional)
First Middle Last
Sex [_]M [_]F [_]Other Name____________________________________
Date of Birth _______________________ First Middle Last
Month Day Year
Sex [_]M [_]F
__ __ __ __ __ __ __ __ __ Date of Birth___________________________
Social Security Number or Month Day Year

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __
Tax ID Number Social Security Number

===================================== =========================================
2. Benefactors 6. My Investment
===================================== =========================================
Enclose signed letter if more infor- Allocate payment with application of
mation is required. $__________ as indicated below (MUST
TOTAL 100%)
1. Name_____________________________
First Middle Last ____% CLASF International Equity 10/30
__ __ __ __ __ __ __ __ __ ____% CLASF Money Market 11/51
Social Security Number or ____% CLASF Managed 12/32
____% CLASF Bond 13/33
__ __ __ __ __ __ __ __ __ ____% CLASF Value Equity 14/34
Tax ID Number ____% CLASF Capital 15/35
Relationship_________________________ ____% Fidelity Asset Mgr 18/38
Percentage____________% ____% Fidelity Compsfund 15/72
____% Fidelity Growth 17/37
2. Name____________________________ ____% Fidelity Growth Opps. 13/73
First Middle Last ____% Fidelity High Income 18/38
__ __ __ __ __ __ __ __ __ ____% Fidelity Index 500 20/40
Social Security Number or ____% Fidelity Overseas 18/38
____% Goldman Sachs Cap'l Gr.
__ __ __ __ __ __ __ __ __ ____% Goldman Sachs Glb. Inc.
Tax ID Number ____% Alger Growth 83/93
Relationship_________________________ ____% Alger Leverage AllCap 85/95
Percentage____________% ____% Alger Small Cap 82/92
==================================== ____% Berger/BIAM IPT Inter'l 68/98
Contingent Beneficiary ____% Berger/BIAM Small Co. Gro. 89/98
____% Dreyfus Cap'l Appreciation 45/47
Name*_______________________________ ____% Dreyfus Growth & Income 00/90
First Middle Last ____% Dreyfus Social Respon. 81/91
____% Montgomery Energ. Mkts. 86/98
__ __ __ __ __ __ __ __ __ ____% Montgomery Growth 87/97
Social Security Number or ____% Sellgman Comm & Info. 50/70
____% Sellgman Frontier 51/71
__ __ __ __ __ __ __ __ __ ____% Goldman CORE US Eqty.
Tax ID Number ____% Goldman Sachs Gr. & Inc.
Relationship_________________________ ____% Fixed Account
Percentage____________% ________________________________________
==================================== =========================================
3. Type of Account (Must be 7. Pre Authorized Check (PAC)
Completed) =========================================
==================================== I authorized the Company to collect
IRA: [_] Traditional $______ (MINIMUM) $100/$50-IRA)
[_] Roth starting on _______________ by initiating
[_] Simple electronic debit entries to my account.
[_] SEP Select One: [_] Checking (attached voided
IRA Transfer/Rollover? check)
[_]Yes [_]No IRA Tax Year is_______ [_] Savings (attach deposit
[_]401(k) [_]487 [_]Non-Qualified slip)
[_]403(b) [_]Keogh (HR-1D) [_]Other If start date is not indicated, this
______________ option will commence 30 days from issue
date. The option is not available on the
29th, 30th or 31st day of each month.
=========================================
*Unless subsequently changed in 8. For Agents Only
accordance with terms of Policy =========================================
issued. Questions? Contact either your broker/
dealer or Canada Life at (800) 905-1959.

