PROVIDENTMUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT, 497, 1997-05-16

PROVIDENTMUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT
497, 1997-05-16

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INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA,
A STOCK LIFE INSURANCE COMPANY
300 CONTINENTAL DRIVE, NEWARK, DELAWARE 19713
TELEPHONE: 1-800-688-5177

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

This Prospectus describes the individual flexible premium deferred variable
annuity contract (the "Contract") being offered by Providentmutual Life and
Annuity Company of America ("Providentmutual"), a stock life insurance company
domiciled in Delaware which is a wholly-owned subsidiary of Provident Mutual
Life Insurance Company ("PMLIC"). The Contract may be sold to or in connection
with retirement plans which may or may not qualify for special Federal tax
treatment under the Internal Revenue Code.

Net Premiums and Contract Values will be allocated, as designated by the
Owner, to one or more of the Subaccounts of the Providentmutual Variable Annuity
Separate Account (the "Variable Account"), or the Guaranteed Account (which is
part of Providentmutual's General Account and pays interest at declared rates
guaranteed to equal or exceed 3%), or both. (The Guaranteed Account is not
offered in the states of Oregon and Washington). The assets of each Subaccount
will be invested solely in a corresponding Portfolio of a designated mutual fund
(the "Funds"). The Funds available under the Contract are: Market Street Fund,
Inc.; Alger American Fund; Variable Insurance Products Fund; Variable Insurance
Products Fund II; Neuberger & Berman Advisers Management Trust; American Century
Variable Portfolios, Inc.; and Van Eck Worldwide Insurance Trust. The
accompanying Prospectuses for the Funds describe the Portfolios of such Funds.
The Contract Account Value prior to the Maturity Date, except for amounts in the
Guaranteed Account, will vary according to the investment performance of the
Portfolios of the Funds in which the selected Subaccounts are invested. The
Owner bears the entire investment risk of amounts allocated to the Variable
Account.

This Prospectus sets forth basic information about the Contract and the
Variable Account that a prospective investor ought to know before investing.
Additional information about the Contract and the Variable Account is contained
in the Statement of Additional Information, which has been filed with the
Securities and Exchange Commission. The Statement of Additional Information is
dated the same as this Prospectus and is incorporated herein by reference. The
Table of Contents for the Statement of Additional Information is on Page 37 of
this Prospectus. You may obtain a copy of the Statement of Additional
Information free of charge by writing to or calling Providentmutual at the
address or phone number shown above.
---------------

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------
THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Definitions........................................................................... 1
Table of Expenses..................................................................... 2
Summary............................................................................... 6
Condensed Financial Information....................................................... 8
The Company, Variable Account and Funds............................................... 9
Providentmutual Life and Annuity Company of America.............................. 9
The Providentmutual Variable Annuity Separate Account............................ 10
The Funds........................................................................ 10
The Market Street Fund, Inc. ............................................... 11
The Alger American Fund..................................................... 12
Variable Insurance Products Fund and Variable Insurance Products Fund II.... 12
Neuberger & Berman Advisers Management Trust................................ 13
American Century Variable Portfolios, Inc. ................................. 14
Van Eck Worldwide Insurance Trust........................................... 14
Resolving Material Conflicts................................................ 15
Addition, Deletion or Substitution of Investments........................... 16
Description of Annuity Contract....................................................... 16
Issuance of a Contract........................................................... 16
Premiums......................................................................... 17
Free-Look Period................................................................. 17
Allocation of Premiums........................................................... 17
Variable Account Value........................................................... 18
Transfer Privilege............................................................... 19
Withdrawals and Surrender........................................................ 20
Death Benefit Before Maturity Date............................................... 22
Proceeds on Maturity Date........................................................ 22
Payments......................................................................... 23
Modification..................................................................... 23
Reports to Contract Owners....................................................... 23
Contract Inquiries............................................................... 23
The Guaranteed Account................................................................ 23
Minimum Guaranteed and Current Interest Rates.................................... 24
Transfers from Guaranteed Account................................................ 24
Payment Deferral................................................................. 25
Charges and Deductions................................................................ 25
Surrender Charge (Contingent Deferred Sales Charge).............................. 25
Administrative Charges........................................................... 26
Mortality and Expense Risk Charge................................................ 26
Other Charges Including Investment Advisory Fees of the Funds.................... 27
Premium Taxes.................................................................... 27
Other Taxes...................................................................... 27
Payment Options....................................................................... 27
Election of Options.............................................................. 27
Description of Options........................................................... 28
Yields and Total Returns.............................................................. 28
Federal Tax Status.................................................................... 30
Introduction..................................................................... 30
Tax Status of the Contract....................................................... 30
Taxation of Annuities............................................................ 31
</TABLE>

i
<PAGE> 3

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Transfers, Assignments or Exchanges of a Contract................................ 33
Withholding...................................................................... 33
Multiple Contracts............................................................... 33
Taxation of Qualified Plans...................................................... 33
Restrictions and Qualified Contracts............................................. 34
Possible Charge for Providentmutual's Taxes...................................... 34
Other Tax Consequences........................................................... 35
Distribution of Contracts............................................................. 35
Legal Proceedings..................................................................... 35
Voting Rights......................................................................... 35
Financial Statements.................................................................. 36
Statements of Additional Information Table of Contents................................ 36
</TABLE>

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<PAGE> 4

DEFINITIONS

ANNUITANT.................. The person whose life determines the annuity
benefits payable under the Contract and whose death
determines the death benefit.

BENEFICIARY................ The person to whom the proceeds payable on the death
of the Owner or the Annuitant will be paid.

CASH SURRENDER VALUE....... The Contract Account Value less any applicable
surrender charge and any applicable premium tax
charge.

CONTRACT ACCOUNT VALUE..... The sum of the Variable Account Value and the
Guaranteed Account Value.

CONTRACT YEARS, MONTHS, AND
ANNIVERSARIES..............
Are measured from the Contract Date.

GUARANTEED ACCOUNT......... This account is part of Providentmutual's General
Account and is not part of nor dependent upon the
investment performance of the Variable Account.

HOME OFFICE................ Providentmutual's office at 300 Continental Drive,
Newark, Delaware 19713.

MATURITY DATE.............. The date when the Contract Account Value will be
applied under a Payment Option, unless the Owner has
elected to receive a lump sum payment of the Cash
Surrender Value.

NET PREMIUM................ The premium paid less any premium tax levied for the
year the premium is paid.

NON-QUALIFIED CONTRACT..... A Contract that is not a "Qualified Contract."

OWNER...................... The person entitled to exercise all rights and
privileges provided in the Contract.

QUALIFIED CONTRACT......... A Contract that is issued in connection with plans
that qualify for special Federal income tax
treatment under sections 401, 403, or 408 of the
Internal Revenue Code of 1986, as amended.

SUBACCOUNT................. The Variable Account has Subaccounts; the assets of
each Subaccount are invested in a corresponding
Portfolio of a designated mutual fund.

VALUATION DAY.............. Each day on which valuation of the assets of a
Subaccount is required by applicable law.

VALUATION PERIOD........... The period that starts at the close of business on
one Valuation Day and ends at the close of business
on the next succeeding Valuation Day.

VARIABLE ACCOUNT........... Providentmutual Variable Annuity Separate Account
which is not part of Providentmutual's General
Account. The Variable Account has Subaccounts each
of which is invested in a corresponding Portfolio of
a designated mutual fund.

WRITTEN NOTICE............. A written request or notice in a form satisfactory
to Providentmutual which is signed by the Owner and
received at the Home Office.

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TABLE OF EXPENSES

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

<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
Sales Load Imposed on Premiums......... none
Maximum Contingent Deferred Sales
Charge (as a percentage of amount
surrendered or withdrawn)(1)......... 7%
ANNUAL ADMINISTRATION FEE.............. $30 per Contract Year
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of Variable Account
Value)
Mortality and Expense Risk Charges..... 1.25%
Account Fees and Expenses(2)........... .15%
----
Total Variable Account
Annual Expenses...................... 1.40%
</TABLE>
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- -------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
MARKET STREET FUND ANNUAL EXPENSES
(as a percentage of average net
assets)
Management Fees
(Investment Advisory Fees)........... 0.33% 0.25% 0.35% 0.40% 0.47%
Other Expenses......................... 0.17% 0.19% 0.21% 0.20% 0.21%
------ -------- ------ ----- -----
Total Fund Annual Expenses............. 0.50% 0.44% 0.56% 0.60% 0.68%

</TABLE>

INTERNATIONAL
PORTFOLIO
-------------
<S> <C>
MARKET STREET FUND ANNUAL EXPENSES
(as a percentage of average net
assets)
Management Fees
(Investment Advisory Fees)........... 0.75%
Other Expenses......................... 0.30%
-----
Total Fund Annual Expenses............. 1.05%
</TABLE>
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION
PORTFOLIO
---------------
<S> <C>
ALGER AMERICAN FUND ANNUAL EXPENSES(4)
(as a percentage of average net
assets)
Management Fees
(Investment Advisory Fees)........... 0.85%
Other Expenses......................... 0.03%
------
Total Fund Expenses.................... 0.88%

</TABLE>

<TABLE>
<CAPTION>
HIGH EQUITY-
INCOME INCOME GROWTH OVERSEES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- -------- ------------- ----------
<S> <C> <C> <C> <C>
VARIABLE INSURANCE PRODUCTS FUND
ANNUAL EXPENSES(4)
(as a percentage of average net
assets)
Management Fees
(Investment Advisory Fees)........... 0.60% 0.51% 0.60% 0.76%
Other Expenses
(after reimbursement)(3)............. 0.11% 0.05% 0.07% 0.16%
------ -------- ------ -----
Total Fund Annual Expenses
(after reimbursement)(3)............. 0.71% 0.56% 0.67% 0.92%
</TABLE>

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<TABLE>
<CAPTION>
ASSET INDEX INVESTMENT
MANAGER 500 GRADE BOND CONTRAFUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- -------- ------------- ----------
<S> <C> <C> <C> <C>
VARIABLE INSURANCE PRODUCTS FUND II
ANNUAL EXPENSES(4)
(as a percentage of average net
assets)
Management Fees
(Investment Advisory Fees)........... 0.64% 0.28% 0.44% 0.61%
Other Expenses
(after reimbursement)(3)............. 0.09% 0.00% 0.14% 0.10%
----- ----- ----- ----
Total Fund Annual Expenses
(after reimbursement)(3)............. 0.73% 0.28% 0.58% 0.71%
</TABLE>

<TABLE>
<CAPTION>
LIMITED
BALANCED GROWTH MATURITY BOND
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- -------- -------------
<S> <C> <C> <C>
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST ANNUAL EXPENSES(4)
(as a percentage of average net
assets)
Management Fees
(Investment Advisory Fees)........... 0.55% 0.53% 0.25%
Other Expenses......................... 0.54% 0.39% 0.53%
------ -------- ------
Total Fund Annual Expenses............. 1.09% 0.92% 0.78%
</TABLE>

<TABLE>
<CAPTION>
CAPITAL
APPRECIATION
PORTFOLIO
---------------
<S> <C>
AMERICAN CENTURY VARIABLE PORTFOLIOS,
INC.
ANNUAL EXPENSES(4)
(as a percentage of average net
assets)
Management Fees
(Investment Advisory Fees)........... 1.00%
Other Expenses......................... 0.00%
------
Total Fund Annual Expenses............. 1.00%
</TABLE>

<TABLE>
<CAPTION>
WORLDWIDE WORLDWIDE
WORLDWIDE HARD EMERGING
BOND ASSETS MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- -------- -------------
<S> <C> <C> <C>
VAN ECK WORLDWIDE INSURANCE TRUST
ANNUAL EXPENSES(4)
(as a percentage of average net
assets)
Management Fees
(Investment Advisory Fees)........... 1.00% 1.00% 1.00%
Other Expenses
(after reimbursement)(3)............. 0.16% 0.23% 0.50%
------ -------- ------
Total Fund Annual Expenses
(after reimbursement)(3)............. 1.16% 1.23% 1.50%
</TABLE>

Premium taxes may be applicable, depending on various states' laws.

The above tables are intended to assist the Owner in understanding the
costs and expenses that will be borne by the Contract Owner, directly or
indirectly. The tables reflect expenses of the Variable Account as

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<PAGE> 7

well as for the Funds for the 1996 calendar year. For a more complete
description of the various costs and expenses, see "Charges and Deductions,"
Page 24.
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(1) A surrender charge is deducted only if a withdrawal or surrender occurs
during the first seven Contract Years; no surrender charge is deducted
for a withdrawal or surrender in Contract Years eight and later. For
the first Contract Year, the maximum charge is 7% of the amount
withdrawn or surrendered. Thereafter, the surrender charge decreases by
1% each subsequent Contract Year until it is zero in Contract Year
eight. The maximum total surrender charge will not exceed 8 1/2% of the
total gross premiums paid under the Contract. Subject to certain
restrictions, after the first Contract Year up to 10% of the Contract
Account Value as of the beginning of a Contract Year may be surrendered
or withdrawn without charge in such Contract Year. (See "Surrender
Charge," Page 24.)
(2) Asset-based administration charge.
(3) For certain portfolios, certain expenses were reimbursed during 1996.
It is anticipated that expense reimbursement and fee waiver
arrangements will continue past the current year. Absent the expense
reimbursement, the 1996 Other Expenses and Total Annual Expenses would
have been 0.07%, 0.58% respectively, for the Fidelity Equity Income
Portfolio, 0.09%, 0.69%, respectively, for the Fidelity Growth
Portfolio, 0.17%, 0.93%, respectively, for the Fidelity Overseas
Portfolio, 0.10%, 0.74%, respectively, for the Fidelity Asset Manager
Portfolio, 0.16%, 0.44%, respectively, for the Fidelity Index 500
Portfolio, 0.13%, 0.74%, respectively, for the Fidelity Contrafund
Portfolio, 0.17%, 1.17%, respectively, for the VanEck Worldwide Bond
Portfolio, 0.24%, 1.24%, respectively, for the VanEck Worldwide Hard
Assets Portfolio and 1.64%, 2.64%, respectively, for the VanEck
Worldwide Emerging Markets Portfolio. Similar expense reimbursement and
fee waiver arrangements were also in place for the other Portfolios and
it is anticipated that such arrangements will continue past the current
year. However, no expenses were reimbursed or fees waived during 1996
for these Portfolios because the level of actual expenses and fees
never exceeded the thresholds at which the reimbursement and waiver
arrangements would have become operative.
(4) The fee and expense information regarding the Funds was provided by
those Funds. The Alger American Fund, the Variable Insurance Products
Fund, the Variable Insurance Products Fund II, Neuberger & Berman
Advisers Management Trust, American Century Variable Portfolios, Inc.
and Van Eck Worldwide Insurance Trust are not affiliated with
Providentmutual. While Providentmutual has no reason to doubt the
accuracy of these figures provided by these non-affiliated Funds,
Providentmutual has not independently verified such information.

