MERRILL LYNCH LIFE VARIABLE ANNUNITY SEPARATE ACCOUNT, 485BPOS, 1995-04-26

MERRILL LYNCH LIFE VARIABLE ANNUNITY SEPARATE ACCOUNT
485BPOS, 1995-04-26

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 26, 1995

REGISTRATION NO. 33-43053
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. 5 /X/

AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 7 /X/

(CHECK APPROPRIATE BOX OR BOXES)

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

MERRILL LYNCH LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(EXACT NAME OF REGISTRANT)

MERRILL LYNCH LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)

800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(609) 282-1429
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)

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

BARRY G. SKOLNICK, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
MERRILL LYNCH LIFE INSURANCE COMPANY
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536

(NAME AND ADDRESS OF AGENT FOR SERVICE)

COPY TO:
STEPHEN E. ROTH, ESQ.
SUTHERLAND, ASBILL & BRENNAN
1275 PENNSYLVANIA AVENUE, NW
WASHINGTON, D.C. 20004-2404

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

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, an indefinite
amount of securities has been registered under the Securities Act of 1933 by
this Registration Statement. The Rule 24f-2 notice for fiscal year 1994 was
filed on February 24, 1995.

It is proposed that this filing will become effective (check appropriate space):

/ / immediately upon filing pursuant to paragraph (b) of Rule 485

/X/ on May 1, 1995 pursuant to paragraph (b) of Rule 485
-----------
(date)

/ / 60 days after filing pursuant to paragraph (a) of Rule 485

/ / on pursuant to paragraph (a)(1) of Rule 485
----------
(date)

If appropriate, check the following box:

/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

The prospectus and the statement of additional information incorporated by
reference therein contained in this registration statement also relate to
variable annuity contracts which are covered by an earlier registration
statement, File No. 33-43052.

Exhibit Index can be found on page C-7
================================================================================
<PAGE> 2

CROSS REFERENCE SHEET

(AS REQUIRED BY RULE 495(A) UNDER THE 1933 ACT)

<TABLE>
<CAPTION>
N-4 ITEM NUMBER AND CAPTION LOCATION
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
PART A
1. Cover Page................................. Cover Page
2. Definitions................................ Definitions
3. Synopsis................................... Capsule Summary of the Contract
4. Condensed Financial Information............ Condensed Financial Information
5. General Description of Registrant,
Depositor, and Portfolio Companies......... Merrill Lynch Life Insurance Company; The
Variable Account; Investments of the
Variable Account; Variable Account Voting
Rights
6. Deductions................................. Capsule Summary of the Contract (Charges
and Deductions; Withdrawals); Charges and
Deductions; Description of the Contract
(Account Transfers; Withdrawals)
7. General Description of Variable Annuity
Contracts.................................. Capsule Summary of the Contract (The
Variable Account); Investments of the
Variable Account; Description of the
Contract; Merrill Lynch Life Insurance
Company; Variable Account Voting Rights;
State Regulation
8. Annuity Period............................. Capsule Summary of the Contract (Annuity
Payments); Description of the Contract
(Annuity Provisions)
9. Death Benefit.............................. Capsule Summary of the Contract (Payment on
Death); Description of the Contract
(Accumulation Provisions)
10. Purchases and Contract Value............... Capsule Summary of the Contract (Premiums);
Description of the Contract (Premiums);
Reports to Contract Owners
11. Redemptions................................ Capsule Summary of the Contract
(Withdrawals; Ten Day Review); Charges and
Deductions; (Contingent Deferred Sales
Charge); Description of the Contract;
(Premiums; Accumulation Provisions;
Withdrawals; Ten Day Right to Review)
12. Taxes...................................... Capsule Summary of the Contract; (Charges
and Deductions); (Premium Taxes); Federal
Income Taxes
13. Legal Proceedings.......................... Legal Proceedings
14. Table of Contents of the Statement of
Additional Information..................... Table of Contents of the Statement of
Additional Information
</TABLE>

<PAGE> 3

PART C

Information required to be included in Part C is set forth under the appropriate
item, so numbered in Part C to this Registration Statement.
<PAGE> 4

PART A

INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 5

PROSPECTUS

MAY 1, 1995

MERRILL LYNCH LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
FLEXIBLE PREMIUMS--NONPARTICIPATING

ISSUED BY

MERRILL LYNCH LIFE INSURANCE COMPANY

Home Office: Little Rock, Arkansas 72201
Service Center: P.O. Box 44222, Jacksonville, Florida 32231-4222
4804 Deer Lake Drive East, Jacksonville, Florida 32246
Phone: (800) 535-5549

OFFERED THROUGH

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

The individual deferred variable annuity contract described in this Prospectus
(the "Contract") is designed to provide comprehensive and flexible ways to
invest and to create a source of income protection for later in life through the
payment of annuity benefits. An annuity is intended to be a long term
investment. Contract owners should consider their need for deferred income
before purchasing the Contract. The Contract is designed to provide annuity
payments in connection with retirement plans that may or may not qualify for
special federal income tax treatment under the Internal Revenue Code.

Both accumulation of the contract values and annuity payments may be on either a
fixed or variable basis, or on a combination fixed and variable basis. Benefits
on a fixed basis are provided by premiums and contract values allocated to the
Fixed Account. (See THE FIXED ACCOUNT on page 20.) Benefits on a variable basis
are provided by premiums and contract values allocated to the Variable Account.
Such variable benefits are not guaranteed as to fixed-dollar amount and will
vary according to investment performance. THIS PROSPECTUS DESCRIBES ONLY THE
VARIABLE ACCOUNT FEATURES OF THE CONTRACT EXCEPT WHERE SPECIFIC REFERENCE IS
MADE TO THE FIXED ACCOUNT.

The Variable Account is a segregated investment account of Merrill Lynch Life
Insurance Company ("Merrill Lynch Life"), which has been named the Merrill Lynch
Life Variable Annuity Separate Account. Premiums and contract values allocated
to the Variable Account will be invested in certain Funds that the contract
owner is eligible to select from the Merrill Lynch Variable Series Funds, Inc.
The contract owner bears the full investment risk with respect to such
investments.

This Prospectus contains information about the Contract and the Variable Account
that a prospective contract owner should know before investing. It should be
read and retained for future reference. Additional information about the
Contract and Variable Account is contained in a Statement of Additional
Information, dated May 1, 1995, which has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The Statement of
Additional Information is available on request and without charge by writing or
calling Merrill Lynch Life's Service Center at the address or phone number set
forth above. The table of contents for the Statement of Additional Information
is included on page 31 of this Prospectus.

THE PURCHASE OF THIS CONTRACT INVOLVES CERTAIN RISKS. BECAUSE IT IS A VARIABLE
ANNUITY, THE VALUE OF THE CONTRACT REFLECTS THE INVESTMENT PERFORMANCE OF THE
SELECTED INVESTMENT OPTIONS. INVESTMENT RESULTS CAN VARY BOTH UP AND DOWN AND
CAN EVEN DECREASE THE VALUE OF PREMIUM PAYMENTS. THEREFORE, CONTRACT OWNERS
COULD LOSE ALL OR PART OF THE MONEY THEY HAVE INVESTED. MERRILL LYNCH LIFE DOES
NOT GUARANTEE THE VALUE OF THE CONTRACT. RATHER, CONTRACT OWNERS BEAR ALL
INVESTMENT RISKS.

AN ANNUITY IS INTENDED TO BE A LONG TERM INVESTMENT. WITHDRAWALS OR SURRENDER OF
THE CONTRACT PREMATURELY MAY RESULT IN SUBSTANTIAL PENALTIES. CONTRACT OWNERS
SHOULD CONSIDER THEIR INCOME NEEDS BEFORE PURCHASING THE CONTRACT.

ALL WITHDRAWALS FROM AND SURRENDER OF THE CONTRACT ARE SUBJECT TO TAX, AND IF
TAKEN BEFORE AGE 59 1/2 MAY ALSO BE SUBJECT TO A 10% FEDERAL PENALTY TAX.

THIS CONTRACT PROVIDES A GUARANTEED DEATH BENEFIT THAT IS PAYABLE ONLY UPON THE
DEATH OF THE CONTRACT OWNER.

PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS
ATTACHED TO A CURRENT PROSPECTUS FOR MERRILL LYNCH VARIABLE SERIES
FUNDS, INC., WHICH SHOULD ALSO BE READ AND KEPT FOR REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 6

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS........................................................................... 4
CAPSULE SUMMARY OF THE CONTRACT....................................................... 5
FEE TABLE............................................................................. 8
CONDENSED FINANCIAL INFORMATION....................................................... 10
MERRILL LYNCH LIFE INSURANCE COMPANY.................................................. 12
THE VARIABLE ACCOUNT.................................................................. 12
FINANCIAL STATEMENTS.................................................................. 12
THE REINSURANCE AGREEMENT............................................................. 13
INVESTMENTS OF THE VARIABLE ACCOUNT................................................... 13
Eligible Funds...................................................................... 13
Reserve Assets Fund.............................................................. 14
Prime Bond Fund.................................................................. 14
High Current Income Fund......................................................... 14
Quality Equity Fund.............................................................. 15
Equity Growth Fund............................................................... 15
Flexible Strategy Fund........................................................... 15
Natural Resources Focus Fund..................................................... 15
American Balanced Fund........................................................... 16
Reinvestment........................................................................ 16
Substitution of Investments......................................................... 16
CHARGES AND DEDUCTIONS................................................................ 16
Contingent Deferred Sales Charge.................................................... 16
Contract Administration Charge...................................................... 17
Waiver of Charges................................................................... 17
Expense Risk Charge................................................................. 17
Mortality Risk Charge............................................................... 17
Distribution Expense Charge......................................................... 17
Payments of Charges and Deductions.................................................. 18
Premium Taxes....................................................................... 18
Fund Expenses....................................................................... 18
DESCRIPTION OF THE CONTRACT........................................................... 18
Premiums............................................................................ 18
Accumulation Provisions............................................................. 18
Accumulation Units............................................................... 18
Value of an Accumulation Unit.................................................... 19
Net Investment Factor............................................................ 19
Valuation Periods................................................................ 19
The Fixed Account................................................................... 20
Payment on Death.................................................................... 20
Beneficiary......................................................................... 20
Ownership........................................................................... 21
Account Transfers................................................................... 21
Withdrawals......................................................................... 21
Suspension of Payments.............................................................. 21
</TABLE>

2
<PAGE> 7

PAGE
----
<S> <C>
Annuity Provisions.................................................................. 22
Variable Annuity................................................................. 22
Selection of Annuity Date and Annuity Options.................................... 22
Change of Annuity Date or Annuity Option......................................... 22
Annuity Options.................................................................. 22
Minimum Annuity Payments......................................................... 23
First Variable Annuity Payment................................................... 23
Age Adjustment................................................................... 23
Number of Annuity Units.......................................................... 23
Value of Each Annuity Unit....................................................... 23
Subsequent Variable Annuity Payments............................................. 23
Assumed Investment Rate.......................................................... 24
Proof of Age, Sex and Survival................................................... 24
Notices and Elections............................................................... 24
Amendment of Contract............................................................... 24
Ten Day Right to Review............................................................. 24
FEDERAL INCOME TAXES.................................................................. 24
Introduction........................................................................ 24
Merrill Lynch Life's Tax Status..................................................... 25
Taxation of Annuities in General.................................................... 25
In General....................................................................... 25
Required Distributions........................................................... 25
Non-natural Owners............................................................... 25
Distributions.................................................................... 26
Penalty Tax...................................................................... 26
Internal Revenue Service Diversification Standards.................................. 26
Transfers, Assignments, or Exchanges of a Contract.................................. 27
Possible Changes in Taxation........................................................ 27
Other Tax Consequences.............................................................. 27
Qualified Plans..................................................................... 27
Individual Retirement Annuities and Individual Retirement Accounts............... 28
Pension and Profit Sharing Plans................................................. 28
Tax-Sheltered Annuities.......................................................... 28
Section 457 Deferred Compensation ("Section 457") Plans.......................... 29
Withholding...................................................................... 29
VARIABLE ACCOUNT VOTING RIGHTS........................................................ 29
REPORTS TO CONTRACT OWNERS............................................................ 30
DISTRIBUTION OF CONTRACTS............................................................. 30
STATE REGULATION...................................................................... 30
LEGAL PROCEEDINGS..................................................................... 30
EXPERTS............................................................................... 31
REGISTRATION STATEMENTS............................................................... 31
LEGAL MATTERS......................................................................... 31
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.............................. 31
APPENDIX.............................................................................. 32
</TABLE>

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

No person has been authorized to give any information or to make any
representation other than that contained in this Prospectus in connection with
the offer contained in this Prospectus and, if given or made, such information
or representation must not be relied upon as having been authorized. This
Prospectus does not constitute an offer of, or solicitation of an offer to
acquire, any variable annuity contracts offered by this Prospectus in any
jurisdiction to anyone to whom it is unlawful to make such an offer or
solicitation in such jurisdiction.

3
<PAGE> 8

DEFINITIONS

accumulation unit: An index used to compute the value of each contract owner's
interest in the Variable Account prior to the annuity date. (See page 18.)

annuitant: The person on whose continuation of life annuity payments may
depend.

annuity: A series of predetermined periodic payments.

annuity date: The date on which annuity payments are to begin. (See page 22.)

annuity unit: An index used to compute variable annuity payments. (See page
23.)

beneficiary: The person to whom payment is to be made on the death of the
contract owner or annuitant. There may be both a contract owner's beneficiary
and an annuitant's beneficiary if the contract owner is not the annuitant.

Contract: A Contract offered by this Prospectus.

contract owner: The person entitled to exercise all rights under a Contract.
(See page 21.)

contract value: The sum of the value of a contract owner's Fixed Account and a
contract owner's interest in the Variable Account.

Funds: The mutual funds, or separate investment portfolios within a series
mutual fund, designated as eligible investments for the Variable Account. (See
page 13.)

fixed annuity: A series of periodic payments of predetermined amounts that do
not vary with investment experience.

net investment factor: An index used to measure the investment performance of a
subaccount of the Variable Account from one valuation period to the next. (See
page 19.)

nonqualified contract: A Contract issued in connection with a nonqualified
plan.

nonqualified plan: A retirement plan other than a qualified plan.

premiums: The money the contract owner pays Merrill Lynch Life for a Contract.
(See page 18.)

qualified contract: A Contract issued in connection with a qualified plan.

qualified plan: A retirement plan that receives favorable tax treatment under
Section 401, 403, 404, 408, 457 or any similar provision of the Internal Revenue
Code. (See page 27.)

Variable Account: A segregated investment account of Merrill Lynch Life
Insurance Company, named the Merrill Lynch Life Variable Annuity Separate
Account. (See page 12.)

subaccount: A division of the Variable Account consisting of the shares of a
particular Fund held by the Variable Account for all Contracts having a similar
tax status. (See page 12.)

valuation period: The interval from one valuation day of a Fund to the next
valuation day, measured from the time each day the Fund is valued. (See page
19.)

variable annuity: A series of periodic payments that vary in amount according
to investment experience. (See page 22.)

4
<PAGE> 9

CAPSULE SUMMARY OF THE CONTRACT

The following capsule summary is intended to provide a brief overview of the
Contract. More detailed information about the Contract can be found in the
sections of this Prospectus that follow, all of which should be read in their
entirety.

THE VARIABLE ACCOUNT

Premiums will be allocated to the Merrill Lynch Life Variable Annuity Separate
Account (the "Variable Account") a segregated investment account, or to the
Fixed Account described on page 20, as directed by the contract owner. The
Variable Account is divided into subaccounts corresponding to the Funds in which
premiums may be invested. For the first 14 days following the date of issue, all
premiums allocable to the Variable Account will be allocated to the Reserve
Assets Fund subaccount. Thereafter, the contract owner's interest in the
Variable Account will be reallocated to the subaccounts selected by the contract
owner. In the Commonwealth of Pennsylvania, all premiums will be invested as of
the date of issue in the subaccounts selected by the contract owner. The
contract owner may change the selection later, subject to certain conditions.
The contract value and the amount of the monthly annuity payments will reflect
the investment performance of the Funds selected. (See THE VARIABLE ACCOUNT on
page 12 and ACCOUNT TRANSFERS on page 21.)

THE FUNDS

The Funds in which premiums currently may be invested are certain separate
investment portfolios of the Merrill Lynch Variable Series Funds, Inc. They are
the Merrill Lynch Reserve Assets Fund, Prime Bond Fund, High Current Income
Fund, Quality Equity Fund, Equity Growth Fund, Flexible Strategy Fund, Natural
Resources Focus Fund and American Balanced Fund. (See INVESTMENTS OF THE
VARIABLE ACCOUNT on page 13.)