[_] Option A (No Trail)
[_] Option B (Trail)
[_] Option C (Trail)
[_] Option D (Trail)

<PAGE>

9. Service Option

BY INITIALING THE BOX(ES) IN THIS SECTION, I/WE HEREBY AUTHORIZE THE COMPANY TO
INITIATE THE OPTION(S) INDICATED. I/WE UNDERSTAND AND AGREE TO ANY
AUTHORIZATION AS FOLLOWS 1) ONLY APPLIES TO THE POLICY APPLIED FOR AND SEPARATE
AUTHORIZATION MUST BE COMPLETED FOR ANY POLICIES. 2) WILL CONTINUE IN EFFECT
UNTIL THE COMPANY RECEIVES WRITTEN REVOCATION FROM ME/US OR THE COMPANY
DISCONTINUES THE OPTIONS(S).

I/WE WILL CONSULT THE CURRENT PROSPECTUS FOR MORE DETAILS ON THE SERVICE OPTIONS
BELOW, SUCH AS THE MINIMUMS AND MAXIMUMS.

================================================================================
================================================================================
[ ] Telephone Transfer Authorization

I/We authorize the Company to act on transfer instructions given by telephone
from any person who can furnish identification. Neither the Company nor any
person authorized by the Company will be responsible for any claim, loss,
liability, or expense in connection with a telephone transfer if the Company or
such other person acted on telephone transfer instructions in good faith in
reliance on this authorization. I/We accept and will comply with the procedures
established by the Company from time to time.
================================================================================
================================================================================
[ ] Dollar Cost Averaging*

I/We hereby authorize the Company to automatically transfer, on a periodic
basis, amounts for regular level investments over time, from one sub-account or
the 1 year Fixed Account shown on this form, to any of the other sub-accounts or
Fixed Accounts specified on this form.

Transfer $ From Start Date
------------ ------------------ ---------------------

Stop Date or Number of Transfers on a
------------- -----------------------

[ ] Monthly [ ] Quarterly [ ] Semi-Annually [ ] Annually

Transfer above amount to (please use numeric codes listed in Section 6):

- ---------- ---------- ---------- ----------
- ---------- ---------- ---------- ----------
- ---------- ---------- ---------- ----------
================================================================================
================================================================================
[ ] Systematic Withdrawal Privilege (SWP)*

I/We hereby authorize the Company to initiate withdrawals from my Policy via
Electronic Funds Transfer, as indicated below.

Select One: [ ] Checking (attach voided check) [ ] Savings (attach deposit slip)

Withdrawal: [ ] Maximum amount allowed without incurring a Surrender
Charge, or $ , to start on / /
--------------- -------------------------------------
Month Day Year

Withdrawal From (please use numeric codes listed in Section 6):

- ---------- ---------- ---------- ----------
- ---------- ---------- ---------- ----------
- ---------- ---------- ---------- ----------
- ---------- ---------- ---------- ----------

Frequency of Withdrawal:[ ] Monthly [ ] Quarterly [ ] Semi-Annually [ ] Annually

Please [ ] Withhold [ ] Do Not Withhold Federal Income Taxes. (If left blank,
10% of federal taxes will be automatically withheld).

NOTE: WITHDRAWALS FROM THE 3, 5, 7, AND 10 YEAR FIXED ACCOUNTS WILL BE SUBJECT
TO A MARKET VALUE ADJUSTMENT.
================================================================================
================================================================================
[ ] Portfolio Rebalancing*

I/We hereby authorize the Company to provide portfolio rebalancing services as
indicated below:

Frequency of Rebalancing: [ ] Quarterly [ ] Semi-Annually [ ] Annually

10. Remarks

11. Signatures

Statement of Applicant: To the best of my knowledge and belief of the person(s)
signing below, all statements in this Application are true and correctly
worded. Each person signing below adopts all statements made in this Application
and agrees to be bound by them. It is agreed that the Policy will not take
effect until the later of: 1) the Policy is issued; or 2) we receive at our
Administrative Office the first premium required under the Policy. No agent or
registered representative can modify this agreement or waive any of the
Company's rights or requirements. I/We acknowledge receipt of the effective
prospectus(es) for the Policy. 3) I/We certify that the number shown on this
form is my/our Social Security # or Taxpayer ID#. 4) The Policy I/We have
applied for is suitable for my/our insurance investment objectives, financial
situation, and needs.