EXAMPLES

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

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

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<PAGE> 8

<TABLE>
<CAPTION>
10
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS YEARS
---------------------------------------------- ------ ------- ------- -------
<S> <C> <C> <C> <C>
Fidelity Asset Manager........................ $86.88 $108.54 $145.00 $284.11
Fidelity Index 500............................ 82.45 94.81 121.57 236.42
Fidelity Contrafund........................... 86.68 107.93 143.97 282.03
Neuberger Balance............................. 90.43 119.42 163.42 320.72
Neuberger Growth.............................. 88.75 114.29 154.76 303.60
Neuberger Lmt. Mat. Bond...................... 87.37 110.05 147.57 289.27
American Century V.P. Capital Appreciation.... 89.54 116.71 158.84 311.69
Van Eck Worldwide Bond........................ 91.12 121.53 166.97 327.69
Van Eck Worldwide Hard Assets................. 91.81 123.63 170.50 334.60
Van Eck Worldwide Emerging Mkts............... 94.47 131.72 184.05 360.81
</TABLE>

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

<TABLE>
<CAPTION>
10
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS YEARS
---------------------------------------------- ------ ------- ------- -------
<S> <C> <C> <C> <C>
MS Growth..................................... $23.00 $ 70.86 $121.36 $260.01
MS Money Market............................... 22.37 68.97 118.18 253.63
MS Bond....................................... 23.62 72.76 124.52 266.35
MS Managed.................................... 24.04 74.02 126.62 270.55
MS Aggressive Growth.......................... 24.88 76.54 130.82 278.92
MS International.............................. 28.76 88.13 150.05 316.72
Alger American Small Cap...................... 26.98 82.81 141.25 299.53
Fidelity High Income.......................... 25.20 77.48 132.39 282.03
Fidelity Equity Income........................ 23.62 72.76 124.52 266.35
Fidelity Growth............................... 24.80 76.29 130.40 278.08
Fidelity Overseas............................. 27.40 84.07 143.33 303.60
Fidelity Inv. Bond............................ 23.83 73.39 125.57 268.45
Fidelity Asset Manager........................ 25.41 78.11 133.44 284.11
Fidelity Index 500............................ 20.69 63.90 109.69 236.42
Fidelity Contrafund........................... 25.20 77.48 132.39 282.03
Neuberger Balance............................. 29.18 89.38 152.11 320.72
Neuberger Growth.............................. 27.40 84.07 143.33 303.60
Neuberger Lmt. Mat. Bond...................... 25.93 79.68 136.05 289.27
American Century V.P. Capital Appreciation.... 28.24 86.57 147.47 311.69
Van Eck Worldwide Bond........................ 29.91 91.56 155.70 327.69
Van Eck Worldwide Hard Assets................. 30.65 93.74 159.29 334.60
Van Eck Worldwide Emerging Mkts............... 33.48 102.11 173.02 360.81
</TABLE>

The Examples provided above assume that no transfer charges or premium
taxes have been assessed. The Examples also assume that the Annual
Administration Fee is $30 (maximum guaranteed charge) and that the Contract
Account Value per contract is $10,000, which translates the Administration Fee
into an assumed .30% charge for purposes of the Examples based on a $1,000
investment.

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

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<PAGE> 9

SUMMARY

THE CONTRACT

Issuance of a Contract. The Contract is an individual flexible premium
deferred variable annuity issued by Providentmutual. Contracts may be sold in
connection with retirement plans which may or may not qualify for special
Federal tax treatment under the Internal Revenue Code. In order to purchase a
Contract, application must be made to Providentmutual through a licensed
Providentmutual representative, who is also a registered representative of 1717
Capital Management Company ("1717") or a broker/dealer having a selling
agreement with 1717 or a broker/dealer having a selling agreement with such
broker/dealer. The minimum initial premium must be paid to Providentmutual.
Annuity payments are deferred unit the Maturity Date. (See "Issuance of a
Contract," Page 16.)

Free-Look Period. The Owner has the right to return the Contract within 10
days after such Owner receives the Contract. The returned Contract will be
treated as if it were never issued. Providentmutual will return to the Owner an
amount equal to the greater of the premiums paid or the Contract Account Value
plus charges deducted, except the Mortality and Expense Risk Charge, Asset-Based
Administration Charge and the Funds' advisory fees and operating expenses. For
Contracts sold to residents of certain states (i.e., Arizona, Minnesota and
Pennsylvania), the amount returned to the Owner will be equal to the sum of: (i)
the difference between the premiums paid, including any contract fees and
charges and the amounts, if any, allocated to the Variable Account under the
Contract; and (ii) the Variable Account Value on the date of termination. (See
"Free-Look Period," Page 17.)

Premiums. The minimum amount which Providentmutual will normally accept as
an initial premium is $2,000. Subsequent premiums of not less than $100 each for
Non-Qualified Contracts and $50 each for Qualified Contracts may be paid under
the Contract. A Planned Periodic Premium schedule may also be selected. (See
"Premiums," Page 17.)

Allocation of Net Premiums. Net Premiums under a Contract will be
allocated, as designated by the Owner, to one or more of the Subaccounts of the
Variable Account or to the Guaranteed Account or to both. (The Guaranteed
Account is not offered in the states of Oregon and Washington.) Except for
Contracts sold to residents of states where the amount returned under the
free-look provision reflects investment performance, the portion of the initial
Net Premium which is to be allocated to the Variable Account will be allocated
to the Money Market Subaccount for a 15-day period. At the end of that period,
the amount in the Money Market Subaccount will be allocated to the chosen
Subaccounts. The assets of each Subaccount will be invested solely in a
corresponding Portfolio of a designated Fund. The Contract Account Value, except
for amounts in the Guaranteed Account, will vary according to the investment
performance of the Portfolios of the Fund in which the chosen Subaccounts are
invested. Interest will be credited to amounts in the Guaranteed Account at a
guaranteed minimum rate of 3% per year, or a higher current interest rate
declared by Providentmutual. (See "Allocation of Premiums," Page 17.)

Transfers. On or before the Maturity Date, the Owner may request a
transfer of all or part of the amount in a Subaccount or the Guaranteed Account
to another Subaccount or the Guaranteed Account subject to certain restrictions.

The minimum amount transferred each time is specified in the Contract
Schedule, or the entire amount in the Subaccount may be transferred, if less
than the specified amount. Only one transfer out of the Guaranteed Account is
allowed each Contract Year and must be made within 30 days of the Contract
Anniversary and is limited in amount.

Withdrawals. At any time before the earlier of the death of the Annuitant
or the Maturity Date, the Owner may withdraw part of the Cash Surrender Value
(Contract Account Value less any applicable Surrender Charge), subject to
certain limitations. (See "Withdrawals and Surrender," Page 20.)

Surrender. Upon Written Notice received at the Home Office on or before
the earlier of the death of the Annuitant or the Maturity Date, the Owner may
surrender the Contract and receive its Cash Surrender Value (Contract Account
Value less any applicable Surrender Charge). (See "Withdrawals and Surrender,"
Page 20.)

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<PAGE> 10

Death Benefit. If the Annuitant dies before the Maturity Date, the
Beneficiary will receive a death benefit. During the first seven Contract years,
the death benefit will be equal to the greater of: the premiums paid less any
withdrawn amounts (including applicable surrender charges) or the Contract
Account Value on the date of receipt of due proof of the Annuitant's death.
After the end of the seventh Contract Year, the death benefit will be equal to
the greatest of:

1. the Contract Account Value as of the end of the seventh Contract Year
plus subsequent premiums paid and less subsequent amounts withdrawn;
or

2. the Contract Account Value on the date of receipt due proof of the
Annuitant's death; or

3. the premiums paid less any withdrawn amounts (including applicable
Surrender Charges).

If the Owner dies before the Maturity Date, the Contract Account Value (or
if the owner is also the Annuitant, the death benefit) must generally be
distributed to the Beneficiary within five years after the date of the Owner's
death. (See "Death Benefit Before Maturity Date," Page 22.)

CHARGES AND DEDUCTIONS

The following charges and deductions are made in connection with the
Contract:

Surrender Charge (Contingent Deferred Sales Charge). No charge for sales
expenses is deducted from premiums at the time premiums are paid. However, if a
Contract has not been in force for seven full Contract Years, upon surrender or
for certain withdrawals a surrender charge is deducted from the amount of the
surrender or withdrawal.

For the first Contract Year, the charge is 7% of the amount withdrawn or
surrendered. Thereafter, the Surrender Charge decreases by 1% each subsequent
Contract Year. In no event will the total Surrender Charge on any one Contract
exceed 8 1/2% of the total gross premiums paid under the Contract. (See
"Surrender Charge," Page 25.)

Annual Administration Fee. On each Contract Anniversary prior to and
including the Maturity Date, and on the Maturity Date if it is not a Contract
Anniversary, Providentmutual deducts an Annual Administration Fee of $30 from
the Contract Account Value. The charge is also deducted upon surrender if the
surrender occurs on other than the Contract Anniversary. (See "Annual
Administration Fee," Page 26.)

Mortality and Expense Risk Charge. Providentmutual deducts a daily
mortality and expense risk charge to compensate it for assuming certain
mortality and expense risks. On or prior to the Maturity Date, the charge is
deducted from the assets of the Variable Account at an annual rate of 1.25%
(approximately 0.70% for mortality risk and 0.55% for expense risks). (See
"Mortality and Expense Risk Charge," Page 26.)

Asset-Based Administration Charge. Providentmutual deducts a daily
administration charge to compensate it for certain expense it incurs in
administration of the Contract. On or prior to the Maturity Date, the charge is
deducted from the assets of the Variable Account at an annual rate of 0.15%.
(See "Asset-Based Administration Charge," Page 26.)

Premium Taxes. If state or other premium taxes are applicable to a
Contract, they will be deducted, depending upon when such taxes are paid to the
taxing authority, either: (i) from premiums as they are received; or (ii) from
the Contract Account Value upon a withdrawal from or surrender of the Contract
or upon application of the Contract Account Value to a Payment Option. (See
"Premium Taxes," Page 27.)

Investment Advisory Fees and Other Expenses of the Funds. Because the
Variable Account purchases shares of the Funds, the net assets of each
Subaccount of the Variable Account will reflect the investment advisory fee
incurred by the corresponding Portfolio of the Funds. For each Portfolio, an
investment advisor is paid a daily fee by the Funds for its investment advisory
services. The advisory fees are based on the average daily net assets of the
Portfolio, and, as a result, the amount of the advisory fee will depend upon the
Portfolio and the assets of such Portfolio. Each Portfolio of the Fund in which
the Variable Account invests is also responsible for its own expenses.
Presently, certain fees and expenses of the Funds are waived and reimbursed.

7
<PAGE> 11

(See "Other Charges Including Investment Advisory Fees of the Funds," Page 26
and the Funds' Prospectuses.)

ANNUITY PROVISIONS

Maturity Date. On the Maturity Date, the Contract Account Value (less
applicable Premium Tax) will be applied under a Payment Option, unless the Owner
chooses to receive the Cash Surrender Value in a lump sum.

Payment Options. Payment Options are fixed, which means that each option
has a fixed and guaranteed amount to be paid during the annuity period. Payments
under these options do not depend upon the Variable Account's performance. The
Payment Options are: Life Annuity; Life Annuity with 10 Years Guaranteed; and
Alternate Income Option. (See "Payment Options," Page 27.)

FEDERAL TAX STATUS

Generally, a distribution (including a surrender, withdrawal or death
benefit payment) may result in adverse Federal income tax consequences. In
certain circumstances, a 10% penalty tax may apply. For a further discussion of
the Federal income status of Variable Annuity Contracts, see "Federal Tax
Status," Page 30.

CONDENSED FINANCIAL INFORMATION

The following condensed financial information is derived from the financial
statements of the Variable Account. The data should be read in conjunction with
the financial statements, related notes and other financial information included
in the Statement of Additional Information. See "Financial Statements," Page 35,
concerning financial statements contained in the Statement of Additional
Information.