RETIREMENT PLANS

The Contract may be issued pursuant to nonqualified retirement plans or plans
qualifying for special tax treatment as "H.R. 10" plans, Individual Retirement
Annuities or Individual Retirement Accounts, corporate pension and
profit-sharing plans, Tax-Sheltered Annuities or Section 457 deferred
compensation ("Section 457") plans. For each Fund, there is one subaccount for
nonqualified plans and one subaccount for qualified plans. (See QUALIFIED PLANS
on page 27.)

PREMIUMS

The full amount of all premiums will be invested initially. There is no
"front-end load" However, certain charges and deductions will be made from the
contract value. (See CHARGES AND DEDUCTIONS below.)

The Contract permits premiums to be paid on a flexible basis at any time in any
amount meeting Merrill Lynch Life's minimum requirements. The minimum initial
premium Merrill Lynch Life will accept is $1,500 for nonqualified Contracts and
$10 for qualified Contracts. For subsequent premiums, the minimum amount for
nonqualified Contracts is $300 ($50 in Tennessee) and the minimum amount for
qualified Contracts is the same as for the initial premium. (See PREMIUMS on
page 18.)

CHARGES AND DEDUCTIONS

A contingent deferred sales charge is deducted in the event of withdrawal of
contract values, subject to certain exceptions. If the contingent deferred sales
charge applies, it will equal the lesser of (a) 5% of the sum of the premiums
paid within 7 years prior to the date of withdrawal, adjusted for any prior
withdrawals, or (b) 5% of the amount withdrawn. This charge is paid to permit
Merrill Lynch Life to recover sales expenses it has incurred. Under no
circumstances will the charges ever exceed 5% of total premiums. (See CONTINGENT
DEFERRED SALES CHARGE on page 16.)

On each contract anniversary on or prior to the annuity date, Merrill Lynch Life
will deduct a contract administration charge of $30 from the contract value. It
will also be deducted upon full withdrawal of the

5
<PAGE> 10

contract value if such withdrawal is not on a contract anniversary. This charge
is made to reimburse Merrill Lynch Life for expenses related to administration
of the Contracts. (See CONTRACT ADMINISTRATION CHARGE on page 17.)

Merrill Lynch Life will deduct a daily expense risk charge. For nonqualified
Contracts, the charge will be equal to an annual rate of 0.50% of the sum of the
daily net asset values of all nonqualified subaccounts. For qualified Contracts,
the rate will be 0.20% of the sum of the daily net asset values of all qualified
subaccounts. This charge is made to compensate Merrill Lynch Life for the risk
of guaranteeing not to increase the contract administration charge regardless of
actual administrative costs. (See EXPENSE RISK CHARGE on page 17.)

Merrill Lynch Life will deduct a daily distribution expense charge equal to an
annual rate of 0.05% of the daily net asset value of the Variable Account. This
charge compensates Merrill Lynch Life in part for expenses incurred distributing
the Contracts. (See DISTRIBUTION EXPENSE CHARGE on page 17.) Merrill Lynch Life
will also deduct a daily mortality risk charge equal to an annual rate of 0.75%
of the daily net asset value of the Variable Account. This charge is made to
compensate Merrill Lynch Life for the mortality guarantees made under the
Contract. (See MORTALITY RISK CHARGE on page 17.)

Premium taxes payable to any government entity will be deducted at the annuity
date. Currently, premium taxes range from 0% to 5%. In those jurisdictions that
do not allow an insurance company to reduce its current taxable premium income
by the amount of any withdrawal, surrender or death benefit paid, Merrill Lynch
Life will also deduct a charge for these taxes on any withdrawal, surrender or
death benefit effected under the Contract. (See PREMIUM TAXES on page 18.)

ANNUITY PAYMENTS

Monthly annuity payments will start on the annuity date. The contract owner may
select the annuity date. He or she may also select an annuity payment option and
a different payment frequency. The contract owner may change his or her
selections later. (See CHANGE OF ANNUITY DATE or ANNUITY OPTION on page 22.) The
amount of each variable annuity payment will depend on the investment
performance of the Funds the contract owner selects.

If the net contract value at the annuity date is less than $5,000 ($3,500 for
qualified Contracts), Merrill Lynch Life may pay the contract value in a lump
sum in lieu of annuity payments. For tax consequences of a lump sum payment, see
TAXATION OF ANNUITIES IN GENERAL on page 25. If any annuity payment would be
less than $50, Merrill Lynch Life may change the frequency of payments to such
intervals as will result in payments of at least $50. (See MINIMUM ANNUITY
PAYMENTS on page 23.)

ACCOUNT TRANSFERS

The contract owner may transfer all or part of the contract value between the
Variable Account and the Fixed Account and among subaccounts of the Variable
Account, subject to certain limitations. (See ACCOUNT TRANSFERS on page 21.) For
Contracts issued prior to April 30, 1986 and reinsured by Merrill Lynch Life,
see the Appendix for special provisions.

PAYMENT ON DEATH

If either the annuitant or the contract owner dies prior to the annuity date,
Merrill Lynch Life will pay the greater of (a) the sum of all premiums paid
(adjusted for any withdrawals) or (b) the then current contract value. No
contingent deferred sales charge will be imposed. (See PAYMENT ON DEATH on page
20.)

WITHDRAWALS

The contract owner may withdraw all or part of the accumulated contract value
prior to the earlier of the annuity date or the death of the annuitant. The
amount the contract owner withdraws must be at least $500. If the Contract is to
continue in force, the remaining contract value must be at least $500. If these
dollar limitations relating to partial withdrawals would prevent the contract
owner from making a partial withdrawal, he or she may nevertheless make a full
withdrawal of the contract value. A contingent deferred sales charge and a
contract administration charge may be imposed. (See WITHDRAWALS on page 21.)
Withdrawals will

6
<PAGE> 11

decrease the contract value. Withdrawals are subject to tax and prior to age
59 1/2 may also be subject to a 10% federal penalty tax. Revenue Code (see
TAXATION OF ANNUITIES IN GENERAL on page 25), and withdrawals under
Tax-Sheltered Annuities are restricted (see TAX-SHELTERED ANNUITIES on page 28).

TEN DAY REVIEW

When the contract owner receives the Contract, it should be reviewed carefully
to make sure it is what the contract owner intended to purchase. Generally,
within 10 days after the contract owner receives the Contract, he or she may
return it for a refund. Some states allow a longer period of time to return the
Contract. The Contract must be delivered to Merrill Lynch Life's Service Center
or to the Financial Consultant who sold it for a refund to be made. Merrill
Lynch Life will then refund to the contract owner the greater of all premiums
paid into the Contract or the contract value as of the date the Contract is
returned. For contracts issued in the Commonwealth of Pennsylvania, Merrill
Lynch Life will refund the contract owner's premiums allocated to the Fixed
Account plus the value of the contract owner's interest in the Variable Account
as of the date the Contract is returned. The Contract will then be deemed void.

7
<PAGE> 12

FEE TABLE

<TABLE>
<CAPTION>
HIGH NATURAL
RESERVE PRIME CURRENT QUALITY EQUITY FLEXIBLE RESOURCES AMERICAN
ASSET BOND INCOME EQUITY GROWTH STRATEGY FOCUS BALANCED
FUND FUND FUND FUND FUND FUND FUND FUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONTRACT OWNER TRANSACTION
EXPENSES:
Contingent Deferred Sales
Charge (as a percentage of
purchase payments or
amount withdrawn, as
applicable)(a)............ 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
ANNUAL CONTRACT ADMINISTRATION
CHARGE(B)................... $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00
SEPARATE ACCOUNT ANNUAL
EXPENSES (AS A PERCENTAGE OF
NET ASSETS):
Expense Risk Charge(c)...... 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
Mortality Risk Charge(d).... 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
Distribution Expense
Charge(d)................. 0.05% 0.05% 0.05% 0.05% 0.05% 0.05% 0.05% 0.05%
------ ------ ------ ------ ------ ------ ------ ------
TOTAL SEPARATE ACCOUNT ANNUAL
EXPENSES.................... 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
---------------------------------------------------------------------------
HIGH NATURAL
RESERVE PRIME CURRENT QUALITY EQUITY FLEXIBLE RESOURCES AMERICAN
ASSETS BOND INCOME EQUITY GROWTH STRATEGY FOCUS BALANCED
FUND FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MERRILL LYNCH VARIABLE SERIES
FUNDS, INC. ANNUAL EXPENSES
FOR THE YEAR ENDED DECEMBER
31, 1994 (AS A PERCENTAGE OF
PORTFOLIO COMPANY NET
ASSETS):
Investment Advisory
Fees(e)................... 0.50% 0.47% 0.52% 0.47% 0.75% 0.65% 0.65% 0.55%
Other Expenses.............. 0.15% 0.07% 0.09% 0.07% 0.08% 0.08% 0.22% 0.08%
---- ---- ---- ---- ---- ---- --- ---
TOTAL MERRILL LYNCH VARIABLE
SERIES FUNDS, INC. ANNUAL
OPERATING EXPENSES.......... 0.65% 0.54% 0.61% 0.54% 0.83% 0.73% 0.87% 0.63%
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>

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

(a) A contingent deferred sales charge is imposed upon withdrawal of all or part
of the contract value. The charge is 5%, applied to the lesser of premiums
paid within the past 7 years (adjusted for any prior withdrawals) or the
amount withdrawn. There will be no charge for such part of the first
withdrawal in a contract year as does not exceed 10% of the premiums paid
prior to the date of withdrawal. (See page 16.)

(b) A contract administration charge of $30 per contract year is deducted from
each Contract. It is deducted from the contract value on each contract
anniversary on or prior to the annuity date and at full withdrawal if made
other than on a contract anniversary.

(c) The expense risk charge is stated as an annual percentage of the daily net
asset value of the Variable Account. The rate indicated is for nonqualified
Contracts. For qualified Contracts, the rate is 0.20%. (See page 16.)

(d) The mortality risk charge and the distribution expense charge are each
stated as an annual percentage of the daily net asset value of the Variable
Account. (See page 17.)

(e) See "Investments of the Variable Account" on page 13.

8
<PAGE> 13

<TABLE>
<CAPTION>
HIGH
RESERVE CURRENT QUALITY
ASSETS PRIME INCOME EQUITY
FUND BOND FUND FUND FUND
EXAMPLE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- ------------------------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
If the contract owner
surrenders his or her
Contract at the end of the
applicable time period, the
contract owner would pay the
following expenses on a
$1,000 investment, assuming
5% annual return on assets:
1-year................... $ 71 $ 70 $ 70 $ 70
3-year................... 115 111 113 111
5-year................... 161 155 159 155
10-year................... 239 227 234 227
If the contract owner
annuitizes, or does not
surrender, at the end of the
applicable time period, the
contract owner would pay the
following expenses on a
$1,000 investment, assuming
5% annual return on assets:
1-year................... $ 21 $ 20 $ 20 $ 20
3-year................... 65 61 63 61
5-year................... 111 105 109 105
10-year................... 239 227 234 227

<CAPTION>
NATURAL
EQUITY FLEXIBLE RESOURCES AMERICAN
GROWTH STRATEGY FOCUS BALANCED
FUND FUND FUND FUND
EXAMPLE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- ------------------------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
If the contract owner
surrenders his or her
Contract at the end of the
applicable time period, the
contract owner would pay the
following expenses on a
$1,000 investment, assuming
5% annual return on assets:
1-year................... $ 73 $ 72 $ 73 $ 71
3-year................... 120 117 121 114
5-year................... 170 165 172 160
10-year................... 257 247 262 236
If the contract owner
annuitizes, or does not
surrender, at the end of the
applicable time period, the
contract owner would pay the
following expenses on a
$1,000 investment, assuming
5% annual return on assets:
1-year................... $ 23 $ 22 $ 23 $ 21
3-year................... 70 67 71 64
5-year................... 120 115 122 110
10-year................... 257 247 262 236
</TABLE>

The foregoing Fee Table and Example are intended to assist investors in
understanding the costs and expenses that a contract owner in the Merrill Lynch
Life Variable Annuity Separate Account will bear directly or indirectly with
respect to each Fund. The Fee Table and Example include charges and expenses of
the Variable Account as well as the Merrill Lynch Variable Series Funds, Inc.

THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR ANNUAL RATES OF RETURN OF ANY FUND. ACTUAL EXPENSES AND ANNUAL RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR THE PURPOSE OF THE EXAMPLE.

The Fee Table and Example do not include charges to contract owners for
reimbursement of premium taxes paid with respect to the Contract. Premium taxes
may be applicable. Refer to PREMIUM TAXES on page 18 for further information.

In the Example, the $30 contract administration charge was converted to a
percentage charge by dividing the total administration charges collected during
1994 by the average total contract values (excluding the value of Contracts in
the annuity period) during 1994. Contract values and administration charges
collected include amounts allocated to the Variable Account only. The percentage
charge so determined was added to the Total Separate Account Annual Expenses
(1.30%) and Total Merrill Lynch Variable Series Funds, Inc. Annual Expenses
(0.62% to 1.13%, depending on the Fund) shown above, and the resulting
percentage figure was multiplied by the average annual assets of the
hypothetical account to determine annual expenses.

9
<PAGE> 14

CONDENSED FINANCIAL INFORMATION

MERRILL LYNCH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE OF ACCUMULATION UNIT VALUES*

FOR THE PERIOD JANUARY 1, 1985 THROUGH DECEMBER 31, 1994

*The accumulation unit values listed below for the periods January 1, 1984
through August 31, 1991 are for periods when the Contracts were funded through
the Merrill Lynch Variable Annuity Account of Family Life Insurance Company
("FLIC"). See page 12. On September 1, 1991, Merrill Lynch Life assumption
reinsured certain of FLIC's variable annuity contracts (see THE REINSURANCE
AGREEMENT on page 13). The financial performance of the Contracts shown in the
Schedule of Accumulation Unit Values, below, includes the performance of the
Contracts for periods prior to September 1, 1991 while part of the FLIC separate
account.

<TABLE>
<CAPTION>
NONQUALIFIED
CONTRACTS: 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Reserve Assets Fund
January 1 value... 13.251 14.068 14.728 15.407 16.252 17.44 18.55 19.38 19.76 20.04
December 31
value........... 14.068 14.728 15.407 16.252 17.439 18.55 19.38 19.76 20.04 20.54
Total units
outstanding at
December 31..... 756,930.2 542,420.0 437,996.5 492,365.6

Prime Bond Fund
January 1 value... 14.164 17.092 19.205 18.750 19.764 22.10 23.38 26.86 28.45 31.46
December 31
value........... 17.092 19.205 18.750 19.764 22.103 23.38 26.86 28.45 31.46 29.57
Total units
outstanding at
December 31..... 618,656.9 667,898.6 741,333.5 610,532.0

High Current Income
Fund
January 1 value... 14.194 17.795 19.637 20.127 22.632 23.76 21.62 30.51 36.15 42.06
December 31
value........... 17.795 19.637 20.127 22.632 23.760 21.62 30.51 36.15 42.06 40.03
Total units
outstanding at
December 31..... 181,893.1 182,229.2 245,495.0 198,985.9

Quality Equity Fund
January 1 value... 14.063 17.330 20.594 20.188 22.626 29.21 29.03 37.30 37.81 42.76
December 31
value........... 17.330 20.594 20.188 22.626 29.210 29.03 37.30 37.81 42.76 41.71
Total units
outstanding at
December 31..... 674,488.8 681,947.8 790,434.5 701,903.6

Equity Growth Fund
January 1 value... 11.735 15.223 17.835 13.681 14.079 16.20 13.99 20.73 20.35 23.66
December 31
value........... 15.223 17.835 13.681 14.079 16.205 13.99 20.73 20.35 23.66 21.66
Total units
outstanding at
December 31..... 269,251.3 310,826.6 336,594.9 314,670.5

Flexible Strategy
Fund
April 30
(commencement)... 10.000
January 1 value... 10.132 10.245 11.252 13.36 13.82 17.06 17.55 20.07
December 31
value........... 10.132 10.245 11.252 13.362 13.82 17.06 17.55 20.07 18.98
Total units
outstanding at
December 31..... 1,491,361.1 1,536,734.4 1,689,884.9 1,451,982.2

American Balanced
Fund
May 31
(commencement)... 10.000
January 1 value... 10.332 12.05 12.04 14.34 14.96 16.76
December 31
value........... 10.332 12.047 12.04 14.34 14.96 16.76 15.85
Total units
outstanding at
December 31..... 226,441.1 309,664.2 344,819.9 282,733.9

