<PAGE>
SUPPLEMENT DATED JANUARY 19, 1998
TO THE PROSPECTUS DATED MAY 1, 1997
OF NORTHBROOK VARIABLE ANNUITY ACCOUNT II
OF NORTHBROOK LIFE INSURANCE COMPANY
Northbrook Life Insurance Company ("Northbrook Life") is pleased to
announce the availability of three new optional enhancements, described below,
to the Contracts described in the Prospectus. Capitalized terms have the same
meaning as given to them in the Prospectus. Please retain this Supplement for
future reference.
DOLLAR COST AVERAGING PROGRAM
Northbrook Life now permits automatic transfers among any Sub-Accounts
of the Variable Account in the Dollar Cost Averaging Program. Accordingly,
please replace the words "the Money Market Sub-Account" with "any Sub-Accounts
of the Variable Account" in your Prospectus, as follows:
Page 3: Definition of Dollar Cost Averaging Program,
Page 5: Question 4, and
Page 14: Paragraph 6 under "Transfers".
AUTOMATIC PORTFOLIO REBALANCING
Northbrook Life Insurance Company now offers Automatic Portfolio Rebalancing.
Accordingly, your Prospectus is amended as follows:
Page 14: Add the following paragraphs after paragraph 6 under "Transfers":
Transfers may also be made automatically through Automatic Portfolio
Rebalancing prior to the Payout Start Date. By electing Automatic Portfolio
Rebalancing, all of the money allocated to Sub-Accounts of the Variable Account
will be rebalanced to the desired allocation on a quarterly basis (or other
frequencies that may be offered by the Company), determined from the first date
that you decide to rebalance. Upon rebalancing, your money will be transferred
among Sub-Accounts of the Variable Account to achieve the desired allocation.
The desired allocation will be the allocation initially selected,
unless subsequently changed. You may change the allocation at any time by giving
us written notice. The new allocation will be effective with the first
rebalancing that occurs after we receive the written request.
Transfers made through Automatic Portfolio Rebalancing are not assessed
a $25 charge and are not included in the twelve free transfers per Contract
Year. Any money allocated to the Fixed Account or the Dollar Cost Averaging
Fixed Account will not be included in the rebalancing.
PERFORMANCE INCOME BENEFIT
Northbrook Life Insurance Company now offers, at the time the Contract is
purchased, the option to elect the Performance Income Benefit. Accordingly, your
Prospectus is amended as follows:
Page 4: Add the definition of Performance Income Benefit:
Performance Income Benefit - An income benefit option which can be
selected at the time the Contract is purchased.
Page 6: Question 6 continued:
<PAGE>
After each reference to "Death Benefit provision" that appears in the first
sentence, insert "or the optional Performance Income Benefit". Also, at the end
of the first sentence, insert "When both the Performance Income Benefit and the
Performance Death Benefit are selected an additional Mortality and Expense Risk
Charge of .24% is assessed bringing the total charges for Contracts with both
the Performance Income Benefit and the Performance Death Benefit to a Mortality
and Expense Risk Charge of 1.49% and an Administrative Expense Charge of .10%."
Page 7: Replace the "Separate Account Annual Expenses" chart in its entirety
with the following chart:
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of account value)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Without an With an With Both the
Optional Optional Optional
Death Benefit Death Benefit Performance
Provision Provision or Income
the Optional Benefit and
Performance the Optional
Income Performance
Benefit Death Benefit
Mortality and Expense Risk Charge 1.25% 1.38% 1.49%
Administrative Expense Charge .10% .10% .10%
Total Separate Account Annual Expenses 1.35% 1.48% 1.59%
</TABLE>
Page 8: Replace the Example headings that read "(with an optional Death Benefit
provision**)" with the heading "(with an optional Death Benefit provision or the
optional Performance Income Benefit**)"
Add the following table under the section: "If you surrender your Contract...."