8
<PAGE> 12

The table below sets forth certain information regarding the Subaccounts as
of December 1996.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
UNITS UNITS UNITS UNITS
UNIT VALUE OUTSTANDING UNIT VALUE OUTSTANDING UNIT VALUE OUTSTANDING UNIT VALUE OUTSTANDING
AS OF AS OF AS OF AS OF AS OF AS OF AS OF AS OF
SUBACCOUNT 12/31/96 12/31/96 12/31/95 12/31/95 12/31/94 12/31/94 12/31/93 12/31/93
- ----------------- ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MS Growth........ 775.34 246.94 657.63 -- 511.45 -- 506.46 --
MS Money Market.. 554.47 1,704.79 534.58 -- 513.30 -- 501.47 --
MS Bond.......... 553.59 152.88 545.35 -- 459.55 -- 493.74 --
MS Managed....... 653.55 47.59 592.07 -- 482.84 -- 498.70 --
MS Aggressive
Growth......... 697.07 101.81 584.65 -- 522.44 -- 529.79 --
MS
International... 651.04 119.04 595.43 -- 528.22 -- 534.25 --
Alger American
Small Cap...... 494.76 923.47 -- -- -- -- -- --
Fidelity High
Income......... 679.15 325.05 604.03 -- 507.88 -- 523.11 --
Fidelity Equity
Income......... 801.08 447.36 710.92 -- 533.64 -- 505.43 --
Fidelity
Growth......... 743.89 595.00 657.74 -- 492.73 -- 499.75 --
Fidelity
Overseas....... 525.59 252.42 -- -- -- -- --
Fidelity Inv.
Bond........... 527.62 273.20 -- -- -- -- -- --
Fidelity Asset
Man............ 641.70 72.94 567.88 -- 492.38 -- 531.69 --
Fidelity Index
500............ 831.78 586.49 686.84 -- 507.68 -- 509.51 --
Fidelity
Contrafund..... 718.85 301.49 601.00 -- -- -- -- --
Neuberger
Balance........ 523.20 80.00 -- -- -- -- -- --
Neuberger
Growth......... 524.02 203.87 -- -- -- -- -- --
Neuberger Lmt.
Mat. Bond...... 519.12 145.08 -- -- -- -- -- --
American Century
VP Capital
Appreciation... 483.82 120.38 -- -- -- -- -- --
Van Eck Worldwide
Bond........... 524.46 173.60 -- -- -- -- -- --
Van Eck Worldwide
Hard Assets.... 522.85 31.36 -- -- -- -- -- --
Van Eck Worldwide
Emerging
Mkts. ......... 524.75 133.66 -- -- -- -- -- --
</TABLE>

THE COMPANY, VARIABLE ACCOUNT AND FUNDS

PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA

The Contracts are issued by Providentmutual Life and Annuity Company of
America ("Providentmutual") which is a stock life insurance company originally
incorporated under the name of Washington Square Life Insurance Company in the
Commonwealth of Pennsylvania in 1958. The name of the Company was changed from
Washington Square to Providentmutual in 1991 and the Company was redomiciled as
a Delaware insurance company in December, 1992. Providentmutual is currently
licensed to transact life insurance business in 48 states and the District of
Columbia. As of December 31, 1996, Providentmutual had total assets of
approximately $962 million.

Providentmutual is a wholly-owned subsidiary of Provident Mutual Life
Insurance Company ("PMLIC"). PMLIC was chartered by the Commonwealth of
Pennsylvania in 1865 and at the end of 1996 had total assets of approximately
$7.1 billion. PMLIC and Providentmutual entered into a Support Agreement on
April 5, 1993 pursuant to which PMLIC agreed to ensure that Providentmutual's
capital and surplus will be maintained at certain levels and that
Providentmutual will maintain cash or cash equivalents in an amount sufficient
for the payment of benefits and other contractual claims. This agreement may not
be modified or terminated prior to January 1, 1998, and then only under certain
circumstances. Other than this Support

9
<PAGE> 13

Agreement, PMLIC is under no obligation to invest money in Providentmutual nor
is it in any way a guarantor of Providentmutual's contractual obligations or
obligations under the Contract.

Providentmutual is subject to regulation by the Insurance Department of the
State of Delaware as well as by the insurance departments of all other states
and jurisdictions in which it does business. Providentmutual submits annual
statements on its operations and finances to insurance officials in such states
and jurisdictions. The forms for the Contract described in this Prospectus are
filed with and (where required) approved by insurance officials in each state
and jurisdiction in which Contracts are sold.

THE PROVIDENTMUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT

The Providentmutual Variable Annuity Separate Account is a separate
investment account of Providentmutual, established by the Board of Directors of
Providentmutual on May 9, 1991, under Pennsylvania law. Because Providentmutual
later redomesticated as a Delaware Insurance Company, the Variable Account is
now subject to regulation by the Delaware Insurance Department. Providentmutual
has caused the Variable Account to be registered with the Securities and
Exchange Commission (the "SEC") as a unit investment trust under the investment
Company Act of 1940 (the "1940 Act"). Such registration does not involve
supervision by the SEC of the management or investment policies or practices of
the Variable Account.

The assets of the Variable Account are owned by Providentmutual. However,
these assets are held separate from other assets and are not part of
Providentmutual's General Account. The portion of the assets of the Variable
Account equal to the reserves or other contract liabilities of the Variable
Account will not be charged with liabilities that arise from any other business
Providentmutual conducts. Providentmutual may transfer to its General Account
any assets of the Variable Account which exceed the reserves and the Contract
liabilities of the Variable Account (which will always be at least equal to the
aggregate Contract value allocated to the Variable Account under the Contracts).

The income, gains or losses, whether or not realized, from the assets of
each Subaccount of the Variable Account are credited to or charged against that
Subaccount without regard to any other income, gains or losses. Providentmutual
may accumulate in the Variable Account the charge for expense and expense risks,
mortality gains and losses and investment results applicable to those assets
that are in excess of the net assets supporting the Contracts.

The Variable Account currently has thirty-three Subaccounts twenty-two of
which are available under the Contracts: Growth; Money Market; Bond; Managed;
Aggressive Growth; International; Alger Small Cap; Fidelity High Income;
Fidelity Equity-Income; Fidelity Growth; Fidelity Asset Manager; Fidelity
Contrafund; Fidelity Index 500; Fidelity Overseas; Fidelity Investment Grade
Bond; Neuberger & Berman Growth; Neuberger & Berman Limited Maturity Bond;
Neuberger & Berman Balanced; American Century VP Capital Appreciation; Van Eck
Worldwide Bond; Van Eck Worldwide Hard Assets; and Van Eck Worldwide Emerging
Markets. The assets of each Subaccount are invested exclusively in shares of a
corresponding Portfolio of a designated Fund.

THE FUNDS

The Variable Account currently invests in portfolios of ten series-type
mutual funds seven of which are available under the Contracts: Market Street
Fund, Inc.; Alger American Fund; Variable Insurance Products Fund; Variable
Insurance Products Fund II; Neuberger & Berman Advisers Management Trust;
American Century Variable Portfolios, Inc. and Van Eck Worldwide Insurance Trust
(collectively, the "Funds"). Each of these Funds are registered with the SEC
under the 1940 Act as an open-end diversified investment company. The SEC does
not, however, supervise the management or the investment practices and policies
of the Funds.

The assets of each Fund portfolio are separate from other portfolios of
that Fund and each portfolio has separate investment objective and policies. As
a result, each portfolio operates as a separate investment portfolio and the
investment performance of one portfolio has no effect on the investment
performance of any

10
<PAGE> 14

other portfolio. Some of the Funds may, in the future, create additional
portfolios. The investment experience of each of the Subaccounts of the Variable
Account depends on the investment performance of its corresponding portfolio.

Each of the Funds sells its shares to the Variable Account in accordance
with the terms of a participation agreement between the Fund and
Providentmutual. The termination provisions of those agreements vary. A summary
of these termination provisions may be found in the Statement of Additional
Information. Should an agreement between Providentmutual and a Fund terminate,
the Variable Account will not be able to purchase additional shares of that
Fund. In that event, Owners will no longer be able to allocate Account Values or
premium payments to Subaccounts investing in portfolios of that Fund.

Additionally, in certain circumstances, it is possible that a Fund or a
portfolio of a Fund may refuse to sell its shares to the Variable Account
despite the fact that the participation agreement between the Fund and
Providentmutual has not been terminated. Should a Fund or a portfolio of a Fund
decide not to sell its shares to Providentmutual, Providentmutual will not be
able to honor requests of Owners to allocate their Account Values or premium
payments to Subaccounts investing in shares of that Fund or portfolio.

Certain Subaccounts invest in portfolios that have similar investment
objectives and/or policies; therefore before choosing Subaccounts, carefully
read the individual prospectuses for the Funds along with this prospectus.

THE MARKET STREET FUND, INC.

The Growth, Money Market, Bond, Managed, Aggressive Growth and
International Subaccounts invest in shares of The Market Street Fund, Inc. The
Fund currently issues six "series" or classes of shares, each of which
represents an interest in a separate Portfolio within the Fund: the Growth
Portfolio, the Money Market Portfolio, the Bond Portfolio, the Managed
Portfolio, the Aggressive Growth Portfolio and the International Portfolio.
Shares of each Portfolio currently are purchased and redeemed by the
corresponding Subaccount.

The investment objectives of the Portfolios are set forth below.

The Growth Portfolio. This Portfolio seeks intermediate and long-term
growth of capital by investing in common stocks of companies believed to offer
above-average growth potential over both the intermediate and the long-term.
Current income is a secondary consideration.

The Money Market Portfolio. Money Market Portfolio seeks to provide
maximum current income consistent with capital preservation and liquidity by
investing in high-quality money market instruments.

The Bond Portfolio. Bond Portfolio seeks to generate a high level of
current income consistent with prudent investment risk by investing in a
diversified portfolio of marketable debt securities.

The Managed Portfolio. The Managed Portfolio seeks to realize as high a
level of long-term total rate of return as is consistent with prudent investment
risk by investing in stocks, bonds, money market instruments or a combination
thereof.

The Aggressive Growth Portfolio. The Aggressive Growth Portfolio seeks to
achieve a high level of long-term capital appreciation by investing in
securities of a diverse group of smaller emerging companies.

The International Portfolio. International Portfolio seeks long-term
growth of capital principally through investments in a diversified portfolio of
marketable equity securities of established non-United States companies.

The Growth, Money Market, Bond, Managed, and Aggressive Growth Portfolios
are advised by Sentinel Advisors Company; and the International Portfolio is
advised by Providentmutual Investment Management Company ("PIMC"). PIMC employs
The Boston Company Asset Management, Inc., to provide investment advisory
services in connection with the International Portfolio. Each of these advisers
is registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940.

11
<PAGE> 15

THE ALGER AMERICAN FUND

The Alger American Small Capitalization Subaccount of the Variable Account
invests in shares of the Alger American Small Capitalization Portfolio of The
Alger American Fund ("Alger American"). (Alger American has other investment
portfolios that are not offered to the Variable Account or under the Policies.)
Shares of the Alger American Small Capitalization Portfolio are purchased and
redeemed by the Variable Account at net asset value without a sales charge. The
Variable Account purchases shares of Alger American Small Capitalization
Portfolio from Alger American in accordance with a participation agreement
between Alger American and PMLIC. The termination provisions of this
participation agreement is described below.

Alger American Small Capitalization Portfolio seeks long-term capital
appreciation by focusing on small, fast-growing companies that offer innovative
products, services or technologies to a rapidly expanding marketplace.

A more extensive description of Alger American and the Alger American Small
Capitalization Portfolio, including the Portfolio's investment objectives and
policies, risks, expenses and other aspects of its operations are contained in
the Prospectus for Alger American which accompanies this Prospectus.

VARIABLE INSURANCE PRODUCTS FUND AND VARIABLE INSURANCE PRODUCTS FUND II

The Fidelity Equity-Income Subaccount, Fidelity Growth Subaccount, Fidelity
High Income Subaccount and Fidelity Overseas Subaccount of the Variable Account
invest in shares of the Equity-Income Portfolio, Growth Portfolio, High Income
Portfolio and Overseas Portfolio, respectively, of the VIP Fund. The Fidelity
Asset Manager Subaccount, Fidelity Contrafund Subaccount, Fidelity Index 500
Subaccount and Fidelity Investment Grade Bond Subaccount of the Variable Account
invest in shares of the Asset Manager Portfolio, Contrafund Portfolio, Index 500
Portfolio and Investment Grade Bond Portfolio, respectively, of the VIP Fund II.
(The VIP Fund and VIP Fund II have other investment Portfolios that are not
offered to the Variable Account or under the Policies.) Shares of these
Portfolios are purchased and redeemed by the Variable Account at net asset value
without a sales charge. The Variable Account purchases shares of the Portfolios
from the VIP Fund and the VIP Fund II in accordance with a participation
agreement between each Fund and PMLIC. The termination provisions of these
participation agreements are described below.

The investment objectives of the Portfolios of the VIP Fund and the VIP
Fund II in which the Subaccounts invest are set forth below. The investment
experience of each Subaccount depends upon the investment performance of the
corresponding Portfolio. There is no assurance that any Portfolio will achieve
its stated objective.

VIP Fund

Equity-Income Portfolio. This Portfolio seeks reasonable income by
investing primarily in income-producing equity securities. In choosing these
securities, the Equity-Income Portfolio considers the potential for capital
appreciation. The Portfolio's goal is to achieve a yield which exceeds the
composite yield of the securities comprising the Standard and Poor's 500
Composite Stock Price Index.

Growth Portfolio. This Portfolio seeks to achieve capital appreciation.
The Growth Portfolio normally purchases common stocks, although its investments
are not restricted to any one type of security. Capital appreciation may also be
found in other types of securities, including bonds and preferred stocks.

High Income Portfolio. This Portfolio seeks to obtain a high level of
current income by investing primarily in high-yielding, lower-rated,
fixed-income securities, while also considering growth of capital.

Overseas Portfolio. This Portfolio seeks long term growth of capital
primarily through investments in foreign securities. The Overseas Portfolio
provides a means for diversification by participating in companies and economies
outside of the United States.

12
<PAGE> 16

VIP Fund II

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

Contrafund Portfolio. This Portfolio seeks capital appreciation by
investing in companies believed to be undervalued due to an overly pessimistic
appraisal by the public.