Natural Resources
Focus Fund
May 31
(commencement)... 10.000
January 1 value... 9.508 11.10 10.27 10.28 10.29 11.22
December 31
value........... 9.508 11.097 10.27 10.28 10.29 11.22 11.23
Total units
outstanding at
December 31..... 36,077.3 50,350.7 97,956.9 92,609.5
</TABLE>

10
<PAGE> 15

MERRILL LYNCH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE OF ACCUMULATION UNIT VALUES*

FOR THE PERIOD JANUARY 1, 1985 THROUGH DECEMBER 31, 1994

<TABLE>
<CAPTION>
QUALIFIED CONTRACTS: 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Reserve Assets Fund
January 1 value... 13.356 14.222 14.933 15.668 16.577 17.84 19.04 19.94 20.39 20.75
December 31
value........... 14.222 14.933 15.668 16.577 17.840 19.04 19.94 20.39 20.75 21.32
Total units
outstanding at
December 31..... 574,284.7 370,601.0 308,644.8 252,365.2

Prime Bond Fund
January 1 value... 14.406 17.436 19.649 19.241 20.347 22.82 24.21 27.90 29.64 32.87
December 31
value........... 17.436 19.649 19.241 20.347 22.823 24.21 27.90 29.64 32.87 30.98
Total units
outstanding at
December 31..... 428,447.8 478,220.2 477,582.5 358,718.0

High Current Income
Fund
January 1 value... 14.988 18.457 20.428 21.000 23.687 24.94 22.76 32.22 38.29 44.68
December 31
value........... 18.457 20.428 21.000 23.687 24.941 22.76 32.22 38.29 44.68 42.65
Total units
outstanding at
December 31..... 74,457.7 73,582.5 93,456.4 92,839.7

Quality Equity Fund
January 1 value... 14.878 18.389 21.918 21.549 24.224 31.37 31.26 40.29 40.96 46.46
December 31
value........... 18.389 21.918 21.549 24.224 31.366 31.26 40.29 40.96 46.46 45.45
Total units
outstanding at
December 31..... 432,953.7 457,836.2 516,176.0 469,259.2

Equity Growth Fund
January 1 value... 12.636 16.439 19.318 14.862 15.341 17.71 15.33 22.79 22.44 26.17
December 31
value........... 16.439 19.318 14.862 15.341 17.710 15.33 22.79 22.44 26.17 24.03
Total units
outstanding at
December 31..... 139,492.7 156,274.5 195,677.9 184,213.2

Flexible Strategy
Fund
April 30
(commencement)... 10.000
January 1 value... 10.152 10.295 11.341 13.51 14.02 17.35 17.90 20.53
December 31
value........... 10.152 10.295 11.341 13.508 14.02 17.35 17.90 20.53 19.47
Total units
outstanding at
December 31..... 1,139,762.3 1,085,349.8 1,225,420.9 1,076,826.3

American Balanced
Fund
May 31
(commencement)... 10.000
January 1 value... 10.350 12.10 12.13 14.49 15.17 17.04
December 31
value........... 10.350 12.104 12.13 14.49 15.17 17.04 16.17
Total units
outstanding at
December 31..... 79,728.3 155,312.1 200,913.9 171,872.9

Natural Resources
Focus Fund
May 31
(commencement)... 10.000
January 1 value... 9.524 11.15 10.35 10.39 10.43 11.40
December 31
value........... 9.524 11.149 10.35 10.39 10.43 11.40 11.45
Total units
outstanding at
December 31..... 28,823.5 27,220.0 40,239.5 44,876.1
</TABLE>

11
<PAGE> 16

MERRILL LYNCH LIFE INSURANCE COMPANY

Merrill Lynch Life Insurance Company ("Merrill Lynch Life") is a stock life
insurance company organized under the laws of the State of Washington in 1986
and redomesticated under the laws of the State of Arkansas in 1991. Merrill
Lynch Life is an indirect wholly owned subsidiary of Merrill Lynch & Co., Inc.,
a corporation whose common stock is traded on the New York Stock Exchange.

Merrill Lynch Life is authorized to sell life insurance and annuity contracts.
Merrill Lynch Life is admitted to do business in 49 states, Guam, the U.S.
Virgin Islands, and the District of Columbia.

All communications, including inquiries, concerning the Contract should be
addressed to Merrill Lynch Life's Service Center at the address printed on the
first page of this Prospectus.

On October 1, 1991, Tandem Insurance Group, Inc. (adba Tandem Life Insurance
Company) ("Tandem"), an affiliate of Merrill Lynch Life, merged with and into
Merrill Lynch Life. Merrill Lynch Life is the surviving company.

As a result of the merger, all contracts previously afforded by Tandem are now
afforded by Merrill Lynch Life. Thus, contract owners maintain their identical
coverage through Merrill Lynch Life.

In addition, the Tandem Variable Annuity Separate Account (the "Tandem Account")
was combined with the Variable Account. Assets of the Tandem Account have become
assets of the Merrill Lynch Life Account. These assets are segregated from all
of Merrill Lynch Life's other assets. The combination of accounts maintained all
investment options and had no adverse impact (including federal tax) on any
contract owners nor any impact on accumulation units, annuity units, or unit
values.

THE VARIABLE ACCOUNT

The establishment of the Variable Account was approved by Merrill Lynch Life's
Board of Directors on March 15, 1991. The Variable Account is registered with
the Securities and Exchange Commission as a unit investment trust pursuant to
the provisions of the Investment Company Act of 1940. Such registration does not
involve any supervision by the Securities and Exchange Commission of the
investment practices or policies of the Variable Account. The Variable Account
meets the definition of a separate account under the federal securities laws.

While the assets of the Variable Account are Merrill Lynch Life's property, as a
segregated investment account, the Variable Account is not chargeable with
liabilities arising out of any other business Merrill Lynch Life may conduct;
however, obligations under the Contract are obligations of Merrill Lynch Life.
Income, gains and losses, whether or not realized, from assets allocated to the
Variable Account are, in accordance with the Contracts, credited to or charged
against the Variable Account without regard to other income, gains or losses of
Merrill Lynch Life. Merrill Lynch Life does not guarantee the investment
performance under the Contracts. Both the variable contract value prior to the
annuity date and the amount of any variable annuity payments will vary with the
performance of the investments selected by the contract owner.

There are two subaccounts for each Fund. One subaccount is for qualified
Contracts and the other is for nonqualified Contracts. No transfers may be made
between a qualified and a nonqualified subaccount.

FINANCIAL STATEMENTS

Financial statements for Merrill Lynch Life Insurance Company and Merrill Lynch
Life Variable Annuity Separate Account can be found in the Statement of
Additional Information. Because the Variable Account acquired a majority of the
assets of Merrill Lynch Variable Annuity Account of Family Life Insurance
Company ("FLIC") in connection with Merrill Lynch Life's assumption reinsurance
of certain variable annuity contracts of FLIC commencing on September 1, 1991,
the financial statements of the Variable Account include the financial
operations of the FLIC separate account for periods prior to September 1, 1991.
The Statement of Additional Information is available upon request and without
charge. This information can be obtained by writing to or calling Merrill Lynch
Life's Service Center at the address or telephone number set forth on the first
page of this Prospectus.

12
<PAGE> 17

THE REINSURANCE AGREEMENT

On March 22, 1991, Merrill Lynch Life and certain affiliated life insurance
companies entered into an assumption reinsurance agreement with Family Life
Insurance Company ("FLIC") relating to various policies including the FLIC
Contracts. The assumption reinsurance of the FLIC Contracts will take place in
several transactions. The first transaction was effected as of September 1,
1991, when Merrill Lynch Life assumption reinsured Contracts in 37 states, Guam
and the Virgin Islands. There have been various assumption reinsurance
transactions subsequent to September 1, 1991.

The FLIC Contracts, which participate in FLIC's Merrill Lynch Variable Annuity
Account, are identical to the Contracts described in this Prospectus, except
that the FLIC Contracts provide for a higher mortality risk charge (.80%
annually under the FLIC Contracts versus .75% annually under the Contracts
described in this Prospectus), but no distribution expense charge. Pursuant to
the agreement, FLIC agreed to transfer and Merrill Lynch Life agreed to assume
on an assumption reinsurance basis all of FLIC's obligations and liabilities
under certain of the Contracts to the maximum extent permitted by law. To
reflect its assumption of the FLIC Contracts, Merrill Lynch Life will issue a
certificate of assumption to the owners of the FLIC Contracts informing them of
Merrill Lynch Life's assumption of FLIC's liabilities under the Contract and of
the change in the components of the charges against separate account assets.

At such time as a Contract is assumption reinsured, assets held in FLIC's
Merrill Lynch Variable Annuity Account equal to the contract liabilities
attributable to the variable portion of the Contract will be transferred to the
Variable Account. Thereafter, the contract owner will deal directly with Merrill
Lynch Life and future premiums will be forwarded directly to Merrill Lynch Life.
The assumption reinsurance of the FLIC Contracts will not change the number of
accumulation or annuity units credited under the Contracts or the value of such
units, which will continue to be affected only by the investment performance of
the Funds. Contract values will be the same as they would have been had the
assumption reinsurance transaction not occurred, and there will be no adverse
tax consequences to a contract owner as a result of the assumption reinsurance
of his or her Contract.

INVESTMENTS OF THE VARIABLE ACCOUNT

ELIGIBLE FUNDS

Premiums will be allocated among one or more subaccounts for investment at net
asset value in shares of the Funds selected by the contract owner. No fee,
penalty or other charge will be imposed. To reduce Merrill Lynch Life's market
risk for cancellations during the TEN DAY RIGHT TO REVIEW described on page 24,
all premiums allocable to the Variable Account will be allocated to the Reserve
Assets Fund subaccount for the first 14 days following the date of issue.
Thereafter, the contract owner's interest in the Variable Account will be
reallocated to the subaccounts selected by the contract owner. In the
Commonwealth of Pennsylvania, all premiums will be invested as of the date of
issue in the subaccounts selected by the contract owner. Therefore, Pennsylvania
contract owners will bear the market risk during the right to review period.
Merrill Lynch Life may make additions to or deletions from the list of eligible
Funds as permitted by law. (See SUBSTITUTION OF INVESTMENTS on page 16.) The
contract owner may transfer all or part of his or her contract value from one
subaccount to another, except no transfer may be made within 30 days of the date
of issue. Transfers must be at least 30 days apart.

Each Fund is a separate investment portfolio of Merrill Lynch Variable Series
Funds, Inc., an open-end management investment company registered with the
Securities and Exchange Commission. Shares of the Merrill Lynch Variable Series
Funds, Inc. are currently sold only to Merrill Lynch Life, ML Life Insurance
Company of New York (an indirect wholly owned subsidiary of Merrill Lynch & Co.,
Inc.) and Family Life Insurance Company (an insurance company not affiliated
with Merrill Lynch Life or Merrill Lynch & Co., Inc.) (collectively the
"Participating Insurance Companies") separate accounts to fund benefits under
certain variable annuity and variable life insurance contracts.

It is conceivable that material conflicts could arise as a result of both
variable annuity and variable life insurance separate accounts investing in the
Funds. Although no material conflicts are foreseen, the

13
<PAGE> 18

Participating Insurance Companies will monitor events in order to identify any
material conflicts between variable annuity and variable life insurance contract
owners to determine what action, if any, should be taken. Material conflicts
could result from such things as (1) changes in state insurance law, (2) changes
in federal income tax law or (3) differences between voting instructions given
by variable annuity and variable life insurance contract owners. If a conflict
occurs, Merrill Lynch Life may be required to eliminate one or more subaccounts
of the Variable Account or substitute a new subaccount. In responding to any
conflict, Merrill Lynch Life will take the action which it believes necessary to
protect its contract owners.

Each Fund receives investment advice from Merrill Lynch Asset Management, L.P.
("MLAM") which is paid fees by the Funds for its services. The fees charged to
each of the Funds are set forth in the summary of investment objectives below.
MLAM is a worldwide mutual fund leader with more than $145.7 billion in assets
under management. It is registered as an investment adviser under the Investment
Advisers Act of 1940. MLAM is an indirect subsidiary of Merrill Lynch & Co.,
Inc. MLAM's principal business address is 800 Scudders Mill Road, Plainsboro,
New Jersey 08536. MLAM and Merrill Lynch Life have entered into an agreement
pursuant to which MLAM pays to Merrill Lynch Life a fee in an amount equal to a
portion of the annual gross investment advisory fees paid by Funds to MLAM
attributable to contracts issued by Merrill Lynch Life. This agreement reflects
administrative services provided by Merrill Lynch Life and affiliates.

A summary of investment objectives of each Fund follows. There is no guarantee
that any Fund will meet its investment objective. Meeting the objectives depends
upon how well the Funds' management anticipates changing economic conditions.
More detailed information, including the risks associated with each Fund
(including any risks associated with investment in the High Current Income Fund)
and deductions from and expenses paid out of the assets of the Funds, may be
found in the current prospectus for the Merrill Lynch Variable Series Funds,
Inc. which is in the back of this booklet. Both prospectuses should be read in
full for a complete evaluation of the Contract.

Reserve Assets Fund

The Fund seeks preservation of capital, liquidity and the highest possible
current income consistent with the foregoing objectives by investing in
short-term money market securities. The Fund invests in short-term United States
government securities; government agency securities; bank certificates of
deposit and bankers' acceptances; short-term corporate debt securities such as
commercial paper and variable amount master demand notes; and repurchase and
reverse repurchase agreements. MLAM receives from the Fund an advisory fee at
the annual rate of 0.50% of the first $500 million of the Fund's average daily
net assets; 0.425% of the next $250 million; 0.375% of the next $250 million;
0.35% of the next $500 million; 0.325% of the next $500 million; 0.30% of the
next $500 million; and 0.275% of the average daily net assets in excess of $2.5
billion.

Prime Bond Fund

The Fund seeks to obtain as high a level of current income as is consistent with
prudent investment management, and capital appreciation to the extent consistent
with the foregoing objective, by investing primarily in long-term corporate
bonds rated A or better by established rating services. MLAM receives from the
Fund an advisory fee at the annual rate of 0.50% of the first $250 million of
the combined average daily net assets of the Fund and High Current Income Fund;
0.45% of the next $250 million; 0.40% of the next $250 million; and 0.35% of the
combined average daily net assets in excess of $750 million. The reduction of
the advisory fee applicable to the Fund is determined on a uniform percentage
basis as described in the Statement of Additional Information for the Funds.

High Current Income Fund

The Fund seeks to obtain as high a level of current income as is consistent with
prudent investment management, and capital appreciation to the extent consistent
with the foregoing objective, by investing principally in fixed-income
securities that are rated in the lower rating categories of the established
rating services or in unrated securities of comparable quality (commonly known
as "junk bonds"). Because investment in such securities entails relatively
greater risk of loss of income or principal, an investment in the

14
<PAGE> 19

High Current Income Fund may not be appropriate as the exclusive investment to
fund a Contract. In an effort to minimize risk, the Fund will diversify its
holdings among many issuers. However, there can be no assurance that
diversification will protect the Fund from widespread defaults during periods of
sustained economic downturn. MLAM receives from the Fund an advisory fee at the
annual rate of 0.55% of the first $250 million of the combined average daily net
assets of the Fund and Prime Bond Fund; 0.50% of the next $250 million; 0.45% of
the next $250 million; and 0.40% of the combined average daily net assets in
excess of $750 million. The reduction of the advisory fee applicable to the Fund
is determined on a uniform percentage basis as described in the Statement of
Additional Information for the Funds.

Quality Equity Fund

The Fund seeks to attain the highest total investment return consistent with
prudent risk through a fully managed investment policy utilizing equity
securities, primarily common stocks of large-capitalization companies, as well
as investment grade debt and convertible securities. Management of the Fund will
shift the emphasis among investment alternatives for capital growth, capital
stability and income as market trends change. MLAM receives from the Fund an
advisory fee at the annual rate of 0.50% of the first $250 million of average
daily net assets; 0.45% of the next $50 million; 0.425% of the next $100
million; and 0.40% of the average daily net assets in excess of $400 million.

Equity Growth Fund

The Fund seeks to attain long-term growth of capital by investing primarily in
common stocks of relatively small companies that management of the Fund believes
have special investment value and emerging growth companies regardless of size.
Such companies are selected by management on the basis of their long-term
potential for expanding their size and profitability or for gaining increased
market recognition for their securities. Current income is not a factor in such
selection. MLAM receives from the Fund an advisory fee at the annual rate of
0.75% of the average daily net assets of the Fund. This is a higher fee than
that of many other mutual funds, but management of the Fund believes it is
justified by the high degree of care that must be given to the initial selection
and continuous supervision of the types of portfolio securities in which the
Fund invests.