(with both the optional Performance Income Benefit and the optional Performance
Death Benefit****)
<TABLE>
<CAPTION>
1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------
<S> <C> <C> <C> <C>
Money Market Sub-Account $65 $ 94 $125 $250
Quality Income Plus Sub-Account $65 $ 94 $126 $251
High Yield Sub-Account $65 $ 93 $125 $249
Utilities Sub-Account $66 $ 98 $133 $266
Income Builder Sub-Account $68 $103 $141 $281
Dividend Growth Sub-Account $65 $ 95 $128 $256
Capital Growth Sub-Account $67 $100 $136 $272
Global Dividend Growth Sub-Account $68 $104 $142 $284
European Growth Sub-Account $71 $112 $155 $310
Pacific Growth Sub-Account $73 $120 $169 $336
Capital Appreciation Sub-Account $68 $103 $141 $281
Equity Sub-Account $65 $ 94 $136 $252
Strategist Sub-Account $65 $ 94 $125 $250
Add the following table under the section: "If you do not surrender your Contract ...."
(with both the optional Performance Income Benefit and the optional Performance
Death Benefit ****)
<CAPTION>
1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------
<S> <C> <C> <C> <C>
Money Market Sub-Account $22 $68 $117 $250
Quality Income Plus Sub-Account $22 $68 $117 $251
High Yield Sub-Account $22 $68 $116 $249
Utilities Sub-Account $24 $73 $124 $266
Income Builder Sub-Account $25 $77 $132 $281
Dividend Growth Sub-Account $23 $70 $119 $256
Capital Growth Sub-Account $24 $75 $128 $272
Global Dividend Growth Sub-Account $25 $78 $134 $284
European Growth Sub-Account $28 $86 $147 $310
Pacific Growth Sub-Account $31 $94 $160 $336
Capital Appreciation Sub-Account $25 $77 $132 $281
Equity Sub-Account $22 $69 $118 $252
Strategist Sub-Account $22 $68 $117 $250
**** Total Separate Account Annual Expenses of 1.59%
</TABLE>
<PAGE>
Page 16: In the third sentence under "Mortality and Expense Risk Charge,"
insert "or the optional Performance Income Benefit" after the phrase "optional
Death Benefit provision." Also, insert the following two sentences before the
last sentence of the first paragraph:
The assessment of the additional .13% for the optional Performance
Income Benefit is attributed to the assumption of additional
survivorship risks. When both the Performance Income Benefit and the
Performance Death Benefit are selected an additional .24% is assessed
for a total of 1.49%.
Page 17: At the end of the second paragraph under "Benefits Under The Contract,"
add the following two sentences:
If the Performance Income Benefit is selected at the time of purchase,
then the Performance Death Benefit is the only optional Death Benefit provision
available. Either of the optional Death Benefit provisions may not be available
in all states.
Page 19: At the end of the "Amount of Variable Annuity Income Payments" section
add the following:
The Performance Income Benefit is an optional benefit that you may
elect at the time you purchase your Contract. Your Performance Income Benefit,
on the date of issue, will equal the amount of your initial Purchase Payment.
For each Contract Anniversary, additional Purchase Payment or withdrawal we will
recalculate your Performance Income Benefit. The Performance Income Benefit will
be 1) increased by additional Purchase Payments and 2) reduced by withdrawals by
an amount equal to: (i) the Performance Income Benefit just before the
withdrawal, multiplied by (ii) the ratio of the withdrawal amount to the Cash
Value just before the withdrawal.
We will recalculate the Performance Income Benefit until the oldest
Owner or Annuitant (if the Owner is a non-natural Owner) attains age 85. After
age 85, we will only recalculate the Performance Income Benefit to reflect
additional Purchase Payments and withdrawals.
To exercise your Performance Income Benefit, you must apply it to an
income plan. The Payout Start Date you select must begin on or after your tenth
Contract Anniversary and within 30 days after a Contract Anniversary. In
addition, you must apply your Performance Income Benefit to an income plan that
provides guaranteed payments for either a single or joint life for at least:
1. 10 years, if the Annuitant's age (or youngest Annuitant's age
in the case of joint Annuitants) is 80 or less on the date you
apply the Benefit, or
2. 5 years, if the Annuitant's age (or youngest Annuitant's age,
in the case of joint Annuitants) is greater than 80 on the date
you apply the Benefit.
If your current Cash Value is higher than the Performance Income
Benefit, you can apply the Cash Value to any income plan. The Performance
Income Benefit may not be available in all states.