Index 500 Portfolio. This Portfolio seeks to provide investment results
that correspond to the total return (i.e., the combination of capital changes
and income) of common stocks publicly traded in the United States. In seeking
this objective, the Index 500 Portfolio attempts to duplicate the composition
and total return of the Standard and Poor's 500 Composite Stock Price Index
while keeping transaction costs and other expenses low. The Portfolio is
designed as a long-term investment option.

Investment Grade Bond Portfolio. This Portfolio seeks as high a level of
current income as is consistent with the preservation of capital by investing in
a broad range of investment-grade fixed-income securities. The Portfolio will
maintain a dollar-weighted average portfolio maturity of ten years or less.

The Portfolios of the VIP Fund and VIP Fund II are managed by Fidelity
Management & Research Company ("FMR"). On behalf of the Asset Manager Portfolio,
FMR has entered into sub-advisory agreements with Fidelity Management & Research
(U.K.) Inc. ("FMR (U.K.)") and Fidelity Management & Research (Far East) Inc.
("FMR Far East"), pursuant to which these entities provide research and
investment recommendations with respect to companies based outside the United
States. FMR (U.K.) primarily focuses on companies based in Europe while FMR Far
East focuses primarily on companies based in Asia and the Pacific Basin.

Each Portfolio utilizes Fidelity Investments Institutional Operations
Company ("FIIOC"), an affiliate of FMR, to maintain the master accounts of the
participating insurance companies. Under the transfer agent agreement with
FIIOC, each Portfolio pays fees based on the type, size, and number of accounts
in each Portfolio and the number of transactions made by shareholders of each
Portfolio.

Each Portfolio also has an agreement with Fidelity Service Co. ("Service"),
an affiliate of FMR under which each Portfolio pays Service to calculate its
daily share prices and to maintain the portfolio and general accounting records
of each Portfolio and to administer each Portfolio's securities lending program.

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST

The Neuberger & Berman Balanced Subaccount, Neuberger & Berman Growth
Subaccount and Neuberger & Berman Limited Maturity Bond Subaccount of the
Variable Account invest in shares of the Balanced Portfolio, Growth Portfolio
and Limited Maturity Bond Portfolio, respectively, of the Neuberger & Berman
Advisers Management Trust ("AMT"). (AMT has other investment portfolios that are
not offered to the Variable Account or under the Policies.) Shares of these
Portfolios are purchased and redeemed by the Variable Account at net asset value
without a sales charge. The Variable Account purchases shares of the Portfolios
from AMT in accordance with a participation agreement between AMT and
Providentmutual. The termination provisions of these participation agreements
are described below.

Each Portfolio of AMT invests all of its net investable assets in its
corresponding Series (each, a "Series") of Advisers Managers Trust ("Managers
Trust"), an open-end management investment company. Each Series invests in
securities in accordance with an investment objective, policies and limitations
identical to those of its corresponding Portfolio. This "master/feeder fund"
structure is different from that of many other investment companies which
directly acquire and manage their own portfolios of securities. For more
information regarding this structure, see the prospectus for AMT.

In that the investment objective of each Portfolio matches that of its
corresponding Series, the following describes the investment objective of each
Series underlying the Portfolio of AMT in which the Subaccounts will invest. The
investment experience of each Subaccount depends upon the investment performance
of its corresponding Portfolio. There is no assurance that any Portfolio will
achieve its stated objective.

13
<PAGE> 17

Balanced Portfolio. The Series corresponding to this Portfolio seeks
long-term capital growth and reasonable current income without undue risk to
principal through investment of a portion of its assets in common stocks and a
portion of its assets in debt securities.

Growth Portfolio. The Series corresponding to this Portfolio seeks capital
appreciation without regard to income through investments in common stocks of
companies that the investment adviser believes will have the maximum potential
for long-term capital appreciation.

Limited Maturity Bond Portfolio. The Series corresponding to this
Portfolio seeks the highest current income consistent with low risk to principal
and liquidity through investment in a diversified portfolio of fixed and
variable debt securities with a short to intermediate term.

The Investment Adviser for the Series of Managers Trust corresponding to
the Balanced, Growth and Limited Maturity Bond Portfolios of AMT is Neuberger &
Berman Management, Incorporated. The Investment Adviser retains Neuberger &
Berman, without cost to AMT, as sub-adviser to furnish it with investment
recommendations and research information.

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

The American Century VP Capital Appreciation Subaccount of the Variable
Account invests in shares of the American Century VP Capital Appreciation
Portfolio of the American Century Variable Portfolios, Inc. ("American
Century"). (American Century has other investment portfolios that are not
offered to the Variable Account or under the Contracts.) Shares of the American
Century Growth Portfolio are purchased and redeemed by the Variable Account at
net asset value without a sales charge. The Variable Account purchases shares of
American Century Growth Portfolio from American Century in accordance with a
participation agreement between American Century and Providentmutual. The
termination provisions of these participation agreements are described below.

American Century VP Capital Appreciation Portfolio seeks capital growth by
investing primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation. There is no assurance that
American Century VP Capital Appreciation Portfolio will achieve its stated
objective.

The investment adviser for the American Century VP Capital Appreciation
Portfolio is Investors Research Corporation ("Investors Research").

VAN ECK WORLDWIDE INSURANCE TRUST

The Van Eck Worldwide Bond, the Van Eck Worldwide Hard Assets and the Van
Eck Worldwide Emerging Markets Subaccounts of the Variable Account invest in
shares of the Van Eck Worldwide Bond, the Van Eck Worldwide Hard Assets and the
Van Eck Worldwide Emerging Markets Portfolios, respectively, of the Van Eck
Worldwide Insurance Trust ("Van Eck Trust"). Shares of the Van Eck Worldwide
Bond Portfolio, the Worldwide Hard Assets Portfolio and Worldwide Emerging
Markets Portfolio are purchased and redeemed by the Variable Account at net
asset value without a sales charge. The Variable Account purchases shares of the
Portfolio from Van Eck Trust in accordance with a participation agreement
between the Van Eck Trust and Providentmutual. The termination provisions of
this participation agreement are described below.

The investment objectives of the Portfolios of Van Eck Trust are set forth
below. The investment experience of each Subaccount depends upon the investment
performance of its corresponding Portfolio. There is no assurance that these
Portfolios will achieve their stated objectives.

Van Eck Worldwide Hard Assets Portfolio seeks long-term capital
appreciation by investing primarily in "Hard Assets Securities." Hard Assets
Securities include equity securities of Hard Asset Companies and securities,
including structured notes, whose value is linked to the price of a Hard Asset
commodity or a commodity index. Hard Asset Companies include companies that are
directly or indirectly engaged to a significant extent in the exploration,
development, production or distribution of one or more of the following

14
<PAGE> 18

(together, Hard Assets); (i) precious metals, (ii) ferrous and non-ferrous
metals, (iii) gas, petroleum, pretochemicals or other hydrocarbons, (iv) forest
products, (v) real estate and (vi) other basic non-agricultural commodities.
Income is a secondary consideration.

Van Eck Worldwide Bond Portfolio seeks high total return through a flexible
policy of investing globally, primarily in debt securities. Total return is
comprised of current income and capital appreciation. The Portfolio attempts to
achieve its investment objective by taking advantage of investment opportunities
in the United States as well as in other countries throughout the world where
opportunities may be more rewarding and may emphasize either component of total
return.

Van Eck Worldwide Emerging Markets Portfolio seeks long-term capital
appreciation by investing primarily in equity securities in emerging markets
around the world.

The investment adviser for the Van Eck Worldwide Bond, the Worldwide Hard
Assets and the Worldwide Emerging Markets Portfolios is Van Eck Associates
Corporation ("Van Eck Associates"). Peregrine Asset Management (Hong Kong)
Limited ("PAM") serves as sub-investment adviser to the Van Eck Worldwide
Emerging Markets Portfolio pursuant to a sub-investment advisory agreement with
Van Eck Associates.

THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
FUNDS WILL BE ACHIEVED.

More detailed information concerning the investment objectives, policies
and restrictions pertaining to the Funds and the expenses, investment advisory
services and charges and the risks attendant to investing in the Portfolios and
other aspects of their operations can be found in the current Prospectus for
each Fund which accompany this prospectus and the current Statement of
Additional Information for each Fund. The Fund prospectuses should be read
carefully before any decision is made concerning the allocation of premium
payments or transfers among the Subaccounts.

You should note that, except for the Portfolios of the Market Street Fund,
Inc., not all of the Portfolios described in the Prospectuses for the Funds are
available with the Contract. Moreover, Providentmutual cannot guarantee that
each Fund will always be available for its variable annuity contracts, but in
the unlikely event that a Fund is not available, Providentmutual will do
everything reasonably practicable to secure the availability of a comparable
fund. Shares of each Portfolio are purchased and redeemed at net asset value,
without a sales charge.

Providentmutual has entered into agreements with the investment advisers of
several of the Funds pursuant to which each such investment adviser will pay
Providentmutual a servicing fee based upon an annual percentage of the average
aggregate net assets invested by Providentmutual on behalf of the Variable
Account. These agreements reflect administrative services provided to the Funds
by Providentmutual. Payments of such amounts by an adviser will not increase the
fees paid by the Funds or their shareholders.

RESOLVING MATERIAL CONFLICTS

The Market Street Fund presently serves as an investment medium for
variable life policies and variable annuity contracts issued by PMLIC and
Providentmutual. At some later date that Fund may serve as an investment medium
for other variable life policies and variable annuity contracts issued by PMLIC
and may be made available as an investment medium for variable contracts issued
by other insurance companies, including affiliated and unaffiliated companies of
PMLIC.

The VIP Fund and VIP Fund II are also used as investment vehicles for
variable life insurance policies and variable annuity contracts issued by PMLIC
and Providentmutual. Alger, AMT, American Century and Van Eck Trust are used as
investment vehicles for variable life insurance policies issued by PMLIC and
Providentmutual. In addition, the Funds, other than Market Street Fund, are used
by registered separate accounts of insurance companies, other than PMLIC or its
affiliates, offering variable annuity contracts and variable life insurance
policies.

15
<PAGE> 19

In addition, certain funds may sell shares to certain retirement plans
qualifying under Section 401 of the Code (including cash or deferred
arrangements under Section 401(k) of the Code). As a result, there is a
possibility that a material conflict may arise between the interests of Owners
of policies generally, or certain classes of Owners, and such retirement plans
or participants in such retirement plans.

Providentmutual currently does not foresee any disadvantages to Owners
resulting from the Funds selling shares to fund products other than
Providentmutual contracts or to retirement plans. However, there is a
possibility that a material conflict may arise between Owners whose policy
values are allocated to the Variable Account and the owners of variable life
insurance policies and variable annuity contracts issued by such other companies
whose values are allocated to one or more other separate accounts investing in
any one of the Funds. In the event of a material conflict, Providentmutual will
take any necessary steps, including removing the Variable Account from that
Fund, to resolve the matter. The Board of Directors of each Fund will monitor
events in order to identify any material conflicts that possibly may arise and
determine what action, if any, should be taken in response to those events or
conflicts. See each individual Fund prospectus for more information.

A full description of the Portfolios of the Funds, their investment
objectives and policies, their risks, expenses, and all other aspects of their
operation is contained in the accompanying Prospectuses for the Funds, which
should be read carefully together with this Prospectus before investing.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS

Providentmutual reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares that are held in
the Variable Account or that the Variable Account may purchase. If the shares of
a Portfolio of the Fund are no longer available for investment or if in
Providentmutual's judgment further investment in any Portfolio should become
inappropriate in view of the purposes of the Variable Account, Providentmutual
may redeem the shares, if any, of that Portfolio and substitute shares of
another registered open-end management company. Providentmutual will not
substitute any shares attributable to a Contract's interest in a Subaccount of
the Variable Account without notice and prior approval of the SEC and state
insurance authorities, to the extent required by the 1940 Act or other
applicable law.

Providentmutual also reserves the right to establish additional Subaccounts
of the Variable Account, each of which would invest in shares corresponding to a
new Portfolio of the Fund or in shares of another investment company having a
specified investment objective. Subject to applicable law and any required SEC
approval, Providentmutual may, in its sole discretion, establish new Subaccounts
or eliminate one or more Subaccounts if marketing needs, tax considerations or
investment conditions warrant. Any new Subaccounts may be made available to
existing Contract Owners on a basis to be determined by Providentmutual.

If any of these substitutions or charges are made, Providentmutual may by
appropriate endorsement change the Contract to reflect the substitution or
change. If Providentmutual deems it to be in the best interest of Contract
Owners and Annuitants, and subject to any approvals that may be required under
applicable law, the Variable Account may be operated as a management company
under the 1940 Act, it may be deregistered under that Act if registration is no
longer required, or it may be combined with other Providentmutual separate
accounts.

DESCRIPTION OF ANNUITY CONTRACT

ISSUANCE OF A CONTRACT

In order to purchase a Contract, application must be made to
Providentmutual through a licensed representative of Providentmutual, who is
also a registered representative of 1717 Capital Management Company ("1717") or
a broker-dealer having a selling agreement with 1717 or a broker/dealer having a
selling agreement with such broker/dealer. Contracts may be sold to or in
connection with retirement plans which to not qualify for special tax treatment
(Non-Qualified Plans) as well as retirement plans that qualify for special tax
treatment under the Internal Revenue Code (Qualified Plans).

16
<PAGE> 20

PREMIUMS

The minimum initial premium which Providentmutual will normally accept is
$2,000. Subsequent premium payments may be paid under the Contract at any time
during the Annuitant's lifetime and before the Maturity Date and must be for at
least $100 each for Non-Qualified Contracts and $50 each for Qualified
Contracts.