Flexible Strategy Fund

The Fund's objective is to seek a high total investment return consistent with
prudent risk. The Fund seeks its objective through a flexible investment policy
using equity securities, intermediate and long-term debt obligations and money
market securities. MLAM receives from the Fund an advisory fee at the annual
rate of 0.65% of the average daily net assets of the Fund.

Natural Resources Focus Fund

The Fund seeks to attain long-term growth of capital and protection of the
purchasing power of capital by investing primarily in equity securities of
domestic and foreign companies with substantial natural resource assets. In
seeking to protect the purchasing power of the capital, the Natural Resources
Focus Fund reserves the right, when management anticipates significant economic,
political, or financial instability, such as high inflationary pressures or
upheaval in foreign currency exchange markets, to invest a majority of its
assets in companies that explore for, extract, process or deal in gold or in
asset-based securities indexed to the value of gold bullion. The Natural
Resource Focus Fund will not concentrate its investments in such securities
until it has been advised that no adverse tax consequences will result. Because
investment in the Natural Resources Focus Fund entails relatively greater risk
of loss of income or principal, an investment in the Fund may not be appropriate
as the exclusive investment to fund a contract. MLAM receives from the Fund an
advisory fee at the annual rate of 0.65% of the average daily net assets of the
Fund.

Merrill Lynch Life and Merrill Lynch Life Variable Annuity Separate Account
reserve the right to suspend the sale of units of the Natural Resources
subaccount in response to conditions in the securities markets or otherwise.

15
<PAGE> 20

American Balanced Fund

The Fund seeks a level of current income and a degree of stability of principal
not normally available from an investment solely in equity securities and the
opportunity for capital appreciation greater than is normally available from an
investment solely in debt securities by investing in a balanced portfolio of
fixed income and equity securities. MLAM receives from the Fund an advisory fee
at the annual rate of 0.55% of the average daily net assets of the Fund.

REINVESTMENT

Fund distributions to the Variable Account are automatically reinvested in
additional Fund shares at net asset value.

SUBSTITUTION OF INVESTMENTS

Merrill Lynch Life may at its discretion substitute a different mutual fund for
any of the Funds shown on the Schedule page of a contract owner's Contract.
Substitution may be made with respect to both existing investments and the
investment of future premiums. However, no such substitution will be made
without any necessary approval of the Securities and Exchange Commission and
applicable state insurance departments. Contract owners will be notified of any
substitutions. Merrill Lynch Life may also add other Funds as eligible
investments of the Variable Account.

CHARGES AND DEDUCTIONS

CONTINGENT DEFERRED SALES CHARGE

Merrill Lynch Life does not make any deductions from premiums paid at the time
of purchase. The contingent deferred sales charge, when applicable, permits
Merrill Lynch Life to recover a portion of the expenses relating to the sale of
the Contract, including commissions, preparation of sales literature and other
promotional activity.

The contingent deferred sales charge is imposed at withdrawal of all or part of
the contract value. It will be the lesser of (a) 5% of the sum of the premiums
paid within 7 years prior to the date of withdrawal, adjusted for any prior
withdrawals, or (b) 5% of the amount withdrawn. The cumulative sum of all
contingent deferred sales charges made within 7 years prior to the date of
withdrawal will never be more than 5% of the sum of all premiums paid during the
same period. No charge will be made for such part of the first withdrawal in a
contract year as does not exceed 10% of the sum of premiums paid prior to the
date of withdrawal. Withdrawals will be deemed made first from premiums on a
first-in, first-out basis and then from any gain. Under no circumstances will
the cumulative sum of the contingent deferred sales charges ever exceed 5% of
total premiums. No charge will be imposed on any payment made due to death of
the annuitant or contract owner. (See PAYMENT ON DEATH on page 20.)

The contingent deferred sales charge may be reduced when sales of Contracts are
made to a trustee, employer or similar party pursuant to a retirement plan or
similar arrangement for sales of Contracts to a group of individuals if such
program results in a savings of sales expenses. The amount of reduction will
depend on such factors as the size of the group, the total amount of premiums
and other relevant factors that might tend to reduce expenses incurred in
connection with such sales. This reduction will not be unfairly discriminatory
to any contract owner. (See ACCUMULATION UNITS on page 18 for a discussion of
the effect the deduction of this charge may have on the number of accumulation
units credited to the Contract.)

Merrill Lynch Life's sales expenses relating to all Contracts will initially be
provided for out of Merrill Lynch Life's surplus. Any contingent deferred sales
charge imposed at withdrawal from a Contract is expected to recover only a
portion of the sales expenses relating to that Contract. Other sales expenses
will be recovered through the distribution expense charge described below. Sales
expenses not recovered through the contingent deferred sales charge and the
distribution expense charge will be recovered from profits derived primarily
from the mortality risk charge and expense risk charge described below.

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CONTRACT ADMINISTRATION CHARGE

Merrill Lynch Life imposes a contract administration charge of $30 per contract
year for administration of the Contracts. It is deducted from the contract value
on each contract anniversary on or prior to the annuity date and at full
withdrawal if made other than on a contract anniversary. Such administration
includes issuing Contracts, maintenance of contract owner records, accounting,
valuation, regulatory compliance and reporting. Even though Merrill Lynch Life's
expenses may increase, the amount of the charge will not change. (See
ACCUMULATION UNITS on page 18 for a discussion of the effect the deduction of
this charge may have on the number of accumulation units credited to the
Contract.) The charge is designed only to reimburse Merrill Lynch Life for such
expenses on a cumulative basis.

WAIVER OF CHARGES

When permitted by the laws of the state in which the Contract is issued, the
contingent deferred sales charge and the contract administration charge will be
waived under a Contract issued by a trustee, employer or similar party pursuant
to a retirement plan or similar arrangement for the benefit of a group of
individuals where the initial premium is in the amount of $500,000 or more. As a
condition to the waiver, the contract owner must agree to a Contract endorsement
prohibiting the allocation of premiums and the transfer of contract values to
the Fixed Account.

EXPENSE RISK CHARGE

Merrill Lynch Life guarantees that the contract administration charge will not
increase, regardless of its actual expenses. To compensate for assuming this
expense risk, Merrill Lynch Life deducts an expense risk charge from the
Variable Account.

The charge is computed and deducted on a daily basis from each subaccount. For
nonqualified Contracts, on an annual basis it equals 0.5% of the daily net asset
value of the Variable Account. For qualified Contracts, the rate is 0.2% of the
daily net asset value of the Variable Account. If the expense risk charge is
insufficient to cover the actual cost of the expense risk, Merrill Lynch Life
will bear the loss. Conversely, if it is more than sufficient, the excess will
be part of Merrill Lynch Life's profit. The rate of the expense risk charge will
not change.

MORTALITY RISK CHARGE

Although variable annuity payments will vary according to the performance of the
investments selected by the contract owner, annuity payments will not be
affected by the mortality experience (death rate) of persons receiving such
payments or of the general population. Merrill Lynch Life assumes this mortality
risk by virtue of annuity rates in the Contract that cannot be changed. Merrill
Lynch Life also guarantees a minimum payment on death of the annuitant or
contract owner prior to the annuity date. (See PAYMENT ON DEATH on page 20.) As
compensation for assuming these mortality risks, Merrill Lynch Life deducts a
mortality risk charge from the Variable Account.

This charge is computed and deducted on a daily basis from each subaccount, but
on an annual basis it equals 0.75% of the daily net asset value of the Variable
Account. If the amount is insufficient to cover the actual cost of the mortality
risk, Merrill Lynch Life bears the loss. Conversely, if the amount proves more
than sufficient, as anticipated, the excess will be part of Merrill Lynch Life's
profit. The amount of the mortality risk charge will not change.

DISTRIBUTION EXPENSE CHARGE

Merrill Lynch Life anticipates that the cost of distributing the Contracts will
exceed the amounts it receives from deferred sales charges. Merrill Lynch Life
deducts a distribution expense charge from the Variable Account to compensate
for some of the distribution costs it incurs in connection with the Contracts.

The distribution expense charge is computed and deducted on a daily basis from
each subaccount, but on an annual basis it equals 0.05% of the daily net asset
value of the Variable Account.

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PAYMENTS OF CHARGES AND DEDUCTIONS

The expense risk charge, the mortality risk charge and the distribution expense
charge will be computed and deducted from each subaccount of the Variable
Account for each day the Contract is in force. The contract administration
charge and the contingent deferred sales charge will be deducted from the Fixed
Account and from each subaccount of the Variable Account in the ratio of each
contract owner's interest in each to his or her contract value.

PREMIUM TAXES

Various jurisdictions impose a premium tax on annuity purchase payments received
by insurance companies. Other jurisdictions impose a premium tax on the contract
value on the annuity date. These taxes will be paid by Merrill Lynch Life when
due. The dollar amount of any premium tax will be deducted from the contract
value at the annuity date. (See ACCUMULATION UNITS below for a discussion of the
effect the deduction of this charge may have on the number of accumulation units
credited to the Contract.) In those jurisdictions that do not allow an insurance
company to reduce its current taxable premium income by the amount of any
withdrawal, surrender or death benefit paid, Merrill Lynch Life will also deduct
a charge for these taxes on any withdrawal, surrender or death benefit effected
under the Contract. Premium taxes currently range from 0% to 5%.

Premium tax rates are subject to change by law, administrative interpretations
or court decisions. Premium tax amounts will depend on, among other things, the
contract owner's state of residence, Merrill Lynch Life's status within that
state and the premium tax laws of that state.

FUND EXPENSES

Merrill Lynch Variable Series Funds, Inc., in calculating the net asset values
of the Funds, deducts advisory fees and operating expenses from the assets of
each Fund. Information about those fees and expenses can be found in the
attached prospectus for the Funds and in its Statement of Additional
Information.

DESCRIPTION OF THE CONTRACT

PREMIUMS

The minimum initial premium for nonqualified Contracts is $1,500. For qualified
Contracts it is $10. The minimum subsequent premium for nonqualified Contracts
is $300 ($50 in Tennessee) and for qualified Contracts it is the same as for the
initial premium. Subsequent premiums may be paid at any time without prior
notice to Merrill Lynch Life. Merrill Lynch Life's consent for subsequent
premiums is required only for Tax-Sheltered Annuities where there has been a
prior withdrawal from the Contract. The Contract will not be in default even if
no subsequent premiums are paid.

Application for a Contract or acceptance of the first premium is subject to
Merrill Lynch Life's underwriting rules for such transactions. Merrill Lynch
Life reserves the right to reject any application. A properly completed
application that is accompanied by the first premium and all information
necessary for the processing of the application will normally be accepted within
2 business days. If an application is not completed properly and therefore,
cannot be processed, and necessary information is not obtained within 5 business
days, Merrill Lynch Life will offer to return the premium.

ACCUMULATION PROVISIONS

Accumulation Units

Premiums are allocated to the subaccounts in accordance with the contract
owner's selection, except during the first 14 days following the date of issue
of the Contract when premiums directed to the Variable Account will be allocated
to the Reserve Assets Fund subaccount. (See discussion under ELIGIBLE FUNDS on
page 13.) At the end of the 14-day period, contract values will be reallocated
to each subaccount selected. In the Commonwealth of Pennsylvania, all premiums
will be invested as of the date of issue in the subaccounts selected by the
contract owner. Upon allocation, premiums are converted into accumulation units
for that

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<PAGE> 23

subaccount. The number of accumulation units is determined by dividing the
amount allocated by the value of an accumulation unit for the valuation period
in which the premium is received at Merrill Lynch Life's Service Center or, in
the case of the first premium, is accepted by Merrill Lynch Life. The number of
accumulation units will not change as a result of investment experience.
However, accumulation units will be canceled in connection with any withdrawal
or transfer from a subaccount, the assessment of all or a portion of the
contract administration charge, contingent deferred sales charge or premium
taxes against the subaccount, or upon the payment of a death benefit or
commencement of annuity payments.

Value of an Accumulation Unit

For each subaccount, the value of an accumulation unit was set at the value of
the corresponding unit of the Merrill Lynch Variable Annuity Account of FLIC as
of the date of the first transfer of assets and liabilities pursuant to the
assumption reinsurance agreement between FLIC and Merrill Lynch Life described
on page 13. The value of an accumulation unit may increase or decrease from one
valuation period to the next. The value for any valuation period is determined
by multiplying the value of an accumulation unit for the last prior valuation
period by the net investment factor for that subaccount for the current
valuation period. It reflects the investment performance and expenses of the
Funds and the deduction of the daily expense, mortality and distribution
charges.

Net Investment Factor

The net investment factor is an index used to measure the investment performance
of a subaccount from one valuation period to the next. For any subaccount, the
net investment factor for a valuation period is determined by dividing (a) by
(b) and subtracting (c):

Where (a) is:

The net asset value per share of the Fund held in the subaccount, as of
the end of the valuation period;

Plus

The per-share amount of any dividend or capital gain distributions by
the Fund if the "ex-dividend" date occurs in the valuation period.

Where (b) is:

The net asset value per share of the Fund held in the subaccount as of
the end of the last prior valuation period.

Where (c) is:

The sum of the daily expense risk charge, the daily mortality risk
charge and the daily distribution expense charge. (See CHARGES AND
DEDUCTIONS on page 16.) For nonqualified Contracts, on an annual basis
the amount of such charges equals 1.3% of the daily net asset value of
the Variable Account. For qualified Contracts, the amount equals 1.0% of
the daily net asset value of the Variable Account.

The net investment factor may be greater or less than one; therefore, the value
of an accumulation unit may increase or decrease. Merrill Lynch Life may adjust
the net investment factor to make provisions for any change in the law that
requires it to pay tax on capital gains in the Variable Account. (See FEDERAL
INCOME TAXES on page 24.)

Valuation Periods

A valuation period is the interval from one valuation day of a Fund to the next
valuation day, measured from the time each day the Fund is valued.

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<PAGE> 24

THE FIXED ACCOUNT

In addition to providing for the allocation of premiums to the subaccounts of
the Variable Account, the Contract also provides for allocation of premiums and
transfer of contract values to the Fixed Account, which accumulate at a
guaranteed interest rate and become part of Merrill Lynch Life's general
account. In the case of qualified contracts, loans also may be taken based on
Fixed Account contract values. (See TAX-SHELTERED ANNUITIES on page 28.) The
interests of contract owners arising from the allocation of premiums or the
transfer of contract values to the Fixed Account are not registered under the
Securities Act of 1933. Merrill Lynch Life's general account is not registered
as an investment company under the Investment Company Act of 1940. Accordingly,
the Fixed Account contract values are not subject to the provisions that would
apply if registration under such acts were required.

Merrill Lynch Life has been advised that the staff of the Securities and
Exchange Commission has not reviewed the disclosures in this Prospectus that
relate to the Fixed Account. Disclosures regarding the Fixed Account and the
general account, however, may be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in the Prospectus.

PAYMENT ON DEATH

If either the annuitant or the contract owner dies prior to the annuity date,
Merrill Lynch Life will pay to the beneficiary, upon receipt of due proof of
death, the greater of (a) the sum of all premiums (adjusted for any withdrawals)
or (b) the contract value for the valuation period in which such proof is
received at Merrill Lynch Life's Service Center.

An annuitant's beneficiary may choose a lump sum or payment under any of the
annuity options of the Contract. A contract owner's beneficiary may receive
payment only as follows:

A surviving spouse of a deceased contract owner may choose a lump sum or payment
under any of the annuity options of the Contract. If the surviving spouse of the
deceased contract owner is both the contract owner's beneficiary and a
contingent owner (if a contingent owner has been named), he or she may choose to
continue the Contract in force after the contract owner's death. A contract
owner's beneficiary who is not the surviving spouse of the deceased contract
owner may choose (a) a lump sum, which must be paid within five years of the
contract owner's death, (b) a life annuity option without guaranteed payments,
or (c) a life annuity option with guaranteed payments or a fixed period annuity
option where the period required for full distribution of the payments
guaranteed does not exceed the life expectancy of the contract owner's
beneficiary. Payment under (b) or (c), above, must start within one year of the
contract owner's death.

If all or part of a lump sum payment to a contract owner's beneficiary or
annuitant's beneficiary is used within 30 days as the premium for a new Contract
issued to the beneficiary, then the new Contract will be deemed a continuation
of the old Contract in computing withdrawal charges under the new Contract. For
tax consequences of lump sum payment, see TAXATION OF ANNUITIES IN GENERAL on
page 25.

