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Supplement to Statement of Additional Information Dated July 8, 1996
Separate Account VA-K (Advantage)
of
Allmerica Financial Life Insurance and Annuity Company
VARIABLE CONTRACT EXCHANGE OFFER
The Company will permit Owners of certain variable annuity contracts, described
below, to exchange their contracts at net asset value for the variable annuity
contracts described in the Prospectus, which are issued on Form No. A3025-96 or
a state variation thereof ("new Contracts"). The Company reserves the right to
suspend this exchange offer at any time.
This offer applies to the exchange of the Company's Elective Payment Variable
Annuity contracts issued on Forms A3012-79 and A3013-79 ("Elective Payment
Exchanged Contracts"; all such contracts have numbers preceded by a "JQ" or "JN"
prefix) and Single Payment Variable Annuity contracts issued on Forms A3014-79
and A3015-79 ("Single Payment Exchanged Contracts"; all such contracts have
numbers preceded by a "KN" or "KQ" prefix). These contracts are referred to
collectively as the "Exchanged Contracts." To effect an exchange, the Company
should receive (1) a completed application for the Contract; (2) the contract
being exchanged and (3) a signed Letter of Awareness.
CONTINGENT DEFERRED SALES CHARGE COMPUTATION. No surrender charge otherwise
applicable to the Exchanged Contracts will be assessed as a result of the
exchange. Instead, the contingent deferred sales charge under the new Contract
will be computed as if the payments that had been made to the Exchanged Contract
were made to the new Contract as of the date of issue of the Exchanged Contract.
Any additional payments to the Contract after the exchange will be subject to
the contingent sales charge computation outlined in the new Contract and
Prospectus; i.e., the charge will be computed based on the number of years that
the additional payment (or portion of that payment) that is being withdrawn has
been credited to the new Contract.
SUMMARY OF DIFFERENCES BETWEEN EXCHANGED CONTRACTS AND THE NEW CONTRACT. The
new Contract and the Exchanged Contracts differ substantially as summarized
below. There may be additional differences important to a person considering an
exchange and the Prospectuses for the new Contract and the Exchanged Contract
should be reviewed carefully before the exchange request is submitted to the
Company.
CONTINGENT DEFERRED SALES CHARGE. The contingent deferred sales charge under
the new Contract, as described in the Prospectus, imposes higher charge
percentages against the excess amount redeemed than the Exchanged Contracts and,
in the case of an exchange of a Single Payment Exchanged Contract, applies the
charge for a greater number of years. In addition, if an Elective Payment
Exchanged Contract was issued more than 9 years before the date of an exchange
under this offer, additional payments to the Exchanged Contract would not be
subject to a surrender charge. New payments to the new Contract may be subject
to a charge if withdrawn prior to the surrender charge period described in the
Prospectus.
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CONTRACT FEE. Under the new Contract, the Company deducts a $30 fee on each
contract anniversary and at surrender if the Accumulated Value is $50,000 or
less. This fee is waived if the new Contract is part of a 401(k) plan. No
contract fees are charged on the Single Payment Exchanged Contracts. A $9 semi-
annual fee is charged on the Elective Payment Exchanged Contracts if the
Accumulated Value is $10,000 or less.
VARIABLE ACCOUNT ADMINISTRATIVE EXPENSE CHARGE. Under the new Contract, the
Company assesses each Sub-Account a daily administrative expense charge at an
annual rate of 0.20% of the average daily net assets of the Sub-Account. No
administrative expense charge based on a percentage of Sub-Account assets is
imposed under the Exchanged Contracts.
TRANSFER CHARGE. No charge for transfers is imposed under the Exchanged
Contracts. Currently, no transfer charge is imposed under the new Contract;
however, the Company reserves the right to assess a charge not to exceed $25 for
each transfer after the twelfth in any contract year.
DEATH BENEFIT. The Exchanged Contracts offer a death benefit that is guaranteed
to be the greater of a contract's accumulated value or gross payments made (less
withdrawals). At the time an exchange is processed, the accumulated value of
the Exchanged Contract becomes the "payment" for the new Contract. Therefore,
the prior purchase payments made under the Exchanged Contract (if higher than
the Exchanged Contract's accumulated value) is no longer a basis for determining
the death benefit under the new Contract. Consequently, whether the initial
minimum death benefit under the new Contract is greater than, equal to or less
than the death benefit of the Exchanged Contract depends on whether the
accumulated value transferred to the new Contract is greater than, equal to or
less than the gross payments under the Exchanged Contract. In addition, under
the Exchanged Contract, the amount of any prior withdrawals are subtracted from
the value of the death benefit. Under the new Contract, where there is a
reduction in the death benefit amount due to a prior withdrawal, the value of
the death benefit is reduced in the same proportion that the new Contract's
accumulated value was reduced on the date of the withdrawal.
ANNUITY TABLES. The Exchanged Contracts contain higher guaranteed annuity
rates.
INVESTMENTS. Accumulated Values and payments under the new Contract may be
allocated to significantly more investment options than are available under the
Exchanged Contracts.
Supplement Dated August 1, 1996