At the time of application, a Planned Periodic Premium schedule may be
selected based on a periodic billing mode of annual, semi-annual, or quarterly
payment. The Owner will receive a premium reminder notice at the specified
interval. The Owner may change the Planned Periodic Premium frequency and
amount. Also, under the Automatic Payment Plan, the Owner can select a monthly
payment schedule pursuant to which premium payments will be automatically
deducted from a bank account or other source rather than being "billed."

FREE-LOOK PERIOD

The Contract provides for an initial "free-look" period. The Owner has the
right to return the Contract within 10 days after such Owner receives the
Contract. When Providentmutual receives the returned Contract at its Home
Office, it will be canceled and Providentmutual will refund to the Owner an
amount equal to the greater of: (a) the premiums paid under the Contract; and
(b) the sum of (i) the Contract Account Value as of the earlier of the date the
returned Contract is received by Providentmutual at its Home Office or by the
Providentmutual representative through whom the Contract was purchased; plus
(ii) the amount of any charges deducted from the Variable Account except the
Mortality and Expense Risk Charge, Asset-Based Administration Charge and the
Funds' advisory fees and operating expenses. For contracts sold to residents of
certain states (i.e., Arizona, Minnesota and Pennsylvania), the amount returned
to the Owner will be equal to the sum of: (i) the difference between the
premiums paid, including any contract fees and charges, and the amounts, if any,
allocated to the Variable Account under the Contract; and (ii) the Variable
Account Value (or, in Pennsylvania, if there is no Variable Account Value, the
reserve for the Contract on the date the Contract is cancelled attributable to
the amounts allocated to the Variable Account.)

ALLOCATION OF PREMIUMS

If the application for a Contract is properly completed and is accompanied
by all the information necessary to process it, including payment of the initial
premium, the initial Net Premium (premium less deduction of any required premium
tax) will be allocated between the Money Market Subaccount and the Guaranteed
Account within two business days of receipt of such premium by Providentmutual
at its Home Office. If the application is not properly completed,
Providentmutual will retain the premium for up to five business days while it
attempts to complete the application. If the application is not complete at the
end of the 5-day period, Providentmutual will inform the applicant of the reason
for the delay and the initial premium will be returned immediately, unless the
applicant specifically consents to Providentmutual retaining the premium until
the application is complete. Once the application is complete, the initial Net
Premium will be allocated within two business days.

At the time of application, the Owner selects how the initial Net Premium
is to be allocated among the Subaccounts and the Guaranteed Account. When, as
described above, Net Premium is allocated, the portion of the initial Net
Premium which is to be allocated to the Subaccounts of the Variable Account will
be allocated to the Money Market Subaccount for a 15-day period. After the
expiration of such 15-day period, the amount in the Money Market Subaccount will
be allocated to the chosen Subaccounts based on the proportion that the
allocation percentage for such Subaccount bears to the sum of the Subaccount
allocation percentages. Any subsequent Net Premiums will be allocated at the end
of the Valuation Period in which the subsequent premium is received by
Providentmutual in the same manner, unless the allocation percentages are
changed. Premiums will be allocated in accordance with the allocation schedule
in effect at the time the premium payment is received.

For contracts sold to residents of states where the amount of the premium
returned during the "Free-Look Period" as described above reflects the
investment performance of the Variable Account, (i.e., Arizona,

17
<PAGE> 21

Minnesota and Pennsylvania) the portion of the initial Net Premium for such
Contract which is to be allocated to the Variable Account will not automatically
be allocated to the Money Market Subaccount for the 15-day period but instead
will be credited to the chosen Subaccounts of the Variable Account within 2 or 5
business days of receipt of such premium.

The values of the Subaccounts of the Variable Account will vary with the
investment experience of the Subaccounts, and the Owner bears the entire
investment risk. Owners should periodically review their allocation schedule for
premiums in light of market conditions and the Owner's overall financial
objectives.

VARIABLE ACCOUNT VALUE

The Variable Account Value will reflect the investment experience of the
chosen Subaccounts of the Variable Account, any premiums paid, any withdrawals,
any surrenders, any transfers, and any charges assessed in connection with the
Contract. There is no guaranteed minimum Variable Account Value, and, because a
Contract's Variable Account Value on any future date depends upon a number of
variables, it cannot be predetermined.

Calculation of Variable Account Value. The Variable Account Value is
determined on each Valuation Date. The value will be the aggregate of the values
attributable to the Contract in each of the Subaccounts, determined for each
Subaccount by multiplying the Subaccount's Unit Value on the relevant Valuation
Date by the number of Subaccount units allocated to the Contract.

Determination of Number of Units. Any amounts allocated to the Subaccounts
will be converted into units of the Subaccount. The number of units to be
credited to the Contract is determined by dividing the dollar amount being
allocated to the Subaccount by the Unit Value for that Subaccount at the end of
the Valuation Period during which the amount was allocated. The number of units
in any Subaccount will be increased at the end of the Valuation Period by any
premiums allocated to the Subaccount during the current Valuation Period and by
any transfers to the Subaccount from another Subaccount or from the Guaranteed
Account during the current Valuation Period. The number of units in any
Subaccount will be decreased at the end of the Valuation Period by any amounts
transferred from the Subaccount to another Subaccount or the Guaranteed Account
during the current Valuation Period and any surrender charge upon a withdrawal
or surrender and the Annual Administration Fee assessed in connection with the
Contract during the current Valuation Period.

Determination of Unit Value. The Unit Value for each Subaccount's first
Valuation Period is set at $500. The Unit Value for a Subaccount is calculated
for each subsequent Valuation Period by multiplying the Unit Value at the end of
the immediately preceding Valuation Period by the Net Investment Factor for the
Valuation Period for which the value is being determined.

Net Investment Factor. The Net Investment Factor is an index that measures
the investment performance of a Subaccount from one Valuation Period to the
next. Each Subaccount has its own Net Investment Factor, which may be greater or
less than one. The Net Investment Factor for each Subaccount for a Valuation
Period equals 1 plus the fraction obtained by dividing (a) by (b) where:

(a) is the net result of:

1. the investment income, dividends, and capital gains, realized or
unrealized, credited during the current Valuation Period; plus

2. any amount credited or released from reserves for taxes
attributable to the operation of the Subaccount; minus

3. the capital losses, realized or unrealized, charged during the
current Valuation Period; minus

4. any amount charged for taxes or any amount set aside during the
Valuation Period as a reserve for taxes attributable to the
operation or maintenance of the Subaccount; minus

5. the amount charged for mortality and expense risk for that
Valuation Period; minus

18
<PAGE> 22

6. the amount charged for administration for that Valuation Period;
and

(b) is the value of the assets in the Subaccount at the end of the
preceding Valuation Period, adjusted for allocations and transfers to and
withdrawals and transfers from the Subaccount occurring during that
preceding Valuation Period.

TRANSFER PRIVILEGE

Before the Maturity Date, an Owner may transfer all or a part of an amount
in the Subaccount(s) to another Subaccount(s) or to the Guaranteed Account, or
transfer a part of an amount in the Guaranteed Account to the Subaccount(s),
subject to these general restrictions and the additional restrictions below. The
minimum transfer amount must be the lesser of $500 or the entire amount in that
Subaccount or the Guaranteed Account. A transfer request that would reduce the
amount in a Subaccount or the Guaranteed Account below $500 may, at
Providentmutual's discretion, be treated as a transfer request for the entire
amount in that Subaccount or the Guaranteed Account.

The transfer will be made on the day Written Notice requesting such
transfer is received by Providentmutual. There is no limit on the number of
transfers which can be made between Subaccounts or to the Guaranteed Account.
However, only one transfer may be made from the Guaranteed Account each Contract
Year (See "Transfers from Guaranteed Account", Page 24).

Telephone Transfers. Transfers will be made based upon instructions given
by telephone, provided the appropriate election has been made at the time of
application or proper authorization is provided to Providentmutual.
Providentmutual reserves the right to suspend telephone transfer privileges at
any time, for any class of Contracts, for any reason.

Providentmutual will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and if it follows such
procedures it will not be liable for any losses due to unauthorized or
fraudulent instructions. Providentmutual, however, may be liable for such losses
if it does not follow those reasonable procedures. The procedures
Providentmutual will follow for telephone transfers include requiring some form
of personal identification prior to acting on instructions received by
telephone, providing written confirmation of the transaction and making a
tape-recording of the instructions given by telephone.

Automatic Asset Rebalancing. Automatic Asset Rebalancing is a feature
which, if elected, authorizes periodic transfers of Variable Account Values
among the Subaccounts in order to achieve a particular percentage allocation of
Variable Account Values among such Subaccounts. Such percentage allocations must
be in whole numbers and must allocate amounts only among the Subaccounts. No
amounts will be transferred to the Guaranteed Account as a part of Automatic
Asset Rebalancing. The percentage allocation of your Contract Account Value for
rebalancing will be based on your premium allocation instructions in effect at
the time of rebalancing. Any allocation instructions that you give us that
differ from your then current allocation instructions will be treated as a
request to change such allocation instructions.

Once elected Automatic Asset Rebalancing begins on the first quarterly or
annual anniversary following election. You may change or terminate Automatic
Asset Rebalancing by written instruction to Provident Mutual, or by telephone if
you have previously authorized us to take telephone instructions. Automatic
Asset Rebalancing transfers do not count as one of the 12 free transfers
available during any Contract Year. Provident Mutual reserves the right to
suspend Automatic Asset Rebalancing at any time for any class of contracts for
any reason upon written notice to you.

Dollar Cost Averaging. Dollar Cost Averaging is a program which, if
elected, enables the Owner of a Contract to systematically and automatically
transfer, on a monthly basis, specified dollar amounts from a designated
Subaccount to the Contract's other Subaccounts. By allocating on a regularly
scheduled basis as opposed to allocating the total amount at one particular
time, an Owner may be less susceptible to the impact of market fluctuations.
Providentmutual, however, makes no guarantee that Dollar Cost Averaging will
result in a profit or protect against loss.

19
<PAGE> 23

Dollar Cost Averaging may be elected for a period from 6 to 36 months. To
qualify for Dollar Cost Averaging, the following minimum amount must be
allocated to the designated Subaccount: 6 months -- $3,000; 12 months -- $6,000;
24 months -- $12,000; 36 months -- $18,000. At least $500 must be transferred
from the designated Subaccount each month. The amount required to be allocated
to the designated Subaccount can be made an initial or subsequent investment or
by transferring amounts into the designated Subaccount from the other
Subaccounts or from the Guaranteed Account (which may be subject to certain
restrictions). (See "Transfers from Guaranteed Account," Page 24.)

Election into this program may occur at the time of application by
completing the authorization on the application or at any time after the
Contract is issued by properly completing the election form and returning it to
the Company by the beginning of the month and ensuring that the required minimum
amount is in the designated Subaccount, Dollar Cost Averaging transfers may not
commence until the later of (a) 30 days after the Contract Date and (b) five
days after the end of the free look period.

Once elected, transfers from the designated Subaccount will be processed
monthly until the number of designated transfers have been completed, or the
value of the designated Subaccount is completely depleted, or the Owner
instructs Providentmutual in writing to cancel the monthly transfers.

Providentmutual reserves the right to discontinue offering automatic
transfers upon 30 days' written notice to the Owner.

WITHDRAWALS AND SURRENDER

Withdrawals. At any time before the earlier of the death of the Annuitant
or the Maturity Date, an Owner may withdraw part of the Cash Surrender Value.
The minimum amount which may be withdrawn is $500; the maximum amount is that
which would leave a cash surrender value of less than $2,000. A withdrawal
request which would reduce the amount in a Subaccount or in the Guaranteed
Account below $500 will be treated as a request for full withdrawal of the
amount in that Subaccount or the Guaranteed Account. Providentmutual will
withdraw the amount requested from the Contract Account Value on the day Written
Notice for the withdrawal is received at its Home Office. Any applicable
Surrender Charge will be deducted from the remaining Contract Account Value.
(See "Surrender Charge," Page 25.)

The Owner may specify the amount to be withdrawn from certain Subaccounts
or the Guaranteed Account for the withdrawal. If the Owner does not so specify
or the amount in the designated Subaccounts or Guaranteed Account is inadequate
to comply with the request, the withdrawal will be made from each Subaccount and
the Guaranteed Account based on the proportion that the value is such account
bears to the Contract Account Value immediately prior to the withdrawal.

A withdrawal may have adverse Federal income tax consequences. (See
"Taxation of Annuities," Page 31.)

Systematic Withdrawals. The Systematic Withdrawal Plan enables the Owner
of a Contract to pre-authorize a periodic exercise of the withdrawal right
described in the Contract. The Owner may elect the plan at the time of
application by completing the authorization on the application form and making a
minimum initial premium payment of $15,000 or by properly completing the
election form after a Contract is issued if it has a Contract Account Value of
$15,000. Certain Federal income tax consequences may apply to systematic
withdrawals from the Contract and the Owner should, therefore, consult with his
or her tax advisor before requesting any Systematic Withdrawal Plan.

Contract Owners entering into the plan instruct Providentmutual to withdraw
a level dollar amount from the Contract on a monthly or quarterly basis.
Distributions will begin on the monthly or quarterly anniversary following the
receipt of the request. The minimum distribution requested must be for at least
$100 monthly or at least $300 quarterly. The maximum amount which can be
withdrawn under the plan each year is 10% of the Contract Account Value as of
the beginning of the Contract Year in which the plan is elected or 10% of the
initial premium paid if elected at the time of application. Providentmutual will
notify the Owner of the total amount to be withdrawn in a subsequent Contract
Year will exceed 10% of the Contract Account Value as of the beginning of such
Contract Year. Unless the Owner instructs Providentmutual to reduce the
withdrawal

20
<PAGE> 24

amount for that year so that it does not exceed the 10% limit, Providentmutual
will continue to process withdrawals for the designated amount. Once the amount
of the withdrawals exceeds the 10% limit, Providentmutual will deduct the
applicable Surrender Charge from the remaining payments made during that
Contract Year. (See "Surrender Charge," Page 24.)