If either the annuitant or the contract owner dies after the annuity date, any
guaranteed amounts remaining unpaid will continue to be paid pursuant to the
annuity option in force at the date of death, unless the beneficiary chooses to
receive the present value of the remaining guaranteed payments in a lump sum.
(See ANNUITY PROVISIONS on page 22.)

BENEFICIARY

The beneficiary is named in the application. If the contract owner is not the
annuitant, there may be one beneficiary to receive payment on the annuitant's
death and a different beneficiary to receive payment on the contract owner's
death. Unless the beneficiary has been irrevocably designated, the beneficiary
may be changed during the lifetime of the annuitant or contract owner, as the
case may be. The estate or heirs of a beneficiary who dies before payment is due
have no rights under the Contract. If no beneficiary survives when payment is
due, payment will be made to the contract owner or to the contract owner's
estate.

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<PAGE> 25

OWNERSHIP

The contract owner is the person entitled to exercise all rights under the
Contract. The annuitant is the contract owner unless otherwise designated in the
application or by endorsement. Only a contract owner who is not also the
annuitant may designate a contingent owner; however, a contract owner who is
also the annuitant may name his or her spouse as a contingent owner. A
contingent owner is the person who is to become contract owner at the death of
the prior contract owner if the Contract continues in force after the death of
the prior contract owner. Ownership of the Contract may be transferred to a new
contract owner. Such a transfer of ownership cancels any designation of
contingent owner, but does not affect a designation of beneficiary. If the
Contract is issued pursuant to a qualified plan, it may not be assigned, pledged
or transferred, unless permitted by law. A collateral assignment does not change
contract ownership. The rights of a collateral assignee have priority over the
rights of a beneficiary. Contract owners should consult a competent tax advisor
before making any such designations, transfers or assignments.

ACCOUNT TRANSFERS

The contract owner may transfer all or part of the contract value among the
Fixed Account and the subaccounts of the Variable Account, subject to the
following restrictions. No transfer may be made from one subaccount of the
Variable Account to another within 30 days of the date of issue or within 30
days of a prior transfer. A transfer from the Fixed Account to any subaccount of
the Variable Account may not be made within six months of the date of issue or
within six months of the date of any prior transfer to the Fixed Account except
for one transfer from the Fixed Account to one or more subaccounts of the
Variable Account in January of each year. Transfers from the Variable Account to
the Fixed Account must be at least 30 days apart. No transfers may be made
between the Fixed Account and the Variable Account after the annuity date.

For Contracts issued prior to April 30, 1986 and reinsured by Merrill Lynch
Life, see the Appendix on page 32 for special provisions. Contract owners may
make transfer requests in writing or by telephone, once Merrill Lynch Life
receives proper telephone transfer authorization. Transfer requests may also be
made through a Merrill Lynch Life Financial Consultant once Merrill Lynch Life
receives proper authorization. Transfer will take effect as of the end of the
valuation period in which the request is received at Merrill Lynch Life's
Service Center.

WITHDRAWALS

The contract owner may withdraw all or part of the contract value, less any
charges. Election to withdraw must be in writing. For full withdrawal, the
election must be accompanied by the Contract. The election must be received by
Merrill Lynch Life prior to the earlier of the annuity date or the death of the
annuitant. Under certain qualified plans, the consent of the contract owner's
spouse may be required.

On receipt of such an election, Merrill Lynch Life will cancel the number of
accumulation units necessary to equal the dollar amount of the withdrawal plus
any applicable contingent deferred sales charge or contract administration
charge. (See CHARGES AND DEDUCTIONS on page 16.) Unless otherwise requested,
partial withdrawals will be deducted from the Fixed Account and subaccounts of
the Variable Account in which the contract owner has an interest in the ratio of
his or her interest therein to the total contract value. Withdrawals and related
charges will be based on values for the valuation period in which the election
(and the Contract, if required) are received at Merrill Lynch Life's Service
Center. A partial withdrawal must be at least $500, and the remaining contract
value must be at least $500; otherwise, the partial withdrawal will not be
permitted. Payment of withdrawals may be deferred (see SUSPENSION OF PAYMENTS
below and FEDERAL INCOME TAXES on page 24), and withdrawals under Tax-Sheltered
Annuities are restricted (see TAX-SHELTERED ANNUITIES on page 28). Withdrawals
will decrease the contract value. Withdrawals are subject to tax and prior to
age 59 1/2 may also be subject to a 10% federal penalty tax. (See TAXATION OF
ANNUITIES IN GENERAL on page 25.)

SUSPENSION OF PAYMENTS

Payment of withdrawals will normally be made within 7 days. However, Merrill
Lynch Life reserves the right to defer any withdrawal payment or transfer of
values if (a) the New York Stock Exchange is closed (other than customary
weekend and holiday closings); (b) trading on the Exchange is restricted by the
Securities

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<PAGE> 26

and Exchange Commission; (c) the Securities and Exchange Commission declares
that an emergency exists such that it is not reasonably practical to dispose of
securities held in the Separate Account or to determine the value of its assets;
or (d) the Securities and Exchange Commission by order so permits for the
protection of security holders.

ANNUITY PROVISIONS

Variable Annuity

A variable annuity is an annuity with payments that are not predetermined as to
dollar amount. Payments will vary according to the investment results of the
applicable subaccount. Annuity payments will be made to the contract owner
unless he or she specifies otherwise in writing. The contract owner may or may
not be the annuitant. The choice is made by the contract owner in the
application.

Selection of Annuity Date and Annuity Options

The contract owner may select the annuity date and an annuity option in the
application. If the contract owner does not do so, the annuity date will be the
first day of the next month after the annuitant's 75th birthday and the annuity
option will be a life annuity with a 10 year guarantee. The annuity date must be
the first day of a calendar month. It may not be later than the first day of the
next month after the annuitant's 85th birthday. (For qualified Contracts, the
annuity date may not be later than April 1 of the calendar year after the
calendar year in which the annuitant attains age 70.)

Change of Annuity Date or Annuity Option

The contract owner may change the annuity date or the annuity option on written
notice received at Merrill Lynch Life's Service Center at least 30 days prior to
the current annuity date.

Annuity Options

The contract owner may select any one of the following variable annuity options
or any other option satisfactory to the contract owner and Merrill Lynch Life.

- - PAYMENTS FOR A FIXED PERIOD -- Payments will be made for the period chosen.
The period must be at least 5 years. With respect to the Variable Account
only, this option is not available until 3 years after the last premium
payment is made for this Contract, and the contract owner may at any time
choose to receive in a lump sum the present value of the remaining payments
commuted at 4% interest. Such lump sum payment will be considered a
withdrawal that may be subject to the contingent deferred sales charge. (See
WITHDRAWALS on page 21.) The contingent deferred sales charge does not apply
to any other variable annuity option. The mortality risk charge will continue
to be deducted under this option, as other options, even though under this
option Merrill Lynch Life assumes no mortality risk.

- - *LIFE ANNUITY -- Payments will be made for the life of the annuitant.
Payments will cease with the last payment due prior to the annuitant's death.

- - *JOINT AND SURVIVOR LIFE ANNUITY -- Payments will be made during the
lifetimes of the annuitant and a designated second person. Payments will
continue as long as either is living.

- - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS -- Payments will be
made for the life of the annuitant. A guaranteed payment period of either 10
or 20 years may be selected. If the annuitant dies during the guaranteed
period, the beneficiary may elect to receive in a lump sum the present value
of the remaining guaranteed payments computed at the interest rate in effect
when annuity payments began.

*These options are life annuities. It is possible under these options for a
payee to receive only one annuity payment if the annuitant (or the annuitant and
a designated second person) dies after the first payment, or to receive only two
annuity payments if the annuitant (or the annuitant and a designated second
person) dies after the second payment, and so on.

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<PAGE> 27

Minimum Annuity Payments

Annuity payments will be made monthly. The contract owner may elect quarterly,
semi-annual or annual payments, in which case the calculation of the periodic
annuity payments will be based on the monthly amount, adjusted by a factor that
takes into account the longer interval between payments. If any payment would be
less than $50 Merrill Lynch Life may change the frequency so payments are at
least $50 each. If the net contract value to be applied at the annuity date is
less than $5,000 ($3,500 for qualified Contracts), Merrill Lynch Life may elect
to pay such amount in a lump sum. For tax consequences of a lump sum payment,
see TAXATION OF ANNUITIES IN GENERAL on page 25.

First Variable Annuity Payment

The dollar amount of the first monthly variable annuity payment will be
determined by applying the contract owner's interest in the Variable Account,
less any premium taxes, to the annuity table for the annuity option chosen. The
annuity tables are in the Contract. The tables are based on the 1983 Table "a"
for Individual Annuity Valuation with interest at 4% and the annuitant's age set
back one year.

Age Adjustment

The Contract contains a formula for adjusting the age of the annuitant based on
the annuity date for purposes of determining the dollar amount of the first
monthly annuity payment for each $1,000 applied under an annuity option. If the
annuity date is between the years 1990 and 1999, the annuitant's age is reduced
one year. For each decade thereafter, the annuitant's age is reduced one
additional year. The maximum age adjustment is five years.

An age adjustment results in a reduction in the monthly annuity payments that
would otherwise be made. It may be advantageous, therefore, for the contract
owner to designate an annuity date that immediately precedes the date on which
an age adjustment would occur under the Contract. For example, annuity payment
rates for an annuitant with an annuity date in the year 2000 will be the same as
those for the year 1999, even though the annuitant is one year older, because
the new decade results in the annuitant's age being reduced by an additional
year.

Number of Annuity Units

The number of Annuity Units for each applicable subaccount is the amount of the
first monthly annuity payment attributable to that subaccount divided by the
value of an annuity unit for that subaccount as of the annuity date. The amount
of the first payment attributable to a subaccount is based on the ratio of each
contract owner's interest in that subaccount at the annuity date to his or her
interest in all subaccounts. The number will not change as a result of
investment experience.

Value of Each Annuity Unit

For each subaccount the value of an annuity unit was set at the value of the
corresponding unit of the Merrill Lynch Variable Annuity Account of FLIC as of
the date of the first transfer of assets and liabilities pursuant to the
assumption reinsurance agreement between FLIC and Merrill Lynch Life described
on page 13. The value may increase or decrease from one valuation period to the
next. For any valuation period, the value of an annuity unit for a particular
subaccount is the value of an annuity unit for that subaccount for the last
prior valuation period multiplied by the net investment factor for that
subaccount for the current valuation period. The result is then multiplied by a
factor to neutralize the assumed investment rate of 4% built into the annuity
tables.

Subsequent Variable Annuity Payments

Subsequent variable annuity payments will vary in amount according to the
investment performance of the applicable subaccounts within the Variable
Account. The amount of subsequent annuity payments, which may change from month
to month, is equal to the number of annuity units for each subaccount chosen
multiplied by the value of an annuity unit for such subaccount for the valuation
period in which payment is due. Merrill

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<PAGE> 28

Lynch Life guarantees that the amount of each subsequent annuity payment will
not be affected by variations in expenses or mortality experience.

Assumed Investment Rate

A 4% assumed investment rate is built into the annuity tables in the Contract. A
higher assumption would mean a higher first annuity payment but more slowly
rising and more rapidly falling subsequent payments. A lower assumption would
have the opposite effect. If the actual net investment rate is 4% annually,
annuity payments will be level.

Proof of Age, Sex and Survival

Merrill Lynch Life may require proof of age, sex or survival of any person upon
whose continuation of life annuity payments depend.

NOTICES AND ELECTIONS

All notices and elections under the Contract must be in writing, signed by the
proper party and must be received at Merrill Lynch Life's Service Center to be
effective, except that account transfers may be made by telephone once Merrill
Lynch Life receives proper telephone transfer authorization. Merrill Lynch Life
is not responsible for their validity. If acceptable to Merrill Lynch Life,
notices or elections relating to beneficiaries and ownership will take effect as
of the date signed unless Merrill Lynch Life has already acted in reliance on
the prior status.

AMENDMENT OF CONTRACT

At any time Merrill Lynch Life may amend the Contract as required to make it
conform with any law, regulation or ruling issued by any government agency to
which the Contract is subject.

TEN DAY RIGHT TO REVIEW

When the owner receives the Contract, it should be reviewed carefully to make
sure it is what the contract owner intended to purchase. Generally, within 10
days after the contract owner receives the Contract, it may be returned for a
refund. Some states allow a longer period of time to return the Contract. The
Contract must be delivered to Merrill Lynch Life's Service Center or to the
Financial Consultant who sold it for a refund to be made. Merrill Lynch Life
will then refund to the contract owner the greater of all premiums paid into the
Contract or the contract value as of the date the Contract is returned. For
Contracts issued in the Commonwealth of Pennsylvania, Merrill Lynch Life will
refund the contract owner's premiums allocated to the Fixed Account plus the
value of the contract owner's interest in the Variable Account as of the date
the Contract is returned. The Contract will then be deemed void.

FEDERAL INCOME TAXES

INTRODUCTION

The Contracts are designed for use in connection with retirement plans that may
or may not be qualified plans under the provisions of the Internal Revenue Code.
The ultimate effect of federal income taxes on contract value, on annuity
payments and on the economic benefit to the contract owner, annuitant or
beneficiary depends on the type of retirement plan for which the Contract is
purchased, on whether the investments of the Variable Account meet Internal
Revenue Service diversification standards (discussed below) and on the tax and
employment status of the individual concerned. The following discussion is
general in nature and is not intended as tax advice. Each person concerned
should consult a competent tax advisor. This discussion is based on Merrill
Lynch Life's understanding of current federal income tax laws as currently
interpreted. No representation is made regarding the likelihood of continuation
of current federal income tax laws or of the current interpretations by the
Internal Revenue Service. MERRILL LYNCH LIFE DOES NOT MAKE

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<PAGE> 29

ANY GUARANTEE REGARDING THE TAX STATUS OF ANY CONTRACT OR ANY TRANSACTION
INVOLVING THE CONTRACTS.

MERRILL LYNCH LIFE'S TAX STATUS

Merrill Lynch Life is taxed as a life insurance company under the Internal
Revenue Code. The Variable Account is not a separate entity, and for tax
purposes its operations are a part of Merrill Lynch Life's. Therefore, Merrill
Lynch Life will be liable for any taxes attributable to the Variable Account.
(See THE VARIABLE ACCOUNT on page 12.)

Under existing federal income tax law, although investment income of the
Variable Account is includible in Merrill Lynch Life's gross income, no income
tax on such income is payable by Merrill Lynch Life. Merrill Lynch Life reserves
the right, however, to deduct from the Variable Account any such taxes imposed
in the future.

TAXATION OF ANNUITIES IN GENERAL

In General

Section 72 of the Internal Revenue Code governs taxation of annuities in
general. With respect to contracts held by natural persons, no taxes are imposed
on increases in the value of a contract until distribution occurs, either in the
form of a withdrawal or as annuity payments under the annuity option elected.
The taxable portion of a distribution (in the form of a single sum payment or an
annuity) is taxable as ordinary income. Additionally, certain transfers of a
Contract for less than adequate consideration, such as a gift, will trigger tax
on the excess of the net contract value over the contract owner's investment in
the Contract.

Required Distributions

In order to be treated as an annuity contract for federal income tax purposes,
Section 72(s) of the Code requires any nonqualified contract to provide that (a)
if any contract owner dies on or after the annuity commencement date but prior
to the time the entire interest in the Contract 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 contract
owner's death; and (b) if any contract owner dies prior to the annuity
commencement date, the entire interest in the Contract will be distributed
within five years after the date of the contract owner's death. These
requirements will be considered satisfied as to any portion of the contract
owner's interest which is payable to or for the benefit of a "designated
beneficiary" and which is distributed over the life of such "designated
beneficiary" or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of that
owner's death. The contract owner's "designated beneficiary" (referred to herein
as the "Owner's Beneficiary") is the person designated by such contract owner as
a beneficiary and to whom ownership of the Contract passes by reason of death
and must be a natural person. However, if the contract owner's "designated
beneficiary" is the surviving spouse of the contract owner, the Contract may be
continued with the surviving spouse as the new owner.

The nonqualified contracts 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. Merrill Lynch Life intends
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 contracts.

Non-natural Owners

Nonqualified contracts held by other than a natural person generally are not
treated as annuities, and the contract owner generally must include in income
any increase in the excess of the contract value over the contract owner's
investment in the contract. This is not applicable to trusts or other entities
acting as an agent for a natural person, and there are certain other exceptions
to this rule. Prospective contract owners who are not natural persons should
consult a competent tax adviser.

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<PAGE> 30

Distributions

The taxable portion of annuity payments is generally determined by a formula
that establishes the ratio that the cost basis of the contract bears to the
expected return under the contract. After such time as the sum of the nontaxable
portion of annuity payments received equals the sum of premium payments
(adjusted for any withdrawals or outstanding loans), all subsequent annuity
payments are fully taxable as ordinary income.