I/WE UNDERSTAND THAT ALL ACCUMULATION BENEFITS AND VALUES PROVIDED BY THE
VARIABLE ACCOUNT MAY INCREASE OR DECREASE DAILY DEPENDING ON INVESTMENT
PERFORMANCE, AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS.

I/WE FURTHER UNDERSTAND THAT AMOUNTS TRANSFERRED, WITHDRAWN OR SURRENDERED UNDER
THIS POLICY FROM THE 3,5,7 AND 10 YEAR FIXED ACCOUNTS MAY INCREASE OR DECREASE
IN ACCORDANCE WITH A MARKET VALUE ADJUSTMENT DURING THE TERM PERIOD SPECIFIED IN
THIS POLICY, SUBJECT TO THE MINIMUM VALUES DEFINED IN THIS POLICY.
[ ] I/We request the Statement of Additional Information

- --------------------------------------------------------------------------------
Signed in (State) Date Signed Signature of Signature of
Owner/Applicant Joint Owner

- --------------------------------------------------------------------------------
Signature of Signature of Signature of
Applicant (if different Joint-Applicant (if Irrevocable
from owner) different from Owner) Beneficiary
(if designated)

Statement of Agent: I certify that 1) the applicant signed this Application; 2)
I am authorized and qualified to discuss the Policy herein applied for; and 3)
to the best of my knowledge replacement [ ] is [ ] is not involved.

FOR CLAFS AGENTS ONLY: You MUST enclose a signed copy of the new CLIENT ACCOUNT
WORKSHEET along with this application.

- --------------------------------------------------------------------------------
Print Registered Name of Firm Date Signed
Representative/Agent
Name

- --------------------------------------------------------------------------------
Signature of Agent Branch Address (if designated)

- --------------------------------------------------------------------------------
Agent Number State License ID Number Agent Phone Number Agent Fax Number

* If start date is not indicated, this option will commence 30 days from issue
date. This option is not available on the 29th, 30th, or 31st day of each
month.

<PAGE>

EXHIBIT 9

OPINION AND CONSENT OF COUNSEL
<PAGE>

February 2, 1999

Board of Directors
Canada Life Insurance Company of New York
500 Mamaroneck Avenue
Harrison, New York 10528

Ladies and Gentlemen:

This opinion is furnished in connection with the filing by Canada Life of New
York Variable Annuity Account 1 (the "Separate Account") of the Registration
Statement on the Form N-4 under the Securities Act of 1933 for certain
individual variable annuity contracts (the "Contracts") offered and funded by
the Separate Account. The Registration Statement covers an indefinite amount of
securities in the form of interests in the Contracts.

I have examined the Charter, By-laws, and other corporate records of Canada Life
Insurance Company of New York (CLNY), and other organizational records of the
Separate Account. On the basis of such examination, it is my opinion that:

1. Canada Life Insurance Company of New York is a stock life insurance company
duly organized and validly existing under the laws of the State of New York.

2. The Separate Account is a "separate account" of Canada Life Insurance Company
of New York pursuant to New York laws and regulations, duly established by a
resolution of Canada Life Insurance Company of New York's Board of Directors
and validly existing under the laws of the state of New York.

3. To the extent New York State law governs, the Contracts have been duly
authorized by Canada Life Insurance Company of New York and, when issued as
contemplated by the Registration Statement, will constitute legal, validly
issued and binding obligations of Canada Life Insurance Company of New York
enforceable in accordance with their terms.

I hereby consent to the use of this opinion as an exhibit to the Registration
Statement, and to the reference to my name under the heading "Legal Matters" in
the Statement of Additional Information.

Sincerely,

/s/ Charles H. MacPhaul
- --------------------------
Charles H. MacPhaul
Counsel