Providentmutual will pay the Owner the amount requested each month or
quarter and cancel units equal to the amount withdrawn from the Subaccounts and
the Guaranteed Account based on the proportion that the value in such Subaccount
or Guaranteed Account bears to the Contract Account Value immediately prior to
the withdrawal. In the event that the amount to be withdrawn exceeds the
Subaccount's Value, Providentmutual will process the withdrawal for the amount
available and will contact the Owner for further instructions.

Each payment under the Systematic Withdrawal Plan of less than 10% of the
Contract Account Value as of the beginning of such Contact Year is not subject
to a Surrender Charge. However, notwithstanding the rules ordinarily governing
the imposition of a Surrender Charge (See "Surrender Charge," Page 24), any
other withdrawal in a year when the Systematic Withdrawal Plan has been utilized
will be subject to the Surrender Charge. If an additional withdrawal is made
from a Contract participating in the plan, systematic withdrawals will
automatically terminate and may only be reinstated on or after the beginning of
the next Contract Year pursuant to a new request.

Systematic withdrawals may be discontinued by the Owner at any time upon
written request to Providentmutual. Providentmutual reserves the right to
discontinue offering systematic withdrawals upon 30 days' written notice to
Owners.

Surrender. At any time before the earlier of the death of the Annuitant or
the Maturity Date, the Owner may request a surrender of the Contract for its
Cash Surrender Value (Contract Account Value less any applicable Surrender
Charge). The proceeds paid to the Contract Owner will equal the amount of the
surrender less the Surrender Charge and any withholding or premium taxes. (See
"Surrender Charge," Page 24.) The Cash Surrender Value will be determined on the
date Written Notice of Surrender and the Contract are received at
Providentmutual's Home Office. The Cash Surrender Value will be paid in a lump
sum unless the Owner requests payment under a Payment Option. A surrender may
have adverse Federal income tax consequences. (See "Taxation of Annuities." Page
31.)

Restrictions on Distributions from Certain Contracts. There are certain
restrictions on surrenders of and withdrawals from Contracts used as funding
vehicles for Internal Revenue Code 403(b) retirement plans. Section 403(b)(11)
of the Internal Revenue Code of 1986, as amended, restricts the distribution
under Section 403(b) annuity contracts of: (i) elective contributions made in
years beginning after December 31, 1988; (ii) earnings on those contributions;
and (iii) earnings in such years on amounts held as of the last year beginning
before January 1, 1989. Distributions of those amounts may only occur upon the
death of the employee, attainment of age 59 1/2, separation from service,
disability, or financial hardship. In addition, income attributable to elective
contributions may not be distributed in the case of hardship.

Contract Termination. Providentmutual may end this Contract and pay the
Cash Surrender Value to the Owner if, before the Maturity Date, all of these
events simultaneously exist;

1. no premiums have been paid for at least two years;

2. the Contract Account Value is less than $2,000; and

3. the total premiums paid, less any partial withdrawals, is less than
$2,000.

Providentmutual will mail the Owner a notice of its intention to end the
Contract at least six months in advance. The Contract will automatically
terminate on the date specified in the notice, unless Providentmutual receives
an additional premium payment before the termination date specified in the
notice. This additional premium payment must be for at least the required
minimum amount. (Termination of the Contract under this provision is not
permitted in New Jersey.)

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<PAGE> 25

DEATH BENEFIT BEFORE MATURITY DATE

Death of Annuitant. If the Annuitant dies before the Maturity Date,
Providentmutual will pay the death benefit under the Contract to the
Beneficiary. During the first seven Contract Years, the death benefit is equal
to the greater of: the premiums paid, less any withdrawals (including applicable
surrender charges); or the Contract Account Value on the date Providentmutual
receives due proof of Annuitant's death. After the end of the seventh Contract
Year, the death benefit is equal to the greatest of:

1. the Contract Account Value as of the end of the seventh Contract Year
plus subsequent premiums paid and less subsequent amounts withdrawn;
or

2. the Contract Account Value on the date Providentmutual receives due
proof of the Annuitant's death; or

3. the premiums paid, less any withdrawals (including applicable
Surrender Charges).

There is no death benefit payable if the Annuitant dies after the Maturity
Date. The proceeds will be paid to the Beneficiary in a lump sum unless the
Owner or Beneficiary elects a Payment Option. If the Annuitant is the Owner, the
proceeds must be distributed in accordance with the rules set forth below in
"Death of Owner" for the death of an Owner before the Maturity Date.

Death of Owner. If an Owner dies before the Maturity Date, Federal tax law
requires (for a Non-Qualified Contract) that the Contract Account Value (or if
the Owner is the Annuitant, the proceeds payable upon the Annuitant's death) be
distributed to the Beneficiary within five years after the date of the Owner's
death. If an Owner dies on or after the Maturity Date, any remaining payments
must be distributed at least as rapidly as under the Payment Option in effect on
the date of such Owner's death.

These distribution requirements will be considered satisfied as to any
portion of the proceeds payable to or for the benefit of a designated
Beneficiary, and which is distributed over the life (or a period not exceeding
the life expectancy) of that Beneficiary, provided that such distributions begin
within one year of the Owner's death. However, if the Owner's spouse is the
designated Beneficiary, the Contract may be continued with such surviving spouse
as the new Owner. If the Contract has joint owners, the surviving joint owner
will be the designated Beneficiary. Joint owners must be husband and wife as of
the Contract Date.

If the Owner is not an individual, the Annuitant, as determined in
accordance with Section 72(s) of the Internal Revenue Code, will be treated as
Owner for purposes of these distribution requirements, and any changes in the
Annuitant will be treated as the death of the Owner.

Other rules may apply to a Qualified Contract.

PROCEEDS ON MATURITY DATE

The maturity Date is selected by the Owner, subject to Providentmutual's
approval and state law.

On the Maturity Date, the proceeds will be applied under the Life Annuity
with Ten Year Certain Payment Option, unless the Owner chooses to have the
proceeds paid under another Payment Option or in a lump sum. If a Payment Option
is elected, the amount which will be applied is the Contract Account Value; if a
lump sum payment is chosen, the amount paid will be the Cash Surrender Value on
the Maturity Date.

The Maturity Date may be changed subject to these limitations: the Owner's
Written Notice must be received at the Home Office at least 30 days before the
current Maturity Date; the requested Maturity Date must be a date that is at
least 30 days after receipt of the Written Notice; and the requested Maturity
Date must be not later than the first day of the month after the Annuitant's
90th birthday, or any earlier date required by law.

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<PAGE> 26

PAYMENTS

Any withdrawal, Cash Surrender Value, or death benefit will usually be paid
within seven days of receipt of written request or receipt and filing of due
proof of death. However, payments may be postponed if:

1. the New York Stock Exchange is closed, other than customary weekend and
holiday closings, or trading on the exchange is restricted as determined
by the SEC; or

2. the SEC permits by an order the postponement for the protection of
policyowners; or

3. the SEC determines that an emergency exists that would make the disposal
of securities held in the Variable Account or the determination of the
value of the Variable Account's net assets not reasonably practicable.

If a recent check or draft has been submitted, Providentmutual has the
right to defer payment until such check or draft has been honored.

Providentmutual has the right to defer payment of any withdrawal, cash
surrender, or transfer from the Guaranteed Account for up to six months from the
date of receipt of Written Notice for a withdrawal, surrender, or transfer. If
payment is not made within 30 days after receipt of documentation necessary to
complete the transaction, or such shorter period required by a particular
jurisdiction, interest will be added to the amount paid from the date of receipt
of documentation at 3% or such higher rate required for a particular state.

MODIFICATION

Upon notice to the Owner, Providentmutual may modify the Contract, but only
if such modification:

1. is necessary to make the Contract or the Variable Account comply with
any law or regulation issued by a governmental agency to which
Providentmutual is subject; or

2. is necessary to assure continued qualification of the Contract under the
Internal Revenue Code or other Federal or state laws relating to
retirement annuities or variable annuity contracts; or

3. is necessary to reflect a change in the operation of the Variable
Account; or

4. provides additional Variable Account and/or fixed accumulation options.

In the event of any such modifications, Providentmutual will make
appropriate endorsement to the Contract.

REPORTS TO CONTRACT OWNERS

At least quarterly, Providentmutual will mail to each Contract Owner, at
such Owner's last known address of record, a report containing the Contract
Account Value and Cash Surrender Value of the Contract and any further
information required by and applicable law or regulation. The information will
be as of a date not more than two months prior to the date of mailing.

CONTRACT INQUIRIES

Inquiries regarding a Contract may be made by writing to Providentmutual at
its Home Office, 300 Continental Drive, Newark, Delaware 19713.

THE GUARANTEED ACCOUNT

An Owner may allocate some or all of the Net Premiums and transfer some or
all of the Contract Account Value to the Guaranteed Account, which is part of
Providentmutual's General Account and pays interest at declared rates guaranteed
for each calendar year (subject to a minimum guaranteed interest rate of 3%).
The principal, after deductions, is also guaranteed. Providentmutual's General
Account supports its insurance and annuity obligations. The Guaranteed Account
has not, and is not required to be, registered with

23
<PAGE> 27

the SEC under the Securities Act of 1933, and neither the Guaranteed Account nor
Providentmutual's General Account has been registered as an investment company
under the Investment Company Act of 1940. Therefore, neither Providentmutual's
General Account, the Guaranteed Account, nor any interests therein are generally
subject to regulation under the 1933 Act or the 1940 Act. The disclosures
relating to these accounts which are included in this Prospectus are for your
information and have not been reviewed by the SEC. However, such disclosures may
be subject to certain generally applicable provisions of Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.

The portion of the Contract Account Value allocated to the Guaranteed
Account will be credited with rates of interest, as described below. Since the
Guaranteed Account is part of Providentmutual's General Account, Providentmutual
assumes the risk of investment gain or loss on this amount. All assets in the
General Account are subject to Providentmutual's general liabilities from
business operations.

MINIMUM GUARANTEED AND CURRENT INTEREST RATES

The Guaranteed Account Value is guaranteed to accumulate at a minimum
effective annual interest rate of 3%. Providentmutual intends to credit the
Guaranteed Account Value with current rates in excess of the minimum guarantee
but is not obligated to do so. These current interest rates are influenced by,
but do not necessarily correspond to, prevailing general market interest rates.
Since Providentmutual, in its sole discretion, anticipates changing the current
interest rate from time to time, different allocations to and from the
Guaranteed Account Value will be credited with different current interest rates.
The interest rate to be credited to each amount allocated or transferred to the
Guaranteed Account will apply to the end of the calendar year in which such
amount is received or transferred. At the end of the calendar year,
Providentmutual will determine a new current interest rate on such amount and
accrued interest thereon (which may be a different current interest rate from
the current interest rate on new allocations to the Guaranteed Account on that
date). The rate declared on such amount and accrued interest thereon at the end
of each calendar year will be guaranteed for the following calendar year. Any
interest credited on the amounts in the Guaranteed Account in excess of the
minimum guaranteed rate of 3% per year will be determined in the sole discretion
of Providentmutual. The Owner assumes the risk that interest credited may not
exceed the guaranteed minimum rate.

Amounts deducted from the Guaranteed Account for the administration fee,
withdrawals, transfers to the Subaccounts, or other charges are currently, for
the purpose of crediting interest, accounted for on a last-in, first-out
("LIFO") method.

Providentmutual reserves the right to change the method of crediting
interest from time to time, provided that such changes do not have the effect of
reducing the guaranteed rate of interest below 3% per annum or shorten the
period for which the interest rate applies to less than a calendar year (except
for the year in which such amount is received or transferred).

Calculation of Guaranteed Account Value. The Guaranteed Account Value at
any time is equal to amounts allocated and transferred to it plus interest
credited to it, minus amounts deducted, transferred, or withdrawn from it.

TRANSFERS FROM GUARANTEED ACCOUNT

Within 30 days prior to or following any Contract Anniversary, one transfer
is allowed from the Guaranteed Account to any or all of the Subaccounts. The
amount transferred from the Guaranteed Account may not exceed 25% of the
Guaranteed Account Value on the date of transfer, unless the balance after the
transfer is less than $500 in which case the entire amount will be transferred.
If the Written Notice of such transfer is received prior to the Contract
Anniversary, the transfer will be made as of the Contract Anniversary; if the
Written Notice is received after the Contract Anniversary, the transfer will be
made as of the date Providentmutual receives the Written Notice at its
Administrative Office.

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<PAGE> 28

PAYMENT DEFERRAL

Providentmutual has the right to defer payment of any withdrawal, cash
surrender, or transfer from the Guaranteed Account for up to six months from the
date of receipt of the Written Notice for withdrawal, surrender, or transfer.

CHARGES AND DEDUCTIONS

SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)

General. No charge for sales expense is deducted from premiums at the time
premiums are paid. However, within certain time limits described below, a
Surrender Charge (contingent deferred sales charge) is deducted from the
Contract Account Value if a withdrawal is made or a Contract is surrendered
before annuity payments begin. In the event surrender charges are not sufficient
to cover sales expenses, the loss will be borne by Providentmutual; conversely,
if the amount of such charges proves more than enough, the excess will be
retained by Providentmutual. Providentmutual does not currently believe that the
surrender charges imposed will cover the expected costs of distributing the
Contracts. Any shortfall will be made up from Providentmutual's general assets.