With respect to nonqualified plans, partial withdrawals of contract value are
treated as taxable income to the extent that the contract value just before the
withdrawal exceeds the investment in the contract. In the case of a withdrawal
under a qualified plan, a ratable portion of the amount received is taxable,
generally based on the ratio of the investment in the contract to the
individual's total accrued benefit under the retirement plan. The assignment or
pledge (or agreement to assign or pledge) of any portion of the value of the
Contract shall be treated as a withdrawal subject to this rule. Full withdrawals
are treated as taxable income to the extent that the net contract value
withdrawn exceeds the investment in the contract. Amounts may be distributed
from the Contract because of the death of an owner or the annuitant. Generally,
such amounts are includible in the income of the recipient as follows: (1) if
distributed in a lump sum, they are taxed in the same manner as a full surrender
as described above, or (2) if distributed under an annuity option, they are
taxed in the same manner as annuity payments, as described above.

All nonqualified annuity contracts entered into after October 21, 1988 that are
issued by Merrill Lynch Life (or its affiliates) to the same owner during any
calendar year are treated as one annuity contract for purposes of determining
the amount includable in gross income under Section 72(e) of the Internal
Revenue Code. 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. Congress has also indicated that the
Treasury Department may have authority to treat the combination purchase of an
immediate annuity contract and a separate deferred annuity contract as a single
annuity contract under its general authority to prescribe rules as may be
necessary to enforce the income tax laws.

For both withdrawals and annuity payments under some types of qualified plans,
there may be no investment in the contract within the meaning of Section 72 of
the Internal Revenue Code, and the total amount received may be taxable.

Contract owners, annuitants and beneficiaries should seek competent financial
advice about the tax consequences of distributions under the retirement plan in
connection with which the Contracts are purchased.

Penalty Tax

A penalty tax is imposed equal to 10% of the taxable income portion of a
withdrawal. The penalty tax applies to both nonqualified and qualified
contracts, with different exceptions for each. The exceptions applicable to both
nonqualified and qualified contracts include (a) distributions made at or after
the contract owner's age 59 1/2, (b) distributions made on or after the contract
owner's death, (c) distributions attributable to the contract owner's
disability, and (d) substantially equal periodic payments for the contract
owner's life or life expectancy (or joint life or joint life expectancy of the
contract owner and a second person). There is an additional exception for
distributions under an immediate annuity contract applicable to nonqualified
contracts and Section 457 plans. Finally, there is an exception unique to
qualified contracts (not applicable to Individual Retirement Annuities and
Accounts) for distributions made to an employee after separation from service
after age 55. (For the tax treatment of any premiums paid prior to August 14,
1982, consult a tax advisor.)

INTERNAL REVENUE SERVICE DIVERSIFICATION STANDARDS

The Internal Revenue Service has published regulations prescribing
diversification standards to be met by nonqualified variable annuity contracts
as a condition to being taxed as annuities under Section 72 of the Internal
Revenue Code. The standards provide that investments of a subaccount of the
Variable Account are adequately diversified if no more than (a) 55% of the value
of its assets is represented by any one investment, (b) 70% is represented by
any two investments, (c) 80% is represented by any three investments, and (d)
90% is represented by any four investments. It is Merrill Lynch Life's opinion
that each subaccount of the Variable Account will meet the diversification
standards imposed by the Internal Revenue Service.

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<PAGE> 31

The Treasury Department has announced that the diversification regulations do
not provide guidance concerning the extent to which contract owners may direct
their investments to particular subaccounts of a separate account. Such guidance
will be included in regulations or Revenue Rulings under Section 817(d) of the
Internal Revenue Code relating to the definition of a variable contract. It is
unknown what standards will be adopted in such regulations. Merrill Lynch Life,
however, believes that according to current law the Contract will be treated as
an annuity for federal income tax purposes and that the Company, not the
contract owner, will be treated as the owner of the contract investments.

The ownership rights under the Contract are similar to, but different in certain
respects from, those described by the Internal Revenue Service in rulings in
which it determined that the owners were not owners of separate account assets.
For example, the owner of the Contract has additional flexibility in allocating
premium payments and account values. These differences could result in the owner
being treated as the owner of the assets of the Variable Account. Merrill Lynch
Life reserves the right to modify the Contract as necessary to prevent the
contract owner from being considered the owner of the assets of the Variable
Account for federal tax purposes. Any such changes will apply uniformly to
affected contract owners and will be made with such notice to affected contract
owners as is feasible under the circumstances.

TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A CONTRACT

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

POSSIBLE CHANGES IN TAXATION

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

OTHER TAX CONSEQUENCES

Merrill Lynch Life does not make any guarantee regarding the tax status of the
Contract or any transaction regarding the Contract. As noted above, the
foregoing discussion of the income tax consequences under the Contract is not
exhaustive and special rules are provided with respect to other tax situations
not discussed in the Prospectus. Further, the income tax consequences discussed
herein reflect the Company's 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 the Contract depend
on the individual circumstances of each contract owner or recipient of the
distribution. A competent tax adviser should be consulted for further
information.

QUALIFIED PLANS

The Contracts are designed for use with several types of qualified plans. The
tax rules applicable to participants in such qualified plans vary according to
the type of plan and the terms and conditions of the plan itself. Therefore, no
attempt is made to provide more than general information about the use of the
Contracts with the various types of qualified plans. Contract owners, annuitants
and beneficiaries are cautioned that the rights of any person to any benefits
under such qualified plans may be subject to the terms and conditions of the
plans themselves, regardless of the terms and conditions of the Contract. Some
retirement plans are subject to distribution and other requirements that are not
incorporated into our Contract administration procedures. Contract owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are

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<PAGE> 32

brief descriptions of the various types of qualified plans in connection with
which Merrill Lynch Life will issue a Contract. When issued in connection with
qualified plans, a Contract will be amended as necessary to conform to the
requirements of the Internal Revenue Code.

Individual Retirement Annuities and Individual Retirement Accounts

Section 408 of the Internal Revenue Code permits eligible individuals to
contribute to an individual retirement program known as an Individual Retirement
Annuity or Individual Retirement Account (each hereafter referred to as "IRA").
IRAs are subject to limits on the amount that may be contributed, the
contributions that may be deducted from taxable income, the persons who may be
eligible and on the time when distributions may commence. Also, distributions
from certain other types of qualified plans may be "rolled over" on a
tax-deferred basis into an IRA. Sales of the Contract for use with IRAs may be
subject to special disclosure requirements of the Internal Revenue Service.
Purchasers of the Contract 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 the Contract within 7 days
of the earlier of the establishment of the IRA or the purchase of the Contract.
Purchasers should seek competent advice as to the suitability of the Contract
for use with IRAs.

Pension and Profit Sharing Plans

Sections 401(a) and 403(a) of the Internal Revenue Code permit corporate
employers to establish various types of retirement plans for employees. These
plans are limited by law as to maximum permissible contributions, distribution
dates, nonforfeitability of interest and tax rates applicable to distributions.
These retirement plans may permit the purchase of the Contracts to accumulate
retirement savings under the plans. Adverse tax or other legal consequences to
the plan, to the participant or to both may result if this Contract is assigned
or transferred to any individual as a means to provide benefit payments, unless
the plan complies with all legal requirements applicable to such benefits prior
to transfer of the Contract. Employers intending to use the Contracts in
connection with such plans should seek competent advice.

Tax-Sheltered Annuities

Section 403(b) of the Internal Revenue Code permits public school employees and
employees of certain types of charitable, educational and scientific
organizations specified in Section 501(c)(3) of the Code to purchase annuity
contracts and, subject to certain limitations, exclude the amount of premiums
from gross income for tax purposes. These annuity contracts are commonly
referred to as "Tax-Sheltered Annuities." Premiums excluded from gross income
will be subject to FICA taxes. Purchasers using the Contracts as a Tax-Sheltered
Annuity should seek competent advice as to eligibility, limitations on
permissible amounts or premiums, and restrictions and tax consequences on
distribution. The restrictions on distributions include a PROHIBITION AGAINST
DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO CONTRIBUTIONS MADE PURSUANT TO A
SALARY REDUCTION AGREEMENT, unless made:

(a) After the contract owner attains age 59 1/2;

(b) Upon separation from service;

(d) For an amount not greater than the total of such contributions in the case
of hardship.

The above restrictions apply to distributions of employee contributions made
after December 31, 1988, earnings on those contributions, and earnings on
amounts attributable to employee contributions that are held as of December 31,
1988. They do not apply to distributions of any employer or other after-tax
contributions, employee contributions made on or before December 31, 1988, and
earnings credited to employee contributions before December 31, 1988.

Owners of Tax-Sheltered Annuities may receive Contract loans. Contract
loans that satisfy certain requirements with respect to loan amount and
repayment are not treated as taxable distributions. If these requirements are
not satisfied, or if the Contract terminates while a loan is outstanding, the
loan balance will

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<PAGE> 33

be treated as a taxable distribution and may be subject to penalty tax, and the
treatment of the Contract under section 403(b) may be adversely affected. In
addition, if the section 403(b) plan is subject to the Employee Retirement
Income Security Act of 1974 ("ERISA"), a Contract loan will be treated as a
"prohibited transaction" subject to certain penalties unless additional ERISA
requirements are satisfied. The Owner of a Tax-Sheltered Annuity should seek
competent advice before requesting a Contract loan.

Section 457 Deferred Compensation ("Section 457") Plans

Under Section 457 of the Internal Revenue Code, employees and independent
contractors who perform services for tax-exempt employers may participate in a
Section 457 plan of their employer allowing them to defer part of their salary
or other compensation. The amount deferred and any income on such amount will
not be taxable until paid or otherwise made available to the employee.

The maximum amount that can be deferred under a Section 457 plan in any tax year
is ordinarily one-third of the employee's includible compensation, up to $7,500.
Includible compensation means earnings for services rendered to the employer
which is includible in the employee's gross income, but excluding any
contributions under the Section 457 plan or a Tax-Sheltered Annuity. During the
last three years before an individual attains normal retirement age additional
"catch-up" deferrals are permitted.

The deferred amounts will be used by the employer to purchase the Contracts. The
Contracts will be owned by the employer and will be subject to the claims of the
employer's creditors. The employee has no rights or vested interest in the
Contract and is only entitled to payment in accordance with the Section 457 plan
provisions. Present federal income tax law does not allow tax-free transfers or
rollovers for amounts accumulated in a Section 457 plan except for transfers to
other Section 457 plans in certain limited cases.

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. As of January 1, 1993, Merrill Lynch Life is generally required
to withhold on distributions under qualified contracts.

VARIABLE ACCOUNT VOTING RIGHTS

In accordance with its view of present applicable law, Merrill Lynch Life will
vote the shares of the Funds held in the Variable Account at any special
meetings of the shareholders of the Funds according to instructions received
from persons having a voting interest in the Variable Account. Merrill Lynch
Life will vote shares attributable to Contracts for which it has not received
instructions in the same proportion as it votes shares for which it has received
instructions. Shares not attributable to Contracts will also be voted in the
same proportion as shares in the respective subaccounts for which instructions
are received. If, however, the Investment Company Act of 1940 should be amended,
or if the present interpretation thereof should change, and as a result Merrill
Lynch Life determines that it is permitted to vote the shares of the Funds in
its own right, Merrill Lynch Life may elect to do so.

The person having the voting interest under a Contract is the contract owner.
Prior to the annuity date, the number of shares of each Fund for which voting
instructions may be given by a contract owner is determined by dividing the
contract owner's interest in the applicable subaccount by the net asset value
per share of that Fund. After the annuity date, the number of shares of each
Fund for which voting instruction may be given is determined by dividing the
reserve for such Contract allocated to the applicable subaccount by the net
asset value per share of that Fund. The votes attributable to such a Contract
will decrease as the reserves underlying the Contract decrease.

The number of Fund shares for which voting instructions may be given will be
determined as of a date to be chosen by Merrill Lynch Life, not more than 90
days prior to the meeting of the Fund.

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<PAGE> 34

Each person having a voting interest in the Variable Account will receive
periodic reports relating to the Funds in which he or she has an interest,
including proxy material and a form with which to give voting instructions.

REPORTS TO CONTRACT OWNERS

Merrill Lynch Life will mail to each contract owner at his or her last address
on record at least annually prior to the annuity date a report containing such
information as may be required by any applicable law or regulation and a
statement showing the current number of accumulation units attributable to the
Contract, the value per accumulation unit, the value of his or her interest in
the Variable Account and the total contract value.

DISTRIBUTION OF CONTRACTS

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") is the principal
underwriter of the Contract. It was organized in 1958 under the laws of the
state of Delaware and is registered as a broker-dealer under the Securities
Exchange Act of 1934. It is a member of the National Association of Securities
Dealers, Inc. ("NASD"). MLPF&S' principal business address is World Financial
Center, 250 Vesey Street, New York, New York 10281.

Contracts are sold by registered representatives (Financial Consultants) of
MLPF&S who are also licensed through various Merrill Lynch Life Agencies
("MLLA") as insurance agents for Merrill Lynch Life. Merrill Lynch Life has
entered into a distribution agreement with MLPF&S and a companion sales
agreement with MLLA through which agreements the Contracts are sold and the
Financial Consultants are compensated by MLLA and/or MLPF&S. The maximum
compensation paid to the Financial Consultant is 2.3% of each premium. In
addition, on the annuity date, the Financial Consultant will receive additional
compensation of no more than 1.4% of the contract value. Additional annual
compensation of no more than 0.10% of the contract value may also be paid to the
Financial Consultant.

The maximum commission Merrill Lynch Life will pay to MLLA to be used to pay
commissions to Financial Consultants is 5% of each premium.

MLPF&S may arrange for sales of the Contract by other broker-dealers who are
registered under the Securities Act of 1934 and are members of the NASD.
Registered representatives of these other broker-dealers may be compensated on a
different basis than MLPF&S registered representatives.

STATE REGULATION

Merrill Lynch Life is subject to the laws of the State of Arkansas and to the
regulations of the Arkansas Insurance Department. It is also subject to the
insurance laws and regulations of all jurisdictions in which it is licensed to
do business.

An annual statement in the prescribed form is filed with the insurance
departments of jurisdictions where Merrill Lynch Life does business disclosing
the Company's operations for the preceding year and its financial condition as
of the end of that year. Insurance department regulation includes periodic
examination to verify Contract liabilities and reserves and to determine
solvency and compliance with all insurance laws and regulations. Merrill Lynch
Life's books and accounts are subject to insurance department review at all
times. A full examination of Merrill Lynch Life's operations is conducted
periodically by the Arkansas Insurance Department and under the auspices of the
National Association of Insurance Commissioners.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Variable Account is a party or to
which the assets of the Variable Account are subject. Merrill Lynch Life and
MLPF&S are engaged in various kinds of routine litigation that, in the Company's
judgment, is not of material importance in relation to Merrill Lynch Life's
total assets. No such litigation relates to the Variable Account.

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<PAGE> 35

EXPERTS

The financial statements of Merrill Lynch Life as of December 31, 1994 and 1993
and for each of the three years in the period ended December 31, 1994 and of the
Accounts as of December 31, 1994 and for the periods presented in the Statement
of Additional Information have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing therein, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing. Deloitte & Touche LLP's principal business
address is Two World Financial Center, New York, New York 10281-1420.

REGISTRATION STATEMENTS

Registration statements have been filed with the Securities and Exchange
Commission under the Securities Act of 1933 and the Investment Company Act of
1940 that relate to the Contract and its investment options. This Prospectus
does not contain all of the information in the registration statements as
permitted by Securities and Exchange Commission regulations. The omitted
information can be obtained from the Securities and Exchange Commission's
principal office in Washington, D.C., upon payment of a prescribed fee.

LEGAL MATTERS

The organization of the Company, its authority to issue the Contract, and the
validity of the form of the Contract have been passed upon by Barry G. Skolnick,
Merrill Lynch Life's Senior Vice President and General Counsel. Sutherland,
Asbill & Brennan of Washington, D.C. has provided advice on certain matters
relating to federal securities laws.

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

Principal Underwriter
Financial Statements
Administrative Services Arrangements
Financial Statements of Merrill Lynch Life Variable Annuity
Separate
Account
Financial Statements of Merrill Lynch Life Insurance Company

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APPENDIX

APPLICABLE ONLY TO CONTRACTS ISSUED PRIOR TO APRIL 30, 1986

If the contract owner's Contract was issued prior to April 30, 1986 and
assumption reinsured by Merrill Lynch Life ("old Contract"), the contract owner
may transfer all of the contract value at net asset value to a new Contract
described in this Prospectus. No contingent deferred sales charge will be
imposed on such transfer, and the new Contract will be deemed a continuation of
the old Contract in computing withdrawal charges under the new Contract.

