<PAGE> 1
PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA
PROVIDENTMUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT
SUPPLEMENT DATED SEPTEMBER 21, 2000
TO
PROSPECTUS DATED MAY 1, 2000
On September 19, 2000, Providentmutual Life and Annuity Company of
America (the "Company") and certain affiliated insurance companies obtained an
order from the Securities and Exchange Commission permitting them to recapture
certain Credit Amounts and Renewal Credits made under your variable annuity
contract (the "Contract"). As a result, this supplement describes certain
changes to your Contract. THIS SUPPLEMENT SHOULD BE RETAINED WITH THE PROSPECTUS
FOR FUTURE REFERENCE.
Please replace the third paragraph under "Credit Amounts" in THE
CONTRACT section of the Contract Summary on page 9 of your prospectus with the
following:
Effective September 19, 2000, we will also offer a rider during the 9th
Contract Year through which you may elect a Renewal Credit, which is an
additional amount to be added to your Contract Account Value as of the 9th,
18th, 27th and 36th Contract Anniversaries and every 9th Contract Anniversary
thereafter until ten years prior to the Maturity Date.
Please replace the "Death Benefit Charge" provision in the CHARGES AND
DEDUCTIONS section of the Contract Summary on page 11 of your prospectus with
the following:
$ DEATH BENEFIT CHARGE. A Death Benefit Charge is deducted when computing the
death benefit upon the death of any Owner prior to the Annuity Date. The Death
Benefit Charge is equal to the dollar amount of Credit Amounts granted under the
Contract during the twelve months preceding the Owner's death.
Please replace the third paragraph on page 24 of your prospectus with
the following:
In the event that you cancel the Contract during the Cancellation
Period, we recapture or retain the Credit Amount. (See "Cancellation Period.")
Further, effective September 19, 2000, the Death Benefit Charge is calculated in
a manner that recaptures any Credit Amount applied within one year of the
Owner's death. (See "Death Benefit Charge.") Upon recapture, we deduct from the
amount refunded or the death benefit paid the initial dollar amount of the
Credit Amount that was first applied to the Contract Account Value.
Consequently, there may be situations where you could be disadvantaged in the
event of such a recapture. For example, if we recapture a Credit Amount during a
period of market decline, the dollar amount we recapture would represent a
greater percent of Contract Account Value than it did when applied.
<PAGE> 2
Please replace the "Renewal Credits" provision in the CREDIT AMOUNTS
section under DESCRIPTION OF ANNUITY CONTRACT on page 24 of your prospectus with
the following:
Renewal Credits. Effective September 19, 2000, you may choose an
optional Renewal Credit rider which allows you to elect, up to 90 days before
the 9th Contract Anniversary (and separately, 90 days before the 18th, 27th and
36th Contract Anniversaries and every 9th Contract Anniversary thereafter until
ten years prior to the Maturity Date), an additional credit to be added by us to
your Contract Account Value as of the Contract Anniversary immediately following
the election.
The Renewal Credit is a percentage of an amount equal to the Contract
Account Value on the appropriate Contract Anniversary minus the aggregate
premiums paid during the five years prior to that Contract Anniversary. This
amount is multiplied by the percentages shown in the following table:
<TABLE>
<CAPTION>
CONTRACT ACCOUNT VALUE (ADJUSTED) RENEWAL CREDIT
--------------------------------- --------------
<S> <C>
From $10,000 to $24,999 .............................. 1.5%
From $25,000 to $99,999 .............................. 3.0%
From $100,000 to $499,999 ............................ 4.0%
From $500,000 to $999,999 ............................ 4.5%
$1,000,000 or more ................................... 5.0%
</TABLE>
The Renewal Credit is allocated among the Subaccounts and the Guaranteed Account
Options based on the premium allocation in effect at the time of the Credit.
There is no charge for this rider.
Recapture of Renewal Credits. Under the Renewal Credit rider, we
recapture or retain the Renewal Credit in the event you surrender the Contract,
withdraw Surrender Value from the Contract, or apply all or part of Surrender
Value to a Payment Option.
Although not a charge, in the event of a withdrawal from the
Contract, a percentage of a pro-rata amount of any Renewal Credit granted during
the prior nine Contract Years is deducted from Contract Account Value. The
appropriate percentage is determined from the following table:
<TABLE>
<CAPTION>
CONTRACT YEARS SINCE PERCENT OF
RENEWAL CREDIT WAS GRANTED RENEWAL CREDIT
-------------------------- --------------
<S> <C>
1-5 ........................................ 100%
6 ......................................... 80%
7 ......................................... 60%
8 ......................................... 40%
9 ......................................... 20%
10 and greater ............................. 0%
</TABLE>
<PAGE> 3
The pro-rata amount of the Renewal Credit to which the percentage is applied is
the product of (a) and (b) where:
(a) equals the ratio of the amount being withdrawn in excess of any free
withdrawal amount to the lessor of (1) the Contract Account Value on
the appropriate Contract Anniversary minus the aggregate premiums paid
during the five years prior to that Contract Anniversary, or (2) the
Contract Account Value as of the withdrawal date; and
(b) equals the amount of the Renewal Credit that has not previously been
withdrawn.
Notwithstanding the table, the amount of this "recapture" deduction never
exceeds the amount of the withdrawal. After any withdrawal, if the entire
Renewal Credit has not been recaptured, then the remaining amount of the Renewal
Credit is recaptured upon subsequent withdrawals. However, the total amount of
deductions from Contract Account Value for this purpose never exceeds the amount
of the Renewal Credit.
Likewise, in the event that the Contract is surrendered or annuitized,
Surrender Value excludes the same percentage of the amount of any Renewal Credit
granted during the prior nine Contract Years.
Please replace the "Death Benefit Charge" provision under CHARGES AND
DEDUCTIONS on page 34 of your prospectus with the following:
A Death Benefit Charge is deducted when computing the death benefit
upon the death of any Owner prior to the Annuity Date. The Death Benefit Charge
is equal to the dollar amount of Credit Amounts granted under the Contract
during the twelve months preceding the Owner's death.