Charges for Withdrawals or Surrender. If a withdrawal is made or a
Contract is surrendered, the applicable Surrender Charge will be as follows:

<TABLE>
<CAPTION>
CHARGES AS PERCENTAGE
CONTRACT YEAR IN OF
WHICH AMOUNT
WITHDRAWAL OR WITHDRAWN OR
SURRENDER OCCURS SURRENDERED
- ------------------ ---------------------
<S> <C>
1 7%
2 6
3 5
4 4
5 3
6 2
7 1
8 and after 0
</TABLE>

No Surrender Charge is deducted if the withdrawal or surrender occurs after
seven full Contract Years. In addition, no Surrender Charge is deducted on the
Maturity Date if the Contract proceeds are applied under a Payment Option.

In no event will the total Surrender Charges assessed under a Contract
exceed 8-1/2% of the total gross premiums paid under that contract.

If the Contract is being surrendered, the Surrender Charge is deducted from
the Contract Account Value in determining the Cash Surrender Value. For a
withdrawal, the Surrender Charge is deducted from the Contract Account Value
remaining after the amount requested is withdrawn.

Amounts Not Subject to Surrender Charge. During the first Contract Year,
the full amount of all withdrawals (and any surrender) will be subject to the
Surrender Charge. Starting in the second Contract

25
<PAGE> 29

Year, the Surrender Charge will be applied to the portion of the withdrawal or
surrender which is in excess of the percentage listed in the table below for the
applicable Contract Year:

<TABLE>
<CAPTION>
% OF CONTRACT
ACCOUNT VALUE
AT BEGINNING OF
CONTRACT YEAR CONTRACT YEAR
- ------------------ ---------------------
<S> <C>
1 0%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
</TABLE>

Amounts up to the Contract Account Value percentage shown above are
available for withdrawal in the applicable Contract Year without the imposition
of a Surrender Charge. However, starting in Contract Year three, and in each
subsequent Contract Year listed above, the applicable percentage for each year
will be reduced by the total percentage withdrawn from the Contract Account
Value in prior years. There is no limit on the number of withdrawals occurring
in any Contract Year. If the Contract is surrendered, the applicable Surrender
Charge will be deducted from the Contract Account Value in determining the Cash
Surrender Value. For a partial withdrawal, any applicable Surrender Charge will
be deducted from the amount withdrawn, unless a request is made in advance that
the Surrender Charge be deducted from the remaining Contract Account Value.

ADMINISTRATIVE CHARGES

Annual Administration Fee. On each Contract Anniversary prior to and
including the Maturity Date, and upon surrender of the Contract or on the
Maturity Date (other than on a Contract Anniversary), Providentmutual deducts
from the Contract Account Value an Annual Administration Fee of $30 to reimburse
it for administrative expenses relating to the Contract. The charge will be
deducted from each Subaccount and the Guaranteed Account based on the proportion
that the value in each such account bears to the total Contract Account Value.
(In some states such as Washington and South Carolina, the charge can only be
deducted from the Guaranteed Account to the extent of premiums allocated to such
account during the Contract Year plus the amount of interest in excess of the
guaranteed minimum which is credited to the account for the Contract Year. The
portion of the charge which is allocable to the Guaranteed Account but cannot be
deducted from such account due to this limitation will be deducted
proportionally from the Subaccounts.) No Annual Administration Fee is payable
during the annuity period. Providentmutual reserves the right to increase this
fee up to $40.

Asset-Based Administration Charge. To compensate Providentmutual for costs
associated with administration of the Contracts, prior to the Maturity Date
Providentmutual deducts a daily asset-based administration charge from the
assets of the Variable Account equal to an annual rate of .15%. Providentmutual
reserves the right to increase this fee up to 0.25%.

The Contracts are administered by PMLIC pursuant to a Service Agreement
between Providentmutual and PMLIC. Under the agreement, PMLIC also maintains
records of transactions relating to the Contracts and provides other services.

MORTALITY AND EXPENSE RISK CHARGE

To compensate Providentmutual for assuming mortality and expense risks,
prior to the Maturity Date Providentmutual deducts a daily Mortality and Expense
Risk Charge from the assets of the Variable Account. Providentmutual will impose
a charge in an amount that is equal to an annual rate of 1.25% (daily rate of
.00342466%) (approximately 0.70% for mortality risk and 0.55% for expense risk).

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<PAGE> 30

The mortality risk Providentmutual assumes is that Annuitants may live for
a longer period of time than estimated when the guarantees in the contract were
established. Because of these guarantees, each Payee is assured that longevity
will not have an adverse effect on the annuity payments received. The mortality
risk Providentmutual assumes also includes a guarantee to pay a death benefit if
the Annuitant dies before the Maturity Date. The expense risk Providentmutual
assumes is the risk that the surrender charges, administration fees, and
transfer fees may be insufficient to cover actual future expenses.

OTHER CHARGES INCLUDING INVESTMENT ADVISORY FEES OF THE FUNDS

Because the Variable Account purchases shares of the Funds, the net assets
of each Subaccount of the Variable Account will reflect the investment advisory
fees and operating expense incurred by the Funds. For each Portfolio, an
investment advisor is paid a daily fee by the Funds for its investment advisory
services. Each advisory fee is a percentage of a Portfolio's average daily net
assets, and thus the actual fee paid depends on the Portfolio and the assets of
such Portfolio. Each Portfolio of the Funds is also responsible for its
operating expenses. See the accompanying current Prospectuses for the Funds for
further details.

PREMIUM TAXES

Various states and other governmental entities levy a premium tax on
annuity contracts issued by insurance companies. Premium tax rates are subject
to change from time to time by legislative and other governmental action. In
addition, other governmental units within a state may levy such taxes.

The timing of tax levies varies from one taxing authority to another. If
premium taxes are applicable to a Contract, they will be deducted, depending on
when such taxes are paid to the taxing authority, either (a) from premiums as
they are received, or (b) from the Contract proceeds upon (i) a withdrawal from
or surrender of the Contract or (ii) application of the proceeds to a Payment
Option.

OTHER TAXES

Currently, no charge will be made against the Variable Account for Federal
income taxes. Providentmutual may, however, make such a charge in the future if
income or gains within the Variable Account will result in any Federal income
tax liability to Providentmutual. Charges for other taxes attributable to the
Variable Account, if any, may also be made.

PAYMENT OPTIONS

The Contract ends on the Maturity Date, at which time the Contract Account
Value will be applied under a Payment Option, unless the Owner elects to receive
the Cash Surrender Value in a single sum. If an election of a Payment Option has
not been filed at Providentmutual's Home Office on the Maturity Date, the
proceeds will be paid as a life annuity with payments for ten years guaranteed.
Prior to the Maturity Date, the Owner can have the Cash Surrender Value applied
under a Payment Option, or a Beneficiary can have the death benefit applied
under a Payment Option. Any premium tax applicable will be deducted from the
Cash Surrender Value or the Contract Account Value at the time payments
commence. The Contract must be surrendered so that the applicable amount can be
paid in a lump sum or a supplemental contract for the applicable Payment Option
can be issued.

The Payment Options available are described below. The term "Payee" means a
person who is entitled to receive payment under that option. The Payment Options
are fixed, which means that each option has a fixed and guaranteed amount to be
paid during the annuity period that is not in any way dependent upon the
investment experience of the Variable Account.

ELECTION OF OPTIONS

An option may be elected, revoked, or changed at any time before the
Maturity Date while the Annuitant is living. If the Payee is other than the
Owner, the election of a Payment Option requires the consent of

27
<PAGE> 31

Providentmutual. If an election is not in effect at the Annuitant's death or if
payment is to be made in one sum under an existing election, the Beneficiary may
elect one of the options after the death of the Annuitant.

An election of option and any revocation or change must be made by Written
Notice. It must be filed with the Home Office.

An option may not be elected if any periodic payment under the election
would be less than $50. Subject to this condition, payments may be made
annually, semi-annually, quarterly, or monthly and are made at the beginning of
such period.

DESCRIPTION OF OPTIONS

Option A -- Life Annuity Option. To have the proceeds paid in equal
amounts each month during the Payee's lifetime with payments ceasing with the
last payment prior to the death of the Payee. No amounts are payable after the
Payee dies. Therefore, if the Payee dies immediately following the date of the
first payment, the Payee will receive one monthly payment only.

Option B -- Life Annuity Option with 10 Years Guaranteed. To have the
proceeds paid in equal amounts each month during the Payee's lifetime with the
guarantee that payments will be made for a period of not less than ten years.
Under this option, if any Beneficiary dies while receiving payment, the present
value of the current dollar amount on the date of death of any remaining
guaranteed payments will be paid in one sum to the executors or administrators
of the Beneficiary unless otherwise provided in writing. Calculation of such
present value shall be at 3% which is the rate of interest assumed in computing
the amount of annuity payments.

The amount of each payment will be determined from the Tables in the
Contract which apply to the particular option using the Payee's age and sex. If
the Contract is sold in a group or employer-sponsored arrangement, the amount of
the payments will be based on the Payee's age, only. Age will be determined from
the nearest birthday at the due date of the first payment.

Alternate Income Option. In lieu of one of the above options, the Contract
Account Value, Cash Surrender Value or death benefit, as applicable, may be
settled under an Alternate Income Option based on Providentmutual's single
premium immediate annuity rates in effect at the time of settlement. Such rates
will be adjusted to a due basis. The first payment will be made immediately (at
the beginning of the first month, rather than at the end of the month) which
will result in receiving one additional payment. The income will be increased by
4%. In no case will the income be less than that which would be payable if the
amount were used to purchase a single premium immediate annuity adjusted to a
due basis.

YIELDS AND TOTAL RETURNS

From time to time, Providentmutual may advertise or include in sales
literature yields, effective yields, and total returns for the Subaccounts.
These figures are based on historical earnings and do not indicate or project
future performance. Each Subaccount may, from time to time, advertise or include
in sales literature performance relative to certain performance rankings and
indices compiled by independent organizations. More detailed information as to
the calculation of performance information, as well as comparisons with
unmanaged market indices, appears in the Statement of Additional Information.

Effective yields and total returns for the Subaccounts are based on the
investment performance of the corresponding Portfolio of the Funds. The Funds'
performance in part reflects the Funds' expenses. See the Prospectuses for the
Funds.

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

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<PAGE> 32

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

The total return of a Subaccount refers to return quotations assuming an
investment under a Contract has been held in the Subaccount for various periods
of time including, but not limited to, a period measured from the date the
Subaccount commenced operations. When a Subaccount has been in operation for
one, five, and ten years, respectively, the total return for these periods will
be provided. For periods prior to the date the Variable Account commenced
operations, performance information for Contracts funded by the Subaccounts will
be calculated based on the performance of the Funds' Portfolios and the
assumption that the Subaccounts were in existence for the same periods as those
indicated for the Funds' Portfolios, with the level of Contract charges that
were in effect at the inception of the Subaccounts for the Contracts.

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

In addition to the standard version described above, total return
performance information computed on two different non-standard bases may be used
in advertisements. Average total return information may be presented, computed
on the same basis as described above, except deductions will not include the
Surrender Charge. In addition, Providentmutual may from time to time disclose
average annual total return in non-standard formats and cumulative total return
for Contracts funded by the Subaccounts.

Providentmutual may, from time to time, also disclose yield, standard total
returns, and non-standard total returns for the Portfolios of the Funds,
including such disclosure for periods prior to the date the Variable Account
commenced operations.

Non-standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed. For additional
information regarding the calculation of other performance data, please refer to
the Statement of Additional Information.

In advertising and sales literature, the performance of each Subaccount may
be compared to the performance of other variable annuity issuers in general or
to the performance of particular types of variable annuities investing in mutual
funds, or investment series of mutual funds with investment objectives similar
to each of the Subaccounts. Lipper Analytical Services, Inc. ("Lipper") and the
Variable Annuity Research Data Service ("VARDS") are independent services which
monitor and rank the performance of variable annuity issuers in each of the
major categories of investment objectives on an industry-wide basis.

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

Advertising and sales literature may also compare the performance of each
Subaccount to the Standard & Poor's Index of 500 Common Stocks, a widely used
measure of stock performance. This unmanaged index assumes the reinvestment of
dividends but does not reflect any "deduction" for the expense of operating or
managing an investment portfolio. Other independent ranking services and indices
may also be used as a source of performance comparison.

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<PAGE> 33

Providentmutual may also report other information including the effect of
tax-deferred compounding on a Subaccount's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income and
capital gains derived from Subaccount investments are reinvested and can lead to
substantial long-term accumulation of assets, provided that the underlying
Portfolio's investment experience is positive.

FEDERAL TAX STATUS

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

INTRODUCTION

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

The Contract may be purchased on a non-qualified basis ("Non-Qualified
Contract") or purchased and used in connection with plans qualifying for
favorable tax treatment ("Qualified Contract"). The Qualified Contract is
designed for use by individuals whose premium payments are comprised solely of
proceeds from and/or contributions under retirement plans which are intended to
qualify as plans entitled to special income tax treatment under Sections 401(a),
403(b), or 408 of the Internal Revenue Code of 1986, as amended (the "Code").
The ultimate effect of Federal income taxes on the amounts held under a
Contract, or annuity payments, and on the economic benefit to the Owner, the
Annuitant, or the Beneficiary depends on the type of retirement plan, on the tax
and employment status of the individual concerned, and on Providentmutual's tax
status. In addition, certain requirements must be satisfied in purchasing a
Qualified Contract with proceeds from a tax-qualified plan and receiving
distributions from a Qualified Contract in order to continue receiving favorable
tax treatment. Therefore, purchasers of Qualified Contracts should seek
competent legal and tax advice regarding the suitability of a Contract for their
situation, the applicable requirements, and the tax treatment of the rights and
benefits of a Contract. The following discussion assumes that Qualified
Contracts are purchased with proceeds from and/or contributions under retirement
plans that qualify for the intended special Federal income tax treatment.