Contracts issued prior to April 30, 1986, contain variable contract charges
identical in aggregate amount to the charges contained in the new Contracts,
except that the contingent deferred sales charge applies with respect to the old
Contracts to withdrawals of any amount during the first contract year. The new
Contracts provide that the contingent deferred sales charge does not apply to a
withdrawal up to 10% of the sum of premiums paid during the first contract year.
After the first contract year, both the old and new Contracts permit
withdrawals, without charge, of up to 10% of the sum of premiums paid prior to
the date of withdrawal.

In all other respects, both old and new Contracts are substantially similar,
except as follows:

1. The old Contracts do not provide for a Fixed Account (see THE FIXED ACCOUNT
on page 20).

2. The old Contracts do not provide for an annuity option of payments for a
fixed period (see ANNUITY OPTIONS on page 22).

3. The old Contracts contain different annuity tables for use in determining the
amount of the first variable annuity payment under the annuity options offered.
The annuity tables in the old Contracts are more favorable to contract owners
than the new Contracts' annuity tables and do not provide for an age adjustment
based on the year in which annuity payments commence. The annuity tables for
both new and old Contracts provide minimum guarantees.

4. Old Contracts, unlike new Contracts, permit a contract owner to transfer all
or part of his or her contract value to or from certain other fixed annuity
contracts issued or reinsured by Merrill Lynch Life to the contract owner.
Transfers must be at least $300, and for a partial transfer the remaining
contract value must be at least $100. All transfers must be at least 6 months
apart and must be made prior to the death of the annuitant and at least 30 days
prior to the annuity date. The primary purpose of this transfer provision is to
provide the contract owner with a means for transfer in and out of Merrill Lynch
Life's companion fixed annuity, a feature unnecessary with respect to the new
Contracts, because of the existence of the Fixed Account.

Any contract owner contemplating an exchange of Contracts should carefully
consider the potential adverse effect on the level of future annuity payments
that may result from an exchange to a new Contract.

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PART B

INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
<PAGE> 38

STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1995

MERRILL LYNCH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT

FLEXIBLE PREMIUMS--NONPARTICIPATING

ISSUED BY

MERRILL LYNCH LIFE INSURANCE COMPANY

Home Office: Little Rock, Arkansas 72201
Service Center: P.O. Box 44222, Jacksonville, FL 32231-4222
4804 Deer Lake Drive East, Jacksonville, Florida 32246
Phone: (800) 535-5549

OFFERED THROUGH

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

Premiums for the Contract described in the Prospectus will be allocated to the
Merrill Lynch Life Variable Annuity Separate Account ("Variable Account"), a
segregated investment account of Merrill Lynch Life Insurance Company ("Merrill
Lynch Life"), unless allocation to the Fixed Account is selected. Premiums and
contract values allocated to the Variable Account will be invested in certain
Funds selected by the contract owner of the Merrill Lynch Variable Series Funds,
Inc., except that, for the first 14 days following the date of issue, such
premiums will be allocated to the Reserve Assets Fund Subaccounts. In the
Commonwealth of Pennsylvania, all premiums will be invested as of the date of
issue in the subaccounts selected by the contract owner. The contract owner
bears the full investment risk with respect to such investments.

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of the Variable Account, dated May 1, 1995.
The Prospectus may be obtained without charge by writing to or calling Merrill
Lynch Life's Service Center at the address or phone number set forth above.

<PAGE> 39

TABLE OF CONTENTS

<TABLE>
<S> <C>
Principal Underwriter.................................................. 2
Financial Statements................................................... 2
Administrative Services Arrangements................................... 2
Financial Statements of Merrill Lynch Life Variable Annuity Separate
Account.............................................................. 3
Financial Statements of Merrill Lynch Life Insurance Company........... 19
</TABLE>

PRINCIPAL UNDERWRITER

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), an affiliate of
Merrill Lynch Life performs all sales and distribution functions regarding the
Contracts and may be deemed the principal underwriter of Merrill Lynch Life
Variable Annuity Separate Account (the "Variable Account") under the Investment
Company Act of 1940. The offering of the Contracts relates to Merrill Lynch
Life's assumption reinsurance of the Contracts previously issued by Family Life
Insurance Company ("FLIC") and offers may also be made from time to time to the
general public. The offering of the interests under the Contracts is continuous.
For the years ended December 31, 1994 and 1993, MLPF&S received in connection
with the sale of the Contracts $865,487 and $1,109,944 respectively.

FINANCIAL STATEMENTS

The financial statements of Merrill Lynch Life included in this Statement of
Additional Information should be distinguished from the financial statements of
the Variable Account and should be considered only as bearing upon the ability
of Merrill Lynch Life to meet any obligations it may have under the Contract.
Because the Variable Account acquired a majority of the assets of Merrill Lynch
Variable Annuity Account of FLIC in connection with Merrill Lynch Life's
assumption reinsurance of certain variable annuity contracts of FLIC commencing
on September 1, 1991, the financial statements of the Variable Account include
the financial operations of the FLIC separate account for periods prior to
September 1, 1991.

ADMINISTRATIVE SERVICES ARRANGEMENTS

Merrill Lynch Life has entered into a Service Agreement with its parent, Merrill
Lynch Insurance Group, Inc. ("MLIG") pursuant to which Merrill Lynch Life can
arrange for MLIG to provide directly or through affiliates certain services.
Pursuant to this agreement, Merrill Lynch Life has arranged for MLIG to provide
administrative services for the Variable Account and the Contracts, and MLIG, in
turn, has arranged for a subsidiary, Merrill Lynch Insurance Group Services,
Inc. ("MLIG Services"), to provide these services. Compensation for these
services, which will be paid by Merrill Lynch Life, will be based on the charges
and expenses incurred by MLIG Services, and will reflect MLIG Services' actual
costs. For the years ended December 31, 1994, 1993 and 1992, Merrill Lynch Life
paid administrative services fees of $44.2 million, $55.8 million and $63.3
million, respectively.

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<PAGE> 40

PART C

OTHER INFORMATION

3
<PAGE> 41

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

<TABLE>
<S> <C>
(A) FINANCIAL STATEMENTS
(1) Financial Statements of Merrill Lynch Life Variable Annuity Separate Account for
the three years ended December 31, 1994 and the Notes relating thereto appear in
the Statement of Additional Information (Part B of the Registration Statement).
(2) Financial Statements of Merrill Lynch Life Insurance Company for the three years
ended December 31, 1994 and the Notes relating thereto appear in the Statement
of Additional Information (Part B of the Registration Statement).

(B) EXHIBITS
(1) Resolution of the Board of Directors of Merrill Lynch Life Insurance Company
establishing the Merrill Lynch Life Variable Annuity Separate Account
(Incorporated by Reference to Registrant's Form N-4 Registration No. 33-40856
Filed May 29, 1991).
(2) Not Applicable
(3) Underwriting Agreement Between Merrill Lynch Life Insurance Company and Merrill
Lynch, Pierce, Fenner & Smith Incorporated (Incorporated by Reference to
Registrant's Form N-4 Registration No. 33-40856 Filed May 29, 1991)
(4)(a) Individual Variable Annuity Contract Issued by Family Life Insurance Company
(Incorporated by Reference to Family Life Insurance Company's Form S-6
Registration No. 33-4292)
(b) Individual Variable Annuity Contract Issued by Merrill Lynch Life Insurance
Company
(Incorporated by Reference to Registrant's Form N-4 Registration No. 33-43053
Filed August 6, 1993)
(c) Endorsements to Individual Variable Annuity Contract issued by Family Life
Insurance Company
(Incorporated by Reference to Family Life Insurance Company's Form S-6
Registration Nos. 2-68607 and 33-4292)
(d) Assumption Certificate (Incorporated by Reference to Registrant's Form N-4
Registration No. 33-40856 Filed May 29, 1991)
(e) Assumption Certificate for use in Illinois (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 1 to Form N-4, Registration No.
33-40856 Filed September 5, 1991)
(f) Assumption Certificate for use in Tennessee (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 1 to Registrant's Form N-4
Registration No. 33-40856 Filed September 5, 1991)
(g) Assumption Certificate of Tandem Insurance Group, Inc. and Company Name Change
and Home Office Address Change Endorsement (Incorporated by Reference to
Registrant's Form N-4 Registration No. 33-43053 Filed October 1, 1991)
(h) Endorsement to Individual Variable Annuity Contract Issued by Merrill Lynch Life
Insurance Company or Family Life Insurance Company (Incorporated by Reference to
Registrant's Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(5) Annuity Application for Fixed and Variable Annuities (Incorporated by Reference
to Registrant's Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(6)(a) Articles of Amendment, Restatement and Redomestication of the Articles of
Incorporation of Merrill Lynch Life Insurance Company (Incorporated by Reference
to Registrant's Form N-4 Registration No. 33-40856 Filed September 5, 1991)
(b) Amended and Restated By-laws of Merrill Lynch Life Insurance Company
(Incorporated by Reference to Registrant's Form N-4 Registration No. 33-40856
Filed September 5, 1991)
(7) Assumption Reinsurance Agreement Between Merrill Lynch Life Insurance Company,
Tandem Insurance Group, Inc. and Royal Tandem Life Insurance Company and Family
Life Insurance Company (Incorporated by Reference to Family Life Insurance
Company's Post-Effective Amendment No. 8 on Form S-6 Registration No. 33-4292
Filed April 24, 1991)
</TABLE>

C-1
<PAGE> 42

<TABLE>
<S> <C>
(8)(a) Amended General Agency Agreement Between Merrill Lynch Life Insurance Company
and Merrill Lynch Life Agency Inc. (Incorporated by Registrant's Form N-4
Registration No. 33-43053 Filed April 25, 1994)
(b) Indemnity Agreement Between Merrill Lynch Life Insurance Company and Merrill
Lynch Life Agency, Inc. (Incorporated by Reference to Registrant's Form N-4
Registration No. 33-40856 Filed May 29, 1991)
(c) Agreement Between Merrill Lynch Life Insurance Company and Merrill Lynch
Variable Series Funds, Inc. Relating to Maintaining Constant Net Asset Value for
the Reserve Assets Fund (Incorporated by Reference to Registrant's Form N-4
Registration No. 33-40856 Filed May 29, 1991)
(d) Agreement Between Merrill Lynch Life Insurance Company and Merrill Lynch
Variable Series Funds, Inc. Relating to Valuation and Purchase Procedures
(Incorporated by Reference to Registrant's Form N-4 Registration No. 33-40856
Filed May 29, 1991)
(e) Plan and Agreement of Merger between Merrill Lynch Life Insurance Company and
Tandem Insurance Group, Inc. (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 1 on Form N-4, Registration No. 33-40856 Filed
September 5, 1991)
(f) Amended Service Agreement Between Merrill Lynch Life Insurance Company and
Merrill Lynch Insurance Group, Inc. (Incorporated by Reference to Registrant's
Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(g) Indemnity Agreement Between Merrill Lynch Life Insurance Company and Merrill
Lynch Life Agency Inc. (Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 on Form N-4, Registration No. 33-43053 Filed April 30, 1992)
(h) Management Agreement Between Merrill Lynch Life Insurance Company and Merrill
Lynch Asset Management, Inc. (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 1 on Form N-4, Registration No. 33-43053 Filed
April 30, 1992)
(i) Reimbursement Agreement Between Merrill Lynch Asset Management, Inc. and Merrill
Lynch Life Agency (Incorporated by Reference to Registrant's Post-Effective
Amendment No. 2 on Form N-4 Registration No. 33-43053 Filed April 30, 1993)
(9) Opinion of Barry G. Skolnick, Esq. and Consent to its use as to the legality of
the securities being registered
(10)(a) Written Consent of Sutherland, Asbill & Brennan
(b) Written Consent of Deloitte & Touche LLP, independent auditors
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14)(a) Power of Attorney from Joseph E. Crowne (Incorporated by Reference to
Registrant's Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(b) Power of Attorney from David E. Dunford (Incorporated by Reference to
Registrant's Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(c) Power of Attorney from John C.R. Hele (Incorporated by Reference to Registrant's
Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(d) Power of Attorney from Allen N. Jones (Incorporated by Reference to Registrant's
Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(e) Power of Attorney from Barry G. Skolnick (Incorporated by Reference to
Registrant's Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(f) Power of Attorney from Anthony J. Vespa (Incorporated by Reference to
Registrant's Form N-4 Registration No. 33-43053 Filed April 25, 1994)
(27) Financial Data Schedule
</TABLE>

C-2
<PAGE> 43

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR*

<TABLE>
<CAPTION>
NAME PRINCIPAL BUSINESS ADDRESS POSITION WITH DEPOSITOR*
- --------------------- -------------------------- ----------------------------------------
<S> <C> <C>
Joseph E. Crowne 800 Scudders Mill Road Director, Senior Vice President,
Plainsboro, NJ 08536 Chief Financial Officer, Chief Actuary,
and Treasurer.

David M. Dunford 800 Scudders Mill Road Director, Senior Vice President and
Plainsboro, NJ 08536 Chief Investment Officer.

John C.R. Hele 800 Scudders Mill Road Director and Senior Vice President.
Plainsboro, NJ 08536

Allen N. Jones 250 Vesey Street Director.
New York, NY 10281

Barry G. Skolnick 800 Scudders Mill Road Director, Senior Vice President General
Plainsboro, NJ 08536 Counsel, and Secretary.

Anthony J. Vespa 800 Scudders Mill Road Director, Chairman of the Board,
Plainsboro, NJ 08536 President and Chief Executive Officer.

Deborah Adler 800 Scudders Mill Road Vice President and Actuary.
Plainsboro, NJ 08536

Robert J. Boucher 1414 Main Street Senior Vice President, Variable Life
Springfield, MA 01102 Administration.

Michael P. Cogswell 800 Scudders Mill Road Vice President and Senior Counsel.
Plainsboro, NJ 08536

Edward W. Diffin, Jr. 800 Scudders Mill Road Vice President and Senior Counsel.
Plainsboro, NJ 08536

Eileen P. Dyson 4804 Deer Lake Drive East Vice President and Assistant Secretary.
Jacksonville, FL 32246

Francis X. Ervin, Jr. 800 Scudders Mill Road Vice President and Controller.
Plainsboro, NJ 08536

Karen P. Klein 800 Scudders Mill Road Vice President and Senior Compliance
Plainsboro, NJ 08536 Officer.

Peter P. Massa 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536

Kelly A. O'Dea 800 Scudders Mill Road Vice President and Senior Compliance
Plainsboro, NJ 08536 Officer.

Shelley K. Parker 1414 Main Street Vice President and Senior Counsel.
Springfield, MA 01102

Julia Raven 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536

Frederick H. Steele 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536

Thomas J. Thatcher 4655 Salisbury Road Vice President and Assistant Secretary.
Suite 400
Jacksonville, FL 32256

Robert J. Viamari 1414 Main Street Vice President and Assistant Secretary.
Springfield, MA 01102

Denis G. Wuestman 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536
</TABLE>

- ---------------
* Each director is elected to serve until the next annual shareholder meeting
or until his or her successor is elected and shall have qualified.

C-3
<PAGE> 44

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT

Merrill Lynch Life Insurance Company is an indirect wholly-owned subsidiary of
Merrill Lynch & Co., Inc.

A list of subsidiaries of Merrill Lynch & Co., Inc. appears below.

<PAGE>
MLCOSUBO395

SUBSIDIARIES OF THE REGISTRANT

The following are subsidiaries of ML & Co. as of March 24, 1995 and the
states or jurisdictions in which they are organized. Indentation indicates the
principal parent of each subsidiary. Except as otherwise specified, in each case
ML & Co. owns, directly or indirectly, at least 99% of the voting securities of
each subsidiary. The names of particular subsidiaries have been omitted because,
considered in the aggregate as a single subsidiary, they would not constitute,
as of the end of the year covered by this report, a "significant subsidiary" as
that term is defined in Rule 1.02(v) of Regulation S-X under the Securities
Exchange Act of 1934.