The following information is added to the Federal Tax Matters Section of
your prospectus.
Roth Individual Retirement Annuities
Section 408A of the Code permits eligible individuals to make
nondeductible contributions to an individual retirement program known as
a Roth Individual Retirement Annuity. Roth Individual Retirement Annuities
are subject to limitations on the amount that can be contributed and on
the time when distributions may commence. "Qualified distributions" from
Roth Individual Retirement Annuities are not includible in gross income.
"Qualified distributions" are any distributions made more than five taxable
years after the taxable year of the first contribution to the Roth Individual
Retirement Annuity, and which are made on or after the date the
individual attains age 59 1/2, made to a beneficiary after the owner's
death, attributable to the owner being disabled or for a first time home
purchase (first time home purchases are subject to a lifetime limit of
$10,000). "Nonqualified distributions" are treated as made from
contributions first and are includible in gross income to the extent such
distributions exceed the contributions made to the Roth Individual
Retirement Annuity. The taxable portion of a "nonqualified distribution"
may be subject to the 10% penalty tax on premature distributions.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. The taxable portion of a conversion or rollover distribution is
includible in gross income, but is exempted from the 10% penalty tax on
premature distributions.
Please retain this Supplement for future reference.
<PAGE>
Part B
SUPPLEMENT DATED JANUARY 19, 1998 TO
THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1997
OF NORTHBROOK VARIABLE ANNUITY ACCOUNT II
OF NORTHBROOK LIFE INSURANCE COMPANY
Under "Standardized Total Return" and "Other Total Return" replace the Example
headings that read "(with an optional Death Benefit provision**)" with the
heading "(with an optional Death Benefit provision or the optional Performance
Income Benefit**)".
Also insert the following tables:
Standardized Total Return
(With both the Optional Performance Income Benefit
and the Optional Performance Death Benefit)
<TABLE>
<CAPTION>
Sub-Account One-Year Since Inception
- ----------------------- -------- ---------------
<S> <C> <C>
Capital Growth 5.46% 11.38%
Dividend Growth 17.68% 22.04%
Equity 6.26% 9.70%
European Growth 23.61% 22.52%
Global Dividend Growth 11.40% 15.44%
High Yield 5.88% 6.63%
Money Market N/A N/A
Pacific Growth (2.08)% .62%
Quality Income Plus (4.37)% (.43)%
Strategist 8.88% 9.91%
Utilities 2.64% 7.63%
(With both the Optional Performance Income Benefit
and the Optional Performance Death Benefit)
<CAPTION>
10-Years or Since
Sub-Account 1 Year 5-Years Inception (if less)
- ----------------------- ------ ------- -------------------
<S> <C> <C> <C>
Capital Growth 5.46% 4.82% 8.45%
Dividend Growth 17.68% 13.15% 11.69%
Equity 6.26% 10.84% 11.25%
European Growth 23.61% 18.99% 16.05%
Global Dividend Growth 11.40% N/A 10.77%
High Yield 5.88% 11.11% 5.52%
Money Market N/A N/A N/A
Pacific Growth (2.08)% N/A (2.04)%
Quality Income Plus (4.37)% 5.71% 6.94%
Strategist 8.88% 7.23% 8.19%
Utilities 2.64% 8.71% 9.57%
Other Total Returns
(With both the Optional Performance Income Benefit
and the Optional Performance Death Benefit)
<CAPTION>
10-Years or Since
Sub-Account 1 Year 5-Years Inception (if less)
- ----------------------- ------ ------- -------------------
<S> <C> <C> <C>
Capital Growth 9.77% 5.03% 8.60%
Dividend Growth 21.99% 13.31% 11.74%
Equity 10.58% 11.01% 11.30%
European Growth 27.93% 19.13% 16.17%
Global Dividend Growth 15.72% N/A 11.80%
High Yield 10.20% 11.27% 5.58%
Money Market N/A N/A N/A
Pacific Growth 2.24% N/A (.74)%
Quality Income Plus (.06)% 5.91% 6.99%
Strategist 13.20% 7.41% 8.23%
Utilities 6.95% 8.89% 9.61%
</TABLE>