TAX STATUS OF THE CONTRACT

Diversification Requirements. Section 817(h) of the Code provides that
separate account investments underlying a contract must be "adequately
diversified" in accordance with Treasury regulations in order for the contract
to qualify as an annuity contract under Section 72 of the Code. The Variable
Account, through each Portfolio of the Funds, intends to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code, which affect how the assets in the various Subaccounts may be
invested. Although Providentmutual does not have control over the Funds in which
the Variable Account invests, we believe that each Portfolio in which the
Variable Account owns shares will meet the diversification requirements and that
therefore the Contract will be treated as an annuity contact under the Code.

In certain circumstances, owners of variable annuity contracts may be
considered the owners, for Federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includable in the variable
annuity contract owner's gross income. Several years ago, the IRS stated in
published rulings that a variable contract owner will be considered the owner of
separate account assets if the contract owner possesses incidents of ownership
in those assets, such as the ability to exercise investment control over the
assets. More recently, the Treasury Department announced, in connection with the
issuance of regulations concerning investment

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<PAGE> 34

diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor, rather that the insurance company, to be treated
as the owner of the assets in the account." This announcement also stated that
guidance would be issued by way of regulations or rulings on the "extent to
which policyholders may direct their investments to particular subaccounts
without being treated as owners of the underlying assets."

The ownership rights under the contract are similar to, but different in
certain resects from, those described by the Service in rulings in which it was
determined that contractowners were not owners of separate account assets. For
example, the Owner of the Contract has the choice of one or more Subaccounts in
which to allocate premiums and Contract values, and may be able to transfer
among Subaccounts more frequently than in such rulings. These differences could
result in the Owner's being treated as the owner of the assets of the Variable
Account. In addition, Providentmutual does not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury Department has
stated it expects to issue. Providentmutual therefore reserves the right to
modify the Contract as necessary to attempt to prevent the Owner from being
considered the owner of the assets of the Variable Account.

Required Distributions. In addition to the requirements of Section 817(h)
of the Code, in order to be treated as an annuity contract for Federal income
tax purposes, Section 72(s) of the Code requires any Non-Qualified Contract to
provide that; (a) if any Owner dies on or after the Maturity 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 Owner's death; and (b)
if any 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 Owner's
death. These requirements will be considered satisfied as to any portion of the
Owner's interest which is payable to or for the benefit of a "designated
beneficiary" and which is distributed over the life of such Beneficiary or over
a period not extending beyond the life expectancy of that Beneficiary, provided
that such distributions begin within one year of that Owner's death. The Owner's
"designated beneficiary" is the person designated by such owner as a Beneficiary
and to whom ownership of the Policy passes by reason of death and must be a
natural person. However, if the owner's "designated beneficiary" is the
surviving spouse of the Owner, the contract may be continued with the surviving
spouse as the new Owner.

The Non-Qualified Contract 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. Providentmutual 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.

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

TAXATION OF ANNUITIES

In General. Section 72 of the Code governs taxation of annuities in
general. Providentmutual believes that an Owner who is a natural person
generally is not taxed on increases in the value of a Contract until
distribution occurs by withdrawing all or part of the Contract Account Value
(e.g., partial withdrawals and complete surrenders) or as annuity payments under
the Payment Option elected. For this purpose, the assignment, pledge, or
agreement to assign or pledge any portion of the Contract Account Value (and in
the case of a Qualified Contract, any portion of an interest in the qualified
plan) generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or an annuity) is taxable as
ordinary income.

The Owner of any annuity contract who is not a natural person generally
must include in income any increase in the excess of the Contract Account Value
over the "investment in the contract" during the taxable year. There are some
exceptions to this rule, and a prospective Owner that is not a natural person
may wish to discuss these with a competent tax advisor.

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<PAGE> 35

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

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

In the case of a withdrawal (including Systematic Withdraws) from a
Non-Qualified Contract before the Maturity Date, under Code Section 72(e)
amounts received are generally first treated as taxable income to the extent
that the accumulation value immediately before the withdrawal exceeds the
"investment in the contract" at that time. Any additional amount withdrawn is
not taxable.

In the case of a full surrender under a Qualified or Non-Qualified
Contract, the amount received generally will be taxable only to the extent it
exceeds the "investment in the contract."

Annuity Payments. Although tax consequences may vary depending on the
Payment Option elected under an annuity contract, under Code Section 72(b),
generally (prior to recovery of the investment in the contract) gross income
does not include that part of the amount received as an annuity under an annuity
contract that bears the same ratio to such amount as the investment in the
contract bears to the expected return at the annuity starting date. Stated
differently, prior to recovery of the investment in the contract, in general,
there is no tax on the amount of each payment which represents the same ratio
that the "investment in the contract" bears to the total expected value of the
annuity payments for the term of payments; however, the remainder of each income
payment is taxable. After the "investment in the contact" is recovered, the full
amount of any additional annuity payments is taxable.

Taxation of Death Benefit Proceeds. Amounts may be distributed from a
Contract because of the death of the Owner or an Annuitant. Generally, such
amounts are includible in the income of the recipient as follows: (i) if
distributed in a lump sum, they are taxed in the same manner as a full surrender
of the contract; or (ii) if distributed under a Payment Option, they are taxed
in the same way as annuity payments. For these purposes, the investment in the
Contract is not affected by the Owner's or Annuitant's death. That is, the
investment in the Contract remains the amount of any purchase payments paid
which were not excluded from gross income.

Penalty Tax on Certain Withdrawals. In the case of a distribution pursuant
to a Non-Qualified Contract, there may be imposed a Federal penalty tax equal to
10% of the amount treated as taxable income. In general, however, there is no
penalty on distributions:

1. made on or after the taxpayer reaches age 59 1/2.

2. made on or after the death of the holder (or if the holder is not an
individual, the death of the primary annuitant);

3. attributable to the taxpayer's becoming disabled;

4. a part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer
and his or her designated beneficiary;

5. made under an annuity contract that is purchased with a single premium
when the annuity starting date is no later than a year from purchase of
the annuity and substantially equal periodic payments are made, not less
frequently than annually, during the annuity period; and

6. made under certain annuities issued in connection with structured
settlement agreements.

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

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<PAGE> 36

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

TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT

A transfer of ownership of a Contract, the designation of an Annuitant,
Payee or other Beneficiary who is not also the Owner, the selection of certain
Maturity Dates or the exchange of a Contract may result in certain tax
consequences to the Owner that are not discussed herein. An Owner contemplating
any such transfer, assignment, or exchange of a Contract should contact a
competent tax advisor with respect to the potential effects of such a
transaction.

WITHHOLDING

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

MULTIPLE CONTRACTS

All non-qualified deferred annuity contracts entered into after October 21,
1988 that are issued by Providentmutual (or its affiliates) to the same Owner
during any calendar year are treated as one annuity Contract for purposes of
determining the amount includible in gross income under Code Section 72(e). This
rule could affect the time when income is taxable and the amount that might be
subject to the 10% penalty tax described above. In addition, the Treasury
Department has specific authority to issue regulations that prevent the
avoidance of Section 72(e) through the serial purchase of annuity contracts or
otherwise. There may also be other situations in which the Treasury may conclude
that it would be appropriate to aggregate two or more annuity contracts
purchased by the same Owner. Accordingly, a Contract Owner should consult a
competent tax advisor before purchasing more than one annuity contract.

TAXATION OF QUALIFIED PLANS

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

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<PAGE> 37

Corporate Pension and Profit Sharing Plans. Section 401(a) of the Code
permits corporate employers to establish various types of retirement plans for
employees. 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. Corporate
employers intending to use the Contract with such plans should seek competent
advice.

Individual Retirement Annuities. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
"Individual Retirement Annuity" or "IRA". These IRAs are subject to limits on
the amount that may be contributed, the persons who may be eligible, and on the
time when distributions may commence. Also, distributions for certain other
types of qualified retirement 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
requirements of the Internal Revenue Service. The Internal Revenue Service has
not reviewed the Contract for qualification as an IRA, and has not addressed in
a ruling of general applicability whether a death benefit provision such as the
provision in the Contract comports with IRA qualification requirements.

SIMPLE Retirement Accounts. Beginning January 1, 1997, certain small
employers may establish Simple Retirement Accounts as provided by Section 408(p)
of the Code, under which employees may elect to defer up to $6,000 (as increased
for cost of living adjustments) as a percentage of compensation. The sponsoring
employer is required to make a matching contribution on behalf of contributing
employees. Distributions from a Simple Retirement Account are subject to the
same restrictions that apply to IRA distributions and are taxed as ordinary
income. Subject to certain exceptions, premature distributions prior to age
59 1/2 are subject to a 10% penalty tax, which is increased to 25% if the
distribution occurs within the first two years after the commencement of the
employee's participation in the plan. The failure of the Simple Retirement
Account to meet Code requirements may result in adverse tax consequences.

Tax Sheltered Annuities. Section 403(b) of the Code allows employees of
certain Section 501(c)(3) organizations and public schools to exclude from their
gross income the premiums paid, within certain limits, on a Contract that will
provide an annuity for the employee's retirement. These payments may be subject
to FICA (social security) tax. Code section 403(b)(11) restricts the
distribution under Code section 403(b) annuity contracts of: (1) elective
contributions made in years beginning after December 31, 1988; (2) earnings on
those contributions; and (3) earnings in such years on amounts held as of the
last year beginning before January 1, 1989. Distribution of those amounts may
only occur upon death of the employee, attainment of age 59 1/2, separation form
service, disability, or financial hardship. In addition, income attributable to
elective contributions may not be distribution in the case of hardship.

RESTRICTIONS UNDER QUALIFIED CONTRACTS

Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under Qualified Contracts or under the terms
of the plans in respect of which Qualified Contracts are issued.

POSSIBLE CHARGE FOR PROVIDENTMUTUAL'S TAXES

At the present time, the Company makes no charge to the Subaccounts for any
Federal, state, or local taxes that the Company incurs which may be attributable
to such Subaccounts or to the Contracts. The Company, however, reserves the
right in the future to make a charge for any such tax or other economic burden
resulting from the application of the tax laws that it determines to be properly
attributable to the Subaccounts or to the Contracts.

If any tax charges are made in the future, they will be accumulated daily
and transferred from the applicable Subaccount to Providentmutual's General
Account. Any investment earnings on tax charges accumulated in a Subaccount will
be retained by Providentmutual.

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OTHER TAX CONSEQUENCES

As noted above, the foregoing comments about the Federal tax consequences
under these Contracts are not exhaustive, and special rules are provided with
respect to other tax situations not discussed in this Prospectus. Further, the
Federal income tax consequences discussed herein reflect Providentmutual'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 a Contract depend on the individual circumstances
of each Owner or recipient of the distribution. A competent tax advisor should
be consulted for further information.

DISTRIBUTION OF CONTRACTS

The Contracts will be offered to the public on a continuous basis, and
Providentmutual does not anticipate discontinuing the offering of the Contracts.
However, Providentmutual reserves the right to discontinue the offering.
Applications for Contracts are solicited by agents who are licensed by
applicable state insurance authorities to sell Providentmutual's variable
annuity contracts and who are also registered representatives of 1717 Capital
Management Company ("1717") or broker/dealers. 1717 is a wholly owned indirect
subsidiary of Provident Mutual Life Insurance Company and is registered with the
SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a member
of the National Association of Securities Dealers, Inc.

1717 acts as the Principal Underwriter, as defined in the Investment
Company Act of 1940, of the Contracts for the Variable Account pursuant to an
Underwriting Agreement between Providentmutual and 1717. 1717 is not obligated
to sell any specific number of Contracts. 1717's principal business address is
Christiana Executive Campus, P.O. Box 15626, Wilmington, Delaware 19850. The
Contracts may also be sold through other broker-dealers registered under the
Securities Exchange Act of 1934 whose representatives are authorized by
applicable law to sell variable annuity contracts. Nonaffiliated broker-dealers
receive full commissions on Contracts sold by their registered representatives,
less a nominal charge by 1717 for expenses incurred. The commissions paid are no
greater than 6% of premiums.

LEGAL PROCEEDINGS

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

VOTING RIGHTS

In accordance with its view of present applicable law, Providentmutual will
vote the Portfolio shares held in the Variable Account at special shareholder
meetings of the Funds in accordance with instructions received from persons
having voting interests in the corresponding Subaccounts. If, however, the
Investment Company Act of 1940 or any regulation thereunder should be amended,
or if the present interpretation thereof should change, or Providentmutual
determines that it is allowed to vote the Portfolio shares in its own right, it
may elect to do so.

The number of votes which are available to an Owner will be calculated
separately for each Subaccount of the Variable Account, and may include
fractional votes. The number of votes attributable to a Subaccount will be
determined by applying an Owner's percentage interest, if any, in a particular
Subaccount to the total number of votes attributable to that Subaccount. An
Owner holds a voting interest in each Subaccount to which the Variable Account
Value is allocated. The Owner only has voting interest prior to the Maturity
Date.

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

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Fund shares as to which no timely instructions are received and shares held
by Providentmutual in a Subaccount as to which an Owner has no beneficial
interest will be voted in proportion to the voting instructions which are
received with respect to all Contracts participating in that Subaccount. Voting
instructions to abstain on any item to be voted upon will be applied on a pro
rata basis to reduce the votes eligible to be cast.

FINANCIAL STATEMENTS

The audited statements of financial condition for Providentmutual as of
December 31, 1996 and 1995 and the related statements of operations, changes in
capital and surplus and cash flows for each of the three years in the period
ended December 31, 1996 as well as the Report of Independent Accountants are
contained in the Statement of Additional Information. The audited statements of
assets and liabilities for the Variable Account as of December 31, 1996 and the
related statements of operations for the year then ended and the statements of
changes in net assets for each of the two years in the period then ended are
included in the Statement of Additional Information.