<TABLE>
<CAPTION>
STATE OR
JURISDICTION
NAME OR ENTITY
- -------------------------------------------------------------------------------------- --------------------------
<S> <C>
Merrill Lynch & Co., Inc. ............................................................ Delaware
Merrill Lynch, Pierce, Fenner & Smith Incorporated(1)............................... Delaware
Broadcort Capital Corp. .......................................................... Delaware
Merrill Lynch & Co., Canada Ltd. ................................................. Ontario
Merrill Lynch Canada Incorporated/Incorporee.................................... Nova Scotia
Merrill Lynch Life Agency Inc.(2)................................................. Washington
Merrill Lynch Princeton Incorporated.............................................. Delaware
ROC Denver, Inc. ................................................................. Delaware
R.O.C. Florida, Inc. ............................................................. Florida
ROC Texas, Inc. .................................................................. Texas
Wagner Stott Clearing Corp.(3).................................................... Delaware
Green Equity, Inc. ................................................................. New Jersey
Merrill Lynch Bank & Trust Co. ..................................................... New Jersey
Merrill Lynch Capital Services, Inc. ............................................... Delaware
Merrill Lynch Derivative Products, Inc.(4).......................................... Delaware
Merrill Lynch Government Securities Inc. ........................................... Delaware
Merrill Lynch Government Securities of Puerto Rico S.A. .......................... Delaware
Merrill Lynch Money Markets Inc. ................................................. Delaware
Merrill Lynch Group, Inc. .......................................................... Delaware
HQ North Company, Inc. ........................................................... New York
Investor Protection Insurance Company............................................. Vermont
Merrill Lynch Capital Partners, Inc. ............................................. Delaware
Merrill Lynch Fiduciary Services, Inc. ........................................... New York
Merrill Lynch Futures Inc. ....................................................... Delaware
Merrill Lynch, Hubbard Inc.(5).................................................... Delaware
Merrill Lynch Insurance Group, Inc. .............................................. Delaware
Merrill Lynch Life Insurance Company............................................ Arkansas
ML Life Insurance Company of New York........................................... New York
Merrill Lynch International Finance Corporation................................... New York
Merrill Lynch International Bank Limited........................................ England
Merrill Lynch Bank (Suisse) S.A. ............................................. Switzerland
Merrill Lynch Trust Company (Jersey) Limited.................................. Jersey,
Channel Islands
Merrill Lynch L.P. Holdings, Inc. ................................................ Delaware
Merrill Lynch MBP Inc. ........................................................... Delaware
Merrill Lynch Mortgage Capital Inc. .............................................. Delaware
Merrill Lynch National Financial.................................................. Utah
Merrill Lynch Private Capital Inc.(6)............................................. Delaware
Merrill Lynch Trust Company....................................................... New Jersey
Merrill Lynch Business Financial Services Inc. ................................. Delaware
Merrill Lynch Credit Corporation................................................ Delaware
Merrill Lynch Home Equity Acceptance, Inc. ................................... Delaware
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
STATE OR
JURISDICTION
NAME OR ENTITY
- -------------------------------------------------------------------------------------- --------------------------
<S> <C>
Merrill Lynch & Co., Inc.
Merrill Lynch International Incorporated (cont'd)
Merrill Lynch Trust Company....................................................... Florida
Merrill Lynch Trust Company of America............................................ Illinois
Merrill Lynch Trust Company of California......................................... California
Merrill Lynch Trust Company of Texas.............................................. Texas
Merrill Lynch/WFC/L, Inc. ........................................................ New York
ML Futures Investment Partners Inc. .............................................. Delaware
ML IBK Positions Inc. ............................................................ Delaware
Merrill Lynch Capital Corporation(7)............................................ Delaware
ML Leasing Equipment Corp.(8)..................................................... Delaware
Merlease Leasing Corp. ......................................................... Delaware
Merrill Lynch Venture Capital Inc. ............................................. Delaware
Princeton Services, Inc.(9)....................................................... Delaware
Merrill Lynch International Incorporated............................................ Delaware
Merrill Lynch GFX, Inc. .......................................................... Delaware
Merrill Lynch International (Australia) Limited................................... New South Wales
Merrill Lynch International Bank.................................................. United States
Merrill Lynch International Holdings Inc. ........................................ Delaware
Merrill Lynch Bank (Austria) Aktiengesellschaft A.G. ........................... Austria
Merrill Lynch Bank and Trust Company (Cayman) Limited........................... Cayman Islands,
British West Indies
Merrill Lynch International & Co.(10)......................................... Netherlands Antilles
Merrill Lynch Capital Markets A.G. ............................................. Switzerland
Merrill Lynch Europe Limited.................................................... England
Merrill Lynch International Limited........................................... England
Merrill Lynch Capital Markets PLC............................................. England
Merrill Lynch, Pierce, Fenner & Smith (Brokers & Dealers) Limited............. England
Merrill Lynch Europe Ltd. ...................................................... Cayman Islands,
British West Indies
Merrill Lynch Holding GmbH(11).................................................. Fed. Rep. of Germany
Merrill Lynch Bank A.G. ...................................................... Fed. Rep. of Germany
Merrill Lynch GmbH............................................................ Fed. Rep. of Germany
Merrill Lynch Holding S.A.F. ................................................... France
Merrill Lynch Capital Markets (France) S.A. .................................. France
Merrill Lynch Hong Kong Securities Limited...................................... Hong Kong
Merrill Lynch Japan Incorporated.................................................. Delaware
Merrill Lynch Specialists Inc. ..................................................... Delaware
<FN>
- ------------------------
(1) MLPF&S also conducts business as "Merrill Lynch & Co."
(2) Similarly named affiliates and subsidiaries that engage in the sale of life
insurance and annuity products are incorporated in various other
jurisdictions.
(3) The preferred stock of the corporation is owned by an unaffiliated group of
investors.
(4) ML & Co. owns 100% of this corporation's outstanding common voting stock.
100% of the outstanding preferred voting stock is held by outside parties.
The board of directors consist of 10 members, 9 of which are ML & Co.
employees and 1 of which represents outside parties.
(5) This corporation has more than 30 direct or indirect subsidiaries operating
in the United States and serving as either general partners or associate
general partners of real estate limited partnerships.
(6) This corporation has 12 subsidiaries which have engaged in direct principal
lending and investment management.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
(7) This company has 10 subsidiaries holding or having a direct or indirect
interest in specific investments on its behalf.
(8) This corporation has more than 45 direct or indirect subsidiaries operating
in the United States and serving as either general partners or associate
general partners of limited partnerships.
(9) This corporation is the general partner of Merrill Lynch Asset Management,
L.P. (whose limited partner is ML & Co.).
(10) A partnership among subsidiaries of ML & Co.
(11) ML & Co. holds a 50% interest in this corporation, with the remaining 50%
interest held by an outside party.
</TABLE>

ITEM 27. NUMBER OF CONTRACTS

As of March 24, 1995, there were 3,465 Qualified Contracts and 3,179
Non-Qualified Contracts.

ITEM 28. INDEMNIFICATION

There is no indemnification of the principal underwriter, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, with respect to the Contract.

The indemnity agreement between Merrill Lynch Life Insurance Company ("Merrill
Lynch Life") and its affiliate Merrill Lynch Life Agency, Inc. ("MLLA"), with
respect to MLLA's general agency responsibilities on behalf of Merrill Lynch
Life and the Contract, provides:

Merrill Lynch Life will indemnify and hold harmless MLLA and all persons
associated with MLLA as such term is defined in Section 3(a)(21) of the
Securities Exchange Act of 1934 against all claims, losses, liabilities and
expenses, to include reasonable attorneys' fees, arising out of the sale by
MLLA of insurance products under the above-referenced Agreement, provided
that Merrill Lynch Life shall not be bound to indemnify or hold harmless
MLLA or its associated persons for claims, losses, liabilities and expenses
arising directly out of the willful misconduct or negligence of MLLA or its
associated persons.

Insofar as indemnification for liabilities 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 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 of the Registrant 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 question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Merrill Lynch, Pierce, Fenner & Smith Incorporated also acts as principal
underwriter for the following additional funds: CBA Money Fund; CMA Government
Securities Fund; CMA Money Fund; CMA Tax-Exempt Fund; CMA Treasury Fund; CMA
Multi-State Municipal Series Trust; The Corporate Fund Investment Accumulation
Program, Inc.; The Municipal Fund Investment Accumulation Program, Inc.;
Corporate Income Fund; Equity Income Fund; The Fund of Stripped ("Zero") U.S.
Treasury Securities; The GNMA Investment Accumulation Program; Government
Security Income Fund; International Bond Fund; The Liberty Street Trust
Municipal Monthly Payment Series; The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities; Merrill Lynch Trust for Government Securities;
Municipal Income Fund; and Municipal Investment Trust Fund.

Merrill Lynch, Pierce, Fenner & Smith Incorporated also acts as principal
underwriter for the following additional accounts: Merrill Lynch Life Variable
Annuity Separate Account A; Merrill Lynch Life Variable Life Separate Account B;
Merrill Lynch Life Variable Life Separate Account II; ML of New York Variable
Life Separate Account; ML of New York Variable Life Separate Account II; ML of
New York Variable Annuity Separate Account; ML of New York Variable Annuity
Separate Account A; ML of New York Variable Annuity Separate Account B; and
Merrill Lynch Variable Life Separate Account.

C-4
<PAGE> 45

(b) The directors, president, treasurer and executive vice presidents of Merrill
Lynch, Pierce, Fenner & Smith Incorporated are as follows:

<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES WITH UNDERWRITER
----------------------------------------- -----------------------------------------
<S> <C>
Herbert M. Allison, Jr.*................. Director and Executive Vice President
Barry S. Friedberg*...................... Director and Executive Vice President
Edward L. Goldberg*...................... Director and Executive Vice President
Stephen L. Hammerman*.................... Director, Chairman and General Counsel
Jerome P. Kenney*........................ Director and Executive Vice President
David H. Komansky*....................... Director, President and Chief Executive
Officer
Theresa Lang*............................ Senior Vice President and Treasurer
Daniel T. Napoli*........................ Director and Senior Vice President
Thomas H. Patrick*....................... Director and Executive Vice President
Winthrop H. Smith, Jr.*.................. Director and Executive Vice President
John L. Steffens*........................ Director and Executive Vice President
Daniel P. Tully*......................... Director
Roger M. Vasey*.......................... Director and Executive Vice President
Arthur H. Zeikel**....................... Director and Executive Vice President
</TABLE>

- ---------------
* World Financial Center, 250 Vesey Street, New York, NY 10281
** 800 Scudders Mill Road, Plainsboro, New Jersey 08536

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books, and records required to be maintained by Section 31(a) of
the 1940 Act and the rules promulgated thereunder are maintained by the
depositor at the principal executive offices at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536 and the Service Center at 4804 Deer Lake Drive
East, Jacksonville, Florida 32246.

ITEM 31. NOT APPLICABLE

ITEM 32. UNDERTAKINGS

(a) Registrant undertakes to file a post-effective amendment to the Registrant
Statement as frequently as is 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 to 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 postcard 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.

(d) Merrill Lynch Life Insurance Company is relying on a no-action letter issued
to the American Counsel of Life Insurance published November 28, 1988. The
no-action letter provides certain assurances relating to variable annuity
registrants' compliance with Section 403(b)(11) of the Internal Revenue Code and
Sections 22(e), 27(c)(1) and 27(d) of the Investment Company Act of 1940.
Merrill Lynch Life hereby represents that it has complied with the provisions of
paragraph (1) through (4) of said no-action letter.

C-5
<PAGE> 46

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Merrill Lynch Life Variable Annuity Separate Account,
certifies that it meets the requirements of Securities Act Rule 486(b) for
effectiveness of this Post-Effective Amendment No. 5 to the Registration
Statement and has caused this Registration Statement to be signed on its behalf,
in the City of Plainsboro, State of New Jersey, on the 26th day of April, 1995.

<TABLE>
<S> <C>
ATTEST: MERRILL LYNCH LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
---------------------------------------------
(Registrant)

/S/ SANDRA K. KELLY By: /S/ BARRY G. SKOLNICK
- --------------------------------------------- -----------------------------------------
Sandra K. Kelly Barry G. Skolnick
Assistant Secretary Senior Vice President of
Merrill Lynch Life Insurance Company

ATTEST: MERRILL LYNCH LIFE INSURANCE COMPANY
---------------------------------------------
(Depositor)

As required by the Securities Act of 1933, this Post-Effective Amendment No. 5
to the Registration Statement has been signed below by the following persons in
the capacities indicated on April 26, 1995.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<S> <C>

* Director, Chairman of the Board, President,
- --------------------------------------------- and Chief Executive Officer
Anthony J. Vespa

* Director, Senior Vice President, Chief
- --------------------------------------------- Financial Officer, Chief Actuary, and
Joseph E. Crowne Treasurer

* Director, Senior Vice President and Chief
- --------------------------------------------- Investment Officer
David M. Dunford

* Director and Senior Vice President
- ---------------------------------------------
John C.R. Hele

* Director
- ---------------------------------------------
Allen N. Jones

By: /S/ BARRY G. SKOLNICK In his own capacity as Director, Senior Vice
----------------------------------------- President, and General Counsel and as
Barry G. Skolnick Attorney-In-Fact
</TABLE>

C-6
<PAGE> 47

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- -------- ---------------------------------------------------------------------------- -----
<S> <C> <C>
(9) Opinion of Barry G. Skolnick, Esq. and Consent to its use as to the legality
of the securities being registered........................................
(10)(a) Written Consent of Sutherland, Asbill & Brennan.............................
(b) Written Consent of Deloitte & Touche LLP, independent auditors..............
(27) Financial Data Schedule.....................................................
</TABLE>

C-7

<PAGE> 1
EXHIBIT (9)

April 25, 1995

Board of Directors
Merrill Lynch Life Insurance Company
800 Scudders Mill Road
Plainsboro, New Jersey 08536

To The Board Of Directors:

In my capacity as General Counsel of Merrill Lynch Life Insurance Company (the
"Company"), I have supervised the preparation of the registration statements of
the Merrill Lynch Life Variable Annuity Separate Account (the "Account") to be
filed by the Company with the Securities and Exchange Commission under the
Securities Act of 1933 and the Investment Company Act of 1940. Such
registration statements describe certain individual variable annuity contracts
which will participate in the Account.

I am of the following opinion:

1. The Company has been duly organized under the laws of the State of
Arkansas and is a validly existing corporation.

2. The individual variable annuity contracts, when issued in accordance
with the prospectus contained in the aforesaid registration statements
and upon compliance with applicable local law, will be legal and
binding obligations of the Company in accordance with their terms.

3. The Account is duly created and validly existing as a separate account
of the Company pursuant to Arkansas law.

4. The assets held in the Account equal to the reserves and other
contract liabilities with respect to the Account will not be
chargeable with liabilities arising out of any other business the
Company may conduct.

In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.

I hereby consent to the filing of this opinion as an exhibit to the aforesaid
registration statements and to the reference to me under the caption "Legal
Matters" in the prospectus contained in said registration statements.

Very truly yours,

/s/ Barry G. Skolnick

Barry G. Skolnick
Senior Vice President and
General Counsel

<PAGE> 1
EXHIBIT 10(a)

April 26, 1995

Board of Directors
Merrill Lynch Life Insurance Company
800 Scudders Mill Road
Plainsboro, New Jersey 08536

Gentlemen:

We hereby consent to the reference to our name under the caption
"Legal Matters" in the Prospectus filed as part of Post-Effective Amendment
No. 5 to Form N-4 (File No. 33-43053) for Merrill Lynch Life Variable Annuity
Separate Account of Merrill Lynch Life Insurance Company. In giving this
consent, we do not admit that we are in the category of persons whose consent
is required under Section 7 of the Securities Act of 1933.

Very truly yours,

SUTHERLAND, ASBILL & BRENNAN

By /s/ Stephen E. Roth
--------------------------
Stephen E. Roth

<PAGE> 1
EXHIBIT (10)(b)

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 5 to Registration
Statement No. 33-43053 of Merrill Lynch Life Variable Annuity Separate Account
on Form N-4 of our reports on (i) Merrill Lynch Life Insurance Company dated
February 27, 1995, and (ii) Merrill Lynch Life Variable Annuity Separate
Account dated February 8, 1995, appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
reference to us under the heading "Experts" in the Prospectus, which is a part
of such Registration Statement.

/s/ Deloitte & Touche LLP

New York, New York
April 25, 1995

<ARTICLE> 6
<CIK> 0000875246
<NAME> MERRILL LYNCH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 172,921,934
<INVESTMENTS-AT-VALUE> 175,803,351
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 175,803,351
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,417
<TOTAL-LIABILITIES> 39,417
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 175,763,934
<DIVIDEND-INCOME> 9,687,712
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 9,687,712
<REALIZED-GAINS-CURRENT> 3,879,897
<APPREC-INCREASE-CURRENT> (19,576,264)
<NET-CHANGE-FROM-OPS> (8,247,745)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (33,727,051)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 192,627,460
